# EDGAR Filing Document

**Accession Number:** 0001302387
**File Stem:** 0001193125-23-069105
**Filing Date:** 2023-3
**Character Count:** 2042290
**Document Hash:** 1fba9c25b0a2380de2b1c281f4b40e19
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-069105.hdr.sgml**: 20230313

**ACCESSION NUMBER**: 0001193125-23-069105

**CONFORMED SUBMISSION TYPE**: S-1

**PUBLIC DOCUMENT COUNT**: 51

**FILED AS OF DATE**: 20230313

**DATE AS OF CHANGE**: 20230313

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BV Financial, Inc.
- **CENTRAL INDEX KEY:** 0001302387
- **STANDARD INDUSTRIAL CLASSIFICATION:** SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** X1
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** S-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-270496
- **FILM NUMBER:** 23727729

**BUSINESS ADDRESS:**
- **STREET 1:** 1230 LIGHT STREET
- **CITY:** BALTIMORE
- **STATE:** MD
- **ZIP:** 21230
- **BUSINESS PHONE:** 410-477-5000

**MAIL ADDRESS:**
- **STREET 1:** 7114 NORTH POINT ROAD
- **CITY:** BALTIMORE
- **STATE:** MD
- **ZIP:** 21219

##### [**Table of Contents**](#toc)
**As filed with the Securities and Exchange Commission on March 13, 2023** 

**Registration No. 333-** 

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**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**WASHINGTON, D.C. 20549** 

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**FORM S-1** 

**REGISTRATION STATEMENT** 

***UNDER***

***THE SECURITIES ACT OF 1933***

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## BV Financial, Inc.
**BayVanguard Bank 401(k) Profit Sharing Plan** 

**(Exact Name of Registrant as Specified in Its Charter)** 

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| | | |
|:---|:---|:---|
| **Maryland** | **6036** | **14-1920944** |
| **(State or Other Jurisdiction of**<br> **Incorporation or Organization)** | **(Primary Standard Industrial**<br> **Classification Code Number)** | **(I.R.S. Employer**<br> **Identification Number)** |

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**7114 North Point Road** 

**Baltimore, Maryland 21219** 

**(410) 477-5000** 

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

**David M. Flair** 

**Co-President and Chief Executive Officer** 

**BV Financial, Inc.** 

**7114 North Point Road** 

**Baltimore, Maryland 21219** 

**(410) 477-5000** 

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

***Copies to:***

**Scott A. Brown, Esq.** 

**Zachary A. Davis, Esq.** 

**Luse Gorman, PC** 

**5335 Wisconsin Avenue, N.W., Suite 780** 

**Washington, D.C. 20015** 

**(202) 274-2000** 

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**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 462(c) 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:

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

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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.** 

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##### [**Table of Contents**](#toc)
**<u>Prospectus Supplement</u>**

**BAYVANGUARD BANK 401(k) PROFIT SHARING PLAN** 

**Offering of Participation Interests in up to 332,610 Shares** 

**of** 

## BV FINANCIAL, INC.
**Common Stock** 

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BV Financial, Inc., a Maryland corporation that we refer to as "BV Financial" throughout this prospectus supplement, is offering shares of common stock for sale at $10.00 per share in connection with the conversion of Bay-Vanguard, M.H.C., Inc., which we refer to as the "MHC" throughout this prospectus supplement, from the mutual holding company to the stock holding company form of organization. The shares being offered represent the ownership interest in BV Financial, for which the MHC currently owns more than 50% of the outstanding shares. BV Financial's common stock currently trades on the Pink Open Market, operated by OTC Markets Group under the trading symbol "BVFL." Following the offering, we expect BV Financial's common stock will trade on the NASDAQ Capital Market also under the trading symbol "BVFL."

In connection with the stock offering, BayVanguard Bank is allowing participants in the BayVanguard Bank 401(k) Profit Sharing Plan (the "401(k) Plan") to invest all or a portion of their account balances in BV Financial common stock. Based upon the value of the 401(k) Plan assets at December 31, 2022, the trustee of the 401(k) Plan could purchase up to 332,610 shares of BV Financial common stock, at the purchase price of $10.00 per share, in the stock offering. This prospectus supplement relates to the election of 401(k) Plan participants to direct the trustee of the 401(k) Plan to invest all or a portion of their 401(k) Plan account balances in BV Financial common stock at the time of the stock offering.

Before you consider investing, you should read the prospectus of BV Financial, dated May ___, 2023, which is attached to this prospectus supplement. It contains detailed information regarding the conversion, the stock offering of BV Financial and the financial condition, results of operations and business of BayVanguard Bank. This prospectus supplement provides information regarding the 401(k) Plan. You should read this prospectus supplement together with the prospectus and keep both for future reference.

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**For a discussion of risks that you should consider, see "Risk Factors" beginning on page 1 in this prospectus supplement, "[Risk Factors](#tx447808_1)" beginning on page<u> </u> of the attached prospectus, and "Notice of Your Rights Concerning Employer Securities" in this prospectus supplement.** 

**The interests in the 401(k) Plan and the offering of the shares of BV Financial common stock have not been approved or disapproved by the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Office of the Commissioner of Financial Regulation for the State of Maryland, the Securities and Exchange Commission or any other federal or state agency. Any representation to the contrary is a criminal offense.** 

**The securities offered by this prospectus supplement are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.** 

This prospectus supplement may be used only in connection with offers and sales by BV Financial in the stock offering of BV Financial common stock that may be acquired within the 401(k) Plan. No one may use this prospectus supplement to reoffer or resell interests in shares of BV Financial common stock acquired through the 401(k) Plan.

You should rely only on the information contained in this prospectus supplement and the attached prospectus. BV Financial, BayVanguard Bank and the 401(k) Plan have not authorized anyone to provide you with different information.

This prospectus supplement does not constitute an offer to sell or solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. Neither the delivery of this prospectus supplement and the attached prospectus nor any sale of BV Financial common stock shall under any circumstances imply that there has been no change in the affairs of BV Financial, BayVanguard Bank or the 401(k) Plan since the date of this prospectus supplement, or that the information contained in this prospectus supplement or incorporated by reference is correct as of any time after the date of this prospectus supplement.

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**The date of this prospectus supplement is May ___, 2023.** 

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##### [**Table of Contents**](#toc)
**TABLE OF CONTENTS** 

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| | |
|:---|:---|
|  [RISK FACTORS](#tx447808_1) | 1 |
|  [THE OFFERING](#tx447808_2) | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Securities Offered](#tx447808_3) | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Election to Purchase BV Financial, Inc. Common Stock](#tx447808_4) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Purchase Priorities](#tx447808_5) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Purchases in the Stock Offering and Oversubscriptions](#tx447808_6) | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Composition of the BV Financial, Inc. Stock Fund](#tx447808_7) | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Minimum and Maximum Investment](#tx447808_8) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Value of 401(k) Plan Assets](#tx447808_9) | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [How to Order Common Stock Through the 401(k) Plan During the Offering](#tx447808_10) | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Special Investment Election Form Delivery Deadline](#tx447808_11) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Irrevocability of Transfer Direction](#tx447808_12) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Future Direction to Purchase and Sell Common Stock](#tx447808_13) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Voting Rights of Common Stock](#tx447808_14) | 8 |
|  [DESCRIPTION OF THE 401(k) PLAN](#tx447808_15) | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Introduction](#tx447808_16) | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Eligibility and Participation](#tx447808_17) | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Contributions under the 401(k) Plan](#tx447808_18) | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Limitations on Contributions](#tx447808_19) | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Benefits Under the 401(k) Plan](#tx447808_20) | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Investment of Contributions and Account Balances](#tx447808_21) | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Performance History](#tx447808_22) | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Description of the Investment Funds](#tx447808_23) | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [BV Financial, Inc. Stock Fund](#tx447808_24) | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Administration of the 401(k) Plan](#tx447808_25) | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Amendment and Termination](#tx447808_26) | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Merger, Consolidation or Transfer](#tx447808_27) | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Federal Income Tax Consequences](#tx447808_28) | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Notice of Your Rights Concerning Employer Securities](#tx447808_29) | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Additional Employee Retirement Income Security Act, as amended, Considerations](#tx447808_30) | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Securities and Exchange Commission Reporting and Short-Swing Profit Liability](#tx447808_31) | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Financial Information Regarding Plan Assets](#tx447808_32) | 19 |
|  [LEGAL OPINION](#tx447808_33) | 19 |

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##### [**Table of Contents**](#toc)
**RISK FACTORS** 

In addition to considering the material risks disclosed under "Risk Factors" beginning on page [#] of the attached prospectus, you should also consider the following:

**If you elect to purchase BV Financial common stock using your 401(k) Plan account balance and the stock offering is oversubscribed, you will bear the risk of price changes in the investment funds of the 401(k) Plan.** 

If you elect to purchase BV Financial common stock using your 401(k) Plan account balance, the 401(k) Plan trustee will sell the designated dollar amount within your 401(k) Plan account pro rata among your investment fund balances (other than the existing BV Financial Stock Fund). If the stock offering is oversubscribed (<u>i.e.</u>, there are more orders for BV Financial common stock than shares available for sale in the stock offering) and the 401(k) Plan trustee cannot use any or all of the funds you allocate to purchase BV Financial common stock in the stock offering, the funds that cannot be invested in BV Financial common stock, and any interest earned on those funds, will be reinvested in your existing investment funds of the 401(k) Plan (other than the existing BV Financial Stock Fund), according to your then existing investment election (<u>i.e.</u>, in proportion to your investment direction for future contributions). During the period from when the 401(k) Plan trustee sells a percentage of each of your investment funds until reinvestment of some or all of those funds back into your investment funds as a result of an oversubscription, you will bear the risk of price changes in the investment funds. It is possible that during this period some or all of the investment funds may have increased in value more than the amount of any interest you may have earned on the reinvested funds before reinvestment. See "The Offering – Purchases in the Stock Offering and Oversubscriptions" in this prospectus supplement.

**THE OFFERING**

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|:---|:---|
| **Securities Offered** | BV Financial is offering participants of the 401(k) Plan the opportunity to purchase participation interests in shares of BV Financial common stock through the 401(k) Plan. A "participation interest" represents your indirect ownership of stock units that are acquired by the 401(k) Plan pursuant to your election and is the equivalent to one share of BV Financial common stock. In this prospectus supplement, "participation interests" are referred to as shares of BV Financial common stock. At the purchase price of $10.00 per share, the 401(k) Plan may acquire up to 332,610 shares of BV Financial common stock in the stock offering, based on the approximate fair market value of the 401(k) Plan's assets as of December 31, 2022.<br>Only employees of BayVanguard Bank may become participants in the 401(k) Plan and only participants may purchase shares of BV Financial common stock through the 401(k) Plan. However, your investment in shares of BV Financial common stock in connection with the stock offering is subject to the purchase priorities listed below.<br>Information regarding the 401(k) Plan is contained in this prospectus supplement and information with respect to the financial condition, results of operations and business of BV Financial and BayVanguard Bank is contained in the accompanying prospectus. The address of the corporate/main office of BV Financial and BayVanguard Bank is 7114 North Point Road, Baltimore, Maryland 21219 and the telephone number at this address is (410) 477-5000. |

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|  | <br> ***Address all questions about this prospectus supplement to Rose Searcy, EVP Human Resources Director, at BayVanguard Bank; telephone: (410) 477-5000, ext. 1013; email: rsearcy@bayvanguard.com.***<br>***Direct all questions about the stock offering, the prospectus, or obtaining a stock order form to purchase stock in the offering outside the 401(k) Plan to the Stock Information Center at [telephone #] (toll-free)***, ***Monday through Friday, 9:00 a.m. through 4:30 p.m., Eastern Time, except for bank holidays.*** |
| **Election to Purchase BV Financial, Inc. Common Stock** | In connection with the stock offering, you may elect to designate a percentage of your 401(k) Plan account balance (other than the existing BV Financial Stock Fund) (up to 100%) to be used to purchase shares of BV Financial common stock in the stock offering. The trustee of the 401(k) Plan will purchase BV Financial common stock at $10.00 per share to be held as stock units, in accordance with your directions. However, your directions are subject to purchase priorities and purchase limitations described below. |
| **Purchase Priorities** | All 401(k) Plan participants are eligible to elect to order BV Financial common stock in the stock offering. However, the elections are subject to the purchase priorities in the Plan or Conversion and Reorganization of Bay-Vanguard, M.H.C., Inc., which provides for a subscription offering and a community offering. In the stock offering, purchase priorities are as follows and apply in case more shares of BV Financial common stock are ordered than are available for sale (i.e., an "oversubscription"):<br><u>Subscription Offering</u>:<br>(1) Each depositor of BayVanguard Bank with aggregate account balances of at least $50 at the close of business on December 31, 2021, gets first priority.<br>(2) BayVanguard Bank's tax-qualified plans, including the employee stock ownership plan and the 401(k) Plan, get second priority.<br>(3) Each depositor of BayVanguard Bank with aggregate account balances of at least $50 at the close of business on [date], gets third priority.<br>(4) Each depositor of BayVanguard Bank at the close of business on [date], get fourth priority. |

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|  | <u>Community Offering</u>:<br>Shares of BV Financial common stock 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) in Baltimore City, Maryland and the Maryland Counties of Ann Arundel, Baltimore, Dorchester, Harford and Talbot.<br>If you fall into purchase priority (1), (3) or (4), you have subscription rights to purchase BV Financial common stock in the subscription offering. You may use up to 100% of your 401(k) Plan account balance (other than balances in the existing BV Financial) to pay for the shares of BV Financial common stock.<br>If you do not fall into purchase priority (1), (3) or (4), you may place an order for the purchase of BV Financial common stock through the 401(k) Plan in the Community Offering, if one.<br>Order to subscribe for shares of BV Financial common stock in the stock offering through the 401(k) Plan must be made using the enclosed Special Investment Election Form; to be completed and submitted in the manner described below under "How to Order Common Stock Through the 401(k) Plan During the Offering."<br>If you fall into purchase priority (1), (3) or (4), you will separately receive a stock offering materials package in the mail, including a stock order form. You may use the stock order form to order shares of BV Financial common stock outside the 401(k) Plan. Refer to the prospectus for information on how to submit such orders.<br>Additionally, or instead of placing an order outside of the 401(k) Plan using a stock order form, you may place an order for the purchase of BV Financial common stock through the 401(k) Plan, using the enclosed Special Investment Election Form, to be completed and submitted in the manner described below under "How to Order Common Stock Through the 401(k) Plan During the Offering." |
| **Purchases in the Stock Offering and Oversubscriptions** | The trustee of the 401(k) Plan will order shares of BV Financial common stock in the stock offering based on the designated percentage set forth on your Special Investment Election Form. Specifically, on or about the second business day following the conclusion of the 401(k) Plan Offering Period (as defined below), each of your current investment funds within your 401(k) Plan account (other than balances in the existing BV Financial Bancorp Stock Fund) will be liquidated based on the designated amount set forth in your Special Investment Election Form, and the proceeds (rounded down to the nearest $10.00 increment) will be  |

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|  | transferred to an interest-bearing account held by the 401(k) Plan pending the formal closing of the stock offering several weeks later. We will determine whether all, or any portion of, your order will be filled (if the offering is oversubscribed, you may not receive all, or any, of your order, depending on your purchase priority, as described above). The amount that can be used toward your order in the stock offering will be applied to the purchase of shares of BV Financial common stock in the stock offering. Following the formal closing of the stock offering, your purchased shares of BV Financial common stock in the stock offering will be reflected in the a BV Financial Stock Fund, which will also then include converted shares of common stock of BV Financial currently held in the existing BV Financial Stock Fund. Your ownership interest in the BV Financial Stock Fund will initially be based on the number of shares of BV Financial common stock that you purchased through the 401(k) Plan in the stock offering, plus the converted shares of common stock of BV Financial and any cash from the existing BV Financial Stock Fund. See "Composition of the BV Financial, Inc. Stock Fund" for further details.<br>If the stock offering is oversubscribed (i.e., there are more orders for BV Financial common stock than shares available for sale in the stock offering) and the trustee is unable to use the full amount allocated by you to purchase BV Financial common stock in the stock offering, the amount that cannot be invested in BV Financial common stock, and any interest earned on that amount, will be reinvested in the existing investment funds of the 401(k) Plan (other than the existing BV Financial Stock Fund), in accordance with your then existing investment election (in proportion to your investment direction for future contributions). The prospectus describes the allocation procedures in the event of an oversubscription.<br>If you choose not to direct the investment of your 401(k) Plan account balance towards the purchase of BV Financial common stock in the stock offering, your account balance will remain invested in the investment funds of the 401(k) Plan as you previously directed. |
| **Composition of the BV Financial, Inc. Stock Fund** | Shares purchased by the 401(k) Plan in the stock offering will be transferred to the 401(k) Plan and held by the BV Financial Stock Fund. The BV Financial Stock Fund is neither a mutual fund nor a diversified or managed investment option. Rather, it is merely a recordkeeping mechanism established by the 401(k) Plan custodian to track the shares purchased by the participants in the stock offering through the 401(k) Plan. The BV Financial Stock Fund will initially consist of shares of BV Financial common stock purchased by participants in the 401(k) Plan, which will be initially valued at $10.00 per share (i.e., the purchase price in the stock offering), plus any converted shares and cash from the existing BV Financial Stock Fund. Following the stock offering, the BV Financial Stock Fund will maintain a cash component for liquidity purposes to facilitate daily transactions, such as investment transfers or distributions from the BV Financial Stock Fund. ***Your ownership interest in the BV Financial Stock Fund will be denominated in stock units.***  |

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|  | After the stock offering, a stock unit will consist of a percentage interest in both BV Financial common stock and cash held in the BV Financial Stock Fund. Stock unit values (similar to the stock's share price) and the number of stock units (similar to number of shares) are used to designate the dollar value of the participant's interest in the BV Financial Stock Fund. Each day the stock unit value of the BV Financial Stock Fund will be determined by dividing the total market value of the fund at the end of the day by the total number of stock units held in the fund by all participants as of the previous day's end. The change in stock unit value reflects the day's change in stock price of BV Financial common stock, any cash dividends accrued, and the interest earned on the cash component of the BV Financial Stock Fund, less any investment management fees (if applicable). **Investment in BV Financial common stock involves special risks related to investments in shares of BV Financial common stock. For a discussion of material risks you should consider, see the "Risk Factors" section of this prospectus supplement, the "Risk Factors" section of the accompanying prospectus, and the section of this prospectus supplement called "Notice of Your Rights Concerning Employer Securities" (see below).** <br>The market value and stock unit holdings of your 401(k) Plan account in the BV Financial Stock Fund will be reported to you on your quarterly statements, which may be accessed through your participant website. |
| **Minimum and Maximum Investment** | In connection with the stock offering, the 401(k) Plan will permit you to use up to 100% of your 401(k) Plan account balance (other than your account balance in the existing BV Financial Stock Fund) for the purchase of BV Financial common stock.<br>The trustee of the 401(k) Plan will subscribe for shares of the BV Financial common stock offered for sale in the stock offering, in accordance with each participant's direction. The trustee will pay $10.00 per share, which will be the same price paid by all other persons who purchase shares in the subscription and community offerings. To purchase BV Financial common stock through the 401(k) Plan, the minimum investment will be the purchase of 25 shares of BV Financial common stock, which equals $250. The prospectus describes maximum purchase limits for investors in the stock offering. |

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| **Value of 401(k) Plan Assets** | The market value of the assets of the 401(k) Plan as of December 31, 2022, was approximately $3,326,103. |
| **How to Order Common Stock Through the 401(k) Plan During the Offering** | Enclosed is a Special Investment Election Form on which you can make a special election to purchase BV Financial common stock in the stock offering through the BV Financial Stock Fund. This is done by following the procedures described below. Note the following stipulations concerning this election:<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Using your Special Investment Election Form, you can designate a percentage (up to 100%) of your total 401(k) Plan account balance (other than balances in the existing BV Financial Stock Fund) to be used to order BV Financial common stock in the stock offering.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Your election is subject to a minimum purchase of 25 shares of BV Financial common stock at the purchase price of $10.00 per share.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Your election, plus any order you placed outside the 401(k) Plan using a stock order form, are together subject to a maximum purchase limit. Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 50,000 shares ($500000) 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 100,000 shares ($1000000) of common stock in all categories of the stock offering combined.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **The election period for the 401(k) Plan ends at 4:00 p.m., Eastern time, on June ___, 2023 (the "401(k) Plan Offering Period").**<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• During the 401(k) Plan Offering Period, you will continue to be able to transfer amounts that are not directed to be used to purchase BV Financial common stock among all other investment funds. However, you will not be permitted to change the investment amounts that you designated to be used to purchase BV Financial common stock on your Special Investment Election Form.<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As soon as practicable following the 401(k) Plan Offering Period (most likely on or about the second day), the 401(k) Plan trustee will sell, on a pro-rata basis, a portion of each of your investment funds within your 401(k) Plan account based on the dollar amount designated in your Special Investment Election Form. Thereafter, the proceeds (rounded down to the nearest $10.00 increment) will be transferred to an interest-bearing account held by the 401(k) Plan pending the formal closing of the stock offering several weeks after the 401(k) Plan Offering Period. |

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|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Following the formal closing of the stock offering, your purchased shares of BV Financial common stock will be reflected in the BV Financial Stock Fund, which will be denominated in stock units. Any amounts remaining in the interest-bearing account because the amounts could not be used by the trustee to purchase BV Financial common stock in the stock offering will be reinvested in the existing investment funds of the 401(k) Plan, in accordance with your then existing investment election (in proportion to your investment direction for future contributions). |
| **Special Investment Election Form Delivery Deadline** | **If you wish to elect to order BV Financial common stock in the stock offering through the 401(k) Plan, you must return your Special Investment Election Form to Rose Searcy, EVP Human Resources Director, at BayVanguard Bank, 7114 North Point Road, Baltimore, Maryland 21219 no later than the [time] deadline on June ___, 2023.**<br>***Address all questions about this prospectus supplement to Rose Searcy, EVP Human Resources Directors, at BayVanguard Bank; telephone: (410) 477-5000; email: rsearcy@bayvanguard.com.*** |
| **Irrevocability of Transfer Direction** | Once you make an election to purchase shares of BV Financial common stock in the stock offering through the 401(k) Plan, you may not change your election. **Your election is irrevocable**. You will, however, continue to be able to transfer amounts not directed towards the purchase of shares of BV Financial common stock among all other investment funds in the 401(k) Plan on a daily basis. |
| **Future Direction to Purchase and Sell Common Stock** | You will be able to purchase participation interests in the BV Financial Stock Fund after the stock offering through the 401(k) Plan. You will also be able to sell your interest in the BV Financial Stock Fund (subject to the restrictions below).<br>After the stock offering, you will again have complete access to any amounts you directed towards the purchase of shares in the stock offering. For example, after the stock offering closes, you generally may sell any units you purchased in the offering. However, special restrictions may apply to purchasing or selling shares of BV Financial common stock by the participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal stockholders of BV Financial. Note that if you are an officer of BV Financial that is restricted by federal or state regulations from selling shares of BV Financial common stock acquired in the stock offering for one year, the BV Financial common stock that you purchased in the stock offering through the 401(k) Plan (and held by the BV Financial Stock Fund) will not be tradable until the one-year trading restriction has lapsed. |

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| **Voting Rights of Common Stock** | The 401(k) Plan provides that you may direct the trustee as to how to vote your interest in the shares of BV Financial common stock held by BV Financial Stock Fund. If the trustee does not receive your voting instructions, the administrator of the 401(k) Plan will direct the trustee to vote your shares in the same proportion as the voting instructions received from other participants related to their shares of BV Financial common stock held by the BV Financial Stock Fund, provided that the vote is made in accordance with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All voting instructions will be kept confidential. |

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**DESCRIPTION OF THE 401(k) PLAN** 

**Introduction** 

BayVanguard Bank originally adopted the predecessor plan to the 401(k) Plan effective as of January 1, 1993, and amended and restated the 401(k) Plan effective January 1, 2022. The 401(k) Plan is a single-employer, tax-qualified plan with a cash or deferred compensation feature established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code").

BayVanguard Bank intends that the 401(k) Plan, in operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. BayVanguard Bank will adopt any amendments to the 401(k) Plan that may be necessary to ensure the continuing qualified status of the 401(k) Plan under the Code and applicable Treasury Regulations.

*Employee Retirement Income Security Act of 1974, as amended ("ERISA").* The 401(k) Plan is an "individual account plan" other than a "money purchase pension plan" within the meaning of ERISA. As such, the 401(k) Plan is subject to all of the provisions of Title I (Protection of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except to the funding requirements contained in Part 3 of Title I of ERISA, which by their terms do not apply to an individual account plan (other than a money purchase plan). The Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained in Title IV of ERISA are not applicable to participants or beneficiaries under the 401(k) Plan.

*Reference to Full Text of 401(k) Plan.* The following portions of this prospectus supplement summarize certain provisions of the 401(k) Plan. They are not complete and are qualified in their entirety by the full text of the BayVanguard Bank 401(k) Profit Sharing Plan. Copies of the 401(k) Plan are available to all employees by filing a request with the 401(k) Plan Administrator c/o BayVanguard Bank, Attn: Rose Searcy. You are urged to carefully read the full text of the 401(k) Plan.

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**Eligibility and Participation** 

As an employee of BayVanguard Bank, you are eligible to become a participant in the 401(k) Plan for purposes of making elective deferrals on the entry date coinciding with or immediately following your attainment of age 21 and completion of 90 consecutive calendar days of employment following date of hire in which you complete at least 250 Hours of Service. For entitlement to employer matching contributions and employer profit sharing contributions, you must complete one Year of Service and attain 21 years of age. The entry dates under the 401(k) Plan are the first day of each calendar quarter following satisfaction of the eligibility requirements for making elective deferrals. The first day of the payroll period following satisfaction of the eligibility requirements for employer matching contributions and the first day of January and July following satisfaction of the eligibility requirements for purposes of receiving employer nonelective contributions.

As of December 31, 2022, there were approximately 73 active and former employees in the 401(k) Plan.

**Contributions under the 401(k) Plan** 

*Elective Deferrals.* 401(k) Plan participants are permitted to defer any whole percentage of their Compensation (as defined below) from 1% to 25% of their Compensation, subject to certain restrictions imposed by the Code, and to have that amount contributed to the 401(k) Plan on their behalf. Participants may make either traditional 401(k) deferrals (pre-tax) or Roth 401(k) deferrals (after-tax). Pre-tax deferrals are not subject to income tax until distributed from the Plan. Roth deferrals are subject to income tax at the time of deferral. The Roth 401(k) deferrals, however, are not taxed when distributed from the Plan if certain eligibility requirements are met. For purposes of the 401(k) Plan, "Compensation" means the taxable compensation reported on Form W-2, with certain exclusions. In addition, any pre-tax contributions made to the 401(k) plan and pre-tax contributions to a Section 125 cafeteria plan and qualified transportation fringe benefits are included in Compensation. For 2023, the Compensation of each participant taken into account under the 401(k) Plan is limited to $330,000. (Limits established by the Internal Revenue Service are subject to increase pursuant to an annual cost-of-living adjustment, as permitted by the Code). Canceling or changing a contribution percentage can be accomplished over the internet at any time.

*Catch-up Contributions*. Participants who have made the maximum amount of regular before-tax contributions allowed by the 401(k) Plan or other legal limits and have attained at least age 50 (or will reach age 50 before the end of the Plan Year, which is December 31), are also eligible to make an additional catch-up contribution. For 2023, the maximum catch-up contribution is $7,500. Participants may authorize BayVanguard Bank to withhold a specified dollar amount of their Compensation for this purpose.

*Qualified Non-elective Contributions*. BayVanguard Bank may make discretionary qualified non-elective contributions which are allocated to each eligible participant's account in proportion to his or her Compensation as a percentage of all eligible participant's Compensation. Qualified non-elective contributions will only be made to non-highly compensated employees and will be made to satisfy certain non-discrimination tests that ensure that the elective deferrals of highly compensated employees do not exceed the elective deferrals of non-highly compensated employees by more than a certain margin. If made, qualified non-elective contributions are deemed to be elective deferrals for purposes of helping to satisfy such tests. Qualified non-elective contributions are fully vested when made.

*Employer Matching Contributions.* BayVanguard Bank currently makes a Matching Contribution equal to 20% of the first 5% of Compensation an eligible participant contributes to the 401(k) Plan for the payroll period.

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**Limitations on Contributions** 

*Contribution Limits.* For the Plan Year beginning January 1, 2023, the amount of before-tax contributions may not exceed $22,500 per calendar year, or $30,000, if a participant is eligible to make catch-up contributions. Contributions in excess of this limit are known as excess deferrals. For participants who defer amounts in excess of this limitation, their gross income for federal income tax purposes will include the excess in the year of the deferral. In addition, unless the excess deferral is distributed before April 15 of the following year, it will be taxed again in the year distributed. Income on the excess deferral distributed by April 15 of the immediately succeeding year will be treated, for federal income tax purposes, as earned and received by you in the tax year in which the contribution is made.

The total amount of contributions that participants make and any employer contributions made on behalf of a participant in one year is limited to the lesser of 100% of compensation or, for 2023, $66,000, or if applicable, $73,500 including catch-up contributions.

*Rollovers*. Participants may make a rollover contribution of an eligible rollover distribution from any other qualified retirement plan or an individual retirement arrangement ("IRA"). These funds will be maintained in a separate rollover account in which participants will have a nonforfeitable vested interest.

**Benefits Under the 401(k) Plan** 

*Vesting.* At all times, participants have a fully vested, nonforfeitable interest in elective deferral and vest in employer contributions under the 401(k) Plan at the rate of 20% per year of service beginning after two years of service; so that they are fully vested after six years of service.

*Distribution at Termination of Employment*. You (or your beneficiary, in the event of your death) will be entitled to receive a distribution of the vested amounts in your account when your employment terminates for any reason. Your benefit will be equal to the vested balance of your account. You will receive payment of your benefit in a lump sum. You may request a partial distribution of the vested portion of your account; the minimum amount will be $1,000. You may be eligible to elect a direct rollover of your distribution to an IRA or another qualified plan to avoid current taxation of your benefit. The Plan will make involuntary cash-out distributions of vested account balances of $1,000 or less. In determining the value of your vested account balance, the Plan will include rollover contributions. If the value of your vested account balance exceeds $1,000, you must consent to any distribution of such account balance. If you are not a 5% or more owner of your employer, your required benefit commencement date is the April 1<sup>st</sup> following the close of the year in which the later occurs: you attain age 73 or you terminate employment.

*Distribution after Death of Participant*. In the event of your death, the value of your entire account will be payable to your beneficiary. If your spouse is your beneficiary, distribution must begin by December 31 of the calendar year immediately following the calendar year in which you died, or by December 31 of the calendar year in which you would have attained age 73, if later.

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**Investment of Contributions and Account Balances** 

All amounts credited to your accounts under the 401(k) Plan are held in the 401(k) Plan trust (the "Trust"), which is administered by the trustee appointed by BayVanguard Bank's Board of Directors. Before the effective date of the stock offering, you are currently given the opportunity to direct the investment of your account into one or more of the following investment options:

American Beacon Large Cap Value Fund

American Funds EuroPacific Growth Fund

Columbia Mid Cap Index Fund

Columbia Small Cap Index Fund

State Street S&P 500 Index Fund

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;T. Rowe Price Blue Chip Growth Fund

BNY Mellon Bond Market Index Fund

Vanguard Target Retirement Income Fund

Vanguard Target Retirement 2020 Fund

Vanguard Target Retirement 2025 Fund

Vanguard Target Retirement 2030 Fund

Vanguard Target Retirement 2035 Fund

Vanguard Target Retirement 2040 Fund

Vanguard Target Retirement 2045 Fund

Vanguard Target Retirement 2050 Fund

Vanguard Target Retirement 2055 Fund

Vanguard Target Retirement 2060 Fund

Vanguard Target Retirement 2065 Fund

Vanguard Target Retirement 2070 Fund

MetLife Stable Value Fund

BV Financial Stock Fund

*Qualified Default Investment Alternative*. For participants who are automatically enrolled in the 401(k) Plan, or otherwise fail to direct how their 401(k) Plan contributions are to be invested, contribution amounts will be invested in the 401(k) Plan's "qualified default investment alternative" until such time as the participant provides investment direction. The 401(k) Plan's qualified default investment alternative is the [fund name]. The specific fund selected for a given participant will be the fund which approximately coincides with or next follows the year in which the participant will attain age 65.

In connection with the stock offering, the 401(k) Plan now provides that, in addition to the investment options specified above, you may direct the trustee, or its representative, to invest all or a portion of your account in the BV Financial Stock Fund.

**Performance History** 

The following table provides performance data with respect to the above investment funds as of December 31, 2022:

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|  | | **Total Returns as of December 31** | **Total Returns as of December 31** | **Total Returns as of December 31** | **Total Returns as of December 31** |
| **Fund Name** |<br>**Dec. 31, 2022** | **1 Year** | **3 Year** | **5 Year** | **10 Year** |
|  American Beacon Large Cap Value Fund | -5.56% | -5.56% | 7.43% | 7.04% | 10.15% |
|  American Funds EuroPacific Growth Fund | -23.00% | -23.00% | -0.50% | 1.18% | 4.94% |
|  Columbia Mid Cap Index Fund | -13.49% | -13.49% | 6.71% | 6.19% | 10.26% |
|  Columbia Small Cap Index Fund | -16.52% | -16.52% | 5.29% | 5.38% | 10.29% |
|  State Street S&P 500 Index Fund | -18.25% | -18.25% | 7.61% | 9.30% | 12.42% |
| T. Rowe Price Blue Chip Growth Fund | -38.75% | -38.75% | -1.15% | 4.96% | 11.54% |
|  BNY Mellon Bond Market Index Fund | -13.62% | -13.62% | -3.15% | -0.41% | 0.59% |
|  Vanguard Target Retirement Income Fund | -12.74% | -12.74% | 0.34% | 2.30% | 3.62% |
|  Vanguard Target Retirement 2020 Fund | -14.15% | -14.15% | 1.33% | 3.22% | 5.83% |
|  Vanguard Target Retirement 2025 Fund | -15.55% | -15.55% | 1.66% | 3.58% | 6.43% |
|  Vanguard Target Retirement 2030 Fund | -16.27% | -16.27% | 2.09% | 3.94% | 6.99% |
|  Vanguard Target Retirement 2035 Fund | -16.62% | -16.62% | 2.64% | 4.34% | 7.57% |
|  Vanguard Target Retirement 2040 Fund | -16.98% | -16.98% | 3.17% | 4.74% | 8.06% |
|  Vanguard Target Retirement 2045 Fund | -17.36% | -17.36% | 3.74% | 5.14% | 8.34% |
|  Vanguard Target Retirement 2050 Fund | -17.46% | -17.46% | 3.80% | 5.18% | 8.36% |
|  Vanguard Target Retirement 2055 Fund | -17.46% | -17.46% | 3.79% | 5.18% | 8.34% |
|  Vanguard Target Retirement 2060 Fund | -17.46% | -17.46% | 3.79% | 5.18% | 8.34% |
|  Vanguard Target Retirement 2065 Fund | -17.39% | -17.39% | 3.78% | 5.15% | 6.42% |
|  Vanguard Target Retirement 2070 Fund | N/A | N/A | N/A | N/A | 1.02% |
|  MetLife Stable Value Fund | 2.48% | 2.48% | 2.28% | 2.53% | 2.49% |
|  BayVanguard Federal Stock | 21.23% | 21.23% | 10.04% | 18.83% | 13.70% |

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**Description of the Investment Funds** 

The following is a description of each of the funds:

**American Beacon Large Cap Value Fund –** The Fund seeks long-term capital appreciation and current income. Normally, most of the Fund's net assets are invested in equity securities of large market capitalization U.S. companies. These companies have market capitalizations within the market capitalization range of the companies in the Russell 1000 Index at the time of investment.

**American Funds EuroPacific Growth Fund –** The Fund seeks long-term growth of capital. The Fund invests primarily in common stocks of issuers in Europe and the Pacific Basin that the investment adviser believes have the potential for growth. Growth stocks are stocks that the investment adviser believes have the potential for above-average capital appreciation. The Fund may invest a portion of its assets in common stocks and other securities of companies in emerging markets.

**Columbia Mid Cap Index Fund –** The Fund seeks total return that corresponds to the total return of the S&P MidCap 400 Index. The Fund invests primarily in common stocks that comprise the S&P MidCap 400 Index. In seeking to match the performance of the Index, the Fund's assets are allocated among common stocks in approximately the same weightings as the Index. The Fund attempts to achieve at least a 95% correlation between the performance of the Index and its investment results.

**Columbia Small Cap Index Fund –** The Fund seeks total return before fees and expenses that correspond to the total return of the Standard & Poor's (S&P) SmallCap 600 Index. Normally, the Fund invests primarily in common stocks that comprise the S&P SmallCap 600 Index. The Investment Manager attempts to achieve at least a 95% correlation between the performance of the Index and the Fund's investment results, before fees and expenses. The Fund may invest in derivatives, such as futures (including equity index futures), for cash equalization purposes.

**State Street S&P 500 Index Fund –** The Fund seeks to replicate as closely as possible the performance of the S&P 500 Index. The advisor uses an index tracking management strategy designed to track the performance of the S&P 500 Index.The index is a well-known stock market index that includes common stocks of 500 companies from a number of sectors and that measures the performance of the large-cap sector of the U.S. equities market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**T. Rowe Price Blue Chip Growth Fund –** The Fund seeks long-term capital growth; income is a secondary objective. The Fund will normally invest primarily in the common stocks of large and medium-sized blue chip growth companies. It focuses on companies with leading market positions, seasoned management, and strong financial fundamentals. The Fund is non-diversified.

**BNY Mellon Bond Market Index Fund –** The Fund seeks to match the total return of the Bloomberg U.S. Aggregate Bond Index. The Fund invests in bonds that are included in the index or other instruments with similar economic characteristics. The Bloomberg U.S. Aggregate Bond Index is a broad-based, unmanaged index that covers the U.S. dollar-denominated, investment grade, fixed-rate, taxable bond market.

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**Vanguard Target Retirement Income Fund –** The Fund seeks current income and some capital appreciation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors currently in retirement. Its indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; inflation-protected public obligations issued by the U.S. Treasury; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds.

**Vanguard Target Retirement 2020 Fund –** The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to a strategy designed for investors planning to retire and leave the workforce in or within a few years of 2020. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

**Vanguard Target Retirement 2025 Fund –** The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2025. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

**Vanguard Target Retirement 2030 Fund –** The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to a strategy designed for investors planning to retire and leave the workforce in or within a few years of 2030. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

**Vanguard Target Retirement 2035 Fund –** The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2035. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

**Vanguard Target Retirement 2040 Fund –** The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to a strategy designed for investors planning to retire and leave the workforce in or within a few years of 2040. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

**Vanguard Target Retirement 2045 Fund –** The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2045. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

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**Vanguard Target Retirement 2050 Fund –** The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to a strategy designed for investors planning to retire and leave the workforce in or within a few years of 2050. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

**Vanguard Target Retirement 2055 Fund –** The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2055. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

**Vanguard Target Retirement 2060 Fund –** The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of Vanguard mutual funds according to an asset allocation strategy designed for investors planning to ret ire and leave the workforce in or within a few years of 2060. The Fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds will increase.

**Vanguard Target Retirement 2065 Fund –** The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of Vanguard mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2065. The Fund's asset allocation will become more conservative over time.

**Vanguard Target Retirement 2070 Fund –** The investment seeks to provide capital appreciation and current income consistent with its current asset allocation. The fund invests in a mix of Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2070 (the target year). The fund's asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase.

**MetLife Stable Value Fund –** The Fund's objective is the safety and preservation of principal and accumulated interest for participant-initiated transactions. The interest credited to balances in the Fund will reflect both current market conditions and performance of the underlying investments in the Fund.

**BV Financial Stock Fund (Current Employer Stock Fund) –** The BV Financial Stock Fund consists primarily of common stock of BV Financial. This fund was made available to 401(k) Plan participants in connection with the mutual holding company reorganization and minority stock offering in 2005. Participants were allowed the opportunity to invest 401(k) Plan funds in the BV Financial Stock Fund. Investments in the BV Financial Stock Fund involve special risks common to investments in the shares of common stock of BV Financial. Shares of BV Financial that were held in the BV Financial Stock Fund before the conversion and offering will be converted into new shares of common stock of BV Financial, in accordance with the exchange ratio. As soon as practicable after the closing of the stock offering, the BV Financial Stock Fund will be merged into the BV Financial Stock Fund.

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**An investment in any of the funds listed above is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. As with any mutual fund investment, there is always a risk that you may lose money on your investment in any of the funds listed above.** 

***For a discussion of material risks you should consider, see "Risk Factors" of this prospectus supplement, "Risk Factors" beginning on page _ of the attached prospectus, and the section of this prospectus supplement called "Notice of Your Rights Concerning Employer Securities" below.***

***Investors should carefully consider a mutual fund's investment objectives, risks, charges, and expenses before investing. A prospectus, or summary prospectus if available, containing this and other information can be obtained by contacting the 401(k) Plan administrator. Read the prospectus carefully before investing.***

***Before directing retirement funds to a separate account, investors should carefully consider the investment objectives, risks, charges, and expenses of the separate account as well as their individual risk tolerance, time horizon and goals. For additional information, contact the 401(k) Plan administrator.***

**BV Financial, Inc. Stock Fund** 

In connection with the stock offering, you may, in the manner described earlier, elect to direct the trustee to invest all or a portion of your 401(k) Plan account in BV Financial common stock (other than account balances in the BV Financial Stock Fund). Your purchased shares will be held within the 401(k) Plan by the BV Financial Stock Fund. The BV Financial Stock Fund is neither a mutual fund nor a diversified or managed investment option. Rather, it is merely a recordkeeping mechanism established by the 401(k) Plan custodian to track the shares purchased by the participants in the stock offering through the 401(k) Plan.

Performance of the BV Financial Stock Fund depends on a number of factors, including the financial condition and profitability of BV Financial and BayVanguard Bank and market conditions for shares of BV Financial common stock generally.

Investments in the BV Financial Stock Fund involve special risks related to investments in the shares of common stock of BV Financial. In making a decision to invest all or a part of your account balance in the BV Financial Stock Fund, you should carefully consider the information set forth in this prospectus supplement under "Notice of Your Rights Concerning Employer Securities – The Importance of Diversifying Your Retirement Savings."

*For a discussion of material risks you should consider, see "Risk Factors" of this prospectus supplement, "Risk Factors" beginning on page [#] of the attached prospectus, and the section of this prospectus supplement called "Notice of Your Rights Concerning Employer Securities" below.* 

**An investment in any of the investment options listed above under "Description of the 401(k) Plan – Description of the Investment Funds" is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. As with any investment option, there is always a risk that you may lose money on your investment in any of the investment options listed above.** 

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**Administration of the 401(k) Plan** 

*The Trustee and Custodian*. Pentegra Trust Company serves as directed trustee of all the investment funds under the 401(k) Plan, including the BV Financial Stock Fund and the BV Financial Stock Fund. Reliance Trust Company is appointed Custodian for all investment funds under the 401(k) Plan.

*401(k) Plan Administrator*. Pursuant to the terms of the 401(k) Plan, the 401(k) Plan is administered by the 401(k) Plan administrator, which is BayVanguard Federal Savings Bank. The address of the 401(k) Plan administrator is 7114 North Point Road, Baltimore, Maryland 21219 and the telephone number at this address is (410) 477-5000. The 401(k) Plan administrator is responsible for the administration of the 401(k) Plan, interpretation of the provisions of the 401(k) Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining the 401(k) Plan, maintenance of 401(k) Plan records, books of account and all other data necessary for the proper administration of the 401(k) Plan, preparation and filing of all returns and reports relating to the 401(k) Plan which are required to be filed with the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries and others under Sections 104 and 105 of ERISA.

*Reports to Plan Participants*. The 401(k) Plan administrator will furnish you a statement at least quarterly showing the balance in your account as of the end of that period, the amount of contributions allocated to your account for that period, and any adjustments to your account to reflect earnings or losses (if any). In addition, you may go online to *www.pentegra.com* at any time to review your account balances.

**Amendment and Termination** 

BayVanguard Bank intends to continue the 401(k) Plan indefinitely. Nevertheless, BayVanguard Bank may terminate the 401(k) Plan at any time. If the 401(k) Plan is terminated in whole or in part, then regardless of other provisions in the 401(k) Plan, you will have a fully vested interest in your 401(k) Plan account. BayVanguard Bank reserves the right to make any amendment or amendments to the 401(k) Plan which do not cause any part of the trust to be used for, or diverted to, any purpose other than the exclusive benefit of participants or their beneficiaries; provided, however, that BayVanguard Bank may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA.

**Merger, Consolidation or Transfer** 

In the event of the merger or consolidation of the 401(k) Plan with another plan, or the transfer of the plan assets to another plan, the 401(k) Plan requires that you would, if either the 401(k) Plan or the other plan terminates, receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit you would have been entitled to receive immediately before the merger, consolidation or transfer, if the 401(k) Plan had then terminated.

**Federal Income Tax Consequences** 

The following is a brief summary of the material federal income tax aspects of the 401(k) Plan. You should not rely on this summary as a complete or definitive description of the material federal income tax consequences relating to the 401(k) Plan. Statutory provisions change, as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws. Consult your tax advisor with respect to any distribution from the 401(k) Plan and transactions involving the 401(k) Plan.

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As a "tax-qualified retirement plan," the Code affords the 401(k) Plan special tax treatment, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the sponsoring employer is allowed an immediate tax deduction for the amount contributed to the 401(k) Plan
each year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) participants pay no current income tax on amounts contributed by the employer on their behalf; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) earnings of the 401(k) Plan are tax-deferred, thereby permitting the tax-free accumulation of income and gains on investments.

BayVanguard Bank will administer the 401(k) Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.

*Lump-Sum Distribution*. A distribution from the 401(k) Plan to a participant or the beneficiary of a participant will qualify as a lump-sum distribution if it is made within one taxable year, on account of the participant's death, disability or separation from service, or after the participant attains age 59<sup><sup>1</sup>⁄<sub>2</sub></sup>, and consists of the balance credited to participants under the 401(k) Plan and all other profit sharing plans, if any, maintained by BayVanguard Bank. The portion of any lump-sum distribution required to be included in your taxable income for federal income tax purposes consists of the entire amount of the lump-sum distribution, less the amount of after-tax contributions, if any, you have made to this 401(k) Plan and any other profit sharing plans maintained by BayVanguard Bank, which is included in the distribution.

*BV Financial Common Stock Included in Lump-Sum Distribution*. If a lump-sum distribution includes BV Financial common stock, the distribution generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any net unrealized appreciation with respect to BV Financial common stock; that is, the excess of the value of BV Financial at the time of the distribution over its cost or other basis of the securities to the trust. The tax basis of BV Financial common stock, for purposes of computing gain or loss on its subsequent sale, equals the value of BV Financial common stock at the time of distribution, less the amount of net unrealized appreciation. Any gain on a subsequent sale or other taxable disposition of BV Financial common stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute long-term capital gain, regardless of the holding period of BV Financial common stock. Any gain on a subsequent sale or other taxable disposition of BV Financial common stock, in excess of the amount of net unrealized appreciation at the time of distribution, will be considered long-term capital gain. The recipient of a distribution may elect to include the amount of any net unrealized appreciation in the total taxable amount of the distribution, to the extent allowed by regulations to be issued by the Internal Revenue Service.

*Distributions: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA*. You may roll over virtually all distributions from the 401(k) Plan to another qualified plan or to an individual retirement account in accordance with the terms of the other plan or account.

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**Notice of Your Rights Concerning Employer Securities** 

Federal law provides specific rights concerning investments in employer securities. Because you may in the future have investments in BV Financial common stock under the 401(k) Plan, you should take the time to read the following information carefully.

*Your Rights Concerning Employer Securities*. The 401(k) Plan must allow you to elect to move any portion of your account that is invested in BV Financial common stock from that investment into other investment alternatives under the 401(k) Plan. You may contact the 401(k) Plan administrator shown above for specific information regarding this right, including how to make this election. In deciding whether to exercise this right, you will want to give careful consideration to the information below that describes the importance of diversification. All of the investment options under the 401(k) Plan are available to you if you decide to diversify out of your investment in BV Financial common stock.

*The Importance of Diversifying Your Retirement Savings*. To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.

In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the 401(k) Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerance for risk. Therefore, you should carefully consider the rights described here and how these rights affect the amount of money that you invest in BV Financial common stock through the 401(k) Plan.

It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the 401(k) Plan to help ensure that your retirement savings will meet your retirement goals.

**Additional Employee Retirement Income Security Act, as amended, Considerations** 

As noted above, the 401(k) Plan is subject to certain provisions of ERISA, including special provisions relating to control over the 401(k) Plan's assets by participants and beneficiaries. The 401(k) Plan's feature that allows you to direct the investment of your account balances is intended to satisfy the requirements of Section 404(c) of ERISA relating to control over plan assets by a participant or beneficiary. The effect of this is two-fold. First, you will not be deemed a "fiduciary" because of your exercise of investment discretion. Second, no person who otherwise is a fiduciary, such as BayVanguard, the 401(k) Plan administrator, or the 401(k) Plan's trustee is liable under the fiduciary responsibility provision of ERISA for any loss which results from your exercise of control over the assets in your 401(k) Plan account.

Because you will be entitled to invest all or a portion of your account balance in the 401(k) Plan in BV Financial common stock, the regulations under Section 404(c) of the ERISA require that the 401(k) Plan establish procedures that ensure the confidentiality of your decision to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights with respect to BV Financial common stock be conducted in a way that ensures the confidentiality of your exercise of these rights.

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**Securities and Exchange Commission Reporting and Short-Swing Profit Liability** 

Section 16 of the Securities Exchange Act of 1934 imposes reporting and liability requirements on officers, directors, and persons beneficially owning more than 10% of public companies, such as BV Financial. Section 16(a) of the Securities Exchange Act of 1934 requires the filing of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10% of the shares of BV Financial, a Form 3 reporting initial beneficial ownership must be filed with the Securities and Exchange Commission. Changes in beneficial ownership, such as purchases, sales and gifts generally must be reported periodically, either on a Form 4 within two business days after the change occurs, or annually on a Form 5 within 45 days after the close of fiscal year of BV Financial. Discretionary transactions in and beneficial ownership of BV Financial common stock by officers, directors and persons beneficially owning more than 10% of BV Financial common stock generally must be reported to the Securities and Exchange Commission by such individuals.

In addition to the reporting requirements described above, Section 16(b) of the Securities Exchange Act of 1934 provides for the recovery by BV Financial of profits realized by an officer, director or any person beneficially owning more than 10% of BV Financial common stock resulting from non-exempt purchases and sales of BV Financial common stock within any six (6)-month period.

The Securities and Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of Section 16(b) for all transactions in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of Section 16(b) persons.

Except for distributions of BV Financial common stock due to death, disability, retirement, termination of employment or under a qualified domestic relations order, persons affected by Section 16(b) are required to hold shares of BV Financial common stock distributed from the 401(k) Plan for six (6) months following such distribution and are prohibited from directing additional purchases of BV Financial common stock for six (6) months after receiving such a distribution.

**Financial Information Regarding Plan Assets** 

Financial information representing the net assets available for 401(k) Plan benefits and the change in net assets available for 401(k) Plan benefits is available upon written request to the 401(k) Plan administrator at the address shown above.

**LEGAL OPINION** 

The validity of the issuance of BV Financial common stock has been passed upon by Luse Gorman, PC, Washington, D.C., which firm has acted as special counsel to BV Financial in connection with the stock offering of BV Financial.

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**PROSPECTUS**![LOGO](g447808g22l81.jpg)

**(Holding company for BayVanguard Bank)** 

**Up to 14,375,000 Shares of Common Stock** 

**(Subject to Increase to up to 16,531,250 Shares)** 

BV Financial, Inc., a Maryland corporation that we refer to as "BV Financial" throughout this prospectus, is offering shares of common stock for sale on a best efforts basis in connection with the conversion of Bay-Vanguard, M.H.C., Inc., which we refer to as "Bay-Vanguard, M.H.C." throughout this prospectus, from the mutual holding company to the stock holding company form of organization. The shares we are offering represent the majority ownership interest in BV Financial currently owned by Bay-Vanguard, M.H.C., a Maryland-chartered mutual holding company. BV Financial's common stock currently trades on the Pink Open Market operated by OTC Markets Group under the symbol "BVFL." Upon completion of the conversion, we expect the shares of BV Financial common stock will trade on the Nasdaq Capital Market under the symbol "BVFL." We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012.

The shares of common stock are first being offered for sale in a subscription offering to eligible members of Bay-Vanguard, M.H.C. (i.e., eligible depositors of BayVanguard Bank) and to tax-qualified employee benefit plans of BayVanguard Bank. Shares not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given first to residents of the communities served by BayVanguard Bank. Any shares of common stock not purchased in the subscription or community offerings may be offered for sale to the public through a syndicate of broker-dealers, referred to in this prospectus as the syndicated community offering. The syndicated community offering may commence before the subscription and community offerings (including any extensions) have expired. However, no shares purchased in the subscription offering or the community offering will be issued until the completion of any syndicated community offering. We may sell up to 16,531,250 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 10,625,000 shares to complete the offering.

In addition to the shares we are selling in the offering, the shares of common stock of BV Financial currently owned by public stockholders will be exchanged for shares of common stock of BV Financial based on an exchange ratio that will result in existing public stockholders owning approximately the same percentage of common stock of BV Financial as they owned immediately before the completion of the conversion. We expect to issue up to 2,628,550 shares in the exchange.

The minimum purchase order is 25 shares. Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 35,000 shares ($350,000) 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 70,000 shares ($700,000) of common stock in all categories of the offering combined.

The subscription offering will expire at 4:30 p.m., Eastern Time, on [expiration date]. If held, the community offering may begin concurrently with, during or after the subscription offering. We may extend the expiration date of the subscription and/or community offerings without notice to you until [extension date], or longer if the Board of Governors of the Federal Reserve System, which we refer to as the "Federal Reserve Board," approves a later date. No single extension may exceed 90 days and the offering must be completed by [final extension date]. Once submitted, orders are irrevocable unless the subscription and community offerings are terminated or extended, with regulatory approval, beyond [extension date], or the number of shares of common stock to be sold is increased to more than 16,531,250 shares or decreased to less than 10,625,000 shares. If the subscription and community offerings are extended past [extension date], 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 offering is increased to more than 16,531,250 shares or decreased to less than 10,625,000 shares, we will resolicit subscribers, and all funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest. Funds received in the subscription and the community offerings will be held in a segregated account at BayVanguard Bank and will earn interest at [interest rate]% per annum until completion or termination of the offering.

Performance Trust Capital Partners is assisting us in selling the shares on a best efforts basis in the subscription and community offerings, and will serve as sole manager for any syndicated community offering. Performance Trust Capital Partners is not required to purchase any shares of common stock that are sold in the offering.

**OFFERING SUMMARY** 

**Price: $10.00 per Share** 

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Minimum** | **Midpoint** | **Maximum** | **Adjusted Maximum** |
|  Number of shares | 10625000 | 12500000 | 14375000 | 16531250 |
|  Gross offering proceeds | $106250000 | $125000000 | $143750000 | $165312500 |
|  Estimated offering expenses, excluding marketing agent fees and expenses (1) | $1350000 | $1350000 | $1350000 | $1350000 |
|  Marketing agent fees and expenses (1)(2) | $1083808 | $1237683 | $1411588 | $1600014 |
|  Estimated net proceeds | $103816193 | $122402317 | $140988422 | $162362486 |
|  Estimated net proceeds per share | $9.77 | $9.79 | $9.81 | $9.82 |

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(1) See "The Conversion and Offering—Plan of Distribution; Marketing Agent and Underwriter
Compensation" for a discussion of Performance Trust Capital Partners' compensation for this offering and the compensation to be received by Performance Trust Capital Partners and the other broker-dealers that may participate in the
syndicated community offering.

(2) Includes records agent fees and expenses payable to Performance Trust Capital Partners. See "The
Conversion and Offering—Records Agent Services."

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

**See "[Risk Factors](#toc447808_2)" beginning on page _.** 

*These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Commissioner of Financial Regulation for the State of Maryland, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.* 

PERFORMANCE TRUST

For assistance, contact the Stock Information Center at [stock center number].

The date of this prospectus is [Prospectus date].

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![LOGO](g447808g94d86.jpg)

![LOGO](g447808g88k40.jpg)

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| | | | | |
|:---|:---|:---|:---|:---|
| «<br>| **North Point** (Headquarters)<br> 7114 North Point Rd<br> Baltimore, MD 21219<br>**Essex**<br> 532 Eastern Blvd<br> Baltimore, MD 21221<br>**Locust Point**<br> 921 East Fort Ave, Suite 102<br> Baltimore, MD 21230<br>**Bayview**<br> 6201 Eastern Ave<br> Baltimore, MD 21224 | **Dundalk**<br> 3101 North Point Rd<br> Baltimore, MD 21222<br>**Perry Hall**<br> 8639 Belair Rd<br> Baltimore, MD 21236<br>**Forest Hill**<br> 1920 Rock Spring Rd<br> Forest Hill, MD 21050<br>**Aberdeen**<br> 501 S Stepney Rd<br> Aberdeen, MD 21001 | **Cambridge** – High St<br> 304 High St<br> Cambridge, MD 21613<br>**Cambridge** – Woods Rd<br> 803 Woods Rd<br> Cambridge, MD 21613<br>**Easton** – Idlewild<br> 501 Idlewild Ave<br> Easton, MD 21601<br>**Easton** – Glebe<br> 8707 Commerce Dr<br> Easton, MD 21601 | **Hurlock**<br> 100 Pine St<br> Hurlock, MD 21643<br>**Mountain Road – Pasadena**<br> 125 Mountain Rd<br> Pasadena, MD 21122<br>**Oxford**<br> 104 Factory St<br> Oxford, MD 21654 |

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**TABLE OF CONTENTS** 

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| | |
|:---|:---|
|  | Page |
|  [SUMMARY](#toc447808_1) | **1** |
|  [RISK FACTORS](#toc447808_2) | **18** |
|  [SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA](#toc447808_3) | **31** |
|  [FORWARD-LOOKING STATEMENTS](#toc447808_4) | **33** |
|  [HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING](#toc447808_5) | **35** |
|  [OUR DIVIDEND POLICY](#toc447808_6) | **36** |
|  [MARKET FOR THE COMMON STOCK](#toc447808_7) | **37** |
|  [HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE](#toc447808_8) | **38** |
|  [CAPITALIZATION](#toc447808_9) | **39** |
|  [PRO FORMA DATA](#toc447808_10) | **41** |
|  [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#toc447808_11) | **45** |
|  [BUSINESS OF BV FINANCIAL](#toc447808_12) | **58** |
|  [BUSINESS OF BAYVANGUARD BANK](#toc447808_13) | **59** |
|  [SUPERVISION AND REGULATION](#toc447808_14) | **76** |
|  [TAXATION](#toc447808_15) | **85** |
|  [MANAGEMENT](#toc447808_16) | **86** |
|  [BENEFICIAL OWNERSHIP OF COMMON STOCK](#toc447808_17) | **97** |
|  [SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS](#toc447808_18) | **98** |
|  [THE CONVERSION AND OFFERING](#toc447808_19) | **99** |
|  [COMPARISON OF STOCKHOLDERS' RIGHTS FOR STOCKHOLDERS OF BV FINANCIAL](#toc447808_20) | **122** |
|  [RESTRICTIONS ON ACQUISITION OF BV FINANCIAL](#toc447808_21) | **122** |
|  [DESCRIPTION OF CAPITAL STOCK OF BV FINANCIAL](#toc447808_22) | **125** |
|  [TRANSFER AGENT](#toc447808_23) | **126** |
|  [EXPERTS](#toc447808_24) | **126** |
|  [LEGAL MATTERS](#toc447808_25) | **126** |
|  [WHERE YOU CAN FIND ADDITIONAL INFORMATION](#toc447808_26) | **126** |
|  [INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF BV FINANCIAL, INC.](#toc447808_27) | **F-1** |

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**SUMMARY** 

The following summary explains the significant aspects of the conversion, the offering and the exchange of existing shares of BV Financial common stock for new shares of BV Financial common stock. It may not contain all of the information that is important to you. Before making an investment decision, you should read this entire document carefully, including the consolidated financial statements and the related notes, and the section entitled "Risk Factors."

**Our Organizational Structure and the Proposed Conversion and Stock Offering** 

Since 2005, we have operated in a two-tier mutual holding company structure. BV Financial is a Maryland corporation that is our publicly traded stock holding company and the parent company of BayVanguard Bank. At December 31, 2022, BV Financial had consolidated assets of $845.0 million, deposits of $684.6 million and stockholders' equity of $97.8 million. BV Financial's parent company is Bay-Vanguard, M.H.C., a Maryland-chartered mutual holding company. At December 31, 2022, BV Financial had 7,418,575 shares of common stock outstanding, of which 6,400,814 shares, or 86.3%, were owned by Bay-Vanguard, M.H.C., and the remaining 1,017,761 shares were held by the public.

Pursuant to the terms of the plan of conversion and reorganization, which we refer to as the "plan of conversion," we are converting from the mutual holding company corporate structure to the fully public stock holding company corporate structure. Upon completion of the conversion, Bay-Vanguard, M.H.C. will cease to exist. The conversion will be accomplished by the merger of Bay-Vanguard, M.H.C. with and into BV Financial. The shares of BV Financial common stock being offered for sale represent the majority ownership interest in BV Financial currently owned by Bay-Vanguard, M.H.C. Public stockholders of BV Financial will receive new shares of common stock of BV Financial in exchange for their current shares of BV Financial at an exchange ratio intended to preserve approximately the same aggregate ownership interest in BV Financial as public stockholders currently have in BV Financial, adjusted downward to reflect certain assets held by Bay-Vanguard, M.H.C., without giving effect to new shares purchased in the offering or cash paid in lieu of any fractional shares. The shares of BV Financial common stock owned by Bay-Vanguard, M.H.C. will be canceled.

The following diagram shows our current organizational structure, reflecting ownership percentages at December 31, 2022:

![LOGO](g447808sp004.jpg)

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After the conversion and offering are completed, we will be organized as a fully public stock holding company, with the stock of BV Financial held as follows:

![LOGO](g447808sp005.jpg)

**Our Business** 

Our business activities are conducted primarily through BayVanguard Bank. BayVanguard Bank is a Maryland-chartered stock savings bank headquartered in Baltimore, Maryland. BayVanguard Bank was originally chartered in 1873 under the name Light Street Savings and Building Association. Through a series of mergers in the decades that followed, Light Street Savings and Building Association had by the 1990s changed its name to Bay Federal Savings Association. In 1996, following a merger with Vanguard Federal Savings and Loan Association, the name was changed to Bay-Vanguard Federal Savings Bank. In 2005, we reorganized into the mutual holding company form of ownership and, in 2019, we converted our charter to a Maryland state savings bank with the new name of BayVanguard Bank. As part of the conversion, BayVanguard Bank will convert its charter to that of a Maryland commercial bank.

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in commercial real estate loans, one- to four-family real estate loans and, to a lesser extent, commercial loans, construction and land loans, marine loans and farm loans. Our lending function focuses on three areas – consumer (e.g., residential loans and marine lending), community (e.g., non-owner occupied residential, commercial real estate and other commercial lending in the areas served by our market area) and investment real estate (e.g., larger commercial real estate lending both inside and outside of our market area). In recent years, we have increased our focus, consistent with our conservative underwriting standards, on originating commercial real estate and commercial loans. We also invest in investment securities. Our revenues are derived primarily from interest on loans and, to a lesser extent, interest on investment securities. Our primary sources of funds are deposits and principal and interest payments on loans and securities. BayVanguard Bank offers a variety of deposit accounts, including noninterest-bearing and interest-bearing checking accounts, money market accounts, savings accounts and certificates of deposit. We have also historically used Federal Home Loan Bank advances to fund our operations and had $12.0 million in advances from the Federal Home Loan Bank of Atlanta as of December 31, 2022.

We have also supplemented our organic growth through four different mergers since 2019. See "Business of BayVanguard Bank—Recent Acquisition History."

BayVanguard Bank is subject to comprehensive regulation and examination by the Office of the Commissioner of Financial Regulation for the State of Maryland (the "OCFR") and the Federal Deposit Insurance Corporation (the "FDIC"). BayVanguard Bank is a member of the Federal Home Loan Bank system. BV Financial is subject to comprehensive regulation and examination by the Federal Reserve Board.

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Following the completion of the conversion and offering, BV Financial will continue to be the holding company for BayVanguard Bank. Our executive offices are located at 7114 North Point Road, Baltimore, Maryland 21219 and our telephone number is (410) 477-5000. Our website address is <u>www.bayvanguard.com</u>. Information on our website is not incorporated into this prospectus and should not be considered a part of this document.

**Business Strategy** 

Our primary focus is on continuing and enhancing our community-oriented retail banking strategy. Highlights of our current business strategy include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Pursue opportunistic acquisitions and partnerships.*** We intend to continue to
prudently pursue opportunities to acquire banks that offer opportunities for solid financial returns. Our primary focus will be on franchises that enhance our funding profile, product capabilities or geographic density or footprint, while
maintaining an acceptable risk profile. We believe in the need to make significant technological investments and the importance of scale in banking. In addition, we believe that the rate of consolidation in the banking industry will continue. We
believe that the stock offering will enhance our historical position as a consolidator in the banking market because of our financial strength, reputation and culture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Grow our loan portfolio with an emphasis on commercial real estate and residential mortgage lending*** . While we intend to continue our recent focus on the origination of commercial real estate loans, we intend to remain a residential mortgage lender in our market area and maintain a balance between the commercial real estate and
residential mortgage portfolios. We originated $117.1 million of commercial real estate and $40.9 million of residential mortgages loans during the year ended December 31, 2022. At December 31, 2022, $318.7 million, or
48.0%, of our total loan portfolio consisted of commercial real estate loans and $262.8 million, or 39.6%, of our total loan portfolio consisted of residential mortgages. The additional capital raised in the offering will further increase our
commercial lending capacity by enabling us to originate more loans and loans with larger balances. This will permit us to serve commercial borrowers with larger lending needs and to originate larger commercial loans than we have in the past.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Manage credit risk to maintain a low level of non-performing assets*** . We believe that maintaining strong asset quality is paramount to our long-term success. We follow conservative underwriting guidelines with sound loan administration, and focus on originating loans secured by real estate. This
includes enhanced loan monitoring of higher risk portfolio segments, higher risk individual loans and larger relationships within the portfolio, and frequent loan grade review. Our non-performing assets
totaled $7.9 million, or 0.94% of total assets, at December 31, 2022. Our total non-performing loans to total loans ratio was 0.88% at December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Increase core deposits with an emphasis on non-interest-bearing deposits*** *.* Deposits are our primary source of funds for lending and investment. Core deposits (which we define as all deposits except for time deposits) were 78.6% of total deposits at December 31, 2022. In particular, non-interest-bearing demand deposits were 24.4% of our total deposits at December 31, 2022. We continue to focus on expanding core deposits by leveraging our business development officers and commercial lending
and retail relationships.

We intend to continue to pursue these business strategies, subject to changes necessitated by future market conditions, regulatory restrictions and other factors. While we are committed to the business strategies noted above, we recognize the challenges and uncertainties of the current environment and plan to execute these strategies as market conditions allow.

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**Impact of COVID-19 Pandemic** 

Although the domestic and global economies have largely recovered from the COVID-19 pandemic, certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may persist for some time, including labor shortages and disruptions of global supply chains. The growth in economic activity and in the demand for goods and services, coupled with labor shortages and supply chain disruptions, has also contributed to rising inflationary pressures and the risk of recession. Given the continued uncertainty and evolving economic effects and social impacts of the COVID-19 pandemic, the future direct and indirect impacts on our business, results of operations and financial condition are uncertain. See "Risk Factors – Risks Related to COVID-19 – The COVID-19 pandemic could continue to pose risks to our business, our results of operations and the future prospects of BV Financial."

**Reasons for the Conversion and Offering** 

Our primary reasons for converting to the fully public stock form of ownership and undertaking the stock offering are to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Facilitate future mergers and acquisitions*** . Although we do not currently have any understandings or
agreements regarding any specific acquisition transaction, the stock holding company structure will give us greater flexibility to structure, and make us a more attractive and competitive bidder for, mergers and acquisitions of other financial
institutions or financial service companies as opportunities arise. The additional capital raised in the offering also will enable us to consider larger merger transactions. In addition, although we intend to remain an independent financial
institution, the stock holding company structure may make us a more attractive acquisition candidate for other institutions. Applicable regulations prohibit anyone from acquiring or offering to acquire more than 10% of our stock for three years
following completion of the conversion without regulatory approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Support our planned growth and strengthen our regulatory capital position with the additional capital we will raise in the stock offering.*** A strong capital position is essential to achieving our long-term objectives of growing BayVanguard Bank and building stockholder value. Although BayVanguard Bank exceeds all regulatory capital requirements,
the proceeds from the offering will materially strengthen our capital position and enable us to support our potential growth and expansion through larger legal lending limits. The augmented regulatory capital will be essential to the continued
implementation of our business strategy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Improve the liquidity of our shares of common stock*** . The larger number of shares that will be
outstanding after completion of the conversion and offering, as well as our shares of stock being traded on the Nasdaq Capital Market, will result in a more liquid and active market for BV Financial common stock. A more liquid and active market will
make it easier for our stockholders to buy and sell our common stock and will give us greater flexibility in implementing capital management strategies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Facilitate our stock holding company's ability to pay dividends to our public stockholders*** .
Current regulations of the Federal Reserve Board prohibit the ability of Bay-Vanguard, M.H.C. to waive receipt of dividends declared by BV Financial. Accordingly, because any dividends declared and paid by BV
Financial would have to be paid to Bay-Vanguard, M.H.C. along with all other stockholders, the amount of dividends available for all other stockholders would have been less than if Bay-Vanguard, M.H.C. were allowed to waive the receipt of dividends. The conversion will eliminate our mutual holding company structure and will facilitate our ability to pay dividends to all stockholders of BV
Financial, subject to legal, regulatory and financial considerations applicable to all financial institutions. See "Our Dividend Policy."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Transition our organization to a stock holding company structure, which gives us greater flexibility to access the capital markets compared to our existing mutual holding company structure*** . The stock holding company structure gives us greater flexibility to access the capital markets to support our growth through possible future equity and
debt offerings. We have no current plans, agreements or understandings regarding any additional equity or debt offerings.

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**Terms of the Offering** 

We are offering for sale between 10,625,000 and 14,375,000 shares of common stock, to eligible members of Bay-Vanguard, M.H.C. (i.e., eligible depositors of BayVanguard Bank), to our tax-qualified employee benefit plans and, to the extent shares remain available, in a community offering to the general public, with a preference given first to natural persons (including trusts of natural persons) residing in Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland. If necessary, we will also offer for sale shares 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 16,531,250 shares as a result of demand for the shares of common stock in the offering or changes in market conditions. Unless the number of shares of common stock to be offered is increased to more than 16,531,250 shares or decreased to fewer than 10,625,000 shares, or the subscription and community offerings are extended beyond [extension date], subscribers will not have the opportunity to change or cancel their stock orders once submitted. If the subscription and community offerings are extended past [extension date], all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. All subscribers will be notified by mail sent to the address the subscriber provides on the stock order form they have submitted. If you do not respond to the notice of extension, your order will be cancelled and we will promptly return your funds with interest at [interest rate]% per annum or cancel your deposit account withdrawal authorization. If the number of shares to be sold is increased to more than 16,531,250 shares or decreased to less than 10,625,000 shares, all subscribers' stock orders will be canceled, their withdrawal authorizations will be canceled and funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest at [interest rate]% per annum. We will then resolicit subscribers, giving them an opportunity to place new orders for a period of time. No shares purchased in the subscription offering and community offering will be issued until the completion of any syndicated community offering, if utilized.

The purchase price of each share of common stock offered for sale in the offering is $10.00. All investors will pay the same purchase price per share, regardless of whether the shares are purchased in the subscription offering, a community offering or a syndicated community offering. Investors will not be charged a commission to purchase shares of common stock in the offering. Performance Trust Capital Partners, LLC, which we refer to as "Performance Trust," our marketing agent in the offering, will use its best efforts to assist us in selling shares of our common stock in the offering but is not obligated to purchase any shares of common stock in the offering.

**How We Determined the Offering Range, the Exchange Ratio and the $10.00 Per Share Purchase Price** 

The amount of common stock we are offering for sale and the exchange ratio for the exchange of shares of BV Financial for new shares of BV Financial are based on an independent appraisal of the estimated market value of BV Financial, assuming the offering has been completed. RP Financial, LC. ("RP Financial"), our independent appraiser, has estimated that, as of February 24, 2023, the fully converted market value was $144.9 million, which represents the midpoint of the valuation range. Based on federal regulations, this market value forms the midpoint of a valuation range with a minimum of $123.1 million and a maximum of $166.6 million ($191.6 million at the adjusted maximum). Based on this valuation range, the 86.3% ownership interest of Bay-Vanguard, M.H.C. in BV Financial as of December 31, 2022 being sold in the offering, certain assets held by Bay-Vanguard, M.H.C. and the $10.00 per share price, the number of shares of common stock being offered for sale by BV Financial ranges from 10,625,000 shares to 14,375,000 shares. The purchase price of $10.00 per share was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The exchange ratio ranges from 1.6599 shares at the minimum of the offering range to 2.2458 (2.5827 at the adjusted maximum) new shares at the maximum of the offering range, and will generally preserve the percentage ownership of public stockholders in BV Financial immediately before the completion of the conversion. RP Financial will update its appraisal before we complete the conversion and offering. If, as a result of demand for the shares or changes in market conditions, RP Financial determines that our estimated pro forma market value has increased, we may sell up to 16,531,250 shares without further notice to you. If our pro forma market value at that time is either below $123.1 million or above $191.6 million, then, after consulting with the Federal Reserve Board, we may: terminate the offering and promptly return all funds with interest; set a new offering range and provide all subscribers the opportunity to place a new order; or take such other actions as may be permitted by the Federal Reserve Board and the Securities and Exchange Commission.

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The appraisal is based in part on BV Financial's financial condition and results of operations, the pro forma effect of the additional capital raised in the offering, and an analysis of a peer group of ten publicly traded savings and loan holding companies that RP Financial considers comparable to BV Financial consistent with regulatory guidelines applicable to the independent valuation. The appraisal peer group consists of the following companies, all of which are traded on the Nasdaq Stock Market. Assets are as of December 31, 2022.

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| | | | |
|:---|:---|:---|:---|
| **Company Name** | **Ticker<br>Symbol** | **Headquarters** | **Total Assets** |
|  |  |  | (In millions) |
|  1895 Bancorp of Wisconsin, Inc. | BCOW | Greenfield, Wisconsin | $529 |
|  Affinity Bancshares, Inc. | AFBI | Covington, Georgia | 791 |
|  HMN Financial, Inc. | HMNF | Rochester, Minnesota | 1096 |
|  Home Federal Bancorp, Inc. of Louisiana | HFBL | Shreveport, Louisiana | 577 |
|  IF Bancorp, Inc. | IROQ | Watseka, Illinois | 824 |
|  Magyar Bancorp, Inc. | MGYR | New Brunswick, New Jersey | 822 |
|  Northeast Community Bancorp, Inc. | NECB | White Plains, New York | 1425 |
|  Provident Financial Holdings, Inc. | PROV | Riverside, California | 1271 |
|  Riverview Bancorp, Inc. | RVSB | Vancouver, Washington | 1599 |
|  William Penn Bancorporation | WMPN | Bristol, Pennsylvania | 871 |

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In applying each of the valuation methods, RP Financial considered adjustments to the pro forma market value based on a comparison of BV Financial with the peer group. RP Financial made upward adjustments for financial condition, profitability, growth and viability of earnings and asset growth and a downward adjustment for primary market area. RP Financial made no adjustments for dividends, liquidity of the shares, marketing of the issue, management, or effect of government regulations and regulatory reform. The upward adjustment applied for financial condition took into consideration the more favorable composition of BV Financial's asset base, including a higher loans/assets ratio, a lower cost of funds and higher current return on equity. The upward adjustment applied for profitability, growth and viability of earnings took into consideration BV Financial's higher earnings as a percent of assets relative to the peer group companies, which was primarily attributable to a higher net interest income ratio, a higher yield/cost spread and lower operating expense ratio. The upward adjustment applied for asset growth was due to the substantially higher pro forma equity position that BV Financial will have following the offering, which will provide for stronger growth potential compared to the peer group. The downward adjustment for market area took into consideration BV Financial's operations in the Baltimore/Washington metropolitan area, which provides for a high level of competition, including a number of larger financial institutions that are BV Financial's most comparable competitors.

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The following table presents a summary of selected pricing ratios for BV Financial (on a pro forma basis) as of and for the twelve months ended December 31, 2022, and for the peer group companies based on earnings and other information as of and for the twelve months ended December 31, 2022, with stock prices as of February 24, 2023, as reflected in the appraisal report. Compared to the average pricing of the peer group, and based upon the information in the following table, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 23.6% on a price-to-book value basis, a discount of 27.6% on a price-to-tangible book value basis, and a premium of 7.3% on a price-to-earnings basis.

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| | | | |
|:---|:---|:---|:---|
|  | **Price-to-earnings multiple<sup>(1)</sup>** | **Price-to-book value ratio** | **Price-to-tangible book**<br>**value ratio** |
|  **BV Financial (on a pro forma basis, assuming completion of the conversion)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjusted Maximum | 16.95x | 79.74% | 85.32% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Maximum | 15.15x | 75.24% | 85.25% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Midpoint | 13.33x | 70.62% | 76.45% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Minimum | 11.36x | 65.23% | 71.12% |
|  **Valuation of peer group companies, all of which are fully converted (on an historical basis)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | 10.45x | 92.38% | 96.66% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | 10.46x | 91.41% | 96.34% |

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(1) Price-to-earnings multiples
calculated by RP Financial in the independent appraisal are based on an estimate of "core" or recurring earnings. These ratios are different than 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 offering the shares of our common stock will trade at or above the $10.00 per share purchase price. Furthermore, the pricing ratios presented in the appraisal were used by RP Financial 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 capital stock of the peer group. The value of the capital stock of a particular 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 Offering—Stock Pricing and Number of Shares to be Issued."

**Effect of Bay-Vanguard, M.H.C.'s Assets on Minority Stock Ownership** 

Public stockholders of BV Financial will receive new shares of common stock of BV Financial in exchange for their current shares of common stock of BV Financial pursuant to an exchange ratio that is designed to provide public stockholders with approximately the same ownership percentage of the common stock of BV Financial after the conversion as their ownership percentage immediately before the conversion, without giving effect to new shares purchased in the offering or cash paid in lieu of any fractional shares. However, the exchange ratio will be adjusted downward to reflect assets held by Bay-Vanguard, M.H.C. (other than shares of common stock of BV Financial) at the completion of the conversion, which net assets consisted primarily of cash totaling $8,000 as of December 31, 2022.

**The Exchange of Existing Shares of BV Financial Common Stock** 

If you are a stockholder of BV Financial immediately before the completion of the conversion and offering, your shares will be exchanged for new shares of common stock of BV Financial. The number of shares of common stock you will receive will be based on the exchange ratio, which will depend upon our final appraised value and the percentage of outstanding shares of BV Financial common stock owned by public stockholders immediately before the completion of the conversion and offering. The following table shows how the exchange ratio will adjust, based on the appraised value of BV Financial as of February 24, 2023, assuming public stockholders of BV Financial own 13.7% of BV Financial common stock and Bay-Vanguard, M.H.C. had assets (excluding its shares of BV Financial common stock) of $8,000 immediately before the completion of the conversion and offering. The table also shows the number of shares of BV Financial common stock a hypothetical owner of BV Financial common stock would receive in exchange for 100 shares of BV Financial common stock owned at the completion of the conversion and offering, depending on the number of shares of common stock issued in the offering.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Shares to be Sold in<br>This Offering** | **Shares to be Sold in<br>This Offering** | **New Shares of BV Financial to**<br>**be Issued for Current Shares**<br>**of BV Financial** | **New Shares of BV Financial to**<br>**be Issued for Current Shares**<br>**of BV Financial** | **Total Shares<br>of Common<br>Stock to be<br>Issued in<br>Exchange and**<br>**Offering** | **Exchange<br>Ratio** | **Equivalent<br>Value of<br>Shares<br>Based<br>Upon<br>Offering<br>Price**<sup>(1)</sup> | **Equivalent<br>Pro Forma<br>Tangible<br>Book Value**<br>**Per<br>Exchanged<br>Share**<sup>(2)</sup> | **Whole<br>Shares to**<br>**be<br>Received<br>for 100<br>Existing<br>Shares**<sup>(3)</sup> |
|  | **Amount** | **Percent** | **Amount** | **Percent** | **Total Shares<br>of Common<br>Stock to be<br>Issued in<br>Exchange and**<br>**Offering** | **Exchange<br>Ratio** | **Equivalent<br>Value of<br>Shares<br>Based<br>Upon<br>Offering<br>Price**<sup>(1)</sup> | **Equivalent<br>Pro Forma<br>Tangible<br>Book Value**<br>**Per<br>Exchanged<br>Share**<sup>(2)</sup> | **Whole<br>Shares to**<br>**be<br>Received<br>for 100<br>Existing<br>Shares**<sup>(3)</sup> |
|  Minimum | 10625000 | 86.3% | 1689427 | 13.7% | 12314427 | 1.6599 | $16.60 | $23.34 | 165 |
|  Midpoint | 12500000 | 86.3% | 1987562 | 13.7% | 14487562 | 1.9529 | 19.53 | 25.54 | 195 |
|  Maximum | 14375000 | 86.3% | 2285696 | 13.7% | 16660696 | 2.2458 | 22.46 | 27.74 | 224 |
|  Adjusted Maximum | 16531250 | 86.3% | 2628550 | 13.7% | 19159800 | 2.5827 | 25.83 | 30.29 | 258 |

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(1) Represents the value of new shares of BV Financial common stock to be received in the conversion by a holder of
one current share of BV Financial, pursuant to the exchange ratio, based upon the $10.00 per share offering price.

(2) Represents the pro forma tangible book value per share at each level of the offering range multiplied by the
respective exchange ratio. At December 31, 2022, BV Financial's tangible book value per share was $11.07.

(3) Cash will be paid in lieu of fractional shares.

No fractional shares of BV Financial common stock will be issued to any public stockholder of BV Financial. For each fractional share that otherwise would be issued, BV Financial will pay cash equal to the product obtained by multiplying the fractional share interest to which the holder otherwise would be entitled by the $10.00 per share offering price.

Outstanding options to purchase shares of BV Financial common stock will convert into and become options to purchase shares of BV Financial common stock based upon the exchange ratio. The aggregate exercise price, duration and vesting schedule of these options will be unaffected by the conversion. At December 31, 2022, there were 36,350 outstanding options to purchase shares of BV Financial common stock, all of which have vested. The outstanding options will be converted into options to purchase 60,377 shares of common stock at the minimum of the offering range and 93,881 shares of common stock at the adjusted maximum of the offering range. Because federal regulations prohibit us from repurchasing our common stock during the first year following the conversion unless compelling business reasons exist to do so, we may use authorized but unissued shares to fund option exercises that occur during the first year following the conversion. If all existing options were exercised and funded with authorized but unissued shares of common stock following the conversion, stockholders would experience ownership dilution of approximately 1.80% at the minimum of the offering range.

**Intended Use of the Proceeds from the Offering** 

We intend to contribute at least 50% of the net proceeds from the offering to BayVanguard Bank, fund a loan to our employee stock ownership plan to finance its purchase of shares of common stock in the stock offering and retain the remainder of the net proceeds from the offering at BV Financial. Therefore, assuming we sell 12,500,000 shares of common stock in the stock offering at the midpoint of the offering range, and we have net proceeds of $122.4 million, we intend to contribute $61.2 million to BayVanguard Bank, loan $10.0 million to our employee stock ownership plan to fund its purchase of shares of common stock and retain the remaining $51.2 million of the net proceeds at BV Financial. Additionally, we may use a portion of the proceeds from the offering to redeem the $3.0 million of junior subordinated debt that we acquired in conjunction with our acquisition of 1880 Bank and its holding company, Delmarva Bancshares, Inc.

BV Financial may use the funds it retains for investment in securities, to repurchase shares of common stock, to acquire other financial institutions, to pay cash dividends and for other general corporate purposes. BayVanguard Bank may use the proceeds it receives to support increased lending, support growth and the development of new products and services, expand its branch network by acquiring new branches or by acquiring other financial institutions. We do not currently have any agreements or understandings regarding any acquisition or branch transactions.

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See "How We Intend to Use the Proceeds from the Offering" for additional information.

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To depositors with accounts at BayVanguard Bank with aggregate balances of at least $50.00 at the close of
business on December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) To our tax-qualified employee benefit plans (including BayVanguard
Bank's employee stock ownership plan), which may subscribe for, in the aggregate, up to 10% of the shares of common stock sold in the offering. We expect our employee stock ownership plan to purchase 8% of the shares of common stock sold in the
offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) To depositors with accounts at BayVanguard Bank with aggregate balances of at least $50.00 at the close of
business on [Supp Elig Record Date].

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) To depositors of BayVanguard Bank at the close of business on [Voting Record Date].

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given first to natural persons (including trusts of natural persons) residing in Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland. The community offering, if any, may occur concurrently with, during or promptly after the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering and the community offering in a syndicated community offering. Performance Trust will act as sole manager for the syndicated community offering. We have the right to accept or reject, in whole or in part, in our sole discretion, orders received in the community offering or syndicated community offering, and our interpretation of the terms and conditions of the plan of conversion will be final. Any determination to accept or reject stock orders in the 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 fully or partially fill your order. 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 Offering."

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

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

Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 35,000 shares ($350,000) of common stock. If any of the following persons purchase shares of common stock, their purchases, in all categories of the offering, when combined with your purchases, cannot exceed 70,000 shares ($700,000) of common stock:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• your spouse or relatives of you or your spouse living in your house or who is a director of officer of BV
Financial or BayVanguard Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• most companies, trusts or other entities in which you are a senior officer, partner, trustee or have a
substantial beneficial interest; or

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

Persons having the same residence or mailing address and persons exercising subscription rights through qualifying accounts registered to the same address at any of the eligibility, supplemental eligibility or voting record dates will be subject to the overall purchase limitation of 70,000 shares ($700,000).

In addition to the above purchase limitations, there is an ownership limitation for current stockholders of BV Financial other than our employee stock ownership plan. Shares of common stock that you purchase in the offering individually or together with persons described above, *plus* any shares you and they receive in exchange for existing shares of BV Financial common stock, may not exceed 9.9% of the total shares of common stock to be issued and outstanding after the completion of the conversion and offering. However, if, based on your current ownership level, you will own more than 9.9% of the total shares of common stock of BV Financial to be issued and outstanding after the completion of the conversion and offering following the exchange of your shares of common stock, you will be ineligible to purchase any new shares in the offering. You will be required to obtain regulatory approval or non-objection before acquiring 10% or more of BV Financial's common stock.

Subject to regulatory approval, we may increase or decrease the purchase and ownership limitations at any time. See the detailed description of the purchase limitations in "The Conversion and Offering—Additional Limitations on Common Stock Purchases."

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) personal check, money order or bank draft made payable directly to BV Financial, Inc.; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) authorizing us to withdraw available funds (without any early withdrawal penalty) from your BayVanguard Bank
deposit account(s), other than checking accounts or individual retirement accounts ("IRAs").

You may not use any type of third-party check to pay for shares of common stock. **Do not submit cash.** Wire transfers will not be accepted. Applicable regulations prohibit BayVanguard Bank from lending funds or extending credit to any person to purchase shares of common stock in the offering. You may not submit a BayVanguard Bank line of credit check. <u>You may not designate withdrawal from a BayVanguard Bank account with check-writing privileges; rather, submit a check.</u> If you request a withdrawal from an account with check-writing privileges, 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 the specified account(s). You may not authorize withdrawal from a BayVanguard Bank individual retirement account. 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 BV Financial, Inc. or authorization to withdraw funds from one or more of your BayVanguard Bank deposit accounts, provided that the stock order form is *received* (not postmarked) before 4:30 p.m., Eastern Time, on [expiration date], which is the expiration of the subscription offering period.

Your completed and signed stock order form and payment may be submitted to us by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) **overnight delivery** to the address indicated on the stock order form for this purpose;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) **hand delivery to our Stock Information Center** located at BayVanguard Bank's branch location at 125
Mountain Road, Pasadena, Maryland; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) **regular mail** using the stock order reply envelope provided.

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**Hand delivery of stock order forms will be accepted only at the Stock Information Center.** Do not deliver your stock order form to any other of BayVanguard Bank's offices. The Stock Information Center is open Monday through Friday between 9:00 a.m. and 4:30 p.m., Eastern Time, except for bank holidays. **Do not mail stock order forms to BayVanguard Bank's offices.**

See "The Conversion and Offering—Procedure for Purchasing Shares in the Subscription and Community Offerings—Payment for Shares" for a complete description of how to purchase shares in the subscription and community offerings.

**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 IRA or other retirement account. If you wish to use some or all of the funds in your BayVanguard Bank IRA or other retirement account, the applicable funds must be 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 promptly, *preferably at least two weeks before the [expiration date] offering deadline*, for assistance with purchases using funds in your IRA or other retirement account you may have at BayVanguard Bank *or elsewhere*. Whether you may use such funds to purchase shares in the offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.

See "The Conversion and Offering—Procedure for Purchasing Shares in the Subscription and Community Offerings—Payment for Shares" and "—Using Individual Retirement Account Funds" for a complete description of how to use IRA funds to purchase shares of common stock in the offering.

**Market for Common Stock** 

Existing publicly held shares of BV Financial's common stock are traded on the Pink Open Market operated by OTC Markets Group under the symbol "BVFL." Upon completion of the conversion, the new shares of common stock of BV Financial will replace the existing shares, which we expect will trade on the Nasdaq Capital Market under the symbol "BVFL." To list our stock on the Nasdaq Capital Market, we are required to have at least three broker-dealers who will make a market in our common stock. As of [Voting Record Date], BV Financial had 15 registered market makers in its common stock.

**Payment of Dividends** 

While management intends to pay a dividend, no decision has been made with respect to the amount and timing of any dividend payments. The amount of any dividends will be subject to our capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. We cannot assure you that we will pay dividends in the future, or that any such dividends will not be reduced or eliminated in the future. For information regarding our proposed dividend policy, see "Our Dividend Policy."

**Purchases by Directors and Executive Officers** 

We expect our directors and executive officers, together with their associates, to subscribe for 386,500 shares of common stock in the offering, representing 3.64% of the shares to be sold at the minimum of the offering range. The purchase price paid by them will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering. Following the conversion and offering, our directors and executive officers, together with their associates, are expected to beneficially own 747,938 shares of common stock (including any stock options exercisable within 60 days of [Voting Record Date]), or 6.07% of our total outstanding shares of common stock at the minimum of the offering range, which includes shares they currently own in BV Financial that will be exchanged for new shares of BV Financial.

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See "Subscriptions by Directors and Executive Officers" for more information on the proposed purchases of shares of common stock by our directors and executive officers.

**Deadline for Orders of Shares of Common Stock in the Subscription and Community Offerings** 

The deadline for submitting orders to purchase shares of common stock in the subscription and community offerings is 4:30 p.m., Eastern Time, on [expiration date], 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 this 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 4:30 p.m., Eastern Time, on [expiration date], whether or not we have been able to locate each person entitled to subscription rights.

See "The Conversion and Offering—Procedure for Purchasing Shares in the Subscription and Community Offerings—Expiration Date" for a complete description of the deadline for purchasing shares in the stock offering.

**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 are attempting to sell or transfer your subscription rights to other individuals. **On the stock order form, you cannot add the names of others for joint stock registration unless they are also named on your qualifying deposit account(s).** Doing so may jeopardize your subscription rights. In addition, the stock order form requires that you list all deposit accounts you held at your date of eligibility, 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.

**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 statement reflecting ownership of shares of common stock issued in the subscription and community offerings 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. We expect trading in the stock to begin on the day of completion of the conversion or the next business day. The conversion is expected to be completed as soon as practicable following satisfaction of the conditions described below in "—Conditions to Completion of the Conversion." **Until a statement reflecting your ownership of shares of common stock is available and delivered to you, you may not be able to sell the shares of common stock that you purchased in the offering, even though the common stock will have begun trading.** Your ability to sell your shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm.

**Conditions to Completion of the Conversion** 

We cannot complete the conversion and offering unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The plan of conversion is approved by at least a majority of votes eligible to be cast by members of Bay-Vanguard, M.H.C. (*i.e.*, eligible depositors of BayVanguard Bank as of the close of business on [Voting Record Date]);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The plan of conversion is approved by BV Financial stockholders holding at least two-thirds of the outstanding shares of common stock of BV Financial as of the close of business on [Voting Record Date], *including shares held by Bay-Vanguard, M.H.C.*;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The plan of conversion is approved by BV Financial stockholders holding at least a majority of the outstanding
shares of common stock of BV Financial as of the close of business on [Voting Record Date], *excluding shares held by Bay-Vanguard, M.H.C.*;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We sell at least the minimum number of shares of common stock offered in the offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We receive all required regulatory approvals to complete the conversion and offering.

Bay-Vanguard, M.H.C. intends to vote its shares in favor of the plan of conversion. At the close of business on [Voting Record Date], Bay-Vanguard, M.H.C. owned 6,400,814 shares, or approximately 86.3%, of the outstanding shares of common stock of BV Financial. At the close of business on [Voting Record Date], the directors and executive officers of BV Financial and their affiliates owned 197,726 shares of BV Financial (excluding exercisable options), or 2.67% of the outstanding shares of common stock and 19.42% of the outstanding shares of common stock excluding shares held by Bay-Vanguard, M.H.C. They intend to vote those shares in favor of the plan of conversion.

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

If we do not receive orders for at least 10,625,000 shares of common stock, we may take one or more steps to sell the minimum number of shares of common stock in the offering range. Specifically, we may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) increase the purchase limitations; and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) seek regulatory approval to extend the offering beyond [extension date], as long as we resolicit subscribers
who previously submitted subscriptions in the offering.

If we extend the offering past [extension date], 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 cancel your stock order and promptly return your funds with interest for funds received in the subscription and community offering or cancel your deposit account withdrawal authorization. If one or more purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount will be given the opportunity to increase their subscriptions up to the then-applicable limit.

**Possible Change in the Offering Range** 

RP Financial will update its appraisal before we complete the conversion and offering. If, as a result of demand for the shares or changes in market conditions, RP Financial determines that our pro forma market value has increased, we may sell up to 16,531,250 shares in the offering without further notice to you. If our pro forma market value at that time is either below $123.1 million or above $191.6 million, then, after consulting with the Federal Reserve Board, we may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• terminate the stock offering and promptly return all funds (with interest paid on funds received in the
subscription and community offerings);

&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 Federal Reserve Board and the Securities and Exchange
Commission.

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If we set a new offering range, we will promptly return funds, with interest at [interest rate]% per annum, for funds received for purchases in the subscription and community offerings, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. We will then resolicit subscribers, allowing them to place a new stock order for a period of time.

**Possible Termination of the Offering** 

We may terminate the offering at any time before the special meeting of members of Bay-Vanguard, M.H.C. and the special meeting of stockholders of BV Financial that have been called to vote on the conversion, and at any time after member and stockholder approval with regulatory approval. If we terminate the offering, we will promptly return your funds with interest at [interest rate]% per annum, and we will cancel deposit account withdrawal authorizations.

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

We expect our employee stock ownership plan, which is a tax-qualified retirement plan operated for the benefit of BayVanguard Bank's employees, to purchase up to 8% of the shares of common stock we sell in the offering. However, if market conditions warrant, in the judgment of its trustee, the employee stock ownership plan's subscription order may not be filled and the employee stock ownership plan may instead elect to purchase shares in the open market following the completion of the conversion, subject to the approval of the Federal Reserve Board.

We intend to implement one or more new stock-based benefit plans no earlier than six months after completion of the conversion. Stockholder approval of these plans will be required before implementation. We have not determined whether we will adopt the plans within or after 12 months following the completion of the conversion. If we implement stock-based benefit plans within 12 months following the completion of the conversion, the stock-based benefit plans would be limited to reserving a number of shares (1) up to 4% of the shares of common stock sold in the offering for awards of restricted stock or restricted stock units to employees and directors, at no cost to the recipients, and (2) up to 10% of the shares of common stock sold in the offering for issuance pursuant to the exercise of stock options by employees and directors. If the stock-based benefit plan is adopted more than 12 months after the completion of the conversion, it would not be subject to the percentage limitations set forth above. We have not yet determined the definitive number of shares that will be reserved for issuance under these plans. For a description of our current stock-based benefit plan, see "Management—Benefits to be Considered Following Completion of the Conversion—Stock-Based Benefit Plans."

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The following table summarizes the number of shares of common stock and the aggregate dollar value of grants that are available under one or more stock-based benefit plans if such plans reserve a number of shares of common stock equal to 4% and 10% of the shares sold in the stock offering for restricted stock awards or restricted stock units and stock options, respectively. The table shows the dilution to stockholders if all such shares are issued from authorized but unissued shares, instead of purchased in the open market. A portion of the stock grants shown in the table below may be made to non-management employees. 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 qualifying employees.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Number of Shares to be Granted or Purchased** | **Number of Shares to be Granted or Purchased** | **Number of Shares to be Granted or Purchased** | **Dilution<br>Resulting<br>from<br>Issuance of**<br>**Shares for<br>Stock-Based<br>Benefit Plans** | | |
| | **At Minimum**<br>**of Offering<br>Range** | **At**<br>**Maximum of<br>Offering<br>Range** | **As a<br>Percentage of<br>Common<br>Stock to be<br>Sold in the<br>Offering** | **Dilution<br>Resulting<br>from<br>Issuance of**<br>**Shares for<br>Stock-Based<br>Benefit Plans** | **Value of Grants<br>(In Thousands)**<sup>(1)</sup> | **Value of Grants<br>(In Thousands)**<sup>(1)</sup> |
| | **At Minimum**<br>**of Offering<br>Range** | **At**<br>**Maximum of<br>Offering<br>Range** | **As a<br>Percentage of<br>Common<br>Stock to be<br>Sold in the<br>Offering** | **Dilution<br>Resulting<br>from<br>Issuance of**<br>**Shares for<br>Stock-Based<br>Benefit Plans** | **At**<br>**Minimum of<br>Offering<br>Range** | **At Maximum<br>of Offering<br>Range** |
|  Employee stock ownership plan | 850000 | 1150000 | 8.0% | N/A<sup>%(2)</sup> | $8500 | $11500 |
|  Restricted stock awards | 425000 | 575000 | 4.0 | 3.34 | 4250 | 5750 |
|  Stock options | 1062500 | 1437500 | 10.0 | 7.94 | 5334 | 7216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 2337500 | 3162500 | 22.0% | 10.78%<sup>(2)</sup> | $18084 | $24466 |

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(1) The actual value of restricted stock awards will be determined based on their fair value as of the date grants
are made. For purposes of this table, fair value for restricted stock awards 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 $5.02 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; an expected option term of ten years; no dividend yield; a risk-free rate of return of 3.88%; and expected volatility of 31.47%. The actual
value of stock options granted 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 and the option pricing model ultimately adopted.

(2) No dilution is reflected for the employee stock ownership plan because such shares are assumed to be purchased
in the offering.

We may fund our stock-based benefit plans through open market purchases, as opposed to new issuances of stock; however, if any options previously granted under our existing 2017 Stock Option Plan or 2021 Equity Incentive Plan (together, the "Equity Incentive Plans") are exercised during the first year following completion of the offering, they will be funded with newly issued shares as federal regulations do not permit us to repurchase our shares during the first year following the completion of the offering, except to fund the grants of restricted stock under a stock-based benefit plan or under extraordinary circumstances.

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The following table presents information as of December 31, 2022 regarding our Equity Incentive Plans and our proposed new stock-based benefit plans. The table below assumes that 19,159,800 shares are outstanding after the offering, which includes the sale of 16,531,250 shares in the offering at the adjusted maximum of the offering range and the issuance of new shares of BV Financial in exchange for old shares of BV Financial based on an exchange ratio of 2.5827. It also assumes that the value of the stock is $10.00 per share.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Existing and New Stock Benefit<br>Plans** | **Participants** | **Shares at Adjusted**<br>**Maximum of<br>Offering Range** | **Estimated Value of**<br>**Shares** | **Percentage of**<br>**Shares Outstanding**<br>**After the<br>Conversion** |
|  **Employee Stock Ownership Plan:** | Officers and Employees |  |  |  |
|  Shares to be purchased in this offering |  | 1322500 | $13225000 | 6.90% |
|  **Restricted Stock Awards:** | Directors, Officers and Employees |  |  |  |
|  Equity Incentive Plans<sup>(1)</sup> |  | 383810<sup>(2)</sup> | $3838099<sup>(3)</sup> | 2.00% |
|  New shares of restricted stock |  | 661250 | 6612500<sup>(3)</sup> | 3.45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total shares of restricted stock |  | 1045060 | $10450599 | 5.45% |
|  **Stock Options:** | Directors, Officers and Employees |  |  |  |
|  Equity Incentive Plans<sup>(1)</sup> |  | 93881<sup>(4)</sup> | $471283<sup>(5)</sup> | 0.49% |
|  New stock options |  | 1653125 | 8298688<sup>(5)</sup> | 8.63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stock options |  | 1747006 | $8769971 | 9.12% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total of stock benefit plans |  | 4114566 | $32445570 | 21.47% |

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(1) The number of shares indicated in the table and the footnotes has been adjusted for the 2.5827 exchange ratio
at the adjusted maximum of the offering range.

(2) At December 31, 2022, 148,608 of these shares have been awarded and 103,798 have vested.

(3) The value of restricted stock awards is determined based on their fair value as of the date grants are made.
For purposes of this table, the fair value of awards under the new stock-based benefit plan is assumed to be the same as the offering price of $10.00 per share.

(4) At December 31, 2022, 36,350 of these options have been awarded and 36,350 have vested.

(5) The weighted-average fair value of stock options has been estimated at $5.02 per option, using the
Black-Scholes option pricing model with the following assumptions: exercise price, $10.00; trading price on date of grant, $10.00; no dividend yield; expected term, ten years; expected volatility, 31.47%; and risk-free rate of return, 3.88%. The
actual value of option grants 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 and the option pricing model ultimately adopted.

**Tax Consequences** 

Bay-Vanguard, M.H.C., BV Financial and BayVanguard Bank have received an opinion of counsel, Luse Gorman, PC, regarding the material federal income tax consequences of the conversion, and have received an opinion of FORVIS, LLP regarding the material Maryland 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 Bay-Vanguard, M.H.C., BV Financial and BayVanguard Bank, persons eligible to subscribe in the subscription offering, or existing stockholders of BV Financial (except as to cash paid for fractional shares). Existing stockholders of BV Financial who receive cash in lieu of fractional shares of BV Financial will recognize a gain or loss equal to the difference between the cash received and the tax basis of the fractional share.

**Emerging Growth Company Status** 

We qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). For as long as we are an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies. See "Risk Factors—Risks Related to Laws and Regulations—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" and "Supervision and Regulation—Emerging Growth Company Status."

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An emerging growth company may elect to use an extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. We have elected 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, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

**Risk Factors** 

An investment in BV Financial common stock is subject to risk, including risks related to our business and this offering. Before making an investment decision, you should read this entire document carefully, including the section entitled "Risk Factors" that immediately follows and that discusses the above risks in further detail.

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

Our banking personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, call our Stock Information Center at [stock center number]. The Stock Information Center is open Monday through Friday between 9:00 a.m. and 4:30 p.m., Eastern Time, except for bank holidays.

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**RISK FACTORS** 

*You should consider carefully the following risk factors in evaluating an investment in the shares of common stock. In addition to these risks and the other risks and uncertainties described elsewhere in this prospectus, there may be additional risks and uncertainties that are not currently known to us or that we currently deem to be immaterial that could materially and adversely affect our business, financial condition or results of operations.* 

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

**We have a substantial amount of commercial real estate loans, and we intend to continue to increase our originations of these types of loans. These loans involve credit risks that could adversely affect our financial condition and results of operations.** 

At December 31, 2022, commercial real estate loans totaled $318.7 million, or 48.0% of our loan portfolio. Given the 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, repayment of such loans 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. In addition, the physical condition of non-owner occupied properties may be below that of owner occupied properties due to lax property maintenance standards, which have a negative impact on the value of the collateral properties. At December 31, 2022, our non-owner occupied commercial loan portfolio totaled $226.9 million, or 34.1% of our total loan portfolio. As our commercial real estate portfolio increases, the corresponding risks and potential for losses from these loans may also increase.

The offering will allow us to increase our loans-to-one borrower limit, which may result in larger loan balances. In addition, to the extent that borrowers have more than one commercial real estate loan outstanding, an adverse development with respect to one loan or one credit relationship could expose us to a significantly greater risk of loss compared to an adverse development with respect to a one- to four-family residential real estate loan. Furthermore, if loans that are collateralized by commercial real estate become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for loan losses and adversely affect our operating results and financial condition.

**Our historical emphasis on residential mortgage loans exposes us to lending risks*.*** 

At December 31, 2022, $262.8 million, or 39.6% of our loan portfolio, was secured by one- to four-family real estate loans and we intend to continue to make loans of this type after the offering. One- to four-family residential mortgage lending is generally sensitive to regional and local economic conditions that can significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. Declines in real estate values could cause some of our residential mortgages to be inadequately collateralized, which would expose us to a greater risk of loss if we seek to recover on defaulted loans by selling the real estate collateral.

**Our non-owner occupied commercial real estate loans and one- to four-family residential real estate loans may expose us to increased credit risk.** 

At December 31, 2022, $226.9 million, or 34.1% of our total loan portfolio, consisted of loans secured by non-owner occupied commercial real estate loans and $125.1 million, or 18.8% of our total loan portfolio, consisted of loans secured by non-owner occupied one- to four-family residential real estate properties. At December 31, 2022, $3.1 million, or 0.9% of these loans were past due. Loans secured by non-owner occupied properties generally expose a lender to greater risk of non-payment and loss than loans secured by owner occupied properties because repayment of such loans depend primarily on the tenant's continuing ability to pay rent to the property owner, who

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is our borrower, or, if the property owner is unable to find a tenant, the property owner's ability to repay the loan without the benefit of a rental income stream. In addition, the physical condition of non-owner occupied properties may be below that of owner occupied properties due to lax property maintenance standards that negatively impact the value of the collateral properties.

**A significant portion of the loans originated by our recently developed investment real estate group are secured by collateral located outside of Maryland and generally carry larger balances than loans originated in other areas of our portfolio. The relatively new nature and location of these loans may result in changes in estimating collectability, which may lead to additional provisions or charge-offs, which could hurt our profits.** 

As further explained in "Business of BayVanguard Bank—Lending Activities—General," in 2020, we established an investment real estate group charged with originating larger real estate projects, primarily non-owner occupied commercial real estate loans, including loans secured by collateral outside of Maryland. At December 31, 2022, $137.5 million, or 60.8%, of investor commercial real estate loans were secured by collateral located outside of Maryland in 34 states throughout the United States. While to date, we have not incurred any losses with regard to loans originated by this group, the investor real estate group's loan portfolio is relatively new and provides us with only a limited payment history pattern from which to judge future collectability, especially through a period of declining and unfavorable or recessionary economic conditions. As a result, it may be difficult to predict the future performance of this part of our loan portfolio. These loans may have delinquency or charge-off levels above our historical experience, which could adversely affect our future performance. Further, these types of loans generally have larger balances and involve a greater risk than one- to four-family residential mortgage loans. Accordingly, if we make any errors in judgment in the collectability of these loans, any resulting charge-offs may be larger on a per loan basis than those incurred historically with our residential mortgage loan or consumer loan portfolios. Also, it may be more difficult for us to resolve problem loans outside of Maryland.

**The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in our local market areas*.*** 

While there is not a single employer or industry in our market area on which a significant number of our customers are dependent, a substantial portion of our loan portfolio is comprised of loans secured by property located in Baltimore City and Anne Arundel, Baltimore and Harford Counties (the "Baltimore market") and Dorchester and Talbot Counties on the Eastern Shore of Maryland. This makes us vulnerable to a downturn in the local economy and real estate markets. Adverse conditions in the local economy such as unemployment, recession, a catastrophic event or other factors beyond our control could impact the ability of our borrowers to repay their loans, which could impact our net interest income. Decreases in local real estate values caused by economic conditions, recent changes in tax laws or other events could adversely affect the value of the property used as collateral for our loans, which could cause us to realize a loss in the event of a foreclosure. Further, deterioration in local economic conditions could drive the level of loan losses beyond the level we have provided for in our allowance for loan losses, which in turn could necessitate an increase in our provision for loan losses and a resulting reduction to our earnings and capital.

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

We maintain an allowance for credit losses, which is established through a provision for credit losses that represents management's best estimate of the current expected losses within the loan portfolio. 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 credit 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 credit 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 loans, as well as any future credit deterioration or changes in economic conditions could require us to increase our allowance for credit losses in the future. At December 31, 2022, our allowance for credit losses was 0.57% of total loans and 64.8% of non-performing loans. Material additions to our allowance would materially decrease our net income.

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The Financial Accounting Standards Board delayed the effective date of the implementation of the Current Expected Credit Loss, or CECL, standard for BV Financial and BayVanguard Bank until January 1, 2023. 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. This has changed the current method of providing allowances for credit losses that are incurred or probable, which has required us to increase our allowance for credit losses, and to greatly increase the types of data we need to collect and review to determine the appropriate level of the allowance for credit losses. The day one CECL adjustment is expected to be in the range of $500,000 - $1.5 million and will be reflected in our financial statements for periods ending in 2023.

In addition, bank regulators periodically review our allowance for credit losses and, as a result of such reviews, we may be required to increase our provision for credit losses or recognize further loan charge-offs. However, regulatory agencies are not directly involved in the process of establishing the allowance for credit losses, as the process is our responsibility and any adjustment of the allowance is the responsibility of our management. Any increase in our allowance for credit 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.

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

**The reversal of the historically low interest rate environment may 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 is reversing its policy of near zero interest rates given its concerns over inflation. Market interest rates have risen in response to the Federal Reserve Board's recent rate increases. As discussed below, the increase in market interest rates may have an adverse effect on our net interest income and profitability.

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

We derive our income mainly from the difference or "spread" between the interest earned on loans, securities and other interest-earning assets and interest paid on deposits, borrowings and other interest-bearing liabilities. In general, the larger the spread, the more we earn. When market rates of interest change, the interest we receive on our assets and the interest we pay on our liabilities will fluctuate. This can cause decreases in our spread and can adversely affect our income. For the past several years, BV Financial has been asset sensitive, which indicates that assets generally reprice faster than liabilities. In a rising rate environment, asset sensitivity is preferable as it results in improvement to our net interest margin.

Interest rates also affect how much money we lend. For example, when interest rates rise, the cost of borrowing increases and loan originations tend to decrease. A rising rate environment can also negatively impact us if the higher debt service costs on adjustable-rate loans lead to borrowers' inability to pay contractual obligations. In addition, changes in interest rates can affect the average life of loans and securities. For example, a reduction in interest rates generally results in increased prepayments of loans and mortgage-backed securities, as borrowers refinance their debt to reduce their borrowing cost. This causes reinvestment risk, because we generally are not able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities in a declining rate environment.

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 also may negatively affect the value of our assets, including the value of our available-for-sale investment securities, which generally decrease when market interest rates rise, and ultimately affect our earnings. At December 31, 2022, we had accumulated other comprehensive losses of $2.3 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.

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Changes in the level of interest rates also may negatively affect our ability to originate real estate loans, the value of our assets, and our ability to realize gains from the sale of our assets, all of which ultimately affect our earnings. Also, our interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on our balance sheet or projected operating results. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk."

**<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 has been a rise in inflation and the Federal Reserve Board has raised certain benchmark interest rates in an effort to combat inflation. As discussed above under "—Risks Related to Market Interest Rates – Changes in interest rates could reduce our profits and asset values," as inflation increases and market interest rates rise 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 generally 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.

**A worsening of economic conditions in our market area could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could adversely affect our operations, financial condition and earnings.** 

Local economic conditions have a significant impact on the ability of our borrowers to repay loans and the value of the collateral securing loans. A deterioration in economic conditions, especially local conditions, could have the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations, and could more negatively affect us compared to a financial institution that operates with more geographic diversity:

&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, thereby reducing customers'
future borrowing power, and reducing the value of assets and collateral associated with existing loans, causing an increase in our allowance for credit losses; 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, acts of terrorism, civil unrest, an outbreak of hostilities or other international or domestic calamities, an epidemic or pandemic, 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.

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**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.** 

Most of our loans are inside of our market area and, as a result, 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 non-performing 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.

**<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.** 

BayVanguard Bank is subject to extensive regulation, supervision and examination by the OCFR and the FDIC, and BV Financial is 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 are intended primarily for the protection of the federal deposit insurance fund and the depositors of BayVanguard Bank, rather than for our 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 credit 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.

**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 acquisitions or establishing 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.

**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.

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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 subject to stringent capital requirements, which may adversely impact our return on equity, require us to raise additional capital, or limit our ability to pay dividends or repurchase shares.** 

Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and define "capital" for calculating these ratios. The minimum capital requirements are: (1) a common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 to risk-based assets capital ratio of 6%; (3) a total capital ratio of 8%; and (4) a Tier 1 leverage ratio of 4%. The regulations also establish a "capital conservation buffer" of 2.5%, which resulted in the following minimum ratios: (1) a common equity Tier 1 capital ratio of 7.0%; (2) a Tier 1 to risk-based assets capital ratio of 8.5%; and (3) a total capital ratio of 10.5%. An institution will be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if its capital level falls below the capital conservation buffer amount.

The application of these capital requirements could, among other things, result in lower returns on equity, and result in regulatory actions if we are unable to comply with such requirements. Specifically, following the completion of the offering, BayVanguard Bank's ability to pay dividends to BV Financial will be limited if it does not maintain the capital conservation buffer required by the capital rules, which may limit BV Financial's ability to pay dividends to its stockholders. See "Supervision and Regulation—Banking Regulation—Capital Requirements."

**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.** 

BV Financial is an emerging growth company, and we expect that BV Financial will cease to be an emerging growth company at the end of the fiscal year following the fifth anniversary of the completion of the offering. For as long as BV Financial continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public 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 and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, BV Financial also will not be subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors review and attest as to the effectiveness of our internal control over financial reporting. We have also elected 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, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. 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, BV Financial 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

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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 our Business Strategy</u>** 

**Our business strategy includes growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. Growing our operations could also cause our expenses to increase faster than our revenues.** 

Our business strategy includes growth in assets, deposits and the scale of our operations. Achieving such growth will require us to attract customers that currently bank at other financial institutions in our market area. Our ability to successfully grow will depend on a variety of factors, including our ability to attract and retain experienced bankers, the continued availability of desirable business opportunities and the level of competition from other financial institutions. Growth opportunities may not be available or we may not be able to manage our growth successfully. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected. Furthermore, there can be considerable costs involved in expanding lending capacity, and generally a period of time is required to generate the necessary revenues to offset these costs, especially in areas in which we do not have an established presence. Accordingly, any such business expansion can be expected to negatively impact our earnings until certain economies of scale are reached.

**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. Our executive officers and lending personnel possess substantial expertise, extensive knowledge of our markets and key business relationships. Any one of them could be difficult to replace. 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. See "Management."

**<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, financial technology or "fintech companies," 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 areas. The greater resources and deposit and loan products offered by some of our competitors may limit our ability to increase our interest-earning assets. For additional information see "Business of BayVanguard Bank—Competition."

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**<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. We have established policies and procedures to prevent or limit the impact of system failures, interruptions and security breaches, including privacy breaches and cyber-attacks. 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.

In the event of 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.

**We outsource critical operations to third-party service providers. Systems failures, interruptions and cybersecurity breaches could have a material adverse effect on us*.*** 

We outsource a majority of our data processing requirements to third-party providers. Accordingly, our operations are exposed to the risk that these vendors will not perform in accordance with 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, and our third-party service providers may be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches. We may have to expend additional resources to protect against the threat of such security breaches and computer viruses, or to alleviate problems caused by such security breaches or viruses. To the extent that the activities of our third-party service providers or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, regulatory scrutiny, litigation costs and other possible liabilities. 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.

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**<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 periodic reports we will be required to file under the Securities Exchange Act of 1934, including our 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. The area requiring significant estimates and assumptions by management include our evaluation of the adequacy of our allowance for credit losses.

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

The regulatory 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 financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.

**<u>Risks Related to COVID-19</u>** 

**The COVID-19 pandemic could continue to pose risks to our business, our results of operations and the future prospects of BV Financial.** 

The COVID-19 pandemic has adversely impacted the global and national economy and certain industries and geographies in which our clients operate. Given its dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on the business of BV Financial, its clients, employees and third-party service providers. The extent of such impact will depend on future developments, which are highly uncertain. Additionally, the responses of various governmental and non-governmental authorities and consumers to the pandemic may have material long-term effects on BV Financial and its clients, which are difficult to quantify in the near-term or long-term.

**<u>Risks Related to Acquisitions and Growth</u>** 

**Acquisitions may disrupt our business and dilute stockholder value*.*** 

We continually evaluate merger and acquisition opportunities of other financial institutions. As a result, negotiations may take place and future mergers or acquisitions with consideration consisting of cash and/or equity securities may occur. We would seek acquisition partners that offer us either significant market presence or the potential to expand our market footprint and improve profitability through economies of scale or expanded services.

Acquiring other banks or businesses may have an adverse effect on our financial results and may involve various other risks commonly associated with acquisitions, including, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• payment of a premium over book and market values that may dilute our tangible book value and earnings per share
in the short- and long-term;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential exposure to unknown or contingent liabilities of the target company, as well as potential asset quality
problems of the target company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential volatility in reported income associated with goodwill impairment losses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulty and expense of integrating the operations and personnel of the target company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inability to realize the expected revenue increases, cost savings, increases in geographic or product presence,
and/or other projected benefits of the acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential disruption to our business and diversion of our management's time and attention;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the possible loss of key employees and customers of the target company; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential changes in banking or tax laws or regulations that may affect the target company.

**We must successfully integrate the operations and retain the customers of our acquired institutions.** 

We have completed multiple acquisitions of financial institutions and continue to explore acquisition opportunities as part of our strategic plan. Future results of operations will depend in large part on our ability to successfully integrate the operations of the institutions we acquire and retain the employees and customers of those institutions. If we are unable to successfully manage the integration of the separate cultures, employee and customer bases and operating systems of the institutions we acquire, our results of operations may be adversely affected.

**Our loan portfolio has grown through acquisition, and therefore may not have been underwritten to meet our credit standards.** 

Loans that were acquired as part of our acquisitions of other depository institutions were not underwritten or originated in accordance with our credit standards, including environmental matters, and we did not have long-standing relationships with many of these borrowers at the time of acquisitions. We reviewed the loan portfolios of each institution acquired as part of the diligence process, and believe that we have established reasonable credit marks with regard to all loans acquired, no assurance can be given that we will not incur losses in excess of the credit marks with regard to these acquired loans, or that any such losses, if they occur, will not have a material adverse effect on our business, financial condition, and results of operations.

**<u>Other Risks Related to Our Business</u>** 

**We are a community bank and our ability to maintain our reputation, which is critical to the success of our business, 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 component of our business strategy is to rely on 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, any or all of which could adversely affect our business and operating results.

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

As a result of the completion of the offering, we will become a public reporting company. 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 will make changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. 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.

**Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.** 

Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses also may change their behavior as a

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result of these concerns. We and our customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. Among the impacts to us could be a drop in demand for our products and services, particularly in certain sectors. In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans. Our efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.

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

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

If you purchase shares of common stock in the 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 or mutual holding companies have traded below the initial offering price. The aggregate purchase price of the shares of common stock sold in the 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. 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 laws and regulations, investor perceptions of BV Financial and the outlook for the financial services industry in general. Price fluctuations in our common stock may be unrelated to our operating performance.

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

We intend to contribute between $51.9 million and $70.5 million of the net proceeds of the offering (or $81.2 million at the adjusted maximum of the offering range) to BayVanguard Bank. 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 offering. BayVanguard Bank may use the net proceeds it receives to fund new loans, expand its retail banking franchise by acquiring branches from other financial institutions or for other general corporate purposes. However, except for funding the loan to the employee stock ownership plan, 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 acquiring other financial institutions, may require the approval of the OCFR, the FDIC or the Federal Reserve Board. 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.

**Our return on equity may be low following the stock offering. This 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 performance of financial institutions. Our return on equity may be low until we are able to leverage the additional capital we receive 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 currently sponsor and the new plan we intend to adopt. Our return on average equity was 11.40% for the year ended December 31, 2022, with consolidated equity of $97.8 million at December 31, 2022. Our pro forma consolidated equity as of December 31, 2022, assuming completion of the offering, is estimated to be between $162.6 million at the minimum of the offering range and $184.8 million at the adjusted maximum of the offering range. Until we can increase our net interest income and non-interest income and leverage the capital raised in the stock offering, our return on equity may be low, which may reduce the market price of our shares of common stock.

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**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, subject to stockholder approval, which will increase our annual compensation and benefit expenses related to the stock options and stock awards granted to participants. 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 that we cannot predict at this time. If we adopt stock-based benefit plans within 12 months following the conversion, 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 total shares of our common stock sold in the offering. If we adopt stock-based benefit plans more than 12 months after the completion of the conversion, 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 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 $3.6 million ($3.0 million 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 discussion of our proposed stock-based plans, see "Management—Benefits to be Considered Following Completion of the Conversion."

**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. 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 7.94% 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 shares sold in the offering, and all such stock options are exercised, and a 3.34% 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 shares sold in the offering. Such dilution would also reduce earnings per share. If we adopt the plans more than 12 months following the conversion, new stock-based benefit plans would not be subject to these size limitations and stockholders could experience even greater dilution.

Although the implementation of new stock-based benefit plans would be subject to stockholder approval, historically, the overwhelming majority of stock-based benefit plans adopted by savings institutions and their holding companies following mutual-to-stock conversions have been approved by stockholders.

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**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 shares of common stock sold in the offering. 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.

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

Certain provisions of our articles of incorporation and bylaws and federal and state banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of BV Financial 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 BV Financial 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 BV Financial" and "Management—Benefits to be Considered Following Completion of the Conversion."

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

We expect that our common stock will be traded on the Nasdaq Capital Market under the symbol "BVFL" upon conclusion of the conversion and offering. 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. Under such circumstances, you could have difficulty selling your shares of common stock on short notice, and, therefore, you should not view the shares of common stock as a short-term investment. Purchasers of common stock in this offering should have long-term investment intent and should recognize that there may be a limited trading market in the common stock, which could make it difficult to sell the common stock after the offering and may have an adverse impact on the price at which the common stock can be sold.

**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 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.

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**SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA** 

The summary information presented below at each date or for each of the years presented is derived in part from the consolidated financial statements of BV Financial. The information at and for the years ended December 31, 2022 and 2021 was derived from the audited consolidated financial statements of BV Financial included elsewhere in this prospectus. The following information is only a summary and should be read in conjunction with the consolidated financial statements and related notes of BV Financial beginning on page F-1 of this prospectus.

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| | | |
|:---|:---|:---|
|  | **At December 31,** | **At December 31,** |
|  | **2022** | **2021** |
|  | **(In thousands)** | **(In thousands)** |
|  **Selected Financial Condition Data:** |  |  |
|  Total assets | $844963 | $815130 |
|  Cash and cash equivalents | 68652 | 111190 |
|  Securities available-for-sale | 33034 | 37793 |
|  Securities held to maturity | 10461 | 4059 |
|  Loans receivable, net | 659131 | 584438 |
|  Investment in life insurance | 19983 | 25966 |
|  Goodwill | 14420 | 14420 |
|  Deferred tax assets, net | 9113 | 8322 |
|  Deposits | 684618 | 680025 |
|  Borrowings | 49039 | 36828 |
|  Total stockholders' equity | 97751 | 83446 |

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| | | |
|:---|:---|:---|
|  | **For the Years Ended**<br>**December 31,** | **For the Years Ended**<br>**December 31,** |
|  | **2022** | **2021** |
|  | **(In thousands)** | **(In thousands)** |
|  **Selected Operating Data:** |  |  |
|  Interest income | $33350 | $29378 |
|  Interest expense | 3430 | 3733 |
|  Net interest income | 29920 | 25645 |
|  Provision for loan losses | 1038 | 575 |
|  Net interest income after provision for loan losses | 28882 | 25070 |
|  Non-interest income | 5665 | 2371 |
|  Non-interest expense | 19994 | 14617 |
|  Income before income taxes | 14553 | 12824 |
|  Income taxes | 4029 | 3383 |
|  Net income | $10524 | $9441 |
|  Basic earnings per share | $1.42 | $1.33 |
|  Diluted earnings per share | $1.41 | $1.32 |

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| | | |
|:---|:---|:---|
|  | **At or For the Years**<br>**Ended December 31,** | **At or For the Years**<br>**Ended December 31,** |
|  | **2022** | **2021** |
|  **Performance Ratios:** |  |  |
|  Return on average assets | 1.23% | 1.16% |
|  Return on average equity | 11.40% | 11.98% |
|  Interest rate spread<sup>(1)</sup> | 3.75% | 3.37% |
|  Net interest margin<sup>(2)</sup> | 3.91% | 3.54% |
|  Non-interest expense to average assets | 2.34% | 1.80% |
|  Efficiency ratio<sup>(3)</sup> | 57.88% | 53.27% |
|  Average interest-earning assets to average interest-bearing liabilities | 134.27% | 142.14% |
|  Average equity to average assets | 10.82% | 9.69% |
|  **Capital Ratios<sup>(4)</sup>:** |  |  |
|  Total capital to risk-weighted assets | 17.34% | 18.07% |
|  Tier 1 capital to risk-weighted assets | 16.76% | 17.57% |
|  Common equity tier 1 capital to risk-weighted assets | 16.76% | 17.57% |
|  Tier 1 capital to average assets | 13.39% | 11.79% |
|  **Asset Quality Ratios:** |  |  |
|  Allowance for loan losses as a percentage of total loans | 0.57% | 0.45% |
|  Allowance for loan losses as a percentage of non-performing loans | 64.80% | 111.28% |
|  Net (charge-offs) recoveries to average outstanding loans during the year | (0.02)% | (0.04)% |
|  Non-performing loans as a percentage of total loans | 0.88% | 0.41% |
|  Non-performing loans as a percentage of total assets | 0.70% | 0.30% |
|  Total non-performing assets as a percentage of total assets | 0.94% | 0.55% |
|  **Other:** |  |  |
|  Number of offices | 15 | 16 |
|  Number of full-time equivalent employees | 107 | 102 |

---

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(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 non-interest expenses divided by the sum of net interest
income and non-interest income.

(4) BayVanguard Bank only.

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##### [**Table of Contents**](#toc)
**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," "plan," "seek," "expect," "will," "would," "should," "could" or "may," 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 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 current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic conditions, either nationally or in our market areas, that are worse than expected including as
a result of employment levels and labor shortages, and the effects of inflation, a potential recession or slowed economic growth caused by supply chain disruptions or otherwise;

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

&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 credit losses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the economic assumptions used to calculated the allowance for credit 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 both residential and commercial real estate market conditions;

&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
financial instruments or our level of loan originations or prepayments on loans we have made and make;

&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 and capital requirements and insurance premiums;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal
Reserve Board;

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

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure to maintain current technologies and/or successfully implement future information technology
enhancements;

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

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

&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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our compensation expense associated with equity allocated or awarded to our 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 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_. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

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##### [**Table of Contents**](#toc)
**HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING** 

Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the offering is completed, we anticipate that the net proceeds will be between $103.8 million and $141.0 million, or $162.4 million if the offering range is increased by 15%.

We intend to use 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:** |
|  | **10,625,000 Shares** | **10,625,000 Shares** | **12,500,000 Shares** | **12,500,000 Shares** | **14,375,000 Shares** | **14,375,000 Shares** | **16,531,250 Shares<sup>(1)</sup>** | **16,531,250 Shares<sup>(1)</sup>** |
|  | **Amount** | **Percent of**<br>**Net**<br>**Proceeds** | **Amount** | **Percent of**<br>**Net**<br>**Proceeds** | **Amount** | **Percent of**<br>**Net**<br>**Proceeds** | **Amount** | **Percent of**<br>**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)** |
|  Gross offering proceeds | $106250 |  | $125000 |  | $143750 |  | $165310 |  |
|  Less: offering expenses | 2434 |  | 2598 |  | 2762 |  | 2950 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net offering proceeds | $103816 | 100.0% | $122402 | 100.0% | $140988 | 100.0% | $162360 | 100.0% |
|  Distribution of net proceeds: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To BayVanguard Bank | $51908 | 50.0% | $61201 | 50.0% | $70494 | 50.0% | $81180 | 50.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To fund loan to employee stock ownership plan | $8500 | 8.2% | $10000 | 8.2% | $11500 | 8.2% | $13225 | 8.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained by BV Financial | $43408 | 41.8% | $51201 | 41.8% | $58994 | 41.8% | $67957 | 41.9% |

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(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 offering.

Payments for shares of common stock made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will reduce BayVanguard Bank's deposits. The net proceeds may vary because total expenses relating to the offering may be more or less than our estimates. For example, our expenses would increase if all the shares offered were not sold in the subscription and community offerings and instead a portion of the shares were sold in a syndicated community offering.

BV Financial may use the proceeds it retains from the offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to invest in securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to repurchase its outstanding junior subordinated debt or shares of its common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to finance the potential acquisition of financial institutions, although we do not currently have any agreements
or understandings regarding any specific acquisition transaction;

&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.

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

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##### [**Table of Contents**](#toc)
BayVanguard Bank may use the net proceeds it receives from the offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to fund new loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to enhance existing products and services, hire additional employees and support growth and the development of
new products and services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to expand its banking franchise by acquiring other financial institutions as opportunities arise, although we do
not currently have any understandings or agreements to acquire a financial institution or other entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to invest in securities; and

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

Initially, a substantial portion of the net proceeds will be invested in short-term investments, investment-grade debt obligations and mortgage-backed securities. We have not determined specific amounts of the net proceeds that would be used for the purposes described above. 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, the attractiveness and availability of potential acquisitions to expand our operations, and overall market conditions. The use of the proceeds may also change depending on our ability to receive regulatory approval to acquire other financial institutions.

We expect our return on equity may be low until we are able to reinvest effectively the additional capital raised in the offering. Until we can increase our net interest income and non-interest income, our return on equity may be below the industry average, which may negatively affect the value of our common stock. See "Risk Factors—Risks Related to the Offering—Our failure to effectively deploy the net proceeds may have an adverse effect on our financial performance" and "—Our return on equity may be low following the stock offering. This could negatively affect the trading price of our shares of common stock."

**OUR DIVIDEND POLICY** 

Our board of directors will have the authority to declare dividends on our shares of common stock, subject to our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. While management intends to pay a dividend following the completion of the conversion and stock offering, no decision has been made with respect to the amount and timing of any dividend payments. We cannot assure you that we will pay dividends in the future, or that any such dividends will not be reduced or eliminated in the future.

BV Financial will not be permitted to pay dividends on its common stock if its stockholders' equity would be reduced below the amount of the liquidation account established by BV Financial in connection with the conversion. The source of dividends will depend on the net proceeds retained by BV Financial and earnings thereon, and dividends from BayVanguard Bank. In addition, BV Financial will be subject to state law limitations and federal bank regulatory policy on the payment of dividends. Maryland law generally limits dividends if the corporation would not be able to pay its debts in the usual course of business after giving effect to the dividend or if the corporation's total assets would be less than the corporation's total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution.

After the completion of the conversion, BayVanguard Bank will not be permitted to pay dividends on its capital stock owned by BV Financial, its sole stockholder, if BayVanguard Bank's stockholder's equity would be reduced below the amount of the liquidation account established in connection with the conversion. In addition, BayVanguard Bank will not be permitted to make a capital distribution if, after making such distribution, it would

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be undercapitalized. BayVanguard Bank must provide notice to the Federal Reserve Board and file an application with the OCFR for approval of a capital distribution if the total capital distributions for the applicable calendar year exceed the sum of its net income for that year to date plus its retained net income for the preceding two years, or it would not be at least adequately capitalized following the distribution.

Any payment of dividends by BayVanguard Bank to BV Financial that would be deemed to be drawn from BayVanguard Bank's bad debt reserves established before 1988, if any, would require a payment of taxes at the then-current tax rate by BayVanguard Bank on the amount of earnings deemed to be removed from the pre-1988 bad debt reserves for such distribution. BayVanguard Bank does not intend to make any distribution that would create such a federal tax liability.

We intend to file a consolidated federal tax return with BayVanguard Bank. Accordingly, it is anticipated that any cash distributions made by us to our stockholders would be treated as cash dividends and not as a non-taxable return of capital for federal tax purposes. Additionally, during the three-year period following the conversion, we will not be permitted to make any capital distribution to stockholders that would be treated by recipients as a tax-free return of capital for federal income tax purposes.

**MARKET FOR THE COMMON STOCK** 

BV Financial's common stock is currently listed on the Pink Open Market operated by OTC Markets Group under the symbol "BVFL." Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Upon completion of the conversion, we expect the new shares of common stock of BV Financial will replace the existing shares of BV Financial and trade on the Nasdaq Capital Market under the symbol "BVFL." In order to list our stock on the Nasdaq Capital Market, we are required to have at least three broker-dealers who will make a market in our common stock. As of [Voting Record Date], BV Financial had 15 registered market makers in its common stock.

As of the close of business on [Voting Record Date], there were 7,418,575 shares of common stock outstanding, including 1,017,761 publicly held shares (shares held by stockholders other than Bay-Vanguard, M.H.C.), and approximately stockholders of record.

On January 18, 2023, the business day immediately preceding the public announcement of the conversion, and on [Voting Record Date], the closing prices of BV Financial common stock as reported on the OTC Pink Market were $25.00 per share and $ per share, respectively. On the effective date of the conversion, all publicly held shares of BV Financial common stock, including shares of common stock held by our officers and directors, will be converted automatically into and become the right to receive a number of new shares of BV Financial common stock determined pursuant to the exchange ratio. See "The Conversion and Offering—Share Exchange Ratio for Current Stockholders." Options to purchase shares of BV Financial common stock will be converted into options to purchase a number of new shares of BV Financial common stock determined pursuant to the exchange ratio, with the same aggregate exercise price. See "Beneficial Ownership of Common Stock."

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##### [**Table of Contents**](#toc)
**HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE** 

At December 31, 2022, BayVanguard Bank exceeded all of the applicable regulatory capital requirements and was considered "well capitalized."

The table below sets forth the historical equity capital and regulatory capital of BayVanguard Bank at December 31, 2022, and the pro forma equity capital and regulatory capital of BayVanguard Bank after giving effect to the sale of shares of common stock at $10.00 per share. The table also compares historical and pro forma capital levels to those required to be considered "well capitalized." The table assumes that BayVanguard Bank receives 50% of the net offering proceeds. See "How We Intend to Use the Proceeds from the Offering."

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **BayVanguard Bank**<br>**Historical at**<br>**December 31, 2022** | **BayVanguard Bank**<br>**Historical at**<br>**December 31, 2022** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** |
|  | **BayVanguard Bank**<br>**Historical at**<br>**December 31, 2022** | **BayVanguard Bank**<br>**Historical at**<br>**December 31, 2022** | **10,625,000 Shares** | **10,625,000 Shares** | **12,500,000 Shares** | **12,500,000 Shares** | **14,375,000 Shares** | **14,375,000 Shares** | **16,531,250 Shares<sup>(1)</sup>** | **16,531,250 Shares<sup>(1)</sup>** |
|  | **Amount** | **Percent**<br>**of Assets** | **Amount** | **Percent**<br>**of Assets** | **Amount** | **Percent**<br>**of Assets** | **Amount** | **Percent**<br>**of Assets** | **Amount** | **Percent**<br>**of 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)** |
|  Equity | $123436 | 14.75% | $162594 | 18.29% | $169637 | 18.89% | $176680 | 19.47% | $184779 | 20.13% |
|  Tier 1 leverage capital <sup>(2)(3)</sup> | $109939 | 13.39% | $149097 | 17.08% | $156140 | 17.70% | $163183 | 18.30% | $171282 | 18.98% |
|  Tier 1 leverage requirement | 41057 | 5.00 | 43652 | 5.00 | 44117 | 5.00 | 44581 | 5.00 | 45116 | 5.00 |
|  Excess | $68882 | 8.39% | $105445 | 12.08% | $112023 | 12.70% | $118602 | 13.30% | $126166 | 13.98% |
|  Tier 1 risk-based capital <sup>(2)(3)</sup> | $109939 | 16.76% | $149097 | 22.37% | $156140 | 23.37% | $163183 | 24.35% | $171282 | 25.48% |
|  Tier 1 risk-based requirement | 52482 | 8.00 | 53312 | 8.00 | 53461 | 8.00 | 53610 | 8.00 | 53781 | 8.00 |
|  Excess | $57457 | 8.76% | $95785 | 14.37% | $102679 | 15.37% | $109573 | 16.35% | $117501 | 17.48% |
|  Total risk-based capital <sup>(2)(3)</sup> | $113757 | 17.34% | $152915 | 22.95% | $159958 | 23.94% | $167001 | 24.92% | $175100 | 26.05% |
|  Total risk-based requirement | 65602 | 10.00 | 66641 | 10.00 | 66826 | 10.00 | 67012 | 10.00 | 67226 | 10.00 |
|  Excess | $48155 | 7.34% | $86274 | 12.95% | $93132 | 13.94% | $99989 | 14.92% | $107874 | 16.05% |
|  Common equity tier 1 risk-based capital <sup>(2)(3)</sup> | $109939 | 16.76% | $149097 | 22.37% | $156140 | 23.37% | $163183 | 24.35% | $171282 | 25.48% |
|  Common equity tier 1 risk-based requirement | 42642 | 6.50 | 43316 | 6.50 | 43437 | 6.50 | 43558 | 6.50 | 43697 | 6.50 |
|  Excess | $67297 | 10.26% | $105781 | 15.87% | $112703 | 16.87% | $119625 | 17.85% | $127585 | 18.98% |
|  Reconciliation of capital infused into BayVanguard Bank: | Reconciliation of capital infused into BayVanguard Bank: | Reconciliation of capital infused into BayVanguard Bank: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net proceeds | $51908 |  | $61201 |  | $70494 |  | $81181 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by stock-based benefit plans | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by stock-based benefit plans | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by stock-based benefit plans | (4250) |  | (5000) |  | (5750) |  | (6613) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by employee stock ownership plan | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by employee stock ownership plan | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by employee stock ownership plan | (8500) |  | (10000) |  | (11500) |  | (13225) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma increase | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma increase | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma increase | $39158 |  | $46201 |  | $53244 |  | $61343 |  |

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(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 offering.

(2) 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.

(3) Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.

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**CAPITALIZATION** 

The following table presents the historical consolidated capitalization of BV Financial at December 31, 2022 and the pro forma consolidated capitalization of BV Financial after giving effect to the conversion and offering based upon the assumptions set forth in the "Pro Forma Data" section.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **BV Financial<br>Historical at<br>December 31,<br>2022** | **BV Financial Pro Forma at December 31, 2022 Based upon the Sale in the**<br>**Offering at $10.00 per share of:** | **BV Financial Pro Forma at December 31, 2022 Based upon the Sale in the**<br>**Offering at $10.00 per share of:** | **BV Financial Pro Forma at December 31, 2022 Based upon the Sale in the**<br>**Offering at $10.00 per share of:** | **BV Financial Pro Forma at December 31, 2022 Based upon the Sale in the**<br>**Offering at $10.00 per share of:** |
|  | **BV Financial<br>Historical at<br>December 31,<br>2022** | **10,625,000<br>Shares** | **12,500,000<br>Shares** | **14,375,000<br>Shares** | **16,531,250<br>Shares<sup>(1)</sup>** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
|  Deposits<sup>(2)</sup> | $684618 | $684618 | $684618 | $684618 | $684618 |
|  Borrowed funds | 49039 | 49039 | 49039 | 49039 | 49039 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits and borrowed funds | $733657 | $733657 | $733657 | $733657 | $733657 |
|  **Stockholders' equity:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred stock, $0.01 par value, 1,000,000 shares authorized (post-conversion)<sup>(3)</sup> |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, $0.01 par value, 45,000,000 shares authorized (post-conversion); shares to be issued as reflected<sup>(3)(4)</sup> | 74 | 123 | 145 | 167 | 192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital<sup>(3)</sup> | 15406 | 50066 | 168630 | 187194 | 208544 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings<sup>(5)</sup> | 84612 | 84612 | 84612 | 84612 | 84612 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | (2341) | (2341) | (2341) | (2341) | (2341) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock to be acquired by stock-based benefit plans<sup>(6)</sup> |  | (4250) | (5000) | (5750) | (6613) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock held by employee stock ownership plan<sup>(7)</sup> |  | (8500) | (10000) | (11500) | (13225) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | $97751 | $219710 | $236046 | $252382 | $271169 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Pro Forma Shares Outstanding:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares offered for sale |  | 10625000 | 12500000 | 14375000 | 16531250 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange shares issued |  | 1689427 | 1987562 | 2285696 | 2628550 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total shares outstanding | 7418575 | 12314427 | 14487562 | 16660696 | 19159800 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity as a percentage of total assets | 11.58% | 22.74% | 24.03% | 25.27% | 26.65% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tangible equity as a percentage of tangible assets | 9.91% | 21.47% | 22.80% | 24.08% | 25.51% |

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(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 offering.

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

(3) BV Financial currently has 45,000,000 authorized shares of common stock, $0.01 par value per share, and
1,000,000 authorized shares of preferred stock, par value $0.01 per share. On a pro forma basis, common stock and additional paid-in capital have been revised to reflect the number of shares of BV Financial
common stock to be outstanding.

(4) No effect has been given to the issuance of additional shares of BV Financial common stock pursuant to the
exercise of options under one or more stock-based benefit plans. If the plans are implemented within the first year after the closing of the offering, an amount up to 10% of the shares of BV Financial common stock sold in the offering will be
reserved for issuance upon the exercise of options under the plans. No effect has been given to the exercise of options currently outstanding. See "Management."

(5) The retained earnings of BayVanguard Bank will be substantially restricted after the conversion. See "The
Conversion and Offering—Liquidation Rights" and "Supervision and Regulation—Banking Regulation—Capital Distributions."

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(6) Assumes a number of shares of common stock equal to 4% of the shares of common stock to be sold in the offering
will be purchased for grant by one or more stock-based benefit plans. The funds to be used by such plans to purchase the shares will be provided by BV Financial. The dollar amount of common stock to be purchased is based on the $10.00 per share
purchase price in the offering and represents unearned compensation. This amount does not reflect possible increases or decreases in the value of common stock relative to the purchase price in the offering. BV Financial will accrue compensation
expense to reflect the vesting of shares pursuant to such stock-based benefit plans and will credit capital in an amount equal to the charge to operations.

(7) Assumes that 8% of the shares sold in the offering will be acquired by the employee stock ownership plan
financed by a loan from BV Financial. The loan will be repaid principally from BayVanguard Bank's contributions to the employee stock ownership plan. Since BV Financial will finance the employee stock ownership plan debt, this debt will be
eliminated through consolidation and no liability will be reflected on BV Financial's consolidated financial statements. Accordingly, the shares of common stock acquired by the employee stock ownership plan are shown in this table as a
reduction of total stockholders' equity. Implementation of such plans will require stockholder approval.

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**PRO FORMA DATA** 

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

The net proceeds are based upon the following assumptions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) all of the shares of common stock will be sold in the subscription and community offerings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) our employee stock ownership plan will purchase 8% of the shares of common stock sold in the offering with a
loan from BV Financial. The loan will be repaid in substantially equal payments of principal and interest (at the prime rate of interest, as may be adjusted annually) over 20 years. Interest income that we earn on the loan will offset the interest
paid by BayVanguard Bank. The effect on earnings for the employee stock ownership plan is the cost of amortizing the combined loan over 20 years, net of historical expense for the period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) we will pay Performance Trust a fee of 0.95% with respect to shares sold in the subscription and community
offering. No fee will be paid with respect to shares of common stock purchased by our qualified and non-qualified employee stock benefit plans, or stock purchased by our officers, directors and employees, and
their immediate families, and no fee will be paid with respect to exchange shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) total expenses of the offering, other than the fees and commissions to be paid to Performance Trust and other
broker-dealers, will be $1.4 million.

In addition, the expenses of the offering may vary from those estimated, and the fees paid to Performance Trust will vary from the amounts estimated if the amount of shares of BV Financial common stock sold varies from the amounts assumed above or if any shares are sold in the syndicated community offering.

We calculated pro forma consolidated net income as if the estimated net proceeds we received had been invested at the beginning of the period at an assumed interest rate of 3.99% (2.91% on an after-tax basis). This represents the yield on the five-year U.S. Treasury Note at December 31, 2022, which, in light of current market interest rates, we consider to more accurately reflect the pro forma reinvestment rate 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 federal regulations require that we assume in presenting pro forma data.

We further believe that the reinvestment rate is factually supportable because:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the yield on the U.S. Treasury Note can be determined and/or estimated from third-party sources; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we believe that U.S. Treasury securities are not subject to credit losses due to a U.S. Government guarantee of
payment of principal and interest.

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. For pro forma earnings per share calculations, we adjusted these figures to give effect to the shares of common stock purchased by the employee stock ownership plan. We computed per share amounts 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 data gives effect to the implementation of one or more stock-based benefit plans. We have assumed that stock-based benefit plans will reserve for restricted stock awards a number of shares of common stock equal to 4% of the shares of common stock sold in the stock offering at the same price for which they were sold in the stock offering. We have assumed that awards of common stock granted under such plans vest over a five-year period.

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We also have assumed that options will be granted under stock-based benefit plans to acquire shares of common stock equal to 10% of the shares of common stock sold in the stock offering. We have assumed 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 had 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 $5.02 for each option.

We may grant options and award shares of common stock under one or more stock-based benefit plans in excess of 10% and 4%, respectively, of the shares of common stock sold in the stock offering and that vest sooner than over a five-year period if the stock-based benefit plans are adopted more than 12 months following the completion of the stock offering.

As discussed under "How We Intend to Use the Proceeds from the Offering," we intend to contribute 50% of the net proceeds from the stock offering to BayVanguard Bank, and we will retain the remainder of the net proceeds from the stock offering. We will use a portion of the proceeds we retain to fund a loan to the employee stock ownership plan. We will retain the rest of the proceeds for future use.

The pro forma data does not give effect to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• withdrawals from deposit accounts to purchase shares of common stock in the stock offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our results of operations after the stock offering; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the market price of the shares of common stock after the stock offering.

The following pro forma data may not be representative of the financial effects of the offering at the date on which the offering actually occurs, and should not be taken as indicative of future results of operations. Pro forma consolidated stockholders' equity represents the difference between the stated amounts of our assets and liabilities. The 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. Moreover, pro forma stockholders' equity per share does not give effect to the liquidation accounts to be established in the conversion or, in the unlikely event of a liquidation of BayVanguard Bank, to the tax effect of the recapture of the bad debt reserve. See "The Conversion and Offering—Liquidation Rights."

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **At or for the Year Ended December 31, 2022**<br>**Based upon the Sale at $10.00 Per Share of:** | **At or for the Year Ended December 31, 2022**<br>**Based upon the Sale at $10.00 Per Share of:** | **At or for the Year Ended December 31, 2022**<br>**Based upon the Sale at $10.00 Per Share of:** | **At or for the Year Ended December 31, 2022**<br>**Based upon the Sale at $10.00 Per Share of:** |
|  | **10,625,000<br>Shares** | **12,500,000<br>Shares** | **14,375,000<br>Shares** | **16,531,250<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)** |
|  Gross proceeds of offering | $106250 | $125000 | $143750 | $165313 |
|  Market value of shares issued in the exchange | 16894 | 19876 | 22857 | 26286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma market capitalization | $123144 | $144876 | $166607 | $191598 |
|  Gross proceeds of offering | $106250 | $125000 | $143750 | $165313 |
|  Expenses | 2434 | 2598 | 2762 | 2950 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimated net proceeds | 103816 | 122402 | 140988 | 162363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock purchased by employee stock ownership plan | (8500) | (10000) | (11500) | (13225) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock purchased by stock-based benefit plans | (4240) | (5000) | (5750) | (6613) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimated net proceeds, as adjusted | $91066 | $107402 | $123738 | $142525 |
|  **<u>For the Year Ended December 31, 2022</u>** |  |  |  |  |
|  Consolidated net earnings: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical | $10524 | $10524 | $10524 | $10524 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income on adjusted net proceeds | 2652 | 3128 | 3604 | 4151 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee stock ownership plan<sup>(2)</sup> | (310) | (365) | (420) | (483) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock awards<sup>(3)</sup> | (621) | (730) | (840) | (965) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock options<sup>(4)</sup> | (995) | (1170) | (1346) | (1548) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma net income | $11250 | $11387 | $11523 | $11679 |
|  Earnings per share<sup>(5)</sup>: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical | $0.92 | $0.78 | $0.68 | $0.59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income on adjusted net proceeds | 0.23 | 0.23 | 0.23 | 0.23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee stock ownership plan<sup>(2)</sup> | (0.03) | (0.03) | (0.03) | (0.03) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock awards<sup>(3)</sup> | (0.05) | (0.05) | (0.05) | (0.05) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock options<sup>(4)</sup> | (0.09) | (0.09) | (0.09) | (0.09) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma earnings per share<sup>(5)</sup> | $0.98 | $084 | $0.74 | $0.65 |
|  Offering price to pro forma net earnings per share | 10.20 | 11.90 | 13.51 | 15.38 |
|  Number of shares used in earnings per share calculations | 11506927 | 13537562 | 15568196 | 17903425 |
|  **<u>At December 31, 2022</u>** |  |  |  |  |
|  Stockholders' equity: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical | $97751 | $97751 | $97751 | $97751 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimated net proceeds | 103816 | 122402 | 140988 | 162363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock acquired by employee stock ownership plan<sup>(2)</sup> | (8500) | (10000) | (11500) | (13225) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock acquired by stock-based benefit plans<sup>(3)</sup> | (4250) | (5000) | (5750) | (6613) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma stockholders' equity<sup>(6)</sup> | $188817 | $205153 | $221489 | $240276 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | $(15615) | $(15615) | $(15615) | $(15615) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma tangible stockholders' equity<sup>(6)</sup> | $173202 | $189538 | $205874 | $224661 |
|  Stockholders' equity per share<sup>(7)</sup>: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical | $7.94 | $6.75 | $5.87 | $5.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimated net proceeds | 8.43 | 8.45 | 8.46 | 8.47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock acquired by employee stock ownership plan<sup>(2)</sup> | (0.69) | (0.69) | (0.69) | (0.69) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock acquired by stock-based benefit plans<sup>(3)</sup> | (0.35) | (0.35) | (0.35) | (0.35) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma stockholders' equity per share<sup>(6)(7)</sup> | $15.33 | $14.16 | $13.29 | $12.54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | $(1.27) | $(1.08) | $(0.94) | $(0.81) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma tangible stockholders' equity per<br>share<sup>(6)(7)</sup> | $14.06 | $13.08 | $12.35 | $11.73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Offering price as percentage of pro forma stockholders' equity per share | 65.23 | 70.62 | 75.24 | 79.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Offering price as percentage of pro forma tangible stockholders' equity per share | 71.12 | 76.45 | 80.97 | 85.25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Number of shares outstanding for pro forma book value per share calculations | 12314427 | 14487562 | 16660696 | 19159800 |

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(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 offering.

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(2) Assumes that 8% of the shares of common stock sold in the offering will be purchased by the employee stock
ownership plan. 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 BV Financial, and the outstanding loan with respect to existing shares of BV Financial
held by the employee stock ownership plan will be refinanced and consolidated with the new loan. BayVanguard Bank 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. BayVanguard Bank's total annual payments on the employee stock ownership plan debt are based upon 20 equal annual installments of principal and interest. Financial Accounting Standards Board Accounting Standards
Codification ("ASC") 718-40, "Compensation—Stock Compensation—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 employee stock ownership plan shares are allocated in equal annual installments
based on the number of loan repayment installments assumed to be paid by BayVanguard Bank, the fair value of the common stock remains equal to the subscription price and the employee stock ownership plan expense reflects an effective combined
federal and state tax rate of 27.0%. The unallocated employee stock ownership plan 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 further assumes that 42,500, 50,000, 57,500 and 66,125 shares were committed to be released during the year ended December 31, 2022 at the minimum, midpoint, maximum, and adjusted maximum of the offering range,
respectively, and in accordance with ASC 718-40, only the employee stock ownership plan shares committed to be released during the period were considered outstanding for net income per share calculations.

(3) Assumes that one or more stock-based benefit plans reserve an aggregate number of shares of common stock equal
to 4% of the shares to be sold in the offering. Stockholder approval of the plans and purchases by the plans may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from BV Financial or
through open market purchases. Shares in the stock-based benefit plans are assumed to vest over a period of five years. The funds to be used to purchase the shares will be provided by BV Financial. The tables assume 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 plan is amortized as an expense during the year ended December 31, 2022, and (iii) the plan expense reflects an
effective combined federal and state tax rate of 27.0%. Assuming stockholder approval of the stock-based benefit plans and that shares of common stock (equal to 4% of the shares sold in the offering) are awarded through the use of authorized but
unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 3.37%.

(4) Assumes that options are granted under one or more stock-based benefit plans to acquire an aggregate number of
shares of common stock equal to 10% of the shares to be sold in the offering. Stockholder approval of the plans may not occur earlier than six months after the completion of the conversion. In calculating the pro forma effect of the stock-based
benefit plans, 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 both $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes option
pricing model was $5.02 for each option and that 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 using an effective combined federal and state tax rate of
27.0% and that 25.0% of the option expense is taxable. The actual expense 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 and the option pricing model
ultimately adopted. Under the above assumptions, the adoption of the stock-based benefit plans will result in no additional shares under the treasury stock method for calculating earnings per share. There can be no assurance that the exercise price
of the stock options will be equal to the $10.00 price per share. If a portion of the shares used to satisfy the exercise of options comes from authorized but unissued shares, our net income per share and stockholders' equity per share would
decrease. The issuance of authorized but unissued shares of common stock pursuant to the exercise of options under such plan would dilute stockholders' ownership and voting interests by approximately 7.94%.

(5) Per share figures include publicly held shares of BV Financial common stock that will be issued in exchange for
new shares of BV Financial common stock in the conversion. See "The Conversion and Offering—Share Exchange Ratio for Current Stockholders." Net income per share computations are determined by taking the number of shares assumed to be
sold in the offering and the number of new shares assumed to be issued in exchange for publicly held shares and, in accordance with ASC 718-40, subtracting the employee stock ownership plan shares that have
not been committed for release during the period. See footnote 2, above. The number of shares of common stock actually sold and exchange shares may be more or less than the assumed amounts.

(6) The retained earnings of BayVanguard Bank will be substantially restricted after the conversion. See "Our
Dividend Policy," "The Conversion and Offering—Liquidation Rights" and "Supervision and Regulation—Banking Regulation—Capital Distributions."

(7) Per share figures include publicly held shares of BV Financial common stock that will be issued in exchange for
new shares of BV Financial common stock in the conversion. Stockholders' equity per share calculations are based upon the sum of (i) the number of shares assumed to be sold in the offering and (ii) shares to be issued in exchange for
publicly held shares at the minimum, midpoint and maximum of the offering range, respectively. The exchange shares reflect an exchange ratio of 1.6599, 1.9529, 2.2458 and 2.5827 at the minimum, midpoint, maximum, and adjusted maximum of the offering
range, respectively. The number of shares actually sold and the corresponding number of exchange shares may be more or less than the assumed amounts.

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

**AND RESULTS OF OPERATIONS** 

This discussion and analysis reflects the information contained in our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information at and for the years ended December 31, 2022 and 2021 is derived in part from the audited consolidated financial statements that appear elsewhere in this prospectus. You should read the information in this section in conjunction with the other business and financial information contained in this prospectus, including the consolidated financial statements and related notes of BV Financial provided elsewhere in this prospectus.

**Overview** 

***Net Interest Income****.* Our primary source of income is net interest income. Net interest income is the difference between interest income, which is the income we earn on our loans and investments, and interest expense, which is the interest we pay on our deposits and borrowings.

***Provision for Loan Losses****.* The allowance for loan losses is a valuation allowance for probable incurred credit losses. The allowance for loan losses is increased through charges to the provision for loan losses. Loans are charged against the allowance when management believes that the collectability of the principal loan amount is not probable. Recoveries on loans previously charged-off, if any, are credited to the allowance for loan losses when realized.

***Non-Interest Income****.* Our primary sources of non-interest income are fees from debit cards, income from investments in life insurance, service fees on deposits and other income.

***Non-Interest Expense****.* Our non-interest expense consists primarily of compensation and related benefits, occupancy and equipment expenses, data processing expenses and other expenses.

Compensation and related benefits consist primarily of salaries and wages paid to our employees, payroll taxes, and expenses for worker's compensation and disability insurance, health insurance, retirement plans and other employee benefits, as well as other incentives.

Occupancy and equipment expenses, which are the fixed and variable costs of buildings and equipment, consist primarily of depreciation charges, rental expenses, furniture and equipment expenses, maintenance, real estate taxes and costs of utilities. Depreciation of premises and equipment is computed using a straight-line method based on the estimated useful lives of the related assets or the expected lease terms, if shorter.

Data processing expenses are fees we pay to third parties for use of their software and for processing customer information, deposits and loans.

Advertising includes most marketing expenses including multi-media advertising, promotional events and materials.

Professional fees include legal, accounting, auditing, internal audit, interest rate risk management, loan review and other services.

Foreclosed real estate and repossessed asset holding costs includes expenses required to maintain, rehabilitate and prepare foreclosed property for sale.

Other expenses include expenses for maintenance and repairs, office supplies, postage, telephone, insurance and other miscellaneous operating expenses.

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***Income Tax Expense****.* ****Our income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between the carrying amounts and the tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amounts expected to be realized.

***Summary of Financial Condition and Operating Results****.* At December 31, 2022, we had $845.0 million in consolidated assets, an increase of $29.9 million, or 3.7%, from $815.1 million at December 31, 2021. The increase was due primarily to a $74.7 million increase in net loans receivable to $659.1 million at December 31, 2022, partially offset by decreases of $42.5 million in cash and cash equivalents to $68.7 million at December 31, 2022 and $6.0 million in investment in life insurance to $20.0 million at December 31, 2022. Total liabilities increased $15.5 million, or 2.1%, from $731.7 million at December 31, 2021 to $747.2 million at December 31, 2022. The increase was primarily due to a $12.0 million increase in Federal Home Loan Bank borrowings.

Stockholders' equity increased $14.3 million, or 17.1%, to $97.8 million at December 31, 2022, primarily due to $10.5 million in net income and $5.5 million of equity acquired in the acquisition of North Arundel Savings Bank ("NASB").

Net income increased $1.1 million, or 11.5%, to $10.5 million for the year ended December 31, 2022, compared to $9.4 million for the year ended December 31, 2021. The increase was due primarily to increases in net interest income and noninterest income, partially offset by increases in the provision for loan losses, noninterest expense and income tax expense.

**Business Strategy** 

We have focused primarily on continuing and enhancing our community-oriented retail banking strategy. Highlights of our current business strategy include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Pursue opportunistic acquisitions and partnerships.*** We intend to continue to
prudently pursue opportunities to acquire banks that offer opportunities for solid financial returns. Our primary focus will be on franchises that enhance our funding profile, product capabilities or geographic density or footprint, while
maintaining an acceptable risk profile. We believe in the need to make significant technological investments and the importance of scale in banking. In addition, we believe that the rate of consolidation in the banking industry will continue. We
believe that the stock offering will enhance our historical position as a consolidator in the banking market because of our financial strength, reputation and culture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Grow our loan portfolio with an emphasis on commercial real estate and residential mortgage lending*** . While we intend to continue our recent focus on the origination of commercial real estate loans, we intend to remain a residential mortgage lender in our market area and maintain a balance between the commercial real estate and
residential mortgage portfolios. We originated $117.1 million of commercial real estate and $40.9 million of residential mortgages loans during the year ended December 31, 2022. At December 31, 2022, $318.7 million, or
48.0%, of our total loan portfolio consisted of commercial real estate loans and $262.8 million, or 39.6%, of our total loan portfolio consisted of residential mortgages. The additional capital raised in the offering will further increase our
commercial lending capacity by enabling us to originate more loans and loans with larger balances. This will permit us to serve commercial borrowers with larger lending needs and to originate larger commercial loans than we have in the past.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Manage credit risk to maintain a low level of non-performing assets*** . We believe that maintaining strong asset quality is paramount to our long-term success. We follow conservative underwriting guidelines with sound loan administration, and focus on originating loans secured by real estate. This
includes enhanced loan monitoring of higher risk portfolio segments, higher risk individual loans and larger relationships within the portfolio, and frequent loan grade review. Our non-performing assets
totaled $7.9 million, or 0.94% of total assets, at December 31, 2022. Our total non-performing loans to total loans ratio was 0.88% at December 31, 2022.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Increase core deposits with an emphasis on non-interest-bearing deposits*** *.* Deposits are our primary source of funds for lending and investment. Core deposits (which we define as all deposits except for time deposits) were 78.6% of total deposits at December 31, 2022. In particular, non-interest-bearing demand deposits were 24.4% of our total deposits at December 31, 2022. We continue to focus on expanding core deposits by leveraging our business development officers and commercial lending
and retail relationships.

We intend to continue to pursue these business strategies, subject to changes necessitated by future market conditions, regulatory restrictions and other factors. While we are committed to the business strategies noted above, we recognize the challenges and uncertainties of the current environment and plan to execute these strategies as market conditions allow.

**Summary of Critical Accounting Policies and Critical Accounting Estimates** 

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with U.S. GAAP. The preparation of these consolidated 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 have determined 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 established as losses that are estimated to have occurred through a provision for loan losses charged to earnings. The allowance for loan losses is evaluated on a no less than a quarterly basis by management. This evaluation focuses on many factors, including, but not limited to: an analysis of delinquency trends, non-performing loan trends, the level of charge-offs and recoveries, prior loss experience, total loans outstanding, the composition of the loan portfolio, the value of collateral securing the loans, the borrower's ability to repay, repayment performance, local economic conditions, and other qualitative and quantitative factors that could affect potential loan losses. The primary quantitative consideration for assessing the adequacy of the allowance for loan losses is our average historical incurred loss experience for the preceding three years. Since we have not experienced significant historical incurred losses, the evaluation of the adequacy of the allowance for loan losses is determined primarily by the consideration of the qualitative factors noted above. Credit risks are inherently different for each segment of the loan portfolio such that the applicability of certain qualitative factors to a particular loan segment is determined by the various risk characteristics of the loan segment. Assessing these factors involves significant judgment. Because each of the criteria used in the evaluation is susceptible to significant revision as current economic trends and conditions change, the established allowance for loan losses may not be indicative of potential loan losses. Therefore, management considers the calculation of the allowance for loan losses a critical accounting estimate. In addition, bank regulators periodically review our allowance for loan losses and, as a result of such reviews, we may be required to increase our provision for loan losses or recognize further loan charge-offs. However, regulatory agencies are not directly involved in the process of establishing the allowance for loan losses, as the process is our responsibility and any adjustment of the allowance is the responsibility of our management.

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The allowance may consist of specific, general and unallocated components. The specific allowance is for unconfirmed losses related to loans that are determined to be impaired. Impairment is measured in one of three ways: (1) using the present value of expected future cash flows discounted at the loan's effective interest rate (i.e., the contractual interest rate adjusted for any net deferred loan fees or costs, premium, or discount existing at the origination or acquisition of the loan), (2) the loan's observable market price, or (3) the fair value of the collateral, if the loan is collateral dependent. When the measurement of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through the allowance for loan losses. At December 31, 2022, the collateral values of collateral-dependent impaired loans was sufficient and no impairment charge was necessary. There were no changes to the policies or methodologies pertaining to the components of allowance for loan losses for the year ended December 31, 2022. The general allowance, which is for loans reviewed collectively, is determined by segregating the remaining loans by type of loan, risk weighting and payment history. An unallocated component of the allowance for loan losses may be maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. We had no unallocated balance at December 31, 2022 or 2021.

The allowance for loan losses at December 31, 2022 was to cover losses in the non-acquired loan portfolio ($432.0 million or 64.8% of gross loans.) The remaining balances of the loan portfolios acquired via the acquisitions of Vigilant Federal Savings Bank ($4.4 million), Kopernik Bank ($41.3 million), Madison Bank ($41.7 million), 1880 Bank ($117.5 million) and NASB ($30.0 million) have accretable and non-accretable credit marks that were assigned to these portfolios at acquisition. Each quarter, these acquired portfolios are analyzed in the same manner as the legacy portfolio to measure the adequacy of the general (accretable) credit marks to cover potential losses. The accretable marks amortize into interest income each month based on loan paydowns in those portfolios. The non-accretable marks are assigned to specific purchased credit impaired ("PCI") loans identified at acquisition and will be utilized if a charge-off is required. The NASB portfolio was only assigned an accretable credit mark at acquisition. Acquisition credit marks totaled $3.8 million at December 31, 2022.

Our allowance for loan losses as a percent of total loans increased from 0.45% at December 31, 2021 to 0.57% at December 31, 2022, which primarily reflects our consideration of the current economic conditions that affect the qualitative factors used in the determination of the allowance for loan losses, as well as the impact of the growth in certain segments of our loan portfolio, among other considerations. Of the $1.1 million increase in the required reserve from December 31, 2021 to December 31, 2022, approximately $970,000 or 85% was due to the growth of the portfolio. Additionally, at December 31, 2022, the qualitative factor for economic conditions was increased for the entire portfolio resulting in an increase of $200,000 in the required reserve. The economic factor is applied to all portfolio segments. As such, it has a greater impact on the required reserve than the other qualitative factors that are applied on a portfolio segment basis. Another major factor that changes from year to year (and quarter to quarter) is the individual delinquency factors assigned to each portfolio segment based on the level of delinquent loans in that segment as a percentage of total loans in that segment at the measurement date. Delinquency factors are assigned per portfolio based on set factors for set ranges of delinquencies within each portfolio. A change in the delinquency factor for a high balance portfolio will have a substantially greater impact on the required reserve than a change in the delinquency factor in a lower balance portfolio. The Company uses a three year look back period for the historical loss factor. Over the past three fiscal years, the Company has been in a net recovery position of $200,000. Therefore, this factor has had minimal impact on the overall calculation.

As noted above, we consider a number of variables in our evaluation of the adequacy of the allowance for loan losses, with one of the more significant variables being growth trends in the various segments of our loan portfolio. Based on our model, if all segments of our loan portfolio grew by 5% on a year-over-year basis, our allowance for loan losses as of December 31, 2022 would have increased by $190,000 to $4.0 million, holding all other variables constant. Conversely, if all segments of our loan portfolio contracted by 5% on a year-over-year basis, our allowance for loan losses as of December 31, 2022 would have decreased by $190,000 to $3.6 million, holding all other variables constant. If the portfolio segment with both the highest balance and highest required reserve ratio (commercial – investor) increased by 10%, the required reserve would increase by $215,000 to $4.0 million, holding all other variables constant.

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Effective January 1, 2023, the CECL accounting standard became effective for us. 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. The day one CECL adjustment is expected to be in the range of $500,000 - $1.5 million and will be reflected in our financial statements for periods ending in 2023.

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

Our annual goodwill impairment test is performed each year as of September 30. BV Financial performed its 2022 annual goodwill impairment qualitative assessment and determined BV Financial's goodwill was not considered impaired. We monitor our performance and evaluate our goodwill for impairment annually or more frequently as needed.

***Deferred Income Taxes.*** At December 31, 2022, we had a net deferred tax asset totaling $9.1 million. In accordance with Accounting Standards Codification ("ASC") Topic 740 "Income Taxes," we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established if it is not more likely than not realizable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting deferred tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect income. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize its federal and state deferred tax asset.

For more information on our critical accounting policies, see Note 1 of the notes to our consolidated financial statements.

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

***Total Assets.*** Total assets were $845.0 million, an increase of $29.9 million, or 3.7%, from $815.1 million at December 31, 2021. The increase was due primarily to a $74.7 million increase in net loans receivable to $659.1 million at December 31, 2022, partially offset by decreases of $42.5 million in cash and cash equivalents to $68.7 million at December 31, 2022 and $6.0 million in investment in life insurance to $20.0 million at December 31, 2022.

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***Cash and Cash Equivalents.*** Cash and cash equivalents decreased $42.5 million to $68.7 million at December 31, 2022 from $111.2 million at December 31, 2021 as funds were used to fund the increases in net loans receivable. We regularly review our liquidity position based on alternative uses of available funds as well as market conditions.

***Net Loans Receivable.*** Net loans receivable increased $74.7 million, or 12.8%, to $659.1 million at December 31, 2022 from $584.4 million at December 31, 2021. Commercial – investor, one-to four-family – non-owner occupied, commercial and commercial – owner occupied loans increased $56.1 million, $28.5 million, $6.5 million and $4.8 million, respectively, to $226.9 million, $125.1 million, $28.1 million and $91.9 million at December 31, 2022 as a result of loan production exceeding payoffs and amortization. These increases were partially offset by decreases to U.S. Government guaranteed and one-to four-family – owner occupied loans of $17.6 million and $2.9 million, respectively, to $4.9 million and $137.7 million at December 31, 2022. The decrease in U.S Government guaranteed loans was due primarily to the forgiveness of Paycheck Protection Program ("PPP") loans through the Small Business Administration ("SBA"). During the year ended December 31, 2022, we acquired $34.2 million in loans as a result of our acquisition of NASB, which consisted of $31.8 million in one-to four-family – owner occupied loans, $2.2 million in residential construction loans and $300,000 in other consumer loans. Without these loans acquired from NASB, one-to four-family – owner occupied would have decreased $34.1 million, primarily due to customers refinancing or selling property, and construction and land would have decreased $3.0 million, primarily due to those loans converting to permanent loans or being refinanced.

***Securities.*** Securities increased $1.6 million, or 3.9%, to $43.5 million at December 31, 2022 from $41.9 million at December 31, 2021. This increase was primarily due to an increase of $4.0 million in agency securities and a $1.6 million increase in held to maturity mortgage-backed securities to $3.3 million at December 31, 2022, partially offset by a $5.9 million decrease in available for sale mortgage-backed securities to $31.1 million at December 31, 2022. Purchases exceeded paydowns and maturities of debt securities for the year.

Investment in life insurance decreased $6.0 million, or 23.0%, to $20.0 million at December 31, 2022. This decrease was due to the receipt of the cash surrender value of a policy due to the death of an insured party.

***Total Liabilities.*** Total liabilities increased $15.5 million, or 2.1%, from $731.7 million at December 31, 2021 to $747.2 million at December 31, 2022. The increase was primarily due to a $12.0 million increase in Federal Home Loan Bank borrowings.

***Deposits.*** Total deposits increased $4.6 million, or 0.7%, to $684.6 million at December 31, 2022 from $680.0 million at December 31, 2021. This increase was primarily due to $40.3 million in deposits that we acquired as a result of our acquisition of NASB, which consisted of $22.5 million in certificates of deposit, $8.0 of money market accounts, $7.3 million in savings accounts and $2.5 million in interest-bearing checking accounts, partially offset by runoffs in our other deposits. Interest-bearing deposits increased $12.4 million, or 2.5%, to $517.4 million at December 31, 2022, partially offset by a $7.8 million, or 4.5%, decrease in noninterest-bearing deposits to $167.2 million at December 31, 2022.

***Federal Home Loan Bank Borrowings.*** We had $12.0 million in Federal Home Loan Bank borrowings at December 31, 2022 compared to no Federal Home Loan Bank borrowings at December 31, 2021. The increase was used to fund loan growth and to maintain liquidity.

***Stockholders' Equity.*** Stockholders' equity increased $14.3 million, or 17.1%, to $97.8 million at December 31, 2022, primarily due to $10.5 million in net income and $5.5 million of equity acquired in the acquisition of NASB.

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**Average Balance Sheets** 

The following tables set 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 would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Net deferred loan fees totaled $900,000 and $1.4 million for the years ended December 31, 2022 and 2021, respectively.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **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:** |  |  |  |  |  |  |
|  Loans | $634152 | $31259 | 4.93% | $591466 | $28728 | 4.86% |
|  Securities available for sale | 36766 | 610 | 1.66% | 32688 | 434 | 1.33% |
|  Securities held to maturity | 7730 | 245 | 3.17% | 3022 | 77 | 2.56% |
|  Cash, cash equivalents and other interest-earning assets | 86134 | 1236 | 1.43% | 97322 | 139 | 0.14% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-earning assets | 764782 | 33350 | 4.36% | 724498 | 29378 | 4.06% |
|  Non-interest-earning assets | 87128 |  |  | 88343 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $851910 |  |  | $812841 |  |  |
|  **Interest-bearing liabilities:** |  |  |  |  |  |  |
|  Interest-bearing demand deposits | $95261 | 65 | 0.07% | $86982 | 55 | 0.06% |
|  Savings deposits | 169677 | 97 | 0.06% | 162500 | 116 | 0.07% |
|  Money market deposits | 108492 | 231 | 0.21% | 95156 | 240 | 0.25% |
|  Certificates of deposit | 154346 | 964 | 0.63% | 157228 | 1485 | 0.94% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-bearing deposits | 527776 | 1357 | 0.26% | 501866 | 1896 | 0.38% |
|  Federal Home Loan Bank advances | 296 | 11 | 3.79% | 3080 | 30 | 0.98% |
|  Subordinated debentures | 36938 | 2062 | 5.58% | 36764 | 1807 | 4.91% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total borrowings | 37234 | 2073 | 5.57% | 39844 | 1837 | 4.61% |
|  Total interest-bearing liabilities | 565010 | 3430 | 0.61% | 541710 | 3733 | 0.75% |
|  Non-interest-bearing demand deposits | 169722 |  |  | 170157 |  |  |
|  Other non-interest-bearing liabilities | 24870 |  |  | 21802 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 759602 |  |  | 733669 |  |  |
|  Equity | 92308 |  |  | 79172 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and equity | $851910 |  |  | $812841 |  |  |
|  Net interest income |  | $29920 |  |  | $25645 |  |
|  Net interest rate spread<sup>(1)</sup> |  |  | 3.75% |  |  | 3.37% |
|  Net interest-earning assets<sup>(2)</sup> | $199772 |  |  | $182788 |  |  |
|  Net interest margin<sup>(3)</sup> |  |  | 3.91% |  |  | 3.54% |
|  Average interest-earning assets to interest-bearing liabilities | 135.36% |  |  | 133.74% |  |  |

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(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.

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**Rate/Volume Analysis** 

The following table presents the effects of changing rates and volumes on our net interest income for the years 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.

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| | | | |
|:---|:---|:---|:---|
|  | **Years Ended**<br>**December 31, 2022 vs. 2021** | **Years Ended**<br>**December 31, 2022 vs. 2021** | **Years Ended**<br>**December 31, 2022 vs. 2021** |
|  | **Increase (Decrease) Due to** | **Increase (Decrease) Due to** | **Total Increase**<br>**(Decrease)** |
|  | **Volume** | **Rate** | **Total Increase**<br>**(Decrease)** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** |
|  **Interest-earning assets:** |  |  |  |
|  Loans | $2103 | $428 | $2531 |
|  Securities available-for-sale | 68 | 109 | 177 |
|  Securities held to maturity | 149 | 18 | 167 |
|  Cash, cash equivalents and other interest-earning assets | (160) | 1257 | 1097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-earning assets | 2229 | 1919 | 3972 |
|  **Interest-bearing liabilities:** |  |  |  |
|  Interest-bearing demand deposits | 6 | 4 | 10 |
|  Savings deposits | 4 | (23) | (19) |
|  Money market deposits | 27 | (38) | (11) |
|  Certificates of deposit | (18) | (502) | (519) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | 19 | (559) | (539) |
|  Federal Home Loan Bank advances | (105) | 86 | (19) |
|  Subordinated debentures | 10 | 245 | 255 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Borrowings | (95) | 331 | 236 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-bearing liabilities | (76) | (228) | (303) |
|  Change in net interest income | $2236 | $2040 | $4275 |

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

***General.*** Net income increased $1.1 million, or 11.5%, to $10.5 million for the year ended December 31, 2022, compared to $9.4 million for the year ended December 31, 2021. The increase was due primarily to increases in net interest income and noninterest income, partially offset by increases in the provision for loan losses, noninterest expense and income tax expense.

***Interest Income.*** Interest income increased $4.0 million, or 13.5%, to $33.4 million for the year ended December 31, 2022 from $29.4 million for the year ended December 31, 2021. The increase was due primarily to increases in interest income on loans, which is our primary source of interest income, and interest income on cash, cash equivalents and other interest-earning assets. Interest income on loans increased $2.5 million, or 8.8%, to $31.3 million for the year ended December 31, 2022 from $28.7 million for the year ended December 31, 2021 due to increases in the average balance of loans and the average yield. The average balance of loans increased $73.1 million, or 13.0%, to $634.2 million for the year ended December 31, 2022 from $561.0 million for the year ended December 31, 2021. The weighted average yield on loans increased seven basis points to 4.93% for the year ended December 31, 2022 compared to 4.86% for the year ended December 31, 2021, as variable rate loans reset to higher interest rates and the rates on new loans exceeded the rates on paid off loans. Interest income on cash, cash equivalents and other interest-earning assets increased $1.1 million, or 789.2%, to $1.2 million for the year ended December 31, 2022 from $139,000 for the year ended December 31, 2021 due to a 129 basis point increase in the average yield on cash, cash equivalents and other interest-earning assets, partially offset by an $11.2 million decrease in the average balance.

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***Interest Expense.*** Interest expense decreased $303,000, or 8.1%, to $3.4 million for the year ended December 31, 2022 compared to $3.7 million for the year ended December 31, 2021, due primarily to a $539,000 decrease on interest paid on deposits, partially offset by a $225,000 increase on interest paid on subordinated debentures.

The decrease in interest expense on deposits was due to a 12 basis point decrease in the average rate, offset by a $25.9 million increase in the average balance of interest-bearing deposits to $527.8 million at December 31, 2022, offset by. The average rate on interest-bearing deposits was 0.26% for the year ended December 31, 2022 as we delayed increasing deposit rates until the fourth quarter of 2022.

Interest expense on subordinated debentures increased $255,000, or 14.1%, to $2.1 million for the year ended December 31, 2022 compared to $1.8 million for the year ended December 31, 2021. The average rate on subordinated debentures increased 67 basis points to 5.58% for the year ended December 31, 2022 compared to 4.91% for the year ended December 31, 2021, due to increases in market interest rates. Interest expense on Federal Home Loan Bank advances decreased $19,000 to $11,000 for the year ended December 31, 2022 due to a decrease in the average balance from $3.1 million for the year ended December 31, 2021 to $296,000 for the year ended December 31, 2022, offset by a 281 basis point increase in the average rate paid on borrowings from 0.98% for the year ended December 31, 2021 to 3.79% for the year ended December 31, 2022.

***Net Interest Income.*** Net interest income increased $4.3 million, or 16.7%, to $29.9 million for the year ended December 31, 2022 from $25.6 million for the year ended December 31, 2021, as a result of a $4.0 million increase in interest income and a $303,000 decrease in interest expense. Our interest rate spread increased 39 basis points to 3.75% for the year ended December 31, 2022, compared to 3.37% for the year ended December 31, 2021, while our net interest margin increased 37 basis points to 3.91% for the year ended December 31, 2022 compared to 3.54% for the year ended December 31, 2021.

***Provision for Loan Losses.*** Provisions for loan losses are charged to operations to establish an allowance for loan losses at a level necessary to absorb known and inherent losses in our loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements. In evaluating the level of the allowance for loan losses, management analyzes several qualitative loan portfolio risk 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. See "—Summary of Critical Accounting Policies and Critical Accounting Estimates" for additional information.

We recorded provisions for loan losses of $1.0 million and $575,000 for the years ended December 31, 2022 and 2021, respectively. The increase in the provision for loan losses for the year ended December 31, 2022 was primarily due to growth trends in various segments of our loan portfolio and increases related to economic factors. Our allowance for loan losses was $3.8 million at December 31, 2022 compared to $2.7 million at December 31, 2021. The ratio of our allowance for loan losses to total loans was 0.57% at December 31, 2022 compared to 0.45% at December 31, 2021, while the allowance for loan losses to non-performing loans was 64.8% at December 31, 2022 compared to 32.3% at December 31, 2021. We had charge-offs of

$56,000 and $165,000 for the year ended December 31, 2022.

The allowance for loan losses at December 31, 2022 was to cover losses in the non-acquired loan portfolio ($432.0 million or 64.8% of gross loans.) The remaining balances of the loan portfolios acquired via the acquisitions of Vigilant Federal Savings Bank ($4.4 million), Kopernik Bank ($41.3 million), Madison Bank ($41.7 million), 1880 Bank ($117.5 million) and NASB ($30.0 million) have accretable and non-accretable credit marks that were assigned to these portfolios at acquisition. Each quarter, these acquired portfolios are analyzed in the same manner as the legacy portfolio to measure the adequacy of the general (accretable) credit marks to cover potential losses. The accretable marks amortize into interest income each month based on loan paydowns in those portfolios. The non-accretable marks are assigned to specific PCI loans identified at acquisition and will be utilized if a charge-off is required. The NASB portfolio was only assigned an accretable credit mark at acquisition. Acquisition credit marks totaled $3.8 million at December 31, 2022.

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We have recorded all loan losses that are both probable and reasonable to estimate at December 31, 2022. However, future changes in the factors we use to calculate the allowance for loan losses, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increases in our provision for loan losses. In addition, the OCFR and the FDIC, as an integral part of their examination processes, will periodically review our allowance for loan losses, and as a result of such reviews, we may have to adjust our allowance for loan losses.

***Non-interest Income.*** Non-interest income information is as follows.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Years Ended**<br>**December 31,** | **Years Ended**<br>**December 31,** | **Change** | **Change** |
|  | **2022** | **2021** | **Amount** | **Percent** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
|  Service fees on deposits | $460 | $444 | $16 | 3.6% |
|  Fees from debit cards | 755 | 780 | (25) | (3.2) |
|  Income from investment in life insurance | 1492 | 683 | 809 | 118.5 |
|  Gain on sale of foreclosed real estate and repossessed assets |  | 12 | (12) | (100.0) |
|  Gain on sale of premises and equipment | 246 |  | 246 | 100.0 |
|  Gain on sale of mortgage loans held for sale | 1 | 57 | (56) | (98.3) |
|  Bargain purchase gain | 1340 |  | 1340 | 100.0 |
|  Other income | 1371 | 395 | 976 | 274.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-interest income | $5665 | $2371 | $3294 | 138.9% |

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Non-interest income increased $3.3 million to $5.7 million for the year ended December 31, 2022 from $2.4 million for the year ended December 31, 2021. The increase was due primarily to a $1.3 million bargain purchase gain resulting from our acquisition of NASB, a $1.0 million increase in other income resulting from an increased volume of deposit and loan related fees and an $809,000 increase in income from investment in life insurance due to the death benefit received exceeding the cash surrender value.

***Non-interest Expense.*** Non-interest expense information is as follows.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Years Ended**<br>**December 31,** | **Years Ended**<br>**December 31,** | **Change** | **Change** |
|  | **2022** | **2021** | **Amount** | **Percent** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
|  Compensation and related benefits | $10130 | $7807 | $2223 | 28.5% |
|  Occupancy | 1661 | 1685 | (24) | 1.4 |
|  Data processing | 1419 | 1608 | (189) | 11.8 |
|  Advertising | 23 | 23 |  |  |
|  Professional fees | 607 | 587 | 20 | 3.4 |
|  Equipment | 436 | 453 | (17) | 3.8 |
|  Foreclosed real estate and repossessed assets holding costs | 965 | 227 | 738 | 325.1 |
|  Amortization of intangible assets | 183 | 176 | 8 | 4.5 |
|  FDIC insurance premiums | 219 | 190 | 29 | 15.3 |
|  Other | 4351 | 1761 | 2589 | 147.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-interest expense | $19994 | $14617 | $5377 | 36.8% |

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Non-interest expense increased $5.4 million to $20.0 million for the year ended December 31, 2022 from $14.6 million for the year ended December 31, 2021. The increase was due primarily to a $2.6 million increase in other non-interest expense to $4.4 million at December 31, 2022 due to merger and systems conversion expenses of $1.6 million, the $500,000 cost of a lease buyout and increases in costs and activities for a larger organization, a $2.2 million increase in compensation and related benefits to $10.1 million at December 31, 2022 due to general

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increases in salary and incentive compensation, additional staffing as we built up the infrastructure to support growth and a $738,000 increase in foreclosed real estate and repossessed assets holding costs related to taking title to two properties from the other real estate owned property assumed in the acquisition of 1880 Bank.

***Income Tax Expense.*** We recognized income tax expense of $4.0 million and $3.4 million for the years ended December 31, 2022 and 2021, respectively, resulting in effective rates of 25.9% and 26.4%. Income tax expense increased as a result of the increase in our net income before taxes.

**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 goal 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. Our Asset/Liability Management Committee, which consists of members of senior management, is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• growing our volume of core deposit accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• holding higher levels of cash and cash equivalents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• continuing the diversification of our loan portfolio by adding more commercial-related loans, which typically
have variable rates and shorter maturities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• purchasing short-term and adjustable rate securities.

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, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage backed securities.

***Change in Net Interest Income.*** We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield curve increases instantaneously by up to 400 basis points or decreases instantaneously by up to 400 basis points, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the "Change in Interest Rates" column below.

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The table below sets forth, as of December 31, 2022, 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.

Estimated Changes in Net Interest Income

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  <u>Change in Interest Rates<sup>(1)</sup>:</u> | <u>- 400 bp</u> | <u>- 300 bp</u> | <u>- 200 bp</u> | <u>- 100 bp</u> | <u>+ 100bp</u> | <u>+ 200 bp</u> | <u>+ 300bp</u> | <u>+ 400bp</u> |
|  December 31, 2022 | (25.36)% | (17.93)% | (10.44)% | (3.77)% | 0.86% | 1.21% | 1.25% | 1.37% |

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

The tables above indicate that at December 31, 2022, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 1.21% increase in net interest income, and in the event of an instantaneous 100 basis point decrease in interest rates, we would experience a 3.77% decrease in net interest income.

***Economic Value of Equity*.** We also 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 a decrease instantaneously by 100, 200, 300, and 400 basis points, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The table below 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.

Estimated Changes in Economic Value of Equity

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  <u>Change in Interest Rates<sup>(1)</sup>:</u> | <u>-400 bp</u> | <u>-300 bp</u> | <u>-200 bp</u> | <u>-100 bp</u> | <u>+ 100 bp</u> | <u>+ 200 bp</u> | <u>+ 300 bp</u> | <u>+ 400 bp</u> |
|  December 31, 2022 | (39.13)% | (32.84)% | (19.19)% | (8.14)% | 3.50% | 4.64% | 4.24% | 3.19% |

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

The table above indicates that at December 31, 2022, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 4.64% increase in EVE, and in the event of an instantaneous 100 basis point decrease in interest rates, we would experience an 8.14% decrease in EVE.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes 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. In this regard, the net interest income and net economic value tables presented 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. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ. Furthermore, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset. In the event of changes in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the tables.

Interest rate risk 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.

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**Liquidity and Capital Resources** 

***Liquidity.*** Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Atlanta. At December 31, 2022 and December 31, 2021, we had $96.8 million and $118.3 million available under a line of credit with the Federal Home Loan Bank of Atlanta, and had $12.0 million outstanding as of December 31, 2022 and no borrowings with the Federal Home Loan Bank of Atlanta as of December 31, 2021. In addition, at December 31, 2022 and December 31, 2021, the Bank had $40.0 million in unfunded letters of credit used to secure municipal deposits outstanding against the line of credit with the Federal Home Loan Bank of Atlanta.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $9.7 million and $10.6 million for the years ended December 31, 2022 and 2021, respectively. Net cash (used in) provided by investing activities, which consists primarily of investments in loans and securities, was $(27.8) million and $17.4 million for the years ended December 31, 2022 and 2021, respectively. Net cash provided by (used in) financing activities, consisting primarily of changes in deposits and advances and the repayment of advances to the Federal Home Loan Bank, was $(24.2) million and $(8.8) million for the years ended December 31, 2022 and 2021, respectively.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Time deposits that are scheduled to mature in less than one year from December 31, 2022 totaled $83.3 million. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize Federal Home Loan Bank advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

***Capital Resources.*** At December 31, 2022, BayVanguard Bank exceeded all of its regulatory capital requirements, and was categorized as well capitalized at December 31, 2022. Management is not aware of any conditions or events since the most recent notification that would change our category. See "Historical and Pro Forma Regulatory Capital Compliance."

The net proceeds from the offering will significantly increase our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including funding loans. Our financial condition and results of operations will be enhanced by the net proceeds from the offering, which will increase our net interest-earning assets and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the offering, as well as other factors associated with the offering, our return on equity will be adversely affected following the offering. See "Risk Factors—Risks Related to the Offering—Our return on equity may be low following the stock offering. This could negatively affect the trading price of our shares of common stock."

**Off-Balance Sheet Arrangements and Aggregate Contractual Obligations** 

***Commitments.*** As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit

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may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At December 31, 2022, we had outstanding commitments to extend credit of $66.2 million and $978,000 of Letters of Credit. See Note 4 to the consolidated financial statements for further information.

***Contractual Obligations.*** In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

**Recent Accounting Pronouncements** 

Please refer to Note 1 to the consolidated financial statements of BV Financial for the years ended December 31, 2022 and 2021 included with this document for a description of recent accounting pronouncements that may affect our financial condition and results of operations.

**Impact of Inflation and Changing Prices** 

The financial statements and related data presented herein have been prepared in accordance with U.S. GAAP, which requires 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 BV FINANCIAL** 

**BV Financial** 

BV Financial, headquartered in Baltimore, Maryland, was organized in 2005 as a federal corporation and savings and loan holding company. In 2019, BV Financial converted its charter to that of a Maryland corporation and bank holding company. BV Financial's common stock is quoted on the Pink Open Market operated by the OTC Markets Group under the symbol "BVFL." BV Financial conducts its operations primarily through its wholly owned subsidiary, BayVanguard Bank. BV Financial manages its operations as one unit, and thus does not have separate operating segments. At December 31, 2022, BV Financial had consolidated assets of $845.0 million, deposits of $684.6 million and stockholders' equity of $97.8 million.

BV Financial was formed as part of the mutual holding company reorganization of BayVanguard Bank, which was completed in 2005. In connection with the reorganization, BV Financial sold 1,190,250 shares of common stock to the public at $10.00 per share, representing 45% of its outstanding shares of common stock and issued an additional 1,454,750 shares of common stock, or 55% of its then-outstanding shares of common stock, to Bay-Vanguard, M.H.C., which was also organized in connection with the reorganization as a mutual savings and loan holding company under the laws of the United States. In 2019, concurrently with BV Financial, Bay-Vanguard, M.H.C. converted its charter to that of a Maryland corporation and mutual bank holding company.

Upon completion of the conversion, BV Financial will continue to be the holding company of BayVanguard Bank and will succeed to all of the business and operations of Bay-Vanguard, M.H.C., which will cease to exist upon completion of the conversion.

As part of the conversion, BV Financial will receive the cash held by Bay-Vanguard, M.H.C. and the net proceeds it retains from the offering. A portion of the net proceeds will be used to fund a loan to the BayVanguard Bank Employee Stock Ownership Plan. BV Financial intends to use the support staff and offices of BayVanguard Bank and will pay BayVanguard Bank for these services. If BV Financial expands or changes its business in the future, it may hire its own employees.

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BV Financial intends to invest the net proceeds of the offering as discussed under "How We Intend to Use the Proceeds from the Offering." In the future, it may pursue other business activities, including mergers and acquisitions, investment alternatives and diversification of operations. There are, however, no current understandings or agreements for these activities.

The executive offices of BV Financial are located at 7114 North Point Road, Baltimore, Maryland 21219, and its telephone number is (410) 477-5000. BV Financial is subject to comprehensive regulation and examination by the Federal Reserve Board.

**BUSINESS OF BAYVANGUARD BANK** 

BayVanguard Bank is a Maryland-chartered stock savings bank headquartered in Baltimore, Maryland. BayVanguard Bank was originally chartered in 1873 under the name Light Street Savings and Building Association. Through a series of mergers in the decades that followed, Light Street Savings and Building Association had by the 1990s changed its name to Bay Federal Savings Association. In 1996, following a merger with Vanguard Federal Savings and Loan Association, the name was changed to Bay-Vanguard Federal Savings Bank. In 2005, we reorganized into the mutual holding company form of ownership and, in 2019, we converted our charter to a Maryland state savings bank with the new name of BayVanguard Bank. As part of the conversion, BayVanguard Bank will convert its charter to that of a Maryland commercial bank.

BayVanguard Bank's business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in commercial real estate loans, one- to four-family real estate loans, and, to a lesser extent, commercial loans, construction and land loans, marine loans and farm loans. Our lending function focuses on three areas – consumer (e.g., residential loans and marine lending), community (e.g., non-owner occupied residential, commercial real estate and other commercial lending in the areas served by our market area) and investment real estate (e.g., larger commercial real estate lending both inside and outside of our market area). In recent years, we have increased our focus, consistent with our conservative underwriting standards, on originating commercial real estate and commercial loans. We also invest in investment securities. Our revenues are derived primarily from interest on loans and, to a lesser extent, interest on investment securities. Our primary sources of funds are deposits and principal and interest payments on loans and securities. BayVanguard Bank offer a variety of deposit accounts, including noninterest-bearing and interest-bearing checking accounts, money market accounts, savings accounts and certificates of deposit. We have also historically used Federal Home Loan Bank advances to fund our operations and had $12.0 million in advances from the Federal Home Loan Bank of Atlanta as of December 31, 2022.

We have also supplemented our organic growth through four different mergers since 2019. See "—Recent Acquisition History."

BayVanguard Bank is subject to comprehensive regulation and examination by the OCFR and the FDIC. BayVanguard Bank is a member of the Federal Home Loan Bank system. Our website address is <u>www.bayvanguard.com</u>. Information on our website is not considered a part of this document.

**Recent Acquisition History** 

Acquisitions of banking institutions and other financial service companies within and surrounding our market area have been, and we expect will continue to be, a key component of our strategy.

In February 2019, we acquired Kopernik Bank, a Maryland-chartered mutual savings bank headquartered in Baltimore, Maryland, which added $139.4 million in assets, $93.0 million in deposits, and $41.2 million in stockholders' equity. The acquisition of Kopernik Bank enhanced our market share in the Baltimore market, and provided BayVanguard Bank with additional capital to engage in further strategic transactions. In connection with the acquisition of Kopernik Bank, BV Financial issued 4,099,822 shares of common stock to Bay-Vanguard, M.H.C. As part of the transaction, BV Financial and Bay-Vanguard, M.H.C. each converted from a federally chartered savings and loan holding company to a Maryland-chartered bank holding company.

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In March 2020, we acquired Madison Bank, a Maryland-chartered stock savings bank headquartered in Forest Hill, Maryland, which added $144.9 million in assets, $94.8 million in deposits, and $28.7 million in stockholders' equity. The acquisition of Madison Bank increased our market presence in our existing market area.

In October 2020, we acquired 1880 Bank, a Maryland-chartered commercial bank headquartered in Cambridge, Maryland, which added $413.0 million in assets, $362.9 million in deposits, and $53.9 million in stockholders' equity. The acquisition of 1880 Bank expanded our market area to include the Eastern Shore of Maryland. Our acquisition of 1880 Bank was funded, in part, by BV Financial's issuance of $35.0 million of its 4.875% fixed-to-floating rate subordinated notes with a maturity date of December 2030.

In January 2022, we acquired North Arundel Savings Bank, a Maryland-charted mutual savings bank located in Pasadena, Maryland, which added $47.8 million in assets, $40.8 million in deposits, and $5.5 million in stockholders' equity. The acquisition of North Arundel Savings Bank increased our market presence in the Baltimore market. In connection with the acquisition of North Arundel Savings Bank, BV Financial issued 251,004 shares of common stock to Bay-Vanguard, M.H.C.

**Market Area** 

We conduct our operations from our main office, 14 branch offices and one standalone interactive teller machine ("ITM"), all of which are located in the Baltimore market (Baltimore City, Anne Arundel, Baltimore and Harford Counties, Maryland) and Dorchester and Talbot Counties, Maryland on the Eastern Shore of Maryland. Out of 24 counties in Maryland, Baltimore County is the third most populous with a population of approximately 854,000 and Baltimore City is the fifth most populous with a population of approximately 570,000 (combined the two would rank as the most populous county). This is compared with populations of approximately 596,500 for Anne Arundel County, 265,000 for Harford County, 37,500 for Talbot County, 32,500 for Dorchester County and 6.2 million for the entire state.

The economy in our primary market area has benefited from being varied and diverse, with a broad economic base. Baltimore County has a median household income of approximately $88,500, Baltimore City has a median household income of approximately $56,000, Anne Arundel County has a median household income of approximately $114,000, Harford County has a median household income of approximately $104,500, Talbot County has a median household income of approximately $80,500 and Dorchester County has a median household income of approximately $61,000. The median household income for Maryland is approximately $96,000 and the median household income is approximately $73,500 for the United States. As of December 2022, the unemployment rate was 3.2% for Baltimore County, 4.4% for Baltimore City, 2.6% for Anne Arundel County, 2.8% for Harford County, 3.3% for Talbot County, and 3.6% for Dorchester County, compared to 4.0% for Maryland and a national rate of 3.5%.

**Competition** 

We face competition within our market area both in making loans and attracting deposits. Our market area has a concentration of financial institutions that include large money center and regional banks, community banks and credit unions. We also face competition from savings institutions, mortgage banking firms, consumer finance companies, financial technology or "fintech" companies and credit unions and, with respect to deposits, from money market funds, brokerage firms, mutual funds and insurance companies. Based on FDIC data at June 30, 2022 (the latest date for which information is available), we had 0.34% of the FDIC-insured deposit market share in the Baltimore Metropolitan Statistical Area, making us the 21<sup>st</sup> largest out of 41 banks operating in the Baltimore Metropolitan Statistical Area, and 31.7% and 7.2% of the FDIC-insured deposit market share in Dorchester County and Talbot County, respectively, making us first out of seven banks and fourth out of nine banks in those counties. Money center banks, such as Bank of America, JP Morgan Chase, Wells Fargo and Citi, and large regional banks, such as TD Bank, M&T Bank and PNC Bank, have a significant presence in our market area.

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**Lending Activities** 

***General.*** Our principal lending activity is the origination of commercial real estate loans, one- to four-family real estate loans and, to a lesser extent, commercial loans, construction and loan loans, marine loans and farm loans. Our lending function focuses on three areas – consumer, community, and investment real estate. The consumer group generally includes loans made to our customer base (e.g., mortgages) and through local brokers (e.g., marine lending). The community group generally includes loans serving the business needs of the communities in our market area, including through non-owner occupied residential lending, commercial real estate lending and other commercial lending. These loans generally come from lender relationships, referrals and, in recent years, contacts we made through our PPP lending. In 2020, we established the investment real estate group charged with originating larger real estate loans, primarily non-owner occupied commercial real estate loans, both inside and outside of our market area. Our lending in this area generally comes through our existing relationships and referrals. While we generally view our lending program through these three areas, there is no requirement that certain types of lending occur through certain areas and as such there is some overlap in the types of loan originations between the three areas.

***Loan Portfolio Composition.*** The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. At December 31, 2022 and 2021, we had no loans held for sale.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **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: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | $137742 | 20.73% | $140675 | 23.90% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 125065 | 18.82 | 96556 | 16.41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied | 91853 | 13.82 | 87077 | 14.80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor<sup>(1)</sup> | 226854 | 34.14 | 170795 | 29.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 17937 | 2.70 | 18731 | 3.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm | 13823 | 2.08 | 12048 | 2.05 |
|  Marine | 15791 | 2.38 | 15923 | 2.71 |
|  Other consumer | 2361 | 0.36 | 2529 | 0.43 |
|  Guaranteed by the U.S. Government | 4933 | 0.74 | 22566 | 3.83 |
|  Commercial | 28052 | 4.22 | 21590 | 3.67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans | 664411 | 100.0% | 588490 | 100.00% |
|  Less: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred origination fees, net | (1467) |  | (1386) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | (3813) |  | (2666) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans receivable, net | $659131 |  | $584438 |  |

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(1) Includes multi-family loans of $22.1 million at December 31, 2022 and $16.6 million at
December 31, 2021.

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***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. The tables present contractual maturities and do not reflect repricing or the effect of prepayments. Actual maturities may differ.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **One- to Four-<br>Family –**<br>**Owner<br>Occupied** | **One- to Four-<br>Family –**<br>**Non-Owned<br>Occupied** | **Commercial<br>Real Estate –<br>Owner<br>Occupied** | **Commercial<br>Real Estate –<br>Investor** | **Construction<br>and Land** | **Farm** | **Marine** |
|  | | | **(In thousands)** | **(In thousands)** | **(In thousands)** | | |
|  Amounts due in: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One year or less | $3400 | $2776 | $6499 | $9492 | $4449 | $2258 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than one to five years | 12918 | 32446 | 19307 | 75614 | 4788 | 3365 | 139 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than five to 15 years | 31922 | 36465 | 30320 | 105918 | 5351 | 5368 | 5772 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than 15 years | 89502 | 53377 | 35727 | 35830 | 3349 | 2832 | 9880 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $137742 | $125065 | $91853 | $226854 | $17937 | $13823 | $15791 |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Other<br>Consumer** | **U.S.<br>Government<br>Guaranteed** | **Commercial** | **Total** |
|  | | | | **(In thousands)** |
|  Amounts due in: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One year or less | $135 | $28 | $8959 | $37996 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than one to five years | 1275 | 1669 | 7343 | 158865 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than five to 15 years | 846 | 2835 | 9961 | 234759 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than 15 years | 105 | 401 | 1789 | 232791 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $2361 | $4933 | $28052 | $664411 |

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

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| | | | |
|:---|:---|:---|:---|
|  | **Due After December 31, 2023** | **Due After December 31, 2023** | **Due After December 31, 2023** |
|  | **Fixed** | **Adjustable** | **Total** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** |
|  Real estate: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | $109457 | $24885 | $134342 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 69649 | 52640 | 122289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied | 49728 | 35626 | 85354 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor | 147685 | 69678 | 217363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 5574 | 7913 | 13487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm | 8081 | 3484 | 11565 |
|  Marine | 15791 |  | 15791 |
|  Other consumer | 2049 | 178 | 2227 |
|  Guaranteed by the U.S. Government | 4380 | 525 | 4905 |
|  Commercial | 11234 | 7858 | 19092 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans | $423628 | $202787 | $626415 |

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***Commercial Real Estate Lending*.** At December 31, 2022, we had $318.7 million in commercial real estate loans, representing 48.0% of our total loan portfolio. Of this amount, we had $91.9 million in owner occupied commercial real estate loans and $226.9 million in commercial – investor real estate loans. Our commercial real estate loans are secured by a variety of properties, including multi-family, commercial retail, office buildings, shopping centers and hotels.

Our commercial real estate loans are generally originated as five- to ten-year balloon loans and are amortized over 20 to 25 years. Interest rates on such loans are generally priced at origination to the Five-Year U.S. Treasury Constant Maturity, plus a margin.

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The maximum loan-to-value ratio of our commercial real estate loans is generally 80% of the lower of purchase price or appraised value of the properties securing the loan and generally requires a minimum debt-service coverage ratio of 1.25x.

We consider a number of factors in originating commercial real estate loans. In addition to the debt-service coverage ratio, we evaluate the loan purpose, the quality of collateral and the borrower's qualifications, experience, credit history, cash flows and financial statements and sources of repayment. Personal guarantees are generally obtained from the principals. We gather information on environmental risks associated with commercial properties and also require appropriate insurance coverage on properties securing real estate loans. In addition, the borrower's and guarantor's financial information is monitored on an ongoing basis by requiring periodic financial statement updates. We also purchase and participate in commercial real estate loans from other financial institutions. Such loans are subject to the same underwriting criteria and loan approval requirements applied to loans originated by BayVanguard Bank.

At December 31, 2022, $146.8 million, or 46.2% of our commercial real estate loans and 29.9% of our total loan portfolio, were secured by collateral located outside of Maryland in 34 states throughout the United States. These out-of-state loans are generally sourced from existing relationships and referrals through accountants, attorneys, financial advisors and real estate brokerage firms. We generally underwrite these loans under the same methodology and terms that are used for our in-state loans.

At December 31, 2022, the average loan balance outstanding in the commercial real estate loan portfolio was $769,000 and the largest individual commercial real estate loan outstanding, net of participations sold, was a $11.2 million loan secured by a hotel. This loan was performing in accordance with its original repayment terms at December 31, 2022.

***One- to-Four Family Residential Real Estate Lending*.** Our one- to four-family residential loan portfolio consists of mortgage loans that enable borrowers to purchase or refinance homes. At December 31, 2022, we had $262.8 million of loans secured by one- to four-family residential real estate, representing 39.6% of our total loan portfolio, of which $228.3 million, or 86.9% are secured by properties located in Maryland. One- to four-family residential loans that are originated on properties located outside of Maryland are generally sourced from existing relationships.

Generally, our one- to four-family residential real estate loans have terms of up to 30 years. At December 31, 2022, 81.6% of our one- to four-family residential real estate loans were fixed-rate loans and 18.4% were adjustable-rate loans. Generally, our adjustable-rate mortgage loans have initial repricing terms of five years. Following the initial repricing term, such loans adjust annually for the balance of the loan term. Adjustable-rate mortgage loans are indexed to the One- or Five-Year U.S. Treasury Constant Maturity rate, plus a margin.

At December 31, 2022, $125.1 million, or 47.6% of the one- to four-family residential real estate loan portfolio and 18.8% of the total loan portfolio, was secured by non-owner occupied properties. We generally originate these loans to investors who have experience with one- to four-family real estate. Generally, we require personal guarantees on these properties if the loan is made to an entity other than individual borrowers. We generally will not make loans in excess of 80% loan to value on non-owner occupied properties.

Loan-to-value ratios are determined by collateral type and occupancy level. We generally limit the loan-to-value ratios of our mortgage loans without private mortgage insurance to 80%. Loans where the borrower obtains private mortgage insurance may be made in excess of this limit, up to 97% of the value of the property.

We do not offer "interest only" mortgage loans on permanent, owner occupied, one- to four-family residential real estate loans (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan), but we do offer such loans on one- to four-family non-owner occupied loans. At December 31, 2022, $9.6 million of our one- to four-family non-owner occupied loans were "interest only" loans. All such loans were performing in accordance with their original repayment terms. We 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

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owed on the loan, resulting in an increased principal balance during the life of the loan. We do not have a "subprime lending" program for one- to four-family residential real estate loans (i.e. loans that generally target borrowers with weakened credit histories).

Generally, residential mortgage loans that we originate include "due-on-sale" clauses, which give us the right to declare a loan immediately due and payable if, among other things, the borrower sells or otherwise disposes of the real property subject to the mortgage and the loan is not repaid. Generally, borrowers are required to obtain title insurance for the benefit of BayVanguard Bank. We also require appropriate insurance coverage on properties securing real estate loans.

***Commercial Lending*.** At December 31, 2022, we had $28.1 million of commercial loans outstanding, representing 4.2% of the total loan portfolio. We originate commercial loans, including equipment loans and business acquisitions loans, and lines of credit to small- and medium-sized companies in our market area. Our commercial loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. Our commercial loan portfolio consists of mix of secured loans and unsecured loans. Generally, secured loans can have a loan-to-value ratio of up to 90% of the collateral securing the loan. Secured loans are generally secured by accounts receivable, inventory and equipment. We generally require our commercial business borrowers to maintain their principal deposit accounts with us, which improves our overall interest rate spread and profitability. We may increase this type of lending in the future.

The commercial loans that we offer are variable- and fixed-rate loans, generally for a one- to ten-year term. Variable interest rates are indexed to the Prime Rate as published in the Wall Street Journal, plus a margin. Commercial loans typically have shorter terms to maturity and higher interest rates than commercial real estate loans.

When making commercial loans, we consider the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, the value of the collateral, if any, and whether the loan is guaranteed by the principals of the borrower.

At December 31, 2022, our largest commercial loan relationship totaled $5.1 million and was secured by aircraft. At December 31, 2022, this loan was performing in accordance with its contractual terms.

***Construction and Land Lending.*** We make construction loans to individuals, builders and commercial borrowers for owner occupied projects. We also make a limited amount of land loans. At December 31, 2022, our construction and land loans totaled $17.9 million, representing 2.7% of our total loan portfolio, and included $3.8 million of land loans. At December 31, 2022, $834,000 of our construction loans were to individuals and $13.3 million were to contractors and builders. Most of our construction and land loans are secured by properties located in our market area.

Construction loans generally have a maximum term of 24 months. Construction loans are limited to 80% of the appraised value on residential construction/rehab loans (lot and improvements), 75% of the appraised value on non-residential construction loans and 90% of appraised value on residential owner-occupied dwellings, with adequate mortgage insurance. At December 31, 2022, our largest outstanding construction loan, net of participations sold, was for $8.0 million of which $3.8 million was outstanding. This loan was performing according to its contractual terms at December 31, 2022.

We also originate loans to finance the acquisition and development of land. Land development loans are generally secured by vacant land located in Maryland and in process of improvement. We generally originate land loans up to 75% of the lower of cost or as completed appraised value. These loans generally have a maximum term of 24 months. At December 31, 2022, our largest land loan had an outstanding balance of $1.3 million and it was performing in accordance with its original repayment terms.

***Marine Lending.*** At December 31, 2022, we had $15.8 million or 2.4% of our total loans in marine loans. Marine loans are typically made through two, long standing, dealer and broker relationships, and, to a much lesser

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extent, walk-in applications. These loans are secured by marine-based collateral, typically have a maximum loan term of 20 years and are made at a fixed rate. For each marine loan arranged through our broker relationships, we generally pay the broker a commission based on the size of the loan. Marine loans are generally limited to no more than 90% of retail price plus taxes and fees or survey value or NADA Marine Appraisal Guide value, whichever is less. Marine lending borrowers generally have very high credit scores, substantial down payments, substantial net worth, personal liquidity, and excess cash flow.

***Farm Lending.*** At December 31, 2022, we had $13.8 million, or 2.1% of our total loans in farm loans. The farm loan portfolio consists of loans to farmers and agricultural businesses, most of which are located on the Eastern Shore of Maryland. These loans are generally secured by farmland and equipment and are generally made to multi-generational clients that we acquired through our acquisition of 1880 Bank or originated since our acquisition of 1880 Bank by 1880 Bank's former lending team. These loans typically have a five-year term and are made at a fixed rate, indexed to the Five-Year U.S. Treasury Constant Maturity rate, plus a margin. We generally limit farm loans to 80% of the purchase price or appraised value of land and 90% of the purchase price or market value of equipment, whichever is less.

***Guaranteed by the U.S. Government.*** The CARES Act established the Paycheck Protection Program through the SBA, which allowed us to lend money to small businesses to maintain employee payrolls through the COVID-19 crisis with guarantees from the SBA. Under this program, loan amounts may be forgiven if the borrower maintains employee payrolls and meet certain other requirements. Such loans totaled $488,000 at December 31, 2022. We have in the past purchased the guaranteed portion of U.S. Department of Agriculture and SBA loans in the secondary market, though we are no longer actively engaged in this market. Such loans totaled $4.4 million at December 31, 2022. We are also authorized lenders under the SBA's 7(a) and 504 programs and have originated loans under those programs in the past. Typically, a 7(a) loan includes a 75% guarantee from the U.S. Government.

***Other Consumer Lending.*** We originate limited amounts of consumer loans apart from marine loans. At December 31, 2022, our consumer loan portfolio totaled $2.4 million, or 0.4% of our total loan portfolio. The consumer loans that we originate generally consist of loans secured by automobile loans, deposits and miscellaneous other types of installment loans and are generally only provided to existing lending clients upon request.

**Loan Underwriting Risks** 

***Commercial Real Estate Loans.*** Loans secured by commercial real estate 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 is the borrower's creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income 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 generally require borrowers and loan guarantors to provide monthly, quarterly, semi-annual or annual financial statements, depending on the size of the loan or lending relationship, on commercial real estate loans. In reaching a decision on whether to make a commercial real estate 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.

If we foreclose on a commercial real estate 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 commercial real estate loans can be unpredictable and substantial.

***Adjustable-Rate One- to Four-Family Residential Real Estate Loans.*** Although adjustable-rate mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they periodically re-price, as interest rates increase the required payments due from the borrower also increase (subject to rate caps),

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increasing the potential for default by the borrower. At the same time, the ability of the borrower to repay the loan and the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustments of the contractual interest rate are also limited by our maximum periodic and lifetime rate adjustments. As a result, the effectiveness of adjustable-rate mortgage loans in compensating for changes in market interest rates may be limited.

***Commercial Loans.*** Commercial loans have greater credit risk than one- to four-family residential real estate loans. Our commercial loans are made based primarily on historical and projected cash flows of the borrower, the borrower's experience and stability and the value and marketability of the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not materialize as forecasted, and collateral securing loans may fluctuate in value because of economic or individual performance factors. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself and the general economic environment in our market area. In addition, commercial loans often result in larger outstanding balances to single borrowers, or related groups of borrowers, and also generally require substantially greater evaluation and oversight efforts. Accordingly, financial information is obtained from the borrowers to evaluate cash flow sufficiency and is periodically updated during the life of the loan.

***Construction and Land Lending.*** 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 prior to its completion. Risk of loss on a construction loan also depends on the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. 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. If the estimate of construction cost is inaccurate, we may be required to advance additional funds beyond the amount originally committed in order to protect the value of the property. Moreover, if the estimated value of the completed project is inaccurate, the borrower may hold a property with a value that is insufficient to assure full repayment of the construction loan upon the sale of the property. Construction loans also carry the risk that construction will not be completed on time in accordance with specifications and projected costs. 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 loans generally involve greater credit risk than long-term financing on developed real estate. If a loan is made on property that is not yet approved for the planned development, there is a risk that necessary approvals will not be granted or will be delayed. Risk of loss on a land loan also depends upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of development costs is inaccurate, we may be required to advance additional funds beyond the amount originally committed to protect the value of the property. Moreover, if the estimated value of the completed project is inaccurate, the borrower may hold a property with a value that is insufficient to assure full repayment of the construction loan upon the sale of the property. Land loans also carry the risk that improvements will not be completed on time in accordance with specifications and projected costs. In addition, repayment of these loans can be dependent on the sale of the property to third parties, and the ultimate sale or rental of the property may not occur as anticipated.

***Marine Lending.*** Marine loans may entail greater risk than one- to four-family residential real estate loans. Repossessed collateral for a defaulted marine loan may not provide an adequate source of repayment for the

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outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower. Further, any collateral securing such loan may depreciate over time, may be difficult to appraise and may fluctuate in value.

***Farm Lending.*** The material risks associated with farm loans include a decline in land values or agricultural commodity prices, increases in production costs, and adverse weather.

***Guaranteed by the U.S. Government.*** Loans guaranteed by the U.S. Government present similar risks as reflected in the other categories mentioned herein. However, the primary differentiating factor is that an explicit guarantee is provided by the government therefore substantially mitigating any risk of loss given default in the event of credit deterioration. Due to the guarantee from the Federal government and nature of the PPP initiative, there is no allowance for loan losses recorded for PPP loans.

**Loan Originations, Participations, Purchases and Sales** 

Most of our loan originations are generated by our loan personnel and from referrals from existing customers, real estate brokers, accountants and other professionals. All loans we originate are underwritten pursuant to our policies and procedures. We originate fixed-rate loans and adjustable-rate loans. Our ability to originate fixed-rate loans or adjustable-rate loans depends on relative customer demand for such loans, which is affected by current and expected future levels of market interest rates.

As a supplement to our in-house loan originations, we have entered into agreements with unaffiliated brokers as a source for certain marine loans. We currently work with two different brokers for marine loans, neither of which we have an ownership interest in or any common employees or directors. Both of the brokers are located in our market area. For each marine loan arranged through our broker relationships, we generally pay the broker a commission based on the loan amount. We use the same parameters in evaluating these loans as we do for our in-house loan originations of one- to four-family residential real estate loans.

We generally do not sell loans we originate into the secondary market. When we do sell certain of our loans, we do so on a best effort basis to third-party investors servicing released. At December 31, 2022, we had no loans held for sale.

We purchase loan participations secured by properties primarily within Maryland in which we are not the lead lender. In these circumstances, we follow our customary loan underwriting and approval policies. At December 31, 2022, the outstanding balances of our loan participations where we are not the lead lender totaled $10.7 million, or 1.7% of our loan portfolio, of which $10.2 million were commercial real estate loans. All such loans were performing in accordance with their original repayment terms. We also have participated out portions of commercial real estate loans that would have exceeded our loans-to-one borrower legal lending limit and for risk diversification. Historically, we have not purchased whole loans.

**Loan Approval Procedures and Authority** 

Our lending is subject to underwriting standards and origination procedures. Generally, decisions on loan applications are made on the basis of information submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal policy) prepared by outside independent licensed appraisers as well as internal evaluations, where permitted by regulations. The loan application processes 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, bank statements and tax returns.

The Board of Directors has granted loan approval authority to certain individual officers up to prescribed limits. All loan approval amounts are based on the aggregate loans (total credit exposure), including total balances of outstanding loans and the proposed loan to the individual borrower and any related entity. Each of our branch managers and assistant branch managers has individual authorization to approve loans that conform to written policies of up to $50,000, which are secured by depository accounts. Our Co-Chief Executive Officers, Chief

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Financial Officer and Chief Credit Officer each have an individual authorization to approve loans up to $500,000 for lending relationships of $3.0 million or less. An individual loan in excess of $500,000 or aggregate credit commitment in excess of $3.0 million requires approval by the majority of the Executive Loan Committee, which consists of our Co-Chief Executive Officers, Chief Financial Officer, and Chief Credit Officer.

**Loans-to-One Borrower** 

Pursuant to applicable law, the aggregate amount of loans that BayVanguard Bank is permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of BayVanguard Bank's unimpaired capital and surplus (25% if the amount in excess of 15% is secured by "readily marketable collateral"). At December 31, 2022, based on the 15% limitation, BayVanguard Bank's loans-to-one-borrower limit was approximately $17.1 million. At December 31, 2022, net of participations sold, our largest loan relationship with one borrower was 16 loans for $14.1 million, which were secured by non-owner occupied commercial real estate, and the underlying loans were performing in accordance with their contractual terms on that date.

**Delinquencies and Asset Quality** 

***Delinquency Procedures****.* When a borrower fails to make a required loan payment by the due date, a late notice is generated stating the payment and late charges due. If payment is not received, a system generated follow-up notice is sent at 31 days. Staff begins calling customers at 16 days past due and sends default letters at 60 days. If the payment default remains uncured, the appropriate action required to collect against the collateral is commenced. When applicable, accounts are assigned to legal counsel with all rights and remedies reserved.

***Loans Past Due and Non-Performing Assets****.* Loans are reviewed on a regular basis. Management determines that a loan is impaired or non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent. When a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and in the process of collection. When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned. The real estate owned is recorded at the lower of carrying amount or fair value, less estimated costs to sell. Soon after acquisition, we order a new appraisal to determine the current market value of the property. Any excess of the recorded value of the loan satisfied over the market value of the property is charged against the allowance for loan losses, or, if the existing allowance is inadequate, charged to expense of the current period. After acquisition, all costs incurred in maintaining the property are expensed. 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 $2.0 million in real estate owned, which consisted primarily of two commercial buildings formerly used to house a privately owned college.

A loan is classified as a troubled debt restructuring if, for economic or legal reasons related to the borrower's financial difficulties, we grant a concession to the borrower that we would not otherwise consider. This usually includes a modification of loan terms, such as capitalizing past due interest or extending the maturity date and possibly a reduction of the interest rate to below market terms or a partial forgiveness of the principal amount due. Troubled debt restructurings are generally returned to accrual status after a period of satisfactory and reasonable future payment performance under the terms of the restructuring. Satisfactory payment performance is generally no less than six consecutive months of timely payments. We had 11 loans totaling $1.1 million that were troubled debt restructurings at December 31, 2022.

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***Delinquent Loans***. The following tables set forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated.

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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**<br>**Past Due** | **60-89**<br>**Days**<br>**Past Due** | **90 Days**<br>**or More<br>Past Due** | **30-59**<br>**Days**<br>**Past Due** | **60-89**<br>**Days**<br>**Past Due** | **90 Days**<br>**or More<br>Past Due** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
|  Real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | $2311 | $793 | $896 | $1449 | $1496 | $737 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 777 | 170 | 379 | 2027 | 138 | 202 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied | 1048 | 103 | 2056 | 468 | 178 | 315 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor | 310 |  | 1433 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land |  | 43 | 160 | 56 |  | 245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |  |  |  |  |
|  Marine |  |  | 59 |  |  |  |
|  Other consumer | 65 |  |  | 59 | 27 | 15 |
|  Guaranteed of the U.S. Government |  |  |  |  | 3 |  |
|  Commercial |  |  |  |  | 8 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $4511 | $1109 | $4983 | $4059 | $1850 | $1514 |

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***Non-Performing Assets.*** The following table sets forth information regarding our non-performing assets. Non-accrual loans include non-accruing troubled debt restructurings of $145,000 and $370,000 as of December 31, 2022 and December 31, 2021.

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|:---|:---|:---|
|  | **At December 31,** | **At December 31,** |
|  | **2022** | **2021** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** |
|  Non-accrual loans: |  |  |
|  Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | $1371 | $1683 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 585 | 270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied | 2167 | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor | 1433 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 247 | 245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |
|  Marine |  |  |
|  Other consumer | 81 | 26 |
|  Guaranteed by the U.S. Government |  |  |
|  Commercial |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-accrual loans | 5884 | 2396 |
|  Accruing loans past due 90 days or more: |  |  |
|  Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied |  | 214 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied |  | 315 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |
|  Marine |  |  |
|  Other consumer |  |  |
|  Guaranteed by the U.S. Government |  |  |
|  Commercial |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total accruing loans past due 90 days or more |  | 529 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-performing loans | 5884 | 2925 |
|  Real estate owned | 1987 | 1987 |
|  Total non-performing assets | $7871 | $4812 |
|  Total non-performing loans to total loans | 0.89% | 0.50% |
|  Total non-accrual loans to total loans | 0.89% | 0.41% |
|  Total non-performing assets to total assets | 0.94% | 0.61% |

---

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

When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable accrued losses. General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When

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an insured institution classifies problem assets as "loss," it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution's determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, such that additional general or specific loss allowances may be required.

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

On the basis of this review of our loans, our classified and special mention loans at the dates indicated were as follows:

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| | | |
|:---|:---|:---|
|  | **At December 31,** | **At December 31,** |
|  | **2022** | **2021** |
|  | **(In thousands)** | **(In thousands)** |
|  Substandard loans | $22424 | $11816 |
|  Doubtful loans |  |  |
|  Loss loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total classified loans | $22424 | $11816 |
|  Special mention loans | $— | $146 |

---

The increase in substandard loans was primarily due to a $4.8 million increase in substandard commercial – investor real estate loans, a $2.7 million increase in substandard commercial – owner occupied real estate loans, a $1.7 million increase in substandard construction and land loans and a $1.2 million increase in substandard one- to four-family – non-owner occupied loans. Of the $22.4 million loans classified as substandard at December 31, 2022, $17.2 million were performing loans. These performing loans that are classified as substandard have characteristics that cause management concern over the ability of the borrower to perform under present loan repayment terms and that may result in the reporting of these loans as non-performing, or impaired, 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 size and composition of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, potential problem 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.

As an integral part of their examination processes, the OCFR and the FDIC will periodically review our allowance for loan losses, and as a result of such reviews, we may have to adjust our allowance for loan losses. However, regulatory agencies are 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.

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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 December 31,** | **At or For the Years Ended December 31,** |
|  | **2022** | **2021** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** |
|  Allowance for loan losses at beginning of year | $2666 | $1841 |
|  Provision for loan losses | 1038 | 575 |
|  Charge-offs: |  |  |
|  Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | 7 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied |  | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |
|  Marine |  |  |
|  Other consumer | 39 | 12 |
|  Guaranteed by the U.S. Government |  |  |
|  Commercial | 10 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total charge-offs | 56 | 128 |
|  Recoveries: |  |  |
|  Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | 43 | 207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 87 | 93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 19 | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |
|  Marine |  |  |
|  Other consumer | 15 | 45 |
|  Guaranteed by the U.S. Government |  |  |
|  Commercial | 1 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total recoveries | 165 | 378 |
|  Net (charge-offs) recoveries | 109 | 250 |
|  Allowance at end of year | $3813 | $2666 |
|  Allowance to non-performing loans | 111.28% | 32.31% |
|  Allowance to total loans outstanding at the end of the year | 0.57% | 0.45% |
|  Net (charge-offs) recoveries to average loans outstanding during the year | (0.02)% | (0.04)% |

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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 to**<br>**Total**<br>**Allocated**<br>**Allowance** | **Percent of**<br>**Loans in**<br>**Each**<br>**Category to**<br>**Total**<br>**Loans** | **Allowance**<br>**for Loan**<br>**Losses** | **Percent of**<br>**Allowance**<br>**in Each**<br>**Category to**<br>**Total**<br>**Allocated**<br>**Allowance** | **Percent of**<br>**Loans in**<br>**Each**<br>**Category to**<br>**Total**<br>**Loans** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
|  Real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | $344 | 9.02% | 20.73% | $258 | 9.70% | 23.90% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 562 | 14.74 | 18.82 | 695 | 26.80 | 16.41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied | 366 | 9.60 | 13.82 | 280 | 10.49 | 14.80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor | 2272 | 59.59 | 34.14 | 1225 | 45.95 | 29.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 93 | 2.44 | 2.70 | 93 | 3.48 | 3.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm | 17 | 0.45 | 2.08 | 2 | 0.09 | 2.05 |
|  Marine | 63 | 1.65 | 0.74 | 48 | 1.78 | 2.71 |
|  Other consumer | 5 | 0.13 | 2.38 | 20 | 0.76 | 0.43 |
|  Guaranteed by the U.S. Government |  |  | 0.36 |  |  | 3.83 |
|  Commercial | 91 | 2.39 | 4.22 | 45 | 1.68 | 3.67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total allocated allowance | 3813 | 100.00% | 100.00% | 2666 | 100.00% | 100.00% |
|  Unallocated |  |  |  |  |  |  |
|  Total | $3813 |  |  | $2666 |  |  |

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**Investment Activities** 

***General***. The goals of our asset liability and investment management policy are to maintain a balance of high quality, diversified, interest-earning assets that provide sufficient risk-adjusted returns relative to the current market, generate a reasonable rate of return and meet or exceed liquidity guidelines. 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 asset liability and investment management policy is reviewed at least annually by the board of directors. All investment decisions are made by our Controller and Vice President of Finance in accordance with board-approved policies and all investment decisions require the approval of our Chief Financial Officer. All investment transactions are reviewed at regularly scheduled quarterly meetings of the board of directors.

We currently invest in mortgage-backed securities, investment grade corporate bonds and securities issued by the U.S. Government and its agencies or government sponsored enterprises. Also, at December 31, 2022, we held $221,000 in equity securities of other financial institutions, which BV Financial holds in a trading account. Our current asset liability and investment management policy also permits, with certain limitations, investments in collateralized mortgage obligations, corporate subordinated debt and municipal securities.

At December 31, 2022, our available for sale investment securities portfolio totaled $33.0 million and consisted of mortgage-backed securities and investment grade corporate bonds and our held to maturity investment securities portfolio totaled $10.5 million and consisted of securities issued by the U.S. Government and its agencies or government sponsored enterprises, mortgage-backed securities and investment grade corporate bonds. In addition, at December 31, 2022, we owned $977,000 of Federal Home Loan Bank of Atlanta stock. As a member of Federal Home Loan Bank of Atlanta, we are required to purchase stock in the Federal Home Loan Bank of Atlanta, which stock is carried at cost and classified as restricted equity securities.

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

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**Sources of Funds** 

***General****.* ****Deposits have traditionally been our primary source of funds for use in lending and investment activities. We have also historically used borrowings to supplement cash flow needs, to 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 noninterest-bearing and interest-bearing checking accounts, money market accounts, savings accounts and certificates of deposit. 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. We have the authority to accept brokered deposits, but had no such deposits as of December 31, 2022. In addition, we had $72.1 million of municipal deposits at December 31, 2022, which represented 10.5% of total deposits.

On a periodic basis, we establish interest rates paid, maturity terms, service fees and withdrawal penalties. 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 the favorable image of BayVanguard Bank 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.

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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** |
|  | **Amount** | **Percent** | **Average<br>Rate** | **Amount** | **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 | $167202 | 24.42% | —% | $175019 | 25.73% | —% |
|  Interest-bearing demand deposits | 96829 | 14.14 | 0.07 | 94059 | 13.83 | 0.07 |
|  Savings deposits | 171772 | 25.09 | 0.05 | 170391 | 25.06 | 0.08 |
|  Money market deposits | 102301 | 14.94 | 0.21 | 98639 | 14.51 | 0.27 |
|  Certificates of deposit | 146514 | 21.40 | 0.63 | 141917 | 20.87 | 1.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $684618 | 100.00% | 0.26% | $680025 | 100.00% | 0.42% |

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As of December 31, 2022 and 2021, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was $165.5 million and $160.4 million, respectively. In addition, as of December 31, 2022, the aggregate amount of all our uninsured certificates of deposit was $17.6 million. We have no deposits that are uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance. The following table sets forth the maturity of the uninsured certificates of deposit as of December 31, 2022.

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| | |
|:---|:---|
| | **At**<br>**December 31, 2022** |
| | **(In thousands)** |
|  **Maturity Period:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Three months or less | $292 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Over three through six months | 14875 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Over six through twelve months | 615 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Over twelve months | 1836 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $17618 |

---

At December 31, 2022 and 2021, $68.6 and $56.6 million of uninsured deposits were deposits of local government entities and secured either by investment securities or Letters of Credit issued by the Federal Home Loan Bank of Atlanta.

***Borrowings***. At December 31, 2022 and December 31, 2021, we had a $96.8 million and a $118.3 million available under a line of credit with the Federal Home Loan Bank of Atlanta, we had $12.0 million Federal Home Loan Bank of Atlanta advances outstanding as of December 31, 2022 and nothing outstanding as of December 31, 2021. In addition, at December 31, 2022 and December 31, 2021, the Bank had $40.0 million in unfunded letters of credit used to secure municipal deposits outstanding against the line of credit with the Federal Home Loan Bank of Atlanta.

In October 2020, BV Financial completed a $35.0 million private placement of unsecured subordinated debt (the "Notes"). The Notes bear an initial interest rate of 4.875% and mature in 2030. The interest rate on the Notes are fixed for the first five years. Thereafter, BV Financial will pay interest on the Notes at a variable rate equal to the then current three-month term Secured Overnight Financing Rate plus 472 basis points. BV Financial may begin redeeming these notes on the December 30, 2025 payment date. The subordinated debt is reported net of debt issuance costs of $427,000 at December 31, 2022 and $583,000 at December 31, 2021.

In conjunction with our acquisition of 1880 Bank and is holding company, Delmarva Bancshares, Inc., we acquired the Easton Capital Trust Junior Subordinated Notes, which were issued by Easton Bank & Trust and assumed by Delmarva Bancshares, Inc. We acquired $3.0 million of junior subordinated debt of Easton Capital Trust I, to fully and unconditionally guarantee the preferred securities issued by the Trust. The junior subordinated debt will mature in 2034. The junior subordinated debt accrues interest at a floating rate equal to the three-month LIBOR plus 2.85%, payable quarterly. The quarterly interest rate on the debentures was 7.29% at December 31, 2022.

**Subsidiary Activities** 

BV Financial has two subsidiaries, BayVanguard Bank and Easton Capital Trust I. The Easton Capital Trust Junior Subordinated Notes were issued by Easton Bank & Trust and assumed by Delmarva Bancshares, Inc. on July 15, 2015 and then assumed by BV Financial on October 31, 2020. BV Financial assumed $3.0 million of junior subordinated debt of Easton Capital Trust I to fully and unconditionally guarantee the preferred securities issued by Easton Capital Trust I. Easton Capital Trust I has no independent assets or operations.

BayVanguard Bank has three subsidiaries, BV Real Estate, LLC, 1920 Rock Spring Road, LLC and Idlewild Properties, LLC, each of which is organized under the laws of the state of Maryland. BV Real Estate, LLC and Idlewild Properties, LLC hold real estate and other assets acquired through foreclosure or repossession by BayVanguard Bank. 1920 Rock Spring Road, LLC is the holding company for a property owned by BayVanguard Bank.

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**Personnel** 

As of December 31, 2022, we had 103 full-time employees and eight part-time employees. Our employees are not represented by any collective bargaining group. Management believes that we have good working relations with our employees.

**Properties** 

We conduct our operations from our main office, 14 branch offices and one standalone ITM, all of which are located in Baltimore City, Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland. We own our main office and 11 of our branch offices and lease the remaining three branch offices. We also lease property in Baltimore that will become our Bayview branch upon relocation from the building where the branch is currently located. We anticipate that the relocation of the Bayview branch will occur in the second half of 2023. At December 31, 2022, the net book value of our premises and equipment was $15.2 million.

**Legal Proceedings** 

We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

**SUPERVISION AND REGULATION** 

**General** 

As a Maryland-chartered commercial bank, BayVanguard Bank is subject to examination and regulation by the OCFR, as its chartering authority, and, as a federally insured nonmember institution, by the FDIC. BayVanguard Bank is a member of the Federal Home Loan Bank of Atlanta and its deposits are insured up to applicable limits by the FDIC. BayVanguard Bank is required to file reports with, and is periodically examined by, the FDIC and the OCFR concerning its activities and financial condition and must obtain regulatory approvals before entering into certain transactions, including mergers with or acquisitions of other financial institutions. This regulatory structure is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies regarding classifying assets and establishing an adequate allowance for loan losses for regulatory purposes.

As a bank holding company following the conversion, BV Financial 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 and the enforcement authority of the Federal Reserve Board. BV Financial 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 OCFR, 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 BV Financial and BayVanguard Bank.

Set forth below is a brief description of material regulatory requirements that are or will be applicable to BayVanguard Bank and BV Financial. 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 BayVanguard Bank and BV Financial.

**Banking Regulation** 

***Supervision and Enforcement Authority*.** BayVanguard Bank is subject to extensive regulation, examination and supervision by the FDIC as its primary federal prudential regulator and the insurer of its deposits.

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This regulatory structure is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the FDIC extensive discretion in connection with its supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of an adequate allowance for loan losses for regulatory purposes.

BayVanguard Bank must file reports with the FDIC concerning its activities and financial condition. It must also obtain prior FDIC approval before entering into certain corporate transactions such as establishing new branches and mergers with, or acquisitions of, other financial institutions. There are periodic examinations by the FDIC to evaluate BayVanguard Bank's safety and soundness and compliance with various regulatory requirements.

The FDIC maintains substantial enforcement authority over regulated institutions. That includes, among other things, the ability to assess civil money penalties, issue cease and desist orders and remove directors and officers. In general, enforcement actions may be initiated in response to violations of laws and regulations, breaches of fiduciary duty and unsafe or unsound practices. The FDIC may also appoint itself as conservator or receiver for an insured bank under specified circumstances, including: (1) insolvency; (2) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; (3) the existence of an unsafe or unsound condition to transact business; (4) insufficient capital; or (5) the incurrence of losses that will deplete substantially all of the institution's capital with no reasonable prospect of replenishment without federal assistance.

Maryland law provides that the OCFR is to examine Maryland-chartered banks at least once during each calendar year, unless the OCFR determines that, during a calendar year, an examination is unnecessary, in which event Maryland law calls for an examination to occur no less frequently than once every 18 months, or at any other time that the OCFR considers necessary. Regulated institutions are assessed for expenses incurred by the OCFR. The OCFR has extensive enforcement authority over Maryland banks. Such authority includes the ability to issue cease and desist orders and civil money penalties and to remove directors or officers. The OCFR may also take possession of a Maryland bank whose capital is impaired and seek to have a receiver appointed by a court.

***Dividends.*** Maryland banks may only pay dividends from undivided profits or, with the prior approval of the OCFR, their surplus in excess of 100% of required capital stock. Maryland banks may not declare a stock dividend unless their surplus, after the increase in capital stock, is equal to at least 20% of the outstanding capital stock as increased. If the surplus of the bank, after the increase in capital stock, is less than 100% of its capital stock as increased, the commercial bank must annually transfer to surplus at least 10% of its net earnings until the surplus is 100% of its capital stock as increased.

Without the approval of the FDIC, a Federal Reserve nonmember bank may not declare or pay a dividend if the total of all dividends declared during the year exceeds its net income during the current calendar year and retained net income for the prior two years. The Bank is further prohibited from making a capital distribution if it would not be adequately capitalized thereafter. See "—Prompt Corrective Regulatory Action" below.

***Capital Requirements.*** Under FDIC regulations, BayVanguard Bank must meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital to risk-based assets, and a Tier 1 capital to average total assets leverage ratio. The existing capital requirements were effective January 1, 2015 and are the result of a final rule implementing regulatory amendments based on recommendations of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").

The capital standards require the maintenance of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets of at least 4.5%, 6% and 8%, respectively, and a Tier 1 leverage ratio of at least 4% of average total assets. Common equity Tier 1 capital is generally defined as common shareholders' equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital. Additional Tier 1 capital generally 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

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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 and lease 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 ("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). BayVanguard Bank exercised the opt-out election regarding the treatment of AOCI. 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, a bank's 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 perceived risks 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 mortgages, 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 an institution does not hold a "capital conservation buffer" of 2.5%, effectively resulting in the following minimum ratios: (1) a common equity Tier 1 capital ratio of 7.0%, (2) a Tier 1 to risk-based assets capital ratio of 8.5%, and (3) a total capital ratio of 10.5%.

Legislation enacted in 2018 required the federal banking agencies, including the FDIC, to establish a "community bank leverage ratio" of between 8% to 10% of average total consolidated assets for qualifying institutions with less than $10 billion of assets. Pursuant to federal legislation enacted in 2020, the community bank leverage ratio requirement was set at 9% for 2022 and thereafter. Institutions with capital meeting the specified requirement and electing to follow the alternative framework will be deemed to comply with the applicable regulatory capital requirements, including the risk-based requirements, and are considered well-capitalized under the prompt corrective action framework. Eligible institutions may opt into and out of the community bank ratio framework on their quarterly call report. To date, BayVanguard Bank has not opted into the community bank leverage ratio framework.

The FDIC also has authority to establish individual minimum capital requirements in appropriate cases upon determination that an institution's capital level is, or is likely to become, inadequate in light of the particular circumstances.

At December 31, 2022, BayVanguard Bank exceeded each of its capital requirements.

***Standards for Safety and Soundness.*** As required by statute, the federal banking agencies have adopted final regulations and Interagency Guidelines Establishing Standards for Safety and Soundness. The guidelines set forth the safety and soundness standards the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. The guidelines address internal controls and information systems, internal audit systems, credit underwriting, loan documentation, interest rate exposure, asset growth, asset quality, earnings and compensation, fees and benefits. The agencies have also established standards for safeguarding customer information. 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.

***Activities and Investments.*** Federal law provides that a state-chartered bank insured by the FDIC generally may not engage as a principal in any activity not permissible for a national bank to conduct or make any equity investment of a type or in an amount not authorized for national banks, notwithstanding state law, subject to certain exceptions. For example, state-chartered banks may, with FDIC approval, continue to exercise state authority to invest in common or preferred stocks listed on a national securities exchange or the Nasdaq Market and to invest in

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shares of investment companies registered under the Investment Company Act of 1940. The maximum permissible investment is 100% of Tier 1 Capital, as specified by the FDIC's regulations, or the maximum amount permitted by Maryland law, whichever is less. Such grandfathered authority terminates upon a change in the institution's charter or a change in control.

In addition, the FDIC is authorized to permit a state-chartered bank to engage in state-authorized activities or investments not permissible for national banks (other than non-subsidiary equity investments) if it meets all applicable capital requirements and it is determined that the activities or investments involved do not pose a significant risk to the Deposit Insurance Fund. The FDIC has adopted procedures for institutions seeking approval to engage in such activities or investments. In addition, a nonmember bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to conduct in a "financial subsidiary" if a bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes.

***Interstate Banking and Branching.*** Federal law permits well capitalized and well managed bank 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, banks may establish de novo branches on an interstate basis at any location where a bank chartered under the laws of the branch location host state may establish a branch.

***Prompt Corrective Regulatory Action.*** Federal law requires, among other things, that federal bank regulatory authorities take "prompt corrective action" with respect to banks that do not meet minimum capital requirements. For these purposes, the law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

The FDIC has adopted regulations to implement the prompt corrective action legislation. An institution is considered "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 "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 "critically undercapitalized" if it has a ratio of tangible equity (as defined in the regulations) to total assets equal to or less than 2.0%. At December 31, 2022, BayVanguard Bank was classified as a "well capitalized" institution.

At each successive lower capital category, an insured depository institution is subject to additional operating restrictions, including limits on growth and a prohibition on the payment of dividends and other capital distributions. Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency. An undercapitalized bank's compliance with a capital restoration plan must be guaranteed by any company that controls the undercapitalized institution in an amount equal to the lesser of 5.0% of the institution's total assets when deemed undercapitalized or the amount necessary to achieve the status of adequately capitalized. If an "undercapitalized" bank fails to submit an acceptable plan, it is treated as if it is "significantly undercapitalized." "Significantly undercapitalized" banks must comply with one or more of a number of possible additional restrictions, including an order by the FDIC to sell sufficient voting stock to become adequately capitalized, reduce total assets, cease receipt of deposits from correspondent banks, dismiss directors or officers, or limit interest rates paid on deposits, compensation of executive officers or capital distributions by the parent holding company. "Critically undercapitalized" institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after it is determined to be critically undercapitalized.

A bank that is classified as well-capitalized, adequately capitalized or undercapitalized may be treated as though it were in the next lower capital category if the FDIC, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment.

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***Transaction with Affiliates and Regulation W of the Federal Reserve Regulations/Loans to Insiders.*** Transactions between banks and their affiliates are governed by federal law. Generally, Section 23A of the Federal Reserve Act and the Federal Reserve Board's Regulation W prohibit a bank and its subsidiaries from engaging in a "covered transaction" with an affiliate if the aggregate amount of covered transactions outstanding with that affiliate, including the proposed transaction, would exceed an amount equal to 10.0% of the bank's capital stock and surplus. The aggregate amount of covered transactions outstanding with all affiliates is limited to 20.0% of the bank's capital stock and surplus. Section 23B applies to "covered transactions," as well as to certain other transactions, and requires that all such transactions be on terms substantially the same, or at least as favorable, to the institution or subsidiary as prevailing market terms for transaction with or involving a non-affiliate. The term "covered transaction" includes making loans to, purchasing assets from, and issuing guarantees to an affiliate, and other similar transactions. Section 23B transactions also include the bank's providing services and selling assets to an affiliate. In addition, loans or other extensions of credit by a bank to an affiliate are required to be collateralized according to the requirements set forth in Section 23A of the Federal Reserve Act.

A bank's loans to its executive officers, directors, any owner of 10% or more of its stock (each, an insider) and any of certain entities affiliated with any such person (an insider's related interest) as well as loans to insiders of affiliates and such insiders' related interests are subject to the conditions and limitations imposed by Section 22(h) of the Federal Reserve Act and its implementing regulations. Under these restrictions, the aggregate amount of the loans to any insider and the insider's related interests may not exceed the loans-to-one-borrower limit applicable to national banks, which is comparable to the loans-to-one-borrower limit applicable to BayVanguard Bank's loans. All loans by a bank to all insiders and insiders' related interests in the aggregate may not exceed the bank's unimpaired capital and unimpaired surplus. Loans to an executive officer, other than loans for the education of the officer's children and certain loans secured by the officer's residence, may not exceed the lesser of (1) $100,000 or (2) the greater of $25,000 or 2.5% of the bank's unimpaired capital and surplus. The regulations require that any proposed loan to an insider, or a related interest of that insider, be approved in advance by a majority of the Board of Directors of the bank, with any interested directors not participating in the voting, if that loan, combined with previous loans by the bank to the insider and his or her related interests, exceeds specified amounts. Generally, such loans must be made on substantially the same terms as, and follow credit underwriting procedures that are not less stringent than, those that are prevailing at the time for comparable transactions with other persons.

The regulations contain a general exception for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the bank and that does not give any preference to insiders of the bank over other employees.

In addition, federal law prohibits extensions of credit to a bank's insiders and their related interests by any other institution that has a correspondent banking relationship with the bank, unless such extension of credit is on substantially the same terms as those prevailing at the time for comparable transactions with other persons and does not involve more than the normal risk of repayment or present other unfavorable features.

***Federal Insurance of Deposit Accounts.*** BayVanguard Bank is a member of the Deposit Insurance Fund, which is administered by the FDIC. Deposit accounts in BayVanguard Bank are insured up to a maximum of $250,000 for each separately insured depositor.

The Federal Deposit Insurance Corporation assesses all insured depository institutions. An institution's assessment rate depends upon the perceived risk to the Deposit Insurance Fund of that institution, with less risky institutions 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. 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 existing system represents a change, required by the Dodd-Frank Act, from the Federal Deposit Insurance Corporation's prior practice of basing the assessment on an institution's aggregate deposits.

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The Federal Deposit Insurance Corporation may increase or decrease the range of assessments uniformly, except that no adjustment in the risk-based assessment system may be made without notice and comment rulemaking.

Insurance of deposits may be terminated by the FDIC upon a finding that the 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 regulatory condition imposed in writing. We do not know of any practice, condition or violation that might lead to termination of BayVanguard Bank's deposit insurance.

***Privacy Regulations.*** Federal law generally requires that BayVanguard Bank 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. In addition, financial institutions are generally required to furnish their customers a privacy notice annually. However, a provision of the Fixing America's Surface Transportation Act enacted in 2015 provides an exception from the annual notice requirement if a financial institution does not share non-public personal information with non-affiliated third parties (other than as permitted under certain exceptions) and its policies and practices regarding disclosure of non-public personal information have not changed since the last distribution of its policies and practices to its customers. In addition, BayVanguard Bank is required to provide its customers with the ability to "opt-out" of having their personal information shared with unaffiliated third parties and to not disclose account numbers or access codes to non-affiliated third parties for marketing purposes.

***Community Reinvestment Act.*** Under the Community Reinvestment Act, or "CRA," as implemented by FDIC, a state nonmember bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires the FDIC, in connection with its examination of each state non-member bank, to assess the institution's record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution, including applications to establish branches and acquire other financial institutions. The CRA requires the FDIC to provide a written evaluation of an institution's CRA performance utilizing a four-tiered descriptive rating system. BayVanguard Bank's most recent FDIC CRA rating in July 2020 was "Outstanding."

***Consumer Protection and Fair Lending Regulations.*** BayVanguard Bank is subject to a variety of federal and Maryland statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit. These statutes and regulations provide for a range of sanctions for non-compliance with their terms, including imposition of administrative fines and remedial orders, and referral to the Attorney General for prosecution of a civil action for actual and punitive damages and injunctive relief. Certain of these statutes, including Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts and practices against consumers, authorize private individual and class action lawsuits and the award of actual, statutory and punitive damages and attorneys' fees for certain types of violations. Federal laws also prohibit unfair, deceptive or abusive acts or practices against consumers, which can be enforced by the Consumer Financial Protection Bureau, the FDIC and state attorneys general.

**Federal Home Loan Bank System** 

BayVanguard Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Banks provide a central credit facility primarily for member institutions. BayVanguard Bank, as a member of the Federal Home Loan Bank of Atlanta, is required to acquire and hold shares of capital stock in the Federal Home Loan Bank of Atlanta. BayVanguard Bank was in compliance with this requirement at December 31, 2022.

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**Other Regulations** 

Interest and other charges collected or contracted for by BayVanguard Bank 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, 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, 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 agencies charged with the responsibility of implementing such
federal laws.

The deposit operations of BayVanguard Bank 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.

**Holding Company Regulation** 

Following the conversion, BV Financial will continue to be a unitary bank holding company registered with the Federal Reserve Board and will be subject to regulations, examination, supervision and reporting requirements applicable to bank holding companies. In addition, the Federal Reserve Board will have enforcement authority over BV Financial and its non-bank subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to the subsidiary bank.

A bank holding company is generally prohibited from engaging in non-banking activities, or acquiring direct or indirect control of more than 5% of the voting securities of any company engaged in non-banking activities. One of the principal exceptions to this prohibition is for activities the Federal Reserve Board had determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are: (1) making or servicing loans; (2) performing certain data processing services; (3) providing discount brokerage services; (4) acting as fiduciary, investment or financial advisor; (5) leasing personal or real property; (6) making investments in corporations or projects designed primarily to promote community welfare; and (7) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.

The Gramm-Leach-Bliley Act of 1999 authorizes a bank holding company that meets specified conditions, including that its depository institution subsidiaries are "well capitalized" and "well managed," to opt to become a "financial holding company." A "financial holding company" may engage in a broader range of financial activities than a bank holding company. Such activities may include insurance underwriting and investment banking. BV Financial has no plans to elect "financial holding company" status at this time.

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Maryland law establishes similar filing and prior approval requirements as to the OCFR for direct or indirect acquisitions of Maryland-chartered institutions.

***Capital.*** Federal legislation required the Federal Reserve Board to establish minimum consolidated capital requirements for bank and savings and loan holding companies that are as stringent as those applicable to their insured depository subsidiaries. However, subsequent federal legislation exempted from the applicability of the consolidated capital requirements holding companies with less than $3.0 billion in consolidated assets, unless otherwise advised by the Federal Reserve Board.

***Source of Strength.*** Federal law provides that bank and savings and loan holding companies must act as a source of strength to their subsidiary depository institution. The expectation is that the holding company will provide capital, liquidity and other support for the institution in times of financial stress.

***Stock Repurchases and Dividends.*** A bank holding company is generally required to give the Federal Reserve Board prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company's consolidated net worth. The Federal Reserve Board may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or would violate any law, regulation, Federal Reserve Board order or directive, or any condition imposed by, or written agreement with, the Federal Reserve Board. There is an exception to this approval requirement for well-capitalized bank holding companies that meet certain other conditions.

Additionally, under the prompt corrective action laws, the ability of a bank holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized.

Notwithstanding the above, the Federal Reserve Board has issued a supervisory bulletin regarding the payment of dividends and repurchase or redemption of outstanding shares of stock by bank and holding companies. In general, the Federal Reserve Board's policy is 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. The supervisory bulletin provides for prior consultation with and review of proposed dividends by the Federal Reserve Board in certain cases, such as where a proposed dividend exceeds earnings for the period for which the dividend would be paid (<u>e.g.</u>, calendar quarter) or where the company's net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund a proposed dividend.

The supervisory bulletin also indicates that a holding company should notify the Federal Reserve Board, under certain circumstances, prior to redeeming or repurchasing common stock or perpetual preferred stock. The specified circumstances include where a holding company is experiencing financial weaknesses or where the repurchase or redemption would result in a net reduction, as of 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. Even outside of these circumstances, the Federal Reserve Board expects as a matter of practice to have notice and opportunity for non-objection before such an action is taken. The supervisory bulletin indicates that such notification is for purposes of allowing Federal Reserve Board supervisory review of, and possible objection to, the proposed repurchases or redemption. These regulatory policies could affect the ability of BV Financial to pay dividends, engage in stock repurchases or otherwise engage in capital distributions.

**Change in Control Regulations** 

Under the Change in Bank Control Act, no person, or group of persons acting in concert, may acquire control of a bank holding company unless the Federal Reserve has been given 60 days' prior written notice and has not disapproved the proposed acquisition. The Federal Reserve considers several factors in evaluating a notice,

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including the financial and managerial resources of the acquirer and competitive effects. Control, as defined under the applicable regulations, means the power, directly or indirectly, to direct the management or policies of the company or to vote 25% or more of any class of voting securities of the company. Acquisition of more than 10% of any class of a bank holding company's voting securities constitutes a rebuttable presumption of control under certain circumstances, including where, as will be the case with BV Financial, 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 (as defined in the Bank Holding Company Act) of a bank holding company without the prior approval of the Federal Reserve. Any company that acquires such control becomes a "bank holding company" subject to registration, examination and regulation by the Federal Reserve.

**Federal Securities Laws** 

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

The registration under the Securities Act of 1933 of shares of common stock issued in BV Financial's public offering does not cover the resale of those shares. Shares of common stock purchased by persons who are not affiliates of BV Financial may be resold without registration. Shares purchased by an affiliate of BV Financial will be subject to the resale restrictions of Rule 144 under the Securities Act of 1933. If BV Financial meets the current public information requirements of Rule 144 under the Securities Act of 1933, each affiliate of BV Financial 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 BV Financial, or the average weekly volume of trading in the shares during the preceding four calendar weeks.

**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 pursuant to the 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.

**Emerging Growth Company Status** 

BV Financial is an emerging growth company. For as long as BV Financial 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," 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 and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, BV Financial also will not be subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors review and attest as to the effectiveness of our internal control over financial reporting. We have also elected 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. Such an election is irrevocable during the period a company is an emerging growth company. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

BV Financial will cease to be an emerging growth company upon the earliest of: (1) the end of the fiscal year following the fifth anniversary of the completion of this offering; (2) the first fiscal year after our annual gross

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revenues are $1.07 billion (adjusted for inflation) or more; (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (4) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million at the end of the second quarter of that fiscal year.

**TAXATION** 

Bay-Vanguard, M.H.C., BV Financial and BayVanguard Bank are subject to federal and state income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal and state taxation is intended only to summarize certain pertinent tax matters and is not a comprehensive description of the tax rules applicable to BV Financial or BayVanguard Bank.

Our federal and state tax returns have not been audited for the past five years.

**Federal Taxation** 

***Method of Accounting****.* BV Financial and BayVanguard Bank currently report income and expenses on the accrual method of accounting and use a tax year ending December 31 for filing their federal income tax returns. BV Financial and BayVanguard Bank file a consolidated federal income tax return. The Small Business Protection Act of 1996 eliminated the use of the reserve method of accounting for income taxes on bad debt reserves by savings institutions. For taxable years beginning after 1995, BayVanguard Bank has been subject to the same bad debt reserve rules as commercial banks. It currently utilizes the experience method under Section 585 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").

***Alternative Minimum Tax****.* For income generated prior to January 1, 2018, the Internal Revenue Code imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences, less an exemption amount, referred to as "alternative minimum taxable income." The alternative minimum tax is payable to the extent tax computed this way exceeds tax computed by applying the regular tax rates to regular taxable income. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. The Tax Cuts and Jobs Act repealed the alternative minimum tax for income generated after January 1, 2018. At December 31, 2022, BV Financial had no minimum tax credit carryovers.

***Net Operating Loss Carryovers****.* As a result of the Tax Cuts and Jobs Act generally, a financial institution may carry net operating losses forward indefinitely, if incurred after December 31, 2017. At December 31, 2022, BV Financial had $26.1 million in federal net operating loss carryforwards, all of which were assumed from acquired institutions.

***Capital Loss Carryovers****.* A corporation cannot recognize capital losses in excess of capital gains generated. Generally, a financial institution 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, BV Financial had no capital loss carryovers.

***Corporate Dividends****.* BV Financial may generally exclude from its income 100% of dividends received from BayVanguard Bank as a member of the same affiliated group of corporations.

**State Taxation** 

***Maryland State Taxation****.* BV Financial is subject to Maryland's Corporation Business Tax at the rate of 8.25% on its taxable income, before net operating loss deductions and special deductions for federal income tax purposes. BayVanguard Bank is required to file Maryland income tax returns. For this purpose, "taxable income" generally means federal taxable income subject to certain adjustments (including addition of interest income on state and municipal obligations).

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**MANAGEMENT** 

**Our Directors and Executive Officers** 

Our board of directors is comprised of 11 members. Directors serve three-year staggered terms so that approximately one-third of the directors are elected at each annual meeting. The following sets forth certain information regarding the members of our board of directors, and executive officers who are not directors, including the terms of office of board members. Except as indicated herein, there are no arrangements or understandings between any director and any other person pursuant to which the director was selected. Age information is as of December 31, 2022, and term as a director includes service with BayVanguard Bank. One director, Michael L. Snyder, will retire from the Board effective as of the 2023 Annual Meeting of Stockholders scheduled for May 4, 2023. The Board has nominated P. David Bramble for election at the 2023 Annual Meeting of Stockholders to take Mr. Snyder's seat on the Board.

With respect to directors, the biographies contain information regarding the person's business experience and the experiences, qualifications, attributes or skills that caused the board of directors to determine that the person should serve as a director. Each director of BV Financial is also a director of BayVanguard Bank and Bay-Vanguard, M.H.C.

All of our directors are long-time residents of the communities we serve and many of such individuals have operated, or currently operate, businesses located in such communities. As a result, each director continuing in office has significant knowledge of the businesses that operate in our market area, an understanding of the general real estate market, values and trends in such communities and an understanding of the overall demographics of such communities. As a community banking institution, we believe that the local knowledge and experience of our directors assists us in assessing the credit and banking needs of our customers, developing products and services to better serve our customers and in assessing the risks inherent in our lending operations. As local residents, our directors are also exposed to the advertising, product offerings and community development efforts of competing institutions which, in turn, assists us in structuring its marketing efforts and community outreach programs.

***Directors with terms ending in 2023:***

***Gary T. Amereihn.*** Age 68. Director since 2019. Mr. Amereihn retired from Kopernik Bank in 2019 as part of BayVanguard Bank's acquisition of Kopernik Bank, having served as Kopernik's Bank's Chairman, Chief Executive Officer and Chief Financial Officer from 1992 to 2019. Mr. Amereihn serves as the Chairman of the Board of BV Financial and BayVanguard Bank. Mr. Amereihn's past service as a chairman, chief executive officer and chief financial officer of a financial institution and his participation in the communities we serve brings an extensive knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for BayVanguard Bank.

***Brian K. McHale.*** Age 68. Director since 1987. Mr. McHale has been a Steamship Clerk with International Longshoremen's Association Local 953 located in Baltimore, Maryland since 1972 and until 2014 was a state delegate to the Maryland General Assembly. Mr. McHale's long-standing involvement in our local community brings knowledge of the local economy and business opportunities to BayVanguard Bank. His leadership skills and knowledge of the financial, economic and regulatory challenges we face make him well suited to serve on the Board.

***Directors with terms ending in 2024:***

***Joseph S. Galli.*** Age 59. Director since 2015. For over 30 years, Mr. Galli has been an Executive Vice President of The Bernstein Companies, which is an owner, developer, investor and manager of commercial, residential, industrial and hotel properties in the Mid-Atlantic region of the United States. Within The Bernstein Companies, Mr. Galli is a managing director of Consortium Capital, which is a series of real estate equity funds that invest in commercial real estate throughout the Mid-Atlantic. Mr. Galli is also the Chairman of the Government Relations Committee for the Washington, D.C. chapter of Autism Speaks. Mr. Galli's experience and long-standing involvement in our local community provides the Board with business management skills and knowledge regarding real estate and business matters in our market area.

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***Kim C. Liddell.*** Age 62. Director since 2020. Mr. Liddell served as the President and Chief Executive Officer of Delmarva Bancshares, Inc. and 1880 Bank from 2010 until its acquisition by BV Financial in 2020. Mr. Liddell also currently serves as a director of the Federal Home Loan Bank of Atlanta. Mr. Liddell's past service as chief executive officer of a financial institution and his participation in the communities we serve brings an extensive knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for BayVanguard Bank.

***Timothy L. Prindle.*** Age 37. Director since 2019. Mr. Prindle was elected as the Co-President and Chief Executive Officer and a member of the Board of Directors of Bay-Vanguard M.H.C., BV Financial and BayVanguard Bank in January 2019. Previously he served as Chief Executive Officer and President of Kopernik Bank since 2012 before it was acquired by BayVanguard in 2019. Mr. Prindle began his career as a Bank Examiner at the Office of Thrift Supervision. In addition to his wide range of management experience and leadership skills, Mr. Prindle's strong regulatory background and his knowledge and understanding of the financial, economic and regulatory environments make him a valuable asset to the Board.

***Machteld V. Thomas.*** Age 68. Director since 2022. Ms. Thomas served as the President and Chief Executive Officer of North Arundel Savings Bank for 14 years before its acquisition by BV Financial in 2021 and is now retired. Ms. Thomas serves on the board of directors of Bello Machre, a nonprofit that offers loving care and support for children and adults with developmental disabilities. Ms. Thomas' past service as a chief executive officer of a financial institution and her participation in the communities we serve brings an extensive knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for BayVanguard Bank.

***Directors with terms ending in 2025:***

***William Streett Baldwin.*** Age 60. Director since 2012. For over 20 years, Mr. Baldwin has been a director of Ellin & Tucker, Chartered, a business consulting and certified public accounting firm located in Baltimore, Maryland. Mr. Baldwin is a certified public accountant and is a member of the American Institution of Certified Public Accountants and the Maryland Association of Certified Public Accountants. Through his experience as a certified public accountant and his strong risk assessment, financial reporting and internal control expertise, as well as extensive knowledge of accounting and regulatory issues, Mr. Baldwin provides an understanding of public accounting and financial matters to the Board.

***William B. Crompton, III.*** Age 69. Director since 2019. Previously he served as a Director of Kopernik Bank since 2017 prior to its acquisition by BV Financial in 2019. Mr. Crompton retired from the Office of the Comptroller of the Currency in 2015. Mr. Crompton had held managerial positions in the Office of the Comptroller of the Currency, Office of Thrift Supervision and Federal Home Loan Bank System for over 30 years. With his background of directly working in and managing the examination and supervision of financial institutions at several bank regulatory agencies, Mr. Crompton provides the Board with extensive knowledge regarding regulatory matters and the financial and economic challenges confronting banks.

***David M. Flair.*** Age 59. Director since 2012. Mr. Flair became the Chief Executive Officer of BV Financial and BayVanguard in October 2013 and was also named President of BV Financial and BayVanguard in November 2014. Mr. Flair was hired as the Chief Financial Officer of BV Financial and BayVanguard in February 2012 and served in that role until May 2014. Mr. Flair served as the Chief Financial Officer of Advance Bank in Baltimore, Maryland, beginning in December 2006 and was also appointed as a director and named the Acting Chief Executive Officer of Advance Bank before his departure in February 2012. Mr. Flair is a certified public accountant and was a partner with Anderson Associates LLP and Beard Miller Company LLP for almost twenty years before joining Advance Bank. In addition to his wide range of management experience and leadership skills, Mr. Flair's strong financial background and his knowledge and understanding of the financial, economic and regulatory environments make him a valuable asset to the Board.

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***Joshua W. Posnick.*** Age 37. Director since 2019. For 3 years, Mr. Posnick has been Managing Director for Mill Creek Residential, a real estate development and management company, located in Washington, D.C. Mr. Posnick provides the Board with business management skills and knowledge regarding real estate and business matters in our market area.

***Director Nominee (Not Currently a Director) for term ending in 2026:***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***P. David Bramble.*** Age 45. Mr. Bramble has been a managing partner at MCB Real Estate, LLC ("MCB") since 2005 and has been working in real estate investment for over 20 years. He dedicates his time to sourcing and capitalizing transactions and overseeing project underwriting and execution. Prior to MCB, Mr. Bramble served as the director of commercial lending for a regionally based full-service lending firm –Madison Funding – which he co- founded in 2000. Prior to that, Mr. Bramble worked for the law firm of Steptoe & Johnson LLP where he provided corporate and real estate advisory services. Mr. Bramble serves as the Chairman of the Board of Lendistry, a fintech enabled CDFI focused on providing small business capital to underserved communities nationwide. He serves on the investment committee and board of the Robert W. Deutsch Foundation, which invests in innovative people, projects, and ideas that improve the quality of life in Baltimore. He also serves on the boards of Johns Hopkins Bayview Hospital, Ronald McDonald House, UPENN Institute for Urban Research and the Baltimore Tree Trust. The Board believes that Mr. Bramble will provide the Board with extensive knowledge regarding financial, economic and legal matters and knowledge of our market area due to his long-standing involvement in our local community.

**Executive Officers Who Are Not Directors** 

***Michael J. Dee****.* ****Age 62. Mr. Dee has been our Senior Vice President and Chief Financial Officer since 2014 and became our Executive Vice President and Chief Financial Officer in 2019.

***Gregory J. Olinde****.* Age 55. Mr. Olinde has been our Executive Vice President and Chief Credit Officer and Delmarva Market President since November 2020. Prior to that, Mr. Olinde was Executive Vice President, Chief Credit Officer for 1880 Bank from January 2013 to October 2020, when 1880 was acquired by BayVanguard Bank.

***Rose M. Searcy****.* ****Age 49. Ms. Searcy has been our Executive Vice President, Human Resources since 2003.

**Board Independence** 

The board of directors has determined that each of our directors, with the exception of Co-President and Co-Chief Executive Officers David M. Flair and Timothy L. Prindle, is "independent" as defined in the listing standards of the Nasdaq Stock Market. Messrs. Flair and Prindle are not independent because they are our executive officers. In determining the independence of our directors, the board of directors considered relationships between BayVanguard Bank and our directors that are not required to be reported under "—Transactions with Certain Related Persons," consisting of deposit accounts that our directors maintain at BayVanguard Bank.

**Transactions with Certain Related Persons** 

The Sarbanes-Oxley Act of 2002 generally prohibits publicly traded companies from making loans 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 BayVanguard Bank, to their executive officers and directors in compliance with federal banking regulations. The aggregate amount of our outstanding loans to our officers and directors and their related entities was approximately $17,000 at December 31, 2022. These loans are made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable loans with persons not related to BayVanguard Bank. These loans neither involve more than the normal risk of collectability nor present other unfavorable features. These loans were performing according to their original terms at December 31, 2022, and were made in compliance with federal banking regulations.

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During the year ended December 31, 2022, BayVanguard Bank entered into an agreement with MCB Real Estate, LLC to lease space for the new location of the Bayview branch in Baltimore. Mr. Bramble is the managing partner at MCB and has an ownership interest of 22.5% in MCB. Mr. Bramble was not a director or a nominee for election to the board of directors at the time BayVanguard Bank entered into the lease agreement. No rent payments have been made by BayVanguard Bank to MCB under the agreement and the total amount of rent outstanding under the agreement is approximately $547,500 over the 10-year term of the lease.

Any transactions that would be required to be reported under this section of this prospectus must be reviewed by our audit committee or another independent body of the board of directors. In addition, any transaction with a director is reviewed by and subject to approval of the members of the board of directors who are not directly involved in the proposed transaction to confirm that the transaction is on terms that are no more favorable than those that would be available to us from an unrelated third party through an arms-length transaction.

**Executive Compensation** 

The following table sets forth for the year ended December 31, 2022 certain information as to the total compensation paid to our Co-President and Chief Executive Officers and our two other most highly compensated executive officers. Each executive is referred to as a "named executive officer." The table excludes perquisites, which did not exceed $10,000 in the aggregate for each named executive officer.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** | **Summary Compensation Table** |
| **Name and principal**<br> **position**  | **Year** | **Salary**<br>**($)** | **Bonus**<br>**($)** | **Stock<br>Awards<br>($)<sup>(1)</sup>** | **Nonequity**<br>**Incentive Plan**<br>**Compensation** | **All other**<br>**Compensation**<br>**($)<sup>(2)</sup>** | **Total**<br>**($)** |
|  David M. Flair,<br>Co-President and Chief Executive Officer | 2022 | 351750 | 6764 | 92820 | 245280 | 14843 | 711457 |
|  Timothy L. Prindle,<br>Co-President and Chief Executive Officer | 2022 | 351750 | 6754 | 31500 | 306600 | 37805 | 734419 |
|  Michael J. Dee,<br>Executive Vice President and Chief Financial Officer | 2022 | 220506 | 4241 |  | 88202 | 5336 | 318419 |
|  Gregory J. Olinde,<br>Executive Vice President and Chief Lending Officer | 2022 | 201010 | 3865 |  | 84004 | 1760 | 290639 |

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(1) In accordance with FASB ASC Topic 718, the reported amount is based on the closing price of BV Financial's
common stock on the grant date ($25.00 per share on January 19, 2022). Restricted stock awards vest in three approximately equal installments, with the first vesting occurring on December 31, 2023. As of December 31, 2022,
Messrs. Flair and Prindle each had an outstanding stock award for 5,803 shares.

(2) A break-down of the various elements of compensation in this column is set forth below: The table excludes
perquisites that did not exceed $10,000 in the aggregate for each named executive officer.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **All Other Compensation** | **All Other Compensation** | **All Other Compensation** | **All Other Compensation** |
| **Name** | **401(k)**<br>**Plan**<br>**($)** | **Insurance**<br>**Premiums**<br>**($)** | **Payout of**<br>**Paid Time**<br>**Off**<br>**($)** | **Total All**<br>**Other**<br>**Compensation**<br>**($)** |
|  David M. Flair | 5400 | 1326 | 8117 | 14843 |
|  Timothy L. Prindle | 4100 | 1236 | 32469 | 37805 |
|  Michael J. Dee | 4100 | 1236 |  | 5336 |
|  Gregory J. Olinde | 524 | 1236 |  | 1760 |

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**Benefit Plans and Agreements** 

***Employment Agreements.*** BayVanguard Bank and BV Financial have entered into employment agreements with Messrs. Flair and Prindle. The employment agreements became effective on February 28, 2019. The initial term of the employment agreements was three years from their effective date. As of each anniversary of the effective date of the employment agreements, the term of the agreements automatically extends for one additional year, so that the remaining term is again three years, unless either BayVanguard Bank or the executive give written notice to the other party of non-renewal. If either party provides the other with notice of non-renewal, the term will become fixed and expire at the end of the then current term. Notwithstanding the foregoing, in the event BayVanguard Bank or BV Financial enters into a transaction that would constitute a change in control, as defined under the employment agreements, the term of the agreements would automatically extend so that they would expire no less than three years following the effective date of the change in control. The conversion of Bay-Vanguard, M.H.C. from the mutual holding company to the stock holding company for of organization will not constitute a "change in control" for purposes of the employment agreements.

The employment agreements specify the base salaries of Messrs. Flair and Prindle, which are currently $398,580. The Board of Directors of BayVanguard Bank may increase, but not decrease, the executives' base salaries. Also, following a change in control, the Compensation Committee (or other appropriate committee) will continue to annually review the executives' base salaries and will increase the base salaries by a percentage that is not less than the average annual percentage increase in base salary received by each executive over the three years immediately preceding the year in which the change in control occurs. In addition to base salary, the agreements provide that each executive will participate in any bonus plan or arrangement of BayVanguard Bank or BV Financial in which senior management is eligible to participate. Each executive is also entitled to participate in all employee benefit plans, arrangements and perquisites offered to employees and officers of BayVanguard Bank and the reimbursement of reasonable travel and other business expenses incurred in the performance of his duties for BayVanguard Bank. BayVanguard Bank will also reimburse each executive for the business use of any automobile, provide or reimburse each executive with/for a cellular phone, and reimburse each executive for certain expenses incurred in connection with the executive's attendance at an annual banking conference.

BayVanguard Bank may terminate the executives' employment, or the executives may resign from their employment, at any time with or without good reason. Under the employment agreements, in the event BayVanguard Bank terminates an executive's employment without cause or the executive voluntary resigns for "good reason" (i.e., a "qualifying termination event"), BayVanguard Bank will pay the executive a lump sum severance payment equal to three times the average taxable income reported in the executive's Form W-2, Box 1, for the five taxable years immediately preceding the year in which the termination of employment occurs. In addition, BayVanguard Bank will provide the executive with continued life insurance and non-taxable medical and dental insurance substantially comparable to the coverage provided by BayVanguard Bank immediately prior to the termination of employment under the same cost-sharing arrangements that apply for active employees of BayVanguard Bank as of the date of termination. The coverage will cease on the earlier of (1) the expiration of the term of the employment agreement or (2) the date on which the executive becomes a full-time employee with another employer.

Under the employment agreement, upon a change in control of BayVanguard Bank or BV Financial, the executives would receive a payment equal to three times the sum of (1) the average taxable income reported in the executive's Form W-2, Box 1, for the five taxable years immediately preceding the year in which the change in control occurs, (2) the matching contributions made to the 401(k) Plan for the plan year immediately preceding the year in which the change in control occurs and (3) the contribution made on the executive's behalf under the employee stock ownership plan for the plan year immediately preceding the year in which the change in control occurs. The payment will be made to the executive within ten days following the change in control. If the change in control payment provided under the employment agreements, together with any other payments or payments or benefits made to or provided to the executives, constitute "parachute payments" under Section 280G of the Code, the executive's payments under the employment agreements will be cut-back to an amount so that there are not parachute payments, but only if the reduction provides a greater economic benefit to the executive than if the executive received all payments and paid any excise tax due under Section 4999 of the Code.

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The employment agreements terminate upon the executive's death or disability. Upon the executive's death, his beneficiary will receive the base salary the executive would have received through the end of the month in which the death occurred. In addition, for one year following his death, the executive's dependents will receive continued non-taxable medical and dental coverage.

The executives' employment may also be terminated for "cause" (as defined in the employment agreements) at any time, in which case the executive will have no right to any payments or benefits, other than any vested benefits.

***Change in Control Agreement.*** BayVanguard Bank has entered into a change in control agreement with Mr. Dee. The change in control agreement has a term of three years and the Board of Directors of BayVanguard Bank may extend the term of the agreement by one year every July 1, so that it again becomes three years, unless the executive gives notice of his desire that the term not be extended.

In the event the executive's employment involuntary terminates for reasons other than cause, or in the event of the executive's resignation for "good reason" (as those terms are defined in the agreement), in either case within one year following a change in control, Mr. Dee will receive a severance payment, paid in a single lump sum, equal to three times his "base amount," as that term is defined for purposes of Section 280G of the Code (i.e., three times the average of the taxable compensation reported in Box 1 of Form W-2 for the five taxable years preceding the year in which the change in control occurs). In addition, BayVanguard Bank will provide the executive with continued life insurance and non-taxable medical and dental insurance substantially comparable to the coverage provided by BayVanguard Bank immediately prior to the termination of employment under the same cost-sharing arrangements that apply for active employees of BayVanguard Bank as of the date of termination. The coverage will cease after thirty-six months. If the coverage cannot be provided to the executive, he will receive a cash payment reasonably estimated to equal the value of the coverage. In the event the payments and benefits paid to or provided to the executive constitute an excess parachute payment for purposes of Section 280G of the Code, the payments or benefits will be reduced to an amount that does not create and excess parachute payment.

***Salary Continuation Plans.*** BayVanguard Bank sponsors a Salary Continuation Plan for each of Messrs. Flair and Prindle. Under the plans, if the executive separates from service prior to reaching his normal retirement age under the plan (age 68 for Mr. Flair and age 48 for Mr. Prindle), the executive will be entitled to an annual benefit of $100,000. The annual payments will commence on the first day of the second month following the separation from service and will continue for 15 years. If an executive separates from service prior to reaching his normal retirement age, he will receive a benefit equal to the accrued benefit (i.e., the amount accrued to reflect the liability of BayVanguard Bank under the plan). The benefit will be paid in installments commencing on the first day of the second month following the executive's normal retirement age and continuing for 15 years.

If an executive dies while in service and prior to reaching his normal retirement age, his beneficiary will receive the accrued benefit under the plan less the benefit described in any endorsement split dollar life insurance agreement between BayVanguard Bank and the executive. If the executive is not a party to a split dollar agreement, the accrued benefit will be paid to his beneficiary in a lump sum on the first day of the second month following the executive's death. If the executive dies following a separation from service or while in service and after attaining his normal retirement age, his beneficiary will receive the present value of the normal retirement benefit less the benefit described in any endorsement split dollar life insurance agreement between BayVanguard Bank and the executive. If the executive is not a party to a split dollar agreement, the present value of the normal retirement benefit will be paid to his beneficiary in a lump sum on the first day of the second month following the executive's death. If the executive dies after payments have commenced under the plan, his beneficiary will receive the present value of the remaining benefit payments less the benefit described in any endorsement split dollar life insurance agreement between BayVanguard Bank and the executive. If the executive is not a party to a split dollar agreement, the present value of the remaining benefit payments will be paid to his beneficiary in a lump sum on the first day of the second month following the executive's death.

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If an executive involuntarily separates from service or separates from service for good reason, in either case, within two years following a change in control, the executive will receive the present value of the normal retirement benefit, payable in a lump sum on the first day of the second month following the separation from service. The conversion of Bay-Vanguard, M.H.C. from the mutual holding company to the stock holding company for of organization will not constitute a "change in control" for purposes of the employment agreement.

If the executive becomes disabled while in service and prior to his normal retirement age, he will receive the normal retirement benefit, as if he had attained his normal retirement age. The benefit will be paid commencing on the first day of the second month following his normal retirement age and continue for 15 years.

***Executive Split Dollar Agreement.*** BayVanguard Bank has purchased life insurance policies covering certain officers, including Mr. Flair. Although the Bank owns these policies, the individuals have an interest in the policy proceeds paid at their death. BayVanguard Bank has entered into an Executive Split Dollar Agreement with Mr. Flair. Under the Split Dollar Agreement, upon Mr. Flair's death, his beneficiaries will receive a death benefit in the amount of the lesser of (1) the present value of the benefit Mr. Flair would have received under as the normal retirement benefit under the Salary Continuation Plan (as if he had attained age 65 immediately prior to his death if he dies prior to age 65) or, if Mr. Flair is in pay status under the Salary Continuation Plan, the present value of the remaining payments that would be due under the Salary Continuation Plan or (2) the net death proceeds (i.e., the total death proceeds of the life insurance policy minus the cash surrender value). Each year, BayVanguard Bank imputes income to Mr. Flair to reflect the value of the life insurance coverage provided under the Split Dollar Agreement. The Split Dollar Agreement terminates upon the occurrence of (1) the surrender, lapse or other termination of the underlying life insurance policy, (2) cessation of the bank's business which is not continued by any successor, (3) written notice of termination of the agreement by either party to the agreement, (4) bankruptcy, receivership, or dissolution of the bank, or (5) distribution of the death benefits in accordance with the terms of the agreement.

***401(k) Plan.*** BayVanguard Bank maintains the BayVanguard Bank 401(k) Profit Sharing 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 of BayVanguard Bank. Eligible employees who are at least 21 years of age become participants in the 401(k) Plan after completing 90 consecutive days of employment during which they compete at least 250 hours of service for elective deferrals under the plan. Eligible employees who are at least 21 years of age become participants in the 401(k) Plan after completing one year of service with the bank for matching and non-elective employer contributions under the plan.

Under the 401(k) Plan, a participant may elect to defer, on a pre-tax basis, between 1% and 25% of their compensation. 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, BayVanguard Bank makes matching contributions equal to 20% of the amount deferred such that the maximum contribution will not exceed 5% of the participant's compensation.

A participant is always 100% vested in his or her salary deferral contributions. A participant will vest in matching and non-elective 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 hardships.

401(k) Plan participants may currently invest a portion of their account balance in the BV Financial Stock Fund. BayVanguard intends to allow participants in the 401(k) plan to use up to 100% of their account balances in the 401(k) Plan to subscribe for stock in the offering. The expense recognized in connection with the 401(k) Plan totaled approximately $72,000 for the fiscal year ended December 31, 2022.

***Employee Stock Ownership Plan.*** In connection with its mutual holding company reorganization and related offering, BayVanguard Bank adopted an employee stock ownership plan for eligible employees, including the named executive officers. Eligible employees begin participating in the employee stock ownership plan on the first entry date commencing on or after the eligible employee's completion of one year of service and attainment of age 21.

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In connection with the stock offering, we expect the trustee to purchase 8% of the common stock sold in the stock offering. To purchase the additional common stock, the trustee will borrow money from BV Financial, Inc. The new loan will be repaid principally through BayVanguard Bank's discretionary contributions to the employee stock ownership plan as well as any dividends payable on common stock held by the employee stock ownership plan over the anticipated 20-year term of the loan. The interest rate for the employee stock ownership plan loan will be the prime rate, as published in *The Wall Street Journal* as of the close of the conversion. At the completion of the offering, the existing shares held in the employee stock ownership plan will be adjusted to reflect the exchange ratio utilized in connection with the stock offering.

The trustee holds the shares purchased by the employee stock ownership plan in an unallocated suspense account and releases the shares as the loan is repaid. Participants become 100% vested in their account balance after five years of service (at the rate of 20% per year). Participants also 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 separation from service in accordance with the terms of the plan document. The employee stock ownership plan reallocates any unvested shares forfeited upon termination of employment among the remaining participants.

As discussed above, we expect the employee stock ownership plan to purchase up to 8% of the shares of common stock we sell in the offering. If market conditions warrant, in the judgment of its trustee, 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, subject to the regulatory approval.

***Outstanding Equity Awards at Fiscal Year End***. The following table sets forth information with respect to outstanding equity awards as of December 31, 2022 for the named executive officers.

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|:---|:---|:---|:---|:---|:---|:---|
| **Outstanding Equity Awards at Fiscal Year End** | **Outstanding Equity Awards at Fiscal Year End** | **Outstanding Equity Awards at Fiscal Year End** | **Outstanding Equity Awards at Fiscal Year End** | **Outstanding Equity Awards at Fiscal Year End** | **Outstanding Equity Awards at Fiscal Year End** | **Outstanding Equity Awards at Fiscal Year End** |
| **Name** | **Option awards** | **Option awards** | **Option awards** | **Option awards** | **Stock awards** | **Stock awards** |
| **Name** | **Number of**<br>**securities**<br>**underlying**<br>**unexercised**<br>**options (#)**<br>**exercisable** | **Number of**<br>**securities**<br>**underlying**<br>**unexercised**<br>**options (#)**<br>**unexercisable** | **Option**<br>**exercise**<br>**price ($)** | **Option**<br>**expiration date** | **Number of**<br>**Shares or Units**<br>**of Stock That**<br>**Have Not Vested**<br>**(#)<sup>(1)</sup>** | **Market Value of**<br>**Shares or Units**<br>**of Stock That**<br>**Have Not Vested**<br>**($)<sup>(2)</sup>** |
|  David M. Flair | 14000 |  | 8.65 | 12/31/2027 | 5803 | 145075 |
|  Timothy L. Prindle |  |  |  |  | 5803 | 145075 |
|  Michael J. Dee | 12000 |  | 8.65 | 12/31/2027 |  |  |
|  Gregory J. Olinde |  |  |  |  |  |  |

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(1) Restricted stock awards vest in three approximately equal installments, with the first vesting occurring on
December 31, 2023.

(2) Based on a closing price of BV Financial's common stock of $25.00 as of December 31, 2022.

***BV Financial, Inc. 2021 Equity Incentive Plan.*** BV Financial has adopted, and its stockholders approved, the BV Financial, Inc. 2021 Equity Incentive Plan. Subject to permitted adjustments for certain corporate transactions (including the conversion), the 2021 Equity Incentive Plan authorizes the issuance or delivery to participants of up to 100,000 shares of BV Financial common stock pursuant to grants of stock options and 145,000 shares of BV Financial common stock pursuant to the grant of restricted stock awards. As of December 31, 2022, there were 87,400 restricted stock awards and 100,000 stock options remaining available for future grants under the 2021 Equity Incentive Plan. At the completion of the stock offering any outstanding awards and any shares remaining available for grant under the 2021 Equity Plan will be adjusted to reflect the stock offering. We will also amend the 2021 Equity Plan to eliminate any reference to our mutual holding company.

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***BV Financial, Inc. 2017 Stock Option Plan.*** BV Financial has adopted, and its stockholders approved, the BV Financial, Inc. 2017 Stock Option Plan. Since the approval of the BV Financial, Inc. 2021 Equity Incentive Plan, no stock options have been available for award under the 2017 Stock Option Plan. However, as of December 31, 2022, 36,350 previously granted stock options remain outstanding.

**Director Compensation** 

The following table sets forth for the year ended December 31, 2022 certain information as to the total compensation we paid to our non-employee directors. Neither Mr. Flair nor Mr. Prindle received any compensation in his capacity as a director during the fiscal year ended December 31, 2022.

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| | | | |
|:---|:---|:---|:---|
| **Director Compensation Table for the Year Ended December 31, 2022** | **Director Compensation Table for the Year Ended December 31, 2022** | **Director Compensation Table for the Year Ended December 31, 2022** | **Director Compensation Table for the Year Ended December 31, 2022** |
| **Name** | **Fees Earned**<br>**or Paid in**<br>**Cash**<br>**($)** | **Stock Awards**<br>**($)<sup>(1)</sup>** | **Total**<br>**($)** |
|  Gary T. Amereihn | 25000 | 28394 | 53394 |
|  William Streett Baldwin | 21750 | 6079 | 27829 |
|  William B. Crompton, III | 24000 | 21107 | 45107 |
|  Joseph S. Galli | 12000 | 21107 | 33107 |
|  Kim C. Liddell | 14250 | 6079 | 20329 |
|  Brian K. McHale | 17500 | 6079 | 23579 |
|  Joshua W. Posnick | 13500 | 6079 | 19579 |
|  Michael L. Snyder<sup>(2)</sup> | 10500 | 6079 | 16579 |
|  Machteld V. Thomas | 12000 |  | 12000 |

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(1) In accordance with FASB ASC Topic 718, the reported amount is based on the closing price of BV Financial's
common stock on the grant date ($22.77 per share on May 6, 2022). Restricted stock awards vest upon the earlier of achievement of certain beneficial ownership requirements or, if such requirements are not met, in three approximately equal
installments, with the first vesting occurring on April 30, 2023. As of December 31, 2022, Messrs. Baldwin, Liddell, McHale, Posnick and Snyder each had an outstanding stock award for 1,193 shares, Mr. Amereihn had an outstanding
stock award for 733 shares, Ms. Thomas had an outstanding stock award for 660 shares and Messrs. Crompton and Galli each had an outstanding stock award for 555 shares.

(2) Mr. Snyder will retire from the Board effective as of the 2023 Annual Meeting of Stockholders scheduled
for May 4, 2023.

***Director Supplemental Retirement Agreement***. BayVanguard Bank has entered into an amended and restated supplemental director retirement agreement with Mr. McHale to provide certain payments to him upon his retirement or to his beneficiary if he dies under certain circumstances. Under the agreement, Mr. McHale is entitled to a retirement benefit equal to $6,100 per year, payable in monthly installments for a period of ten years commencing within 30 days following his separation from service on or after attaining age 70. If Mr. McHale terminates service with BayVanguard Bank before age 70 for reasons other than cause, he is entitled to receive the accrued liability balance, payable in an unreduced lump sum within 30 days following his separation from service. If Mr. McHale dies while actively serving as a member of the board of directors, 100% of his accrued liability account will be paid to his beneficiary within 30 days following his death in an unreduced lump sum. If he dies during the installment payout of benefits, the remaining installments will be paid monthly to his beneficiary. If Mr. McHale separates from service following a change in control (as defined in the agreement), Mr. McHale will receive benefits under the plan as if he had retired from BayVanguard Bank upon attainment of age 70.

**Benefits to be Considered Following Completion of the Conversion** 

***Stock-Based Benefit Plans.*** Following the 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 offering, and, if adopted within 12 months after the 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 offering, stockholders must approve the plans by a majority of votes cast on the proposal. 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 shares sold in the offering.

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The following additional restrictions would apply to our stock-based benefit plans if we adopt such plans within 12 months after the 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 shares sold in the offering, unless BayVanguard Bank 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 shares sold in the offering;

&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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• accelerated vesting is not permitted except for death, disability or upon a change in control of BV Financial or
BayVanguard Bank; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our executive officers or directors must exercise or forfeit their options if BayVanguard Bank becomes critically
undercapitalized, is subject to enforcement action or receives a capital directive.

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.

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 BV Financial's common stock at the time 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.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Share Price** | **425,000 Shares**<br>**Awarded at Minimum of**<br>**Offering Range** | **500,000 Shares**<br>**Awarded at Midpoint of**<br>**Offering Range** | **575,000 Shares Awarded**<br>**at Maximum of Offering**<br>**Range** | **661,250 Shares Awarded**<br>**at Adjusted Maximum of**<br>**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 | $3400000 | $4000000 | $4600000 | $5290000 |
| 10.00 | 4250000 | 5000000 | 5750000 | 6612500 |
| 12.00 | 5100000 | 6000000 | 6900000 | 7935000 |
| 14.00 | 5950000 | 7000000 | 8050000 | 9257500 |

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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 BV Financial at the time 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.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Exercise Price** | **Grant-Date Fair**<br>**Value Per Option** | **1,062,500 Options**<br>**at Minimum of**<br>**Offering Range** | **1,250,000 Options**<br>**at Midpoint of**<br>**Offering Range** | **1,437,500 Options**<br>**at Maximum of**<br>**Offering Range** | **1,653,125 Options**<br>**at Adjusted**<br>**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 | $4.02 | $4271250 | $5025000 | $5778750 | $6645563 |
| 10.00 | 5.02 | 5333750 | 6275000 | 7216250 | 8298688 |
| 12.00 | 6.02 | 6396250 | 7525000 | 8653750 | 9951813 |
| 14.00 | 7.03 | 7469375 | 8787500 | 10105625 | 11621469 |

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**The tables presented above are provided for informational purposes only. There can be no assurance that our stock price will not trade below $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" beginning on page _.** 

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##### [**Table of Contents**](#toc)
**BENEFICIAL OWNERSHIP OF COMMON STOCK** 

The following table provides the beneficial ownership of shares of common stock of BV Financial held by our directors and executive officers, individually and as a group, and all individuals known to management to own more than 5% of our common stock at [Voting Record Date]. For purposes of this table, a person is deemed to be the beneficial owner of any shares of common stock over which he has, or shares, directly or indirectly, voting or investment power or as to which he or she has the right to acquire beneficial ownership at any time within 60 days after [Voting Record Date].

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| | | |
|:---|:---|:---|
|  | **Number of Shares** | **Percent<br>Outstanding<sup>(1)</sup>** |
|  ***5% Beneficial Owners:*** |  |  |
|  Bay-Vanguard, M.H.C. | 6400814 | 86.3% |
|  7114 North Point Road<br> Baltimore, Maryland 21219 |  |  |
|  ***Directors and Nominees:*** |  |  |
|  Gary T. Amereihn | 10792<sup>(2)</sup> | \* |
|  William Streett Baldwin | 3510<sup>(3)</sup> | \* |
| P. David Bramble |  | \* |
|  William B. Crompton, III | 6346<sup>(4)</sup> | \* |
|  David M. Flair | 52111<sup>(5)</sup> | \* |
|  Joseph S. Galli | 34939<sup>(6)</sup> | \* |
|  Kim C. Liddell | 1565<sup>(3)</sup> | \* |
|  Brian K. McHale | 4681<sup>(3)</sup> | \* |
|  Timothy L. Prindle | 62153 | \* |
|  Joshua W. Posnick | 1560<sup>(3)</sup> | \* |
|  Machteld V. Thomas | 1520<sup>(6)</sup> | \* |
|  ***Executive Officers Who Are Not Directors:*** |  |  |
|  Michael J. Dee | 21862 | \* |
|  Gregory J. Olinde |  | \* |
|  All directors, nominees and executive officers as a group<br>(14 persons) | 211726 | 2.85% |

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\* Less than 1%. 

(1) Based on 7,418,575 shares outstanding at [Voting Record Date].

(2) Includes 733 shares of unvested restricted stock.

(3) Includes 1,193 shares of unvested restricted stock.

(4) Includes 533 shares of unvested restricted stock.

(5) Includes options to acquire 14,000 shares, 5,803 shares of unvested restricted stock, 4,142 shares allocated
under the Employee Stock Ownership Plan and 2,908 shares held in trust in the BayVanguard Bank 401(k) Plan.

(6) Includes 660 shares of unvested restricted stock.

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**SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS** 

The table below sets forth, for each of BV Financial's directors and executive officers, and for all of these individuals as a group, the following information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the number of exchange shares to be held upon completion of the conversion, based upon their beneficial
ownership of BV Financial common stock at [Voting Record Date], as set forth in "Beneficial Ownership of Common Stock;"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the proposed purchases of subscription shares, assuming sufficient shares of common stock are available to
satisfy their subscriptions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the total shares of common stock to be held upon completion of the conversion.

In each case, it is assumed that subscription shares are sold at the minimum of the offering range. See "The Conversion and Offering—Additional Limitations on Common Stock Purchases." Federal regulations prohibit our directors and officers from selling the shares they purchase in the offering for one year after the date of purchase.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Number of<br>Exchange Shares to**<br>**Be Held<sup>(1)</sup>** | **Proposed Purchases of Stock in the**<br>**Offering<sup>(2)</sup>** | **Proposed Purchases of Stock in the**<br>**Offering<sup>(2)</sup>** | **Total Common Stock to be Held at**<br>**Minimum of Offering Range<sup>(1)(3)</sup>** | **Total Common Stock to be Held at**<br>**Minimum of Offering Range<sup>(1)(3)</sup>** |  |
| **Name of Beneficial Owner** | **Number of<br>Exchange Shares to**<br>**Be Held<sup>(1)</sup>** | **Number of<br>Shares** | **Amount** | **Number of<br>Shares** | **Percentage of<br>Shares<br>Outstanding** |  |
|  Gary T. Amereihn | 17913 | 30000 | $300000 | 47913 |  | \*% |
|  William Streett Baldwin | 5826 | 35000 | 350000 | 40826 |  | \* |
| P. David Bramble<sup>(4)</sup> |  | 10000 | 100000 | 10000 |  | \* |
|  William B. Crompton, III | 10533 | 30000 | 300000 | 40533 |  | \* |
|  David M. Flair | 86499 | 35000 | 350000 | 121499 |  | \* |
|  Joseph S. Galli | 57995 | 70000 | 700000 | 127995 | 1.04 |  |
|  Kim C. Liddell | 2597 | 35000 | 350000 | 37597 |  | \* |
|  Brian K. McHale | 7769 | 10000 | 100000 | 17769 |  | \* |
|  Timothy L. Prindle | 103167 | 70000 | 700000 | 173167 | 1.41 |  |
|  Joshua W. Posnick | 2589 | 5000 | 50000 | 7589 |  | \* |
|  Machteld V. Thomas | 2523 | 30000 | 300000 | 32523 |  | \* |
|  Michael J. Dee | 36288 | 30000 | 300000 | 66288 |  | \* |
|  Gregory J. Olinde |  | 5000 | 50000 | 5000 |  | \* |
|  Rose M. Searcy | 17739 | 1500 | 15000 | 19239 |  | \* |
|  All Directors and Executive Officers as a Group | 351438 | 396500 | $3965000 | 747938 | 6.07 | % |

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\* Less than 1%. 

(1) Based on information presented under "Beneficial Ownership of Common Stock," and assuming an exchange
ratio of 1.6599 at the minimum of the offering range.

(2) Includes proposed subscriptions, if any, by associates.

(3) Assuming an exchange ratio of 2.5827 at the adjusted maximum of the offering range, directors and executive
officers would beneficially own 943,318 shares, or 4.92% of our outstanding shares of common stock.

(4) Mr. Bramble will only be eligible to purchase shares of our common stock in the offering in a community
offering, if one is held.

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##### [**Table of Contents**](#toc)
**THE CONVERSION AND OFFERING** 

The boards of directors of Bay-Vanguard, M.H.C. and BV Financial have approved the plan of conversion. The plan of conversion must also be approved by the stockholders of BV Financial and the members of Bay-Vanguard, M.H.C. (*i.e.*, eligible depositors of BayVanguard Bank). Special meetings of stockholders and members have been called for this purpose. We have filed applications with the Federal Reserve Board with respect to the conversion. The approval of the Federal Reserve Board is required before we can consummate the conversion and issue shares of common stock. We have also filed an application with the OCFR with respect to the conversion of BayVanguard Bank's charter to that of a Maryland commercial bank, including amending and restating BayVanguard Bank's charter to, among other things, establish a liquidation account. The approval of the OCFR is required before we can consummate the conversion and issue shares of common stock. Any approval by the Federal Reserve Board or the OCFR does not constitute a recommendation or endorsement of the plan of conversion.

**General** 

Pursuant to the plan of conversion, our organization will convert from the mutual holding company form of organization to the fully stock form. Bay-Vanguard, M.H.C. will be merged into BV Financial and as a result Bay-Vanguard, M.H.C. will cease to exist. As part of the conversion, the 86.3% ownership interest of Bay-Vanguard, M.H.C. in BV Financial will be offered for sale in the offering. When the conversion is completed, BV Financial will continue to own all of the outstanding common stock of BayVanguard Bank and public stockholders will own all of the outstanding common stock of BV Financial. A diagram of our corporate structure before and after the conversion is set forth in the "Summary" section of this prospectus.

Under the plan of conversion, at the completion of the conversion and offering, each share of BV Financial common stock owned by persons other than Bay-Vanguard, M.H.C. will be converted automatically into the right to receive new shares of BV Financial common stock determined pursuant to an exchange ratio. The exchange ratio will ensure that immediately after the exchange of existing shares of BV Financial for new shares of BV Financial the public stockholders will own the same aggregate percentage of shares of common stock of BV Financial that they owned immediately before the conversion, excluding any shares they purchased in the offering and their receipt of cash paid in lieu of fractional shares, and adjusted downward to reflect certain assets held by Bay-Vanguard, M.H.C.

We intend to retain between $43.4 million and $68.0 million of the net proceeds of the offering and to contribute between $51.9 million and $81.2 million of the net proceeds to BayVanguard Bank. The conversion will be consummated only upon the sale of at least the minimum number of shares of our common stock offered pursuant to the plan of conversion.

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, including our employee stock ownership plan, supplemental account holders, and other members (qualifying depositors). In addition, we may offer common stock for sale in a community offering to members of the general public, with a preference given to natural persons (including trusts of natural persons) residing in Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland.

We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the community offering. The community offering may begin concurrently with, during or after the subscription offering and must be completed within 45 days after the completion of the subscription offering unless otherwise extended by the Federal Reserve Board. See "—Community Offering."

We also may offer for sale shares of common stock not purchased in the subscription or community offerings in a syndicated community offering in which Performance Trust will be sole manager. See "—Syndicated Community Offering."

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We determined the number of shares of common stock to be offered in the offering based upon an independent valuation appraisal of the estimated pro forma market value of BV Financial. All shares of common stock to be sold in the 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 shares of common stock to be issued in the offering will be determined at the completion of the offering. See "—Stock Pricing 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 conversion and offering and is qualified in its entirety by reference to the provisions of the plan of conversion. A copy of the plan of conversion is available for inspection at each office of BayVanguard Bank. The plan of conversion is also filed as an exhibit to Bay-Vanguard, M.H.C.'s application for conversion, of which this prospectus is a part, copies of which may be obtained from the Federal Reserve Board. The plan of conversion is also filed as an exhibit to the registration statement we have filed with the Securities and Exchange Commission, of which this prospectus is a part. Copies of the registration statement 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 and Offering** 

Our primary reasons for converting and undertaking the stock offering are to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Support our planned growth and strengthen our regulatory capital position with the additional capital we will raise in the stock offering .*** A strong capital position is essential to achieving our long-term objectives of growing BayVanguard Bank and building stockholder value. Although BayVanguard Bank exceeds all regulatory capital
requirements, the proceeds from the offering will materially strengthen our capital position and enable us to support our potential growth and expansion through larger legal lending limits. The augmented regulatory capital will be essential to the
continued implementation of our business strategy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Improve the liquidity of our shares of common stock*** . We expect that the larger number of shares
that will be outstanding after completion of the conversion and offering, as well as our shares of stock being traded on the Nasdaq Capital Market, will result in a more liquid and active market for BV Financial common stock. A more liquid and
active market will make it easier for our stockholders to buy and sell our common stock and will give us greater flexibility in implementing capital management strategies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Facilitate future mergers and acquisitions*** . Although we do not currently have any understandings or
agreements regarding any specific acquisition transaction, the stock holding company structure will give us greater flexibility to structure, and make us a more attractive and competitive bidder for, mergers and acquisitions of other financial
institutions or financial service companies as opportunities arise. The additional capital raised in the offering also will enable us to consider larger merger transactions. In addition, although we intend to remain an independent financial
institution, the stock holding company structure may make us a more attractive acquisition candidate for other institutions. Applicable regulations prohibit anyone from acquiring or offering to acquire more than 10% of our stock for three years
following completion of the conversion without regulatory approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Facilitate our stock holding company's ability to pay dividends to our public stockholders*.** Current regulations of the Federal Reserve Board prohibit the ability of Bay-Vanguard, M.H.C. to waive receipt of dividends declared by BV Financial. Accordingly, because any
dividends declared and paid by BV Financial have been paid to Bay-Vanguard, M.H.C. along with all other stockholders, the amount of dividends available for all other stockholders has been less than if Bay-Vanguard, M.H.C. were allowed to waive the receipt of dividends. The conversion will eliminate our mutual holding company structure and will facilitate our ability to pay dividends to all stockholders of BV
Financial, subject to legal, regulatory and financial considerations applicable to all financial institutions. See "Our Dividend Policy."

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•  ***Transition our organization to a stock holding company structure, which gives us greater flexibility to access the capital markets compared to our existing mutual holding company structure*** . The stock holding company structure gives us greater flexibility to access the capital markets to support our growth through possible future equity and
debt offerings. We have no current plans, agreements or understandings regarding any additional equity or debt offerings.

**Approvals Required** 

The affirmative vote of a majority of the total votes eligible to be cast by the members of Bay-Vanguard, M.H.C. (*i.e.*, eligible depositors of BayVanguard Bank) is required to approve the plan of conversion. By their approval of the plan of conversion, the members of Bay-Vanguard, M.H.C. will also be approving the merger of Bay-Vanguard, M.H.C. with and into BV Financial, which includes the conversion of BayVanguard Bank's charter to that of a Maryland commercial bank. The affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock of BV Financial and the affirmative vote of the holders of a majority of the outstanding shares of common stock of BV Financial held by the public stockholders of BV Financial (*i.e.*, all stockholders other than Bay-Vanguard, M.H.C.) also are required to approve the plan of conversion. By their approval of the plan of conversion, the public stockholders will also be approving the merger of Bay-Vanguard, M.H.C. with and into BV Financial as well as the amendments to the articles of incorporation of BV Financial. We have filed applications with the Federal Reserve Board with respect to the conversion. The approval of the Federal Reserve Board is required before we can consummate the conversion and issue shares of common stock. The OCFR must also approve BayVanguard Bank's conversion from a state-chartered stock savings bank to a state-chartered commercial bank, including amending and restating BayVanguard Bank's charter to, among other things, establish a liquidation account. The approval of the OCFR is required before we can consummate the conversion and issue shares of common stock.

**Share Exchange Ratio for Current Stockholders** 

At the completion of the conversion, each publicly held share of BV Financial common stock will be converted automatically into the right to receive a number of new shares of BV Financial common stock. The number of shares of common stock will be determined pursuant to the exchange ratio, which ensures that the public stockholders will own approximately the same percentage of common stock in BV Financial after the conversion as they held in BV Financial immediately before the conversion, exclusive of their purchase of additional shares of common stock in the offering, and their receipt of cash in lieu of fractional exchange shares, and adjusted downward to reflect certain assets held by Bay-Vanguard, M.H.C. The exchange ratio will not depend on the market value of BV Financial common stock. The exchange ratio will be based on the percentage of BV Financial common stock held by the public, the independent valuation of BV Financial prepared by RP Financial, and the number of shares of common stock sold in the offering. The exchange ratio is expected to range from approximately 1.6599 shares for each publicly held share of BV Financial at the minimum of the offering range to 2.5827 shares for each publicly held share of BV Financial at the adjusted maximum of the offering range.

The following table shows how the exchange ratio will adjust, based on the appraised value of BV Financial as of February 24, 2023, assuming public stockholders of BV Financial own 13.7% of the outstanding shares of BV Financial common stock and Bay-Vanguard, M.H.C. has cash of $8,000 immediately before the completion of the conversion. The table also shows how many new shares of BV Financial a hypothetical current owner of BV Financial common stock would receive in the exchange for 100 shares of common stock owned at the completion of the conversion, depending on the number of shares issued in the offering.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Shares to be Sold in**<br>**This Offering** | **Shares to be Sold in**<br>**This Offering** | **Shares of BV**<br>**Financial to be**<br>**Issued for New**<br>**Shares of<br>BV Financial** | **Shares of BV**<br>**Financial to be**<br>**Issued for New**<br>**Shares of<br>BV Financial** | **Total Shares**<br>**of Common**<br>**Stock to be**<br>**Issued in**<br>**Exchange**<br>**and Offering** | **Exchange**<br>**Ratio** | **Equivalent**<br>**Value of**<br>**Shares**<br>**Based**<br>**Upon**<br>**Offering**<br>**Price<sup>(1)</sup>** | **Equivalent**<br>**Pro Forma**<br>**Tangible**<br>**Book Value**<br>**Per**<br>**Exchanged**<br>**Share<sup>(2)</sup>** | **Whole**<br>**Shares to**<br>**be**<br>**Received**<br>**for 100**<br>**Existing**<br>**Shares<sup>(3)</sup>** |
|  | **Amount** | **Percent** | **Amount** | **Percent** | | | | | |
|  Minimum | 10625000 | 86.3% | 1689427 | 13.7% | 12314427 | 1.6599 | $16.60 | $23.34 | 165 |
|  Midpoint | 12500000 | 86.3% | 1987562 | 13.7% | 14487562 | 1.9529 | 19.53 | 25.54 | 195 |
|  Maximum | 14375000 | 86.3% | 2285696 | 13.7% | 16660696 | 2.2458 | 22.46 | 27.74 | 224 |
|  Adjusted Maximum | 16531250 | 86.3% | 2628550 | 13.7% | 19159800 | 2.5827 | 25.83 | 30.29 | 258 |

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(1) Represents the value of shares of BV Financial common stock to be received in the conversion by a holder of one
current share of BV Financial, pursuant to the exchange ratio, based upon the $10.00 per share offering price.

(2) Represents the pro forma tangible book value per share at each level of the offering range multiplied by the
respective exchange ratio. At December 31, 2022, BV Financial's tangible book value per share was $11.07.

(3) Cash will be paid in lieu of fractional shares.

Options to purchase shares of BV Financial common stock that are outstanding immediately before the completion of the conversion will be converted into options to purchase new shares of BV Financial common stock, with the number of shares subject to the option and the exercise price per share to be adjusted based upon the exchange ratio. The aggregate exercise price, term and vesting period of the options will remain unchanged.

**Effects of Conversion** 

***Continuity****.* The conversion will not affect the normal business of BayVanguard Bank of accepting deposits and making loans. As part of the conversion, BayVanguard Bank will convert its charter to that of a Maryland commercial bank. This change will not have a material effect on the business of BayVanguard Bank and BayVanguard Bank will continue to be regulated by the OCFR and the FDIC. After the conversion, BayVanguard Bank will continue to offer existing services to depositors, borrowers and other customers. The directors of BV Financial serving at the time of the conversion will continue to be the directors of BV Financial upon the completion of the conversion.

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

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

***Effect on Voting Rights of Depositors****.* Depositors of BayVanguard Bank are members of, and have voting rights in, Bay-Vanguard, M.H.C., as to all matters requiring a vote of members. Upon completion of the conversion, depositors will no longer have voting rights. All voting rights in BayVanguard Bank will be vested in BV Financial as the sole stockholder of BayVanguard Bank. The stockholders of BV Financial will possess exclusive voting rights with respect to BV Financial common stock.

***Tax Effects****.* We have received an opinion of counsel with regard to the federal income tax consequences of the conversion and an opinion of our tax advisor with regard to the Maryland income tax consequences of the conversion to the effect that the conversion will not be a taxable transaction for federal or state income tax purposes to Bay-Vanguard, M.H.C., BV Financial, BayVanguard Bank, the public stockholders of BV Financial (except for cash paid for fractional shares), eligible account holders, supplemental eligible account holders, or other members. See "—Material Income Tax Consequences."

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***Effect on Liquidation Rights****.* Each depositor in BayVanguard Bank has both a deposit account in BayVanguard Bank and a pro rata ownership interest in the net worth of Bay-Vanguard, M.H.C. based upon the deposit balance in his or her account. This ownership interest is tied to the depositor's account and has no tangible market value separate from the deposit account. This ownership interest may only be realized in the event of a complete liquidation of Bay-Vanguard, M.H.C. and BayVanguard Bank; however, there has never been a liquidation of a solvent mutual holding company. Any depositor who opens a deposit account prior to the completion of the offering receives a pro rata ownership interest in Bay-Vanguard, M.H.C. 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 of the balance in the deposit account but nothing for his or her ownership interest in the net worth of Bay-Vanguard, M.H.C., which is lost to the extent that the balance in the account is reduced or closed.

Consequently, depositors in a stock depository institution that is a subsidiary of a mutual holding company normally have no way of realizing the value of their ownership interest, which would be realizable only in the unlikely event that Bay-Vanguard, M.H.C. and BayVanguard Bank are liquidated completely. If this occurs, the depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of Bay-Vanguard, M.H.C. after other claims, including claims of depositors to the amounts of their deposits, are paid.

Under the plan of conversion, Eligible Account Holders (as defined below) and Supplemental Eligible Account Holders (as defined below) will receive an interest in liquidation accounts maintained by BV Financial and BayVanguard Bank in an aggregate amount equal to (1) Bay-Vanguard, M.H.C.'s ownership interest in BV Financial's total stockholders' equity as of the date of the latest statement of financial condition included in this prospectus, plus (2) the value of the net assets of Bay-Vanguard, M.H.C. as of the date of the latest statement of financial condition of Bay-Vanguard, M.H.C. before the consummation of the conversion (excluding its ownership of BV Financial). BV Financial and BayVanguard Bank will hold the liquidation accounts for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain deposits in BayVanguard Bank after the conversion. The liquidation accounts are intended to preserve for Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their deposit accounts with BayVanguard Bank a liquidation interest in the residual net worth, if any, of BV Financial or BayVanguard Bank (after the payment of all creditors, including depositors to the full extent of their deposit accounts) in the event of a liquidation of (a) BV Financial and BayVanguard Bank or (b) BayVanguard Bank. See "—Liquidation Rights.

**Stock Pricing and Number of Shares to be Issued** 

The plan of conversion and applicable regulations require that the aggregate purchase price of the common stock sold in the offering must be based on the appraised pro forma market value of the common stock, as determined by an independent valuation. We have retained RP Financial to prepare an independent valuation appraisal. For its services in preparing the initial valuation and one valuation update, RP Financial will receive a fee of $135,000, as well as payment for reimbursable expenses. During the past three years, we have paid RP Financial a fee of $79,000 for providing its independent appraisal, valuation and other services in connection with our acquisition of NASB and for performing the fair value analysis of the loans and deposits and determined a core deposit intangible of the acquired institution for our acquisitions of Madison Bank and 1880 Bank. We have agreed to indemnify RP Financial and its employees and affiliates for certain costs and expenses in connection with claims or litigation relating to the appraisal and arising out of any misstatement or untrue statement of a material fact in information supplied to RP Financial by us or by an intentional omission by us to state a material fact in the information provided, except where RP Financial has been negligent or at fault.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the present results and financial condition of BV Financial and the projected results and financial condition of
BV Financial;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the economic and demographic conditions in BV Financial's existing market area;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• certain historical, financial and other information relating to BV Financial;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a comparative evaluation of the operating and financial characteristics of BV Financial with those of other
publicly traded savings institutions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effect of the conversion and offering on BV Financial's stockholders' equity and earnings
potential;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the proposed dividend policy of BV Financial; 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 RP Financial considered comparable to BV Financial 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 financial institutions with relatively comparable resources, strategies and financial and other operating characteristics. Such companies must also be traded on a securities exchange (such as the Nasdaq Stock Market). The peer group companies selected for BV Financial also consisted of fully converted stock institutions that were not subject to an actual or rumored acquisition and that had been publicly traded for at least one year. In addition, RP Financial limited the peer group to fully converted thrifts with assets between $525 million and $1.6 billion.

The independent valuation appraisal considered the pro forma effect of the offering. Consistent with federal appraisal guidelines, the appraisal applied three primary methodologies: (1) the pro forma price-to-book value approach applied to both reported book value and tangible book value; (2) the pro forma price-to-earnings approach applied to reported and core earnings; and (3) 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. RP Financial placed the greatest emphasis on the price-to-earnings and price-to-book approaches in estimating pro forma market value. RP Financial did not consider a pro forma price-to-assets approach to be as 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 core earnings.

In applying each of the valuation methods, RP Financial considered adjustments to the pro forma market value based on a comparison of BV Financial with the peer group. RP Financial made upward adjustments for financial condition, profitability, growth and viability of earnings and asset growth and a downward adjustment for primary market area. RP Financial made no adjustments for dividends, liquidity of the shares, marketing of the issue, management, or effect of government regulations and regulatory reform. The upward adjustment applied for financial condition took into consideration the more favorable composition of BV Financial's asset base, including a higher loans/assets ratio, a lower cost of funds and higher current return on equity. The upward adjustment applied for profitability, growth and viability of earnings took into consideration BV Financial's higher earnings as a percent of assets relative to the peer group companies, which was primarily attributable to a higher net interest income ratio, a higher yield/cost spread and lower operating expense ratio. The upward adjustment applied for asset growth was due to the substantially higher pro forma equity position that BV Financial will have following the offering, which will provide for stronger growth potential compared to the peer group. The downward adjustment for market area took into consideration BV Financial's operations in the Baltimore/Washington metropolitan area, which provides for a high level of competition, including a number of larger financial institutions that are BV Financial's most comparable competitors.

Included in RP Financial's independent valuation were certain assumptions as to the pro forma earnings of BV Financial after the conversion that were used in determining the appraised value. These assumptions included estimated expenses, an assumed after-tax rate of return of 2.91% on the net offering proceeds and purchases in the open market of 4% of the common stock issued in the offering by the stock-based benefit plan at the $10.00 per share purchase price. See "Pro Forma Data" for additional information concerning assumptions included in the independent valuation and used in preparing pro forma data. The use of different assumptions may yield different results.

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The independent valuation states that as of February 24, 2023, the estimated pro forma market value of BV Financial was $144.9 million. Based on federal regulations, this market value forms the midpoint of a range with a minimum of $123.1 million and a maximum of $166.6 million ($191.6 million at the adjusted maximum). The aggregate offering price of the shares will be equal to the valuation range multiplied by the adjusted percentage of BV Financial common stock owned by Bay-Vanguard, M.H.C. The number of shares offered will be equal to the aggregate offering price of the shares divided by the price per share. Based on the valuation range, the adjusted percentage of BV Financial common stock owned by Bay-Vanguard, M.H.C., certain assets held by Bay-Vanguard, M.H.C. and the $10.00 price per share, the minimum of the offering range is 10,625,000 shares, the midpoint of the offering range is 12,500,000 shares and the maximum of the offering range is 14,375,000 shares.

The board of directors of BV Financial reviewed the independent valuation and, in particular, considered the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• BV Financial's financial condition and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a comparison of financial performance ratios of BV Financial to those of other financial institutions of similar
size;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• market conditions generally and in particular for financial institutions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the historical trading price of the publicly held shares of BV Financial common stock.

All of these factors are set forth in the independent valuation. The board of directors also reviewed the methodology and the assumptions used by RP Financial in preparing the independent valuation and believes that such assumptions were reasonable. The offering range may be amended, with the approval of the Federal Reserve Board, as a result of subsequent developments in the financial condition of BV Financial or BayVanguard Bank or market conditions generally. If the independent valuation is updated to amend the pro forma market value of BV Financial to less than $123.1 million or more than $191.6 million, the appraisal will be filed with the Securities and Exchange Commission by means of a post-effective amendment to BV Financial's registration statement.

The following table presents a summary of selected pricing ratios for BV Financial (on a pro forma basis) at and for the twelve months ended December 31, 2022, and for the peer group companies based on earnings and other information at and for the twelve months ended December 31, 2022, with stock prices at February 24, 2023, as reflected in the appraisal report. Compared to the average pricing of the peer group, and based upon the information in the following table, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 23.6% on a price-to-book value basis, a discount of 27.6% on a price-to-tangible book value basis and a premium of 7.3% on a price-to-earnings basis. Our board of directors, in reviewing and approving the appraisal, considered the range of price-to-earnings multiples and the range of price-to-book value and price-to-tangible book value ratios at the different amounts of shares to be sold in the offering. The appraisal did not consider one valuation approach to be more important than the other. The estimated appraised value and the resulting premium/discount took into consideration the potential financial effect of the conversion and offering as well as the trading price of BV Financial's common stock. The closing price of the common stock was $25.00 per share on January 18, 2023, the last trading day immediately preceding the announcement of the conversion, and $30.21 per share on February 24, 2023, the effective date of the appraisal.

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| | | | |
|:---|:---|:---|:---|
|  | **Price-to-earnings multiple** | **Price-to-book value ratio** | **Price-to-tangible book**<br>**value ratio** |
|  **BV Financial (on a pro forma basis, assuming completion of the conversion)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjusted Maximum | 16.95x | 79.74% | 85.32% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Maximum | 15.15x | 75.24% | 85.25% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Midpoint | 13.33x | 70.62% | 76.45% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Minimum | 11.36x | 65.23% | 71.12% |
|  **Valuation of peer group companies, all of which are fully converted (on an historical basis)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | 10.45x | 92.38% | 96.66% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | 10.46x | 91.41% | 96.34% |

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**The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing our shares of common stock. RP Financial did not independently verify our consolidated financial statements and other information that we provided to them, nor did RP Financial independently value our assets or liabilities. The independent valuation considers BayVanguard Bank as a going concern and should not be considered as an indication of the liquidation value of BayVanguard Bank. 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 offering will thereafter be able to sell their shares at prices at or above $10.00 per share.** 

Following commencement of the subscription offering, the maximum of the valuation range may be increased by up to 15%, or up to $191.6 million, without resoliciting subscribers, which will result in a corresponding increase of up to 15% in the maximum of the offering range to up to 16,531,250 shares, to reflect changes in the market and financial conditions or demand for the shares. We will not decrease the minimum of the valuation range and the minimum of the offering range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See "—Additional Limitations on Common Stock Purchases" as to the method of distribution of additional shares to be issued in the event of an increase in the offering range of up to 16,531,250 shares.

If the update to the independent valuation at the conclusion of the offering results in an increase in the maximum of the valuation range to more than $191.6 million and a corresponding increase in the offering range to more than 16,531,250 shares, or a decrease in the minimum of the valuation range to less than $123.1 million and a corresponding decrease in the offering range to fewer than 10,625,000 shares, then we will promptly return, with interest at [interest rate]% per annum, all funds previously delivered to us to purchase shares of common stock in the subscription and community offerings and cancel deposit account withdrawal authorizations and, after consulting with the Federal Reserve Board, we may terminate the plan of conversion. Alternatively, we may establish a new offering range, extend the offering period and commence a resolicitation of purchasers or take other actions as permitted by the Federal Reserve Board to complete the offering. If we extend the offering and conduct a resolicitation due to a change in the independent valuation, we will notify subscribers of the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. Any single offering extension will not exceed 90 days; aggregate extensions may not conclude beyond [final extension date], which is two years after the special meeting of members to approve the plan of conversion.

An increase in the number of shares to be issued in the offering would decrease both a subscriber's ownership interest and BV Financial's pro forma earnings and stockholders' equity on a per share basis while increasing stockholders' equity on an aggregate basis. A decrease in the number of shares to be issued in the offering would increase both a subscriber's ownership interest and BV Financial's pro forma earnings and stockholders' equity on a per share basis, while decreasing stockholders' equity on an aggregate basis.

Copies of the independent valuation appraisal report of RP Financial and the detailed memorandum setting forth the method and assumptions used in the appraisal report are filed as exhibits to the documents specified under "Where You Can Find Additional Information."

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**Subscription Offering and Subscription Rights** 

In accordance with the plan of conversion, rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and on the purchase and ownership limitations set forth in the plan of conversion and as described below under "—Additional Limitations on Common Stock Purchases."

***Priority 1: Eligible Account Holders****.* Each depositor of BayVanguard Bank 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 $350,000 (35,000 shares) of our common stock, 0.10% of the total number of shares of common stock sold in the offering, or 15 times the product of the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate Qualifying Deposit account balances of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposit account balances of all Eligible Account Holders. See "—Additional 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, any remaining unallocated shares will be allocated to each remaining Eligible Account Holder whose subscription remains unfilled in same 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 among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of our shares of common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she has an ownership interest on December 31, 2021. In the event of an oversubscription, failure to list all accounts could result in fewer shares being allocated than if all accounts had been disclosed. In the event of an oversubscription, the subscription rights of Eligible Account Holders who are also directors or executive officers of BV Financial or who are associates of such persons will be subordinated to the subscription rights of other Eligible Account Holders to the extent attributable to their increased deposits in the 12 months preceding December 31, 2021.

***Priority 2: Tax-Qualified Plans****.* Our tax-qualified employee plans, including BayVanguard Bank's employee stock ownership plan, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the offering, although our employee stock ownership plan intends to purchase 8% of the shares of common stock sold in the offering. If market conditions warrant, in the judgment of its trustee, the employee stock ownership plan may instead elect to purchase shares in the open market following the completion of the conversion, subject to the approval of the Federal Reserve Board.

***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 by our tax-qualified employee stock benefit plans, each depositor of BayVanguard Bank with a Qualifying Deposit at the close of business on [Supp Elig Record Date], who is not an Eligible Account Holder (a "Supplemental Eligible Account Holder"), will receive, without payment therefor, nontransferable subscription rights to purchase up to $350,000 (35,000 shares) of common stock, subject to the overall purchase limitations. See "—Additional 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, any remaining 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 among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

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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 has an ownership interest at [Supp Elig Record Date]. In the event of an oversubscription, failure to list all accounts could result in fewer shares being allocated than if all accounts 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, by our tax-qualified employee stock benefit plans and by Supplemental Eligible Account Holders, each depositor of BayVanguard Bank at the close of business on [Voting Record Date] who is not an Eligible Account Holder or Supplemental Eligible Account Holder (collectively, "Other Members") will receive, without payment therefor, nontransferable subscription rights to purchase up to $350,000 (35,000 shares) of common stock, subject to the overall purchase limitations. See "—Additional 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 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, any remaining shares will be allocated in the proportion that the amount of the subscription of each Other Member bears to the total amount of the subscriptions of all Other Members whose subscriptions remain unsatisfied.

To ensure proper allocation of common stock, each Other Member Account Holder must list on the stock order form all deposit accounts in which he or she has an ownership interest at [Voting Record Date].

***Expiration Date***. The subscription offering will expire at 4:30 p.m., Eastern Time, on [expiration date], unless extended by us for up to 45 days or such additional periods with the approval of the Federal Reserve Board, if necessary. Subscription rights will expire whether or not each account holder 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, maximum or adjusted maximum of the offering range. Subscription rights which have not been exercised before the expiration date will become void.

We will not execute orders until at least the minimum number of shares of common stock has been sold in the offering. If at least 10,625,000 shares have not been sold in the offering by [extension date] and the Federal Reserve Board has not consented to an extension, all funds delivered to us to purchase shares of common stock in the offering will be returned promptly, with interest at [interest rate]% per annum, for funds received in the subscription and community offerings, and all deposit account withdrawal authorizations will be canceled. If the Federal Reserve Board grants an extension beyond [extension date], we will resolicit purchasers in the offering as described under "—Procedure for Purchasing Shares in the Subscription and Community Offerings—Expiration Date."

**Community Offering** 

To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions of Eligible Account Holders, our tax-qualified employee stock benefit plans, Supplemental Eligible Account Holder and Other Members, we may offer shares pursuant to the plan of conversion to members of the general public in a community offering. Shares would be offered in the community offering with the following preferences:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Natural persons (including trusts of natural persons) residing in Baltimore City and Anne Arundel, Baltimore,
Dorchester, Harford and Talbot Counties, Maryland; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Other members of the general public.

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Subscribers in the community offering may purchase up to $350,000 (35,000 shares) of common stock, subject to the overall purchase limitations. See "—Additional Limitations on Common Stock Purchases." **The opportunity to purchase shares of common stock in the 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 offering.** 

If we do not have sufficient shares of common stock available to fill the orders of natural persons residing in Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland, 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 natural persons (including trusts of natural persons) residing in those counties whose orders remain unsatisfied on an equal number of shares basis per order. If an oversubscription occurs due to the orders of members of the general public, the allocation procedures described above will apply to the orders of such persons. 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 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 with respect to the community means 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. We may utilize deposit or loan records or other evidence provided to us to determine whether a person is a resident. In all cases, however, the determination shall be in our sole discretion.

***Expiration Date****.* The community offering may begin concurrently with, during or promptly after the subscription offering, and is currently expected to terminate at the same time as the subscription offering, and must terminate no more than 45 days following the subscription offering, unless extended. We may decide to extend the community offering for any reason and we are not required to give purchasers notice of any such extension unless such period extends beyond [extension date], in which case we will resolicit purchasers.

**Syndicated Community Offering** 

If feasible, our board of directors may decide to offer for sale shares of common stock not subscribed for or purchased in the subscription and community offerings in a syndicated community offering, subject to such terms, conditions and procedures as we may determine, in a manner that will achieve a wide distribution of our shares of common stock.

If a syndicated community offering is held, Performance Trust will serve as sole manager. In such capacity, Performance Trust may form a syndicate of other brokers-dealers who are member firms of the Financial Industry Regulatory Authority, Inc. ("FINRA"). Neither Performance Trust nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Performance Trust has agreed to use its best efforts in the sale of shares in any syndicated community offering. We have not selected any particular broker-dealers to participate in a syndicated community offering and will not do so until before the commencement of the syndicated community offering. The shares of common stock will be sold at the same price per share ($10.00 per share) that the shares are sold in the subscription offering and the community offering.

If there is a syndicated community offering, it is currently expected that investors would follow the same general procedures applicable to purchasing shares in the subscription and community offerings (the use of stock order forms and the submission of funds directly to BV Financial for the payment of the purchase price of the shares ordered) except that payment must be in immediately available funds (bank checks, money orders, deposit account withdrawals from accounts at BayVanguard Bank or wire transfers). See "—Procedure for Purchasing Shares in the Subscription and Community Offerings." "Sweep" arrangements and delivery versus payment settlement will only

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be used in a syndicated community offering to the extent consistent with Rules 10b-9 and 15c2-4 of the Securities Exchange Act of 1934, as amended, and then-existing guidance and interpretations thereof of the Securities and Exchange Commission regarding the conduct of "min/max" offerings.

A syndicated community offering must terminate no more than 45 days following the expiration of the subscription offering, unless extended with the approval of the Federal Reserve Board, if necessary.

If for any reason we cannot effect a syndicated community offering of shares of common stock not purchased in the subscription and community offerings, or if there are an insignificant number of shares remaining unsold after such offerings, we will try to make other arrangements for the sale of such unsubscribed shares. The Federal Reserve Board and the Financial Industry Regulatory Authority must approve any such arrangement.

**Additional Limitations on Common Stock Purchases** 

The plan of conversion includes the following additional limitations on the number of shares of common stock that may be purchased in the offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) No person may purchase fewer than 25 shares of common stock, to the extent those shares are available for
purchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase
more than $350,000 (35,000 shares) of common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Tax-qualified employee benefit plans, including our employee stock
ownership plan, may purchase in the aggregate up to 10% of the shares of common stock sold in the offering, including shares issued if the offering range is increased by up to 15%;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Except for the employee stock ownership plan, as described above, no person or entity, together with associates
or persons acting in concert with such person or entity, may purchase more than $700,000 (70,000 shares) of common stock in all categories of the offering combined;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The number of shares of common stock that an existing BV Financial public stockholder may purchase in the
offering, together with associates or persons acting in concert with such stockholder, when combined with the shares that the stockholder and his or her associates will receive in exchange for existing BV Financial common stock, may not exceed 9.9%
of the shares of common stock of BV Financial to be issued and outstanding at the completion of the conversion and offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) The maximum number of shares of common stock that may be purchased in all categories of the offering by
executive officers and directors of BayVanguard Bank and their associates, in the aggregate, when combined with shares of common stock of BV Financial issued in exchange for existing shares of BV Financial, may not exceed 25% of the total shares
issued in the conversion.

Depending upon market or financial conditions, our board of directors, with regulatory approval and without further approval of members of Bay-Vanguard, M.H.C. and stockholders of BV Financial, may decrease or increase the purchase limitations. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount of shares of common stock and who indicated on their stock order forms a desire to be resolicited in the event of an increase will be given the opportunity to increase their orders up to the then applicable revised limit. The effect of this type of resolicitation will be an increase in the number of shares of common stock owned by persons who choose to increase their orders. If the maximum purchase limitation is increased to 5% of the shares sold in the offering, such limitation may be further increased to 9.99%, provided that orders for shares of common stock exceeding 5% of the shares sold in the offering may not exceed in the aggregate 10% of the total shares sold in the offering.

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If the offering range is increased to up to 16,531,250 shares of common stock, shares will be allocated in the following order of priority in accordance with the plan of conversion:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) to fill the subscriptions of our tax-qualified employee benefit plans,
specifically our employee stock ownership plan, for up to 10% of the total number of shares of common stock sold in the offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) if there is an oversubscription at the Eligible Account Holder, Supplemental Eligible Account Holder or Other
Member levels, to fill unfilled subscriptions of these subscribers according to their respective priorities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) to fill unfilled subscriptions in the community offering, with preference given first to natural persons
(including trusts of natural persons) residing in Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland and then to members of the general public.

The term "associate" of a person means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) any corporation or organization (other than BayVanguard Bank, BV Financial or Bay-Vanguard, M.H.C. or a majority-owned subsidiary of any of those entities) of which the person is a senior officer, partner or, directly or indirectly, 10% 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 similar fiduciary capacity; provided, however, it does not include any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a similar fiduciary capacity; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any blood or marriage relative of the person, who either has the same home as the person or who is a director
or officer of BV Financial or BayVanguard Bank.

The term "acting in concert" means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) knowing participation in a joint activity or interdependent conscious 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.

A person or company that acts in concert with another person or company ("other party") will 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 determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated.

We have the sole discretion to determine whether prospective purchasers are "associates" or "acting in concert." We may presume that certain persons are acting in concert based upon, among other things, joint account relationships or the fact that persons share a common address (whether or not related by blood or marriage), held deposit accounts with BayVanguard Bank at the eligibility, supplemental eligibility, or voting record dates that were registered to the same address, or may have filed joint Schedules 13D or 13G with the Securities and Exchange Commission with respect to BV Financial or other companies. Our directors are not treated as associates of each other solely because of their membership on the board of directors.

Common stock purchased in the offering will be freely transferable except for shares purchased by directors and certain officers of BV Financial or BayVanguard Bank and except as described below. Any purchases made by any associate of BV Financial or BayVanguard Bank for the explicit purpose of meeting the minimum

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number of shares of common stock required to be sold in order to complete the offering shall be made for investment purposes only and not with a view toward redistribution. In addition, under Financial Industry Regulatory Authority guidelines, members of the Financial Industry Regulatory Authority and their associates are subject to certain restrictions on transfer of securities purchased in accordance with subscription rights and to certain reporting requirements upon purchase of these securities. For a further discussion of limitations on purchases of our shares of common stock at the time of conversion and thereafter, see "—Certain Restrictions on Purchase or Transfer of Our Shares after Conversion" and "Restrictions on Acquisition of BV Financial."

**Plan of Distribution; Marketing Agent and Underwriter Compensation** 

***Subscription and Community Offerings****.* To assist in the marketing of our shares of common stock in the subscription and community offerings, we have retained Performance Trust, which is a broker-dealer registered with the Financial Industry Regulatory Authority. Performance Trust will assist us on a best efforts basis in the subscription and community offerings by providing the following services:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consulting as to the marketing implications of any aspect of the plan of conversion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing with us the financial impact of the offering, based upon the independent appraisal;

&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 in the design and implementation of a marketing strategy for the offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• assisting us in scheduling and preparing meetings with potential investors and/or other broker-dealers, if
necessary; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• providing such other general advice and assistance as may be reasonably requested to promote the successful
completion of the offering.

For these services, Performance Trust has received a non-refundable management fee of $30,000 and will receive at the closing of the offering a fee of 0.95% of the aggregate purchase price of the shares of common stock sold in the subscription offering and 1.50% of the aggregate purchase price of any shares of common stock sold in a community offering, excluding shares purchased by or on behalf of: (1) any employee benefit plan or trust of BV Financial or BayVanguard Bank established for the benefit of its directors, officers and employees; (2) any charitable foundation established by BV Financial or BayVanguard Bank (or any shares contributed to such a charitable foundation); and (3) any director, trustee, officer or employee of BV Financial or BayVanguard Bank or members of their immediate families (whether directly or through a personal trust), which for these purposes means spouse, parents, siblings and children who live in the same house as a director, trustee, officer or employee of BV Financial or BayVanguard Bank. The management fee, to the extent actually paid at or before closing, will be credited against the offering fee.

***Syndicated Community Offering****.* ****If shares of common stock are sold in a syndicated community offering, we will pay a fee of 5.00% of the aggregate dollar amount of common stock sold in the syndicated community offering to Performance Trust and any other broker-dealers included in the syndicated community offering.

***Expenses****.* Performance Trust also will be reimbursed for reasonable out-of-pocket expenses and fees and expenses of its legal counsel not to exceed $175,000. Such total expenses may be increased to not exceed $250,000 in the event of a resolicitation of subscribers. If the plan of conversion is terminated or if Performance Trust's engagement is terminated in accordance with the provisions of the agency agreement, Performance Trust will receive reimbursement of its reasonable out-of-pocket expenses. Performance Trust 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 Performance Trust up to $50,000 in fees and expenses for serving as stock information center manager, as described below.

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**Records Agent Services** 

We have also engaged Performance Trust as stock information center manager in connection with the conversion and the subscription and community offerings. In its role as stock information center manager, Performance Trust will assist us by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• performing records agent services, including but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consolidation of customer accounts for voting and offering purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• coordinating with our financial printer for labeling and mailing of all proxy and offering materials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• providing supporting account information to our legal counsel for "blue sky" research and applicable
registration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• assisting our transfer agent with the generation and mailing of statements of ownership, interest and refund
checks and 1099-INT statements, as required;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• coordinating proxy tabulation and solicitation efforts; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• subscription services; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• stock information center manager services including but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• coordinating vote solicitation and the special meeting of members;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• designing the stock order forms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• organizing and supervising the stock information center; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• employee training.

Performance Trust will receive fees of up to $50,000 for these services, of which $20,000 has been paid as of the date of this prospectus.

**Indemnity** 

We will indemnify Performance Trust 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 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 Performance Trust's engagement with respect to the conversion.

**Solicitation of Offers by Officers and Directors** 

Some of our directors and executive officers may participate in the solicitation of offers to purchase common stock in the subscription and community offerings. These persons will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other regular employees of BayVanguard Bank may assist in the 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 Performance Trust. Our

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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 offering.

**Procedure for Purchasing Shares in the Subscription and Community Offerings** 

***Expiration Date.*** The subscription and community offerings will expire at 4:30 p.m., Eastern Time, on [expiration date], unless we extend one or both for up to 45 days, with the approval of Federal Reserve Board, if required. This extension may be approved by us, in our sole discretion, without notice to purchasers in the offering. Any extension of the subscription and/or community offering beyond [extension date] would require the Federal Reserve Board's approval. If the 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 [interest rate]% 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 [interest rate]% per annum, for funds received in the subscription and community offerings. 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 [expiration date] expiration date of the offering, in accordance with 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 in accordance with Rule 15c2-8. Stock order forms will be distributed only with a prospectus.

We reserve the right in our sole discretion to terminate the 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 [interest rate]% 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 are not required to accept orders submitted on photocopied or facsimiled stock order forms. All stock order forms must be *received* (not postmarked) on or before 4:30 p.m., Eastern Time, on [expiration date]. 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.

***Submitting your Stock Order Form and Payment.*** Your completed and signed stock order form and payment may be submitted to us by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) **overnight delivery** to the address indicated on the stock order form for this purpose;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) **hand delivery to our Stock Information Center** located at BayVanguard Bank's branch location at 125
Mountain Road, Pasadena, Maryland; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) **regular mail** using the stock order reply envelope provided.

**Hand delivery of stock order forms will be accepted only at the Stock Information Center.** Do not deliver your stock order form to any other of BayVanguard Bank's offices. The Stock Information Center is open Monday through Friday between 9:00 a.m. and 4:30 p.m., Eastern Time, except for bank holidays. **Do not mail stock order forms to BayVanguard Bank's offices.** 

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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 offering. If you are ordering shares in the 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 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 BayVanguard Bank, 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;(1) personal check, money order or bank draft, made payable to BV Financial, Inc. **Do not remit cash**; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) authorization of withdrawal of available funds from your BayVanguard Bank deposit account(s).

Appropriate means for designating withdrawals from deposit account(s) at BayVanguard Bank 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 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) at the time the stock order form is received. Checks and money orders received in the subscription and community offerings will be immediately cashed and placed in a segregated account at BayVanguard Bank and will earn interest at [interest rate]% per annum from the date payment is processed until the offering is completed or terminated.

You may not remit cash, any type of third-party checks (including those payable to you and endorsed over to BV Financial) or a BayVanguard Bank line of credit check. You may not designate on your stock order form direct withdrawal from a retirement account at BayVanguard Bank. See "—Using Individual Retirement Account Funds." Additionally, you may not designate on your stock order form a direct withdrawal from BayVanguard Bank deposit accounts with check-writing privileges. Instead, a check should be provided. If you request a direct withdrawal from an account with check-writing privileges, 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 the specified account(s). If permitted by the Federal Reserve Board, in the event we resolicit persons who subscribed for the maximum purchase amount, as described above in "—Additional 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.

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Once we receive your executed stock order form, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by [extension date]. If the subscription and community offerings are extended past [extension date], 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 [interest rate]% per annum, or cancel your deposit account withdrawal authorization. We may resolicit purchasers for a specified period of time.

Regulations prohibit BayVanguard Bank from lending funds or extending credit to any persons to purchase shares of common stock in the 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 offering, it will not be required to pay for such shares until completion of the offering, provided that there is a loan commitment from an unrelated financial institution or BV Financial to lend to the employee stock ownership plan the necessary amount to fund the purchase. In addition, if our 401(k) plan purchases shares in the offering, it will not be required to pay for such shares until completion of the offering.

***Using Individual Retirement Account Funds.*** If you are interested in using funds in your IRA at BayVanguard Bank or other retirement account to purchase shares of common stock in the offering, you must do so through an account offered by a custodian that can hold common stock. By regulation, BayVanguard Bank's IRAs are not capable of holding common stock. Therefore, if you wish to use funds that are currently in an IRA held at BayVanguard Bank, 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. 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 BayVanguard Bank or elsewhere, to purchase shares of common stock should contact our Stock Information Center for guidance as soon as possible, preferably at least two weeks before the [expiration date] offering deadline. You may select the independent trustee or custodian of your choice. However, 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 or the independent trustee or custodian you select. 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 and community offerings 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. We expect trading in the stock to begin on the day of completion of the conversion or the next business day. **Until a statement reflecting your ownership of shares of common stock is available and delivered to you, you may not be able to sell the shares of common stock that you purchased, 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.

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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;(1) 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;(2) 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;(3) 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. On the stock order form, you cannot add the names of others for joint stock registration unless they are also named on your qualifying deposit account(s). Doing so may jeopardize your subscription rights. In addition, the stock order form requires that you list all deposit accounts you held at your date of eligibility, 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. 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 offering.** 

**We will pursue any and all legal and equitable remedies in the event 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 personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, call our Stock Information Center at [stock center number]. The Stock Information Center is open Monday through Friday between 9:00 a.m. and 4:30 p.m., Eastern Time, except for bank holidays.

**Liquidation Rights** 

***Liquidation Before the Conversion.*** In the unlikely event that Bay-Vanguard, M.H.C. is liquidated before the conversion, all claims of creditors of Bay-Vanguard, M.H.C. would be paid first. Thereafter, if there were any assets of Bay-Vanguard, M.H.C. remaining, these assets would first be distributed to depositors of BayVanguard Bank pro rata based on the value of their accounts at BayVanguard Bank.

***Liquidation Following the Conversion.*** The plan of conversion provides for the establishment, upon the completion of the conversion, of a liquidation account by BV Financial for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders in an amount equal to (1) Bay-Vanguard, M.H.C.'s ownership interest in BV Financial's total stockholders' equity as of the date of the latest statement of financial condition contained in

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this prospectus plus (2) the value of the net assets of Bay-Vanguard, M.H.C. as of the date of the latest statement of financial condition of Bay-Vanguard, M.H.C. before the consummation of the conversion (excluding its ownership of BV Financial). The plan of conversion also provides for the establishment of a parallel liquidation account in BayVanguard Bank to support the BV Financial liquidation account if BV Financial does not have sufficient assets to fund its obligations under the BV Financial liquidation account.

In the unlikely event that BayVanguard Bank were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first. However, except with respect to the liquidation account to be established in BV Financial, a depositor's claim would be solely for the principal amount of his or her deposit accounts plus accrued interest. Depositors generally would not have an interest in the value of the assets of BayVanguard Bank or BV Financial above that amount.

The liquidation account established by BV Financial is intended to provide qualifying depositors of BayVanguard Bank with a liquidation interest (exchanged for the liquidation interests such persons had in Bay-Vanguard, M.H.C.) after the conversion in the event of a complete liquidation of BV Financial and BayVanguard Bank or a liquidation solely of BayVanguard Bank. Specifically, in the unlikely event that either (1) BayVanguard Bank or (2) BV Financial and BayVanguard Bank were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first, followed by a distribution to depositors as of the close of business on December 31, 2021 and [Supp Elig Record Date] of their interests in the liquidation account maintained by BV Financial. Also, in a complete liquidation of both entities, or of BayVanguard Bank only, when BV Financial has insufficient assets (other than the stock of BayVanguard Bank) to fund the liquidation account distribution owed to Eligible Account Holders and Supplemental Eligible Account Holders, and BayVanguard Bank has positive net worth, then BayVanguard Bank shall immediately make a distribution to fund BV Financial's remaining obligations under the liquidation account. In no event will any Eligible Account Holder or Supplemental Eligible Account Holder be entitled to a distribution that exceeds such holder's interest in the liquidation account maintained by BV Financial as adjusted periodically pursuant to the plan of conversion and federal regulations. If BV Financial is completely liquidated or sold apart from a sale or liquidation of BayVanguard Bank, then the BV Financial liquidation account will cease to exist and Eligible Account Holders and Supplemental Eligible Account Holders will receive an equivalent interest in the BayVanguard Bank liquidation account, subject to the same rights and terms as the BV Financial liquidation account.

Pursuant to the plan of conversion, after two years from the date of conversion and upon the written request of the Federal Reserve Board, BV Financial will transfer, or, upon the prior written approval of the Federal Reserve Board, may transfer the liquidation account and the depositors' interests in such account to BayVanguard Bank and the liquidation account shall thereupon be subsumed into the liquidation account of BayVanguard Bank.

Under the rules and regulations of the Federal Reserve Board, a post-conversion merger, consolidation, or similar combination or transaction with another depository institution or depository institution holding company in which BV Financial or BayVanguard Bank is not the surviving institution, would not be considered a liquidation. In such a transaction, the liquidation account would be assumed by the surviving institution or company.

Each Eligible Account Holder and Supplemental Eligible Account Holder would have an initial pro-rata 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 $50.00 or more held in BayVanguard Bank as of the close of business on December 31, 2021 or [Supp Elig Record Date], respectively, equal to the proportion that the balance of such account holder's deposit account at the close of business on December 31, 2021 or [Supp Elig Record Date], respectively, bears to the balance of all deposit accounts of all Eligible Account Holders and Supplemental Eligible Account Holders in BayVanguard Bank on such dates.

If, however, on any December 31 annual closing date commencing after the effective date of the conversion, the amount in any such deposit account is less than the amount in the deposit account at the close of business on December 31, 2021 or [Supp Elig Record Date], or any other annual closing date, then the liquidation account as well as the interest in the liquidation account relating to such deposit account will be reduced by the

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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 depositors. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are satisfied would be available for distribution to stockholders.

**Material Income Tax Consequences** 

Completion of the conversion is subject to the prior receipt of an opinion of counsel or tax advisor with respect to the federal and state income tax consequences of the conversion to Bay-Vanguard, M.H.C., BV Financial, BayVanguard Bank, Eligible Account Holders, Supplemental Eligible Account Holders, and Other Members. Unlike private letter rulings, an opinion of counsel or a tax advisor is not binding on the Internal Revenue Service or any state taxing authority, and those authorities may disagree with the opinion. In the event of a disagreement, there can be no assurance that BV Financial or BayVanguard Bank would prevail in a judicial proceeding.

Bay-Vanguard, M.H.C., BV Financial and BayVanguard Bank have received an opinion of counsel, Luse Gorman, PC, regarding all of the material federal income tax consequences of the conversion, which include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The merger of Bay-Vanguard, M.H.C. with and into BV Financial will
qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The constructive exchange of Eligible Account Holders' and Supplemental Eligible Account Holders'
liquidation interests in Bay-Vanguard, M.H.C. for liquidation interests in BV Financial will satisfy the continuity of interest requirement of Section 1.368-1(b) of
the Federal Income Tax Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) None of Bay-Vanguard, M.H.C., BV Financial, Eligible Account Holders
nor Supplemental Eligible Account Holders will recognize any gain or loss on the transfer of the assets of Bay-Vanguard, M.H.C. to BV Financial and the assumption by BV Financial of Bay-Vanguard, M.H.C.'s liabilities, if any, in constructive exchange for liquidation interests in BV Financial.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The basis of the assets of Bay-Vanguard, M.H.C. and the holding period
of the assets to be received by BV Financial will be the same as the basis and holding period of such assets in Bay-Vanguard, M.H.C. immediately before the exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Each stockholder's aggregate basis in shares of BV Financial common stock (including fractional share
interests) received in the exchange will be the same as the aggregate basis of BV Financial common stock surrendered in the exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Each stockholder's holding period in its BV Financial common stock received in the exchange will include
the period during which the BV Financial common stock surrendered was held, provided that the BV Financial common stock surrendered is a capital asset in the hands of the stockholder on the date of the exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Except with respect to cash received in lieu of fractional shares, current stockholders of BV Financial will
not recognize any gain or loss upon their exchange of BV Financial common stock for new BV Financial common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Cash received by any current stockholder of BV Financial in lieu of a fractional share interest in new shares
of BV Financial common stock will be treated as having been received as a distribution in full payment in exchange for a fractional share interest of BV Financial common stock, which the stockholder would otherwise be entitled to receive.
Accordingly, a stockholder will recognize gain or loss equal to the difference between the cash received and the basis of the fractional share. If the common stock is held by the stockholder as a capital asset, the gain or loss will be capital gain
or loss.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) It is more likely than not that the fair market value of the nontransferable subscription rights to purchase BV
Financial common stock is zero. 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 BV Financial common stock. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) It is more likely than not that at the effective date of the conversion the fair market value of the benefit
provided by the liquidation account of BayVanguard Bank supporting the payment of the BV Financial liquidation account in the event either BayVanguard Bank (or BV Financial and BayVanguard Bank) were to liquidate after the conversion (including a
liquidation of BayVanguard Bank or BayVanguard Bank and BV Financial following a purchase and assumption transaction with a credit union) when BV Financial lacks sufficient net assets to pay the liquidation account distribution due is zero.
Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and Supplemental Eligible Account Holders upon the constructive distribution to them of such rights in the BayVanguard Bank liquidation
account as of the effective date of the conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) It is more likely than not that the basis of the shares of BV Financial common stock purchased in the offering
by the exercise of nontransferable subscription rights will be the purchase price. The holding period of the BV Financial common stock purchased pursuant to the exercise of nontransferable subscription rights will commence on the date the right to
acquire such stock was exercised.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) No gain or loss will be recognized by BV Financial on the receipt of money in exchange for BV Financial common
stock sold in the offering.

We believe that the tax opinions summarized above address the material federal income tax consequences that are generally applicable to Bay-Vanguard, M.H.C., BV Financial, BayVanguard Bank, persons receiving subscription rights, and stockholders of BV Financial. With respect to items 9 and 11 above, Luse Gorman, PC noted that the subscription rights will be granted at no cost to the recipients, are legally nontransferable 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. Luse Gorman, PC further noted that RP Financial has issued a letter that the subscription rights have no ascertainable fair market value. Luse Gorman, PC also noted that the Internal Revenue Service has not in the past concluded that subscription rights have value. Based on the foregoing, Luse Gorman, PC believes that it is more likely than not that the nontransferable subscription rights to purchase shares of common stock have no value. However, the issue of whether or not the nontransferable subscription rights have value is based on all the facts and circumstances. 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 the ascertainable value, and we could recognize gain on the distribution of such rights. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are encouraged to consult with their own tax advisors as to the tax consequences if subscription rights are deemed to have an ascertainable value.

The opinion as to item 10 above is based on the position that: (1) no holder of an interest in a liquidation account has ever received any payment attributable to liquidation of a solvent bank and/or holding company (other than as set forth below); (2) the interests in the liquidation accounts are not transferable; (3) 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 BayVanguard Bank are reduced; (4) 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

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these instances involved the purchase and assumption of a bank's assets by a credit union; and (5) the BayVanguard Bank liquidation account payment obligation arises only if BV Financial lacks sufficient assets to fund the liquidation account or if BayVanguard Bank (or BayVanguard Bank and BV Financial) enters into a transaction to transfer BayVanguard Bank's assets and liabilities to a credit union.

In addition, we have received a letter from RP Financial stating its belief that the benefit provided by the BayVanguard Bank liquidation account supporting the payment of the liquidation account if (1) BV Financial lacks sufficient net assets or (2) BayVanguard Bank (or BayVanguard Bank and BV Financial) enters into a transaction to transfer BayVanguard Bank's assets and liabilities to a credit union, does not have any economic value at the time of the conversion. Based on the foregoing, Luse Gorman, PC believes it is more likely than not that such rights in the BayVanguard Bank liquidation account have no value. If such rights are subsequently found to have an economic value as of the effective time of the conversion, 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 date of the conversion.

The opinion of Luse Gorman, PC, unlike a letter ruling issued by the Internal Revenue Service, is not binding on the Internal Revenue Service and the conclusions expressed therein may be challenged at a future date. The Internal Revenue Service has issued favorable rulings for transactions substantially similar to the proposed conversion and stock offering, but those rulings may not be cited as precedent by any taxpayer other than the taxpayer to whom a ruling is addressed. We do not plan to apply for a letter ruling concerning the transactions described herein.

We have also received an opinion from FORVIS, LLP that the Maryland income tax consequences are consistent with the federal income tax consequences.

The federal and state tax opinions have been filed with the Securities and Exchange Commission as exhibits to BV Financial's registration statement.

**Certain Restrictions on Purchase or Transfer of Our Shares after Conversion** 

All shares of common stock purchased in the offering by a director or certain officers of BayVanguard Bank, BV Financial or Bay-Vanguard, M.H.C. generally may not be sold for a period of one year following the closing of the conversion, except if the individual dies. 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 record 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 BV Financial 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, certain officers and their associates, during the three-year period following the closing of the conversion, may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the Federal Reserve Board. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding common stock or to purchases of our common stock by any of our tax-qualified employee stock benefit plans or non-tax-qualified employee stock benefit plans, including any stock option or restricted stock plans.

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**COMPARISON OF STOCKHOLDERS' RIGHTS FOR STOCKHOLDERS OF** 

**BV FINANCIAL** 

***General.* **Except as noted below, the rights of stockholders of BV Financial will not change as a result of the consummation of the conversion. See "Where You Can Find Additional Information" for procedures for obtaining a copy of BV Financial's articles of incorporation and bylaws.

***Issuance of Capital Stock.*** Pursuant to applicable laws and regulations, Bay-Vanguard, M.H.C. is required to own not less than a majority of the outstanding shares of BV Financial common stock. Bay-Vanguard, M.H.C. will no longer exist following consummation of the conversion.

**RESTRICTIONS ON ACQUISITION OF BV FINANCIAL** 

Although the board of directors of BV Financial is unaware of any effort that might be made to obtain control of BV Financial after the conversion, the board of directors believes that it is appropriate to include certain provisions as part of BV Financial's articles of incorporation to protect the interests of BV Financial and its stockholders from takeovers which the board of directors might conclude are not in the best interests of BV Financial or its stockholders.

The following discussion is a general summary of the material provisions of Maryland law, BV Financial's articles of incorporation and bylaws, BayVanguard Bank's articles of incorporation and certain other regulatory provisions that may be deemed to have an "anti-takeover" effect. The following description is necessarily general and is not intended to be a complete description of the document or regulatory provision in question. BV Financial's articles of incorporation and bylaws are included as part of Bay-Vanguard, M.H.C.'s application for conversion filed with the Federal Reserve Board and BV Financial's registration statement filed with the Securities and Exchange Commission. See "Where You Can Find Additional Information."

**Maryland Law and Articles of Incorporation and Bylaws of BV Financial** 

Maryland law, as well as BV Financial's articles of incorporation and bylaws, contain a number of provisions relating to corporate governance and rights of stockholders that may 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 also render the removal of the board of directors or management of BV Financial more difficult.

***Directors.*** The board of directors is divided into three classes. The members of each class are elected for a term of three years and only one class of directors will be elected annually. Thus, it takes at least two annual elections to replace a majority of the board of directors. The bylaws establish qualifications for board members, including restrictions based upon prior legal or regulatory violations and a maximum age limit. 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.

***Restrictions on Calling Special Meetings.*** The bylaws provide that special meetings of stockholders can be called by the chairperson, the president, the chief executive officer or by a majority of the whole board of directors or upon the written request of stockholders entitled to cast at least a majority of all outstanding stock entitled to vote at the meeting.

***Limitation of Voting Rights.*** The articles of incorporation provide that no record owner of any of BV Financial's outstanding common stock that is beneficially owned, directly or indirectly, by a person who beneficially owns more than 10% of the outstanding shares of common stock will be permitted to vote any shares in excess of such 10% limit. This provision has been included in the articles of incorporation in reliance on Section 2-507(a) of the Maryland General Corporation Law, which entitles stockholders to one vote for each share of stock unless the articles of incorporation provide for a greater or lesser number of votes per share or limit or deny voting rights.

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***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 a majority of the voting power of all of BV Financial's then-outstanding common stock entitled to vote (after giving effect to the limitation on voting rights discussed above in "—Limitation of Voting Rights").

***Authorized but Unissued Shares*.** After the conversion, BV Financial will have authorized but unissued shares of common and preferred stock. See "Description of Capital Stock of BV Financial." The articles of incorporation authorize 1,000,000 shares of serial preferred stock. BV Financial 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 the shares of each such series. In the event of a proposed merger, tender offer or other attempt to gain control of BV Financial that the board of directors does not approve, it may 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 BV Financial. The board of directors has no present plan or understanding to issue any preferred stock.

***Amendments to Articles of Incorporation and Bylaws.*** Except as otherwise provided in the articles of incorporation, aamendments to the articles of incorporation must be approved by the board of directors and by the affirmative vote of at least a majority of the votes entitled to be cast at the meeting where such amendment is considered.

Amendments to the bylaws must be approved by the affirmative vote of a majority of BV Financial's directors or by the affirmative vote of at least 80% of the votes entitled to be cast at a duly constituted meeting of stockholders.

The provisions requiring the affirmative vote of at least a majority of the votes entitled to be cast have been included in the articles of incorporation of BV Financial in reliance on Section 2-104(b)(5) of the Maryland General Corporation Law, which permits the articles of incorporation to require a lesser proportion of votes than the proportion that would otherwise be required for stockholder action under the Maryland General Corporation Law, provided that this proportion may not be less than a majority of all the votes entitled to be cast on the matter.

***Business Combinations with Interested Stockholders.*** Maryland law restricts mergers, consolidations, sales of assets and other business combinations between BV Financial and an "interested stockholder."

***Evaluation of Offers.*** The articles of incorporation of BV Financial provide that its board of directors, when evaluating a transaction that would or may involve a change in control of BV Financial (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 consider the interests of its employees, suppliers, creditors and customers and its direct and indirect subsidiaries, the economy of the state, region and nation, community and societal considerations, and the long-term and short-term interests of BV Financial and its stockholders.

***Purpose and Anti-Takeover Effects of BV Financial's Articles of Incorporation and Bylaws*.** Our board of directors believes that the provisions described above are prudent and will reduce our vulnerability to takeover attempts and certain other transactions that have not been negotiated with and approved by our board of directors. These provisions also will assist us in the orderly deployment of the offering proceeds into productive assets during the initial period after the conversion. We believe these provisions are in the best interests of BV Financial and its stockholders. Our board of directors believes that it will be in the best position to determine the true value of BV Financial and to negotiate more effectively for what may be in the best interests of all our stockholders. Accordingly, our board of directors believes that it is in the best interests of BV Financial and all of our stockholders to encourage potential acquirers to negotiate directly with the board of directors and that these provisions will

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encourage such negotiations and discourage hostile takeover attempts. It is also the view of our board of directors that these provisions should not discourage persons from proposing a merger or other transaction at a price reflective of the true value of BV Financial and that is in the best interests of all our stockholders.

Takeover attempts that have not been negotiated with and approved by our board of directors present the risk of a takeover on terms that may be less favorable than might otherwise be available. A transaction that is negotiated and approved by our board of directors, on the other hand, can be carefully planned and undertaken at an opportune time in order to obtain maximum value for our stockholders, with due consideration given to matters such as the management and business of the acquiring corporation.

Although a tender offer or other takeover attempt may be made at a price substantially above the current market price, such offers are sometimes made for less than all of the outstanding shares of a target company. As a result, stockholders may be presented with the alternative of partially liquidating their investment at a time that may be disadvantageous, or retaining their investment in an enterprise that is under different management and whose objectives may not be similar to those of the remaining stockholders.

Despite our belief as to the benefits to stockholders of these provisions of BV Financial's articles of incorporation and bylaws, these provisions also may have the effect of discouraging a future takeover attempt that would not be approved by our board of directors, but pursuant to which stockholders may receive a substantial premium for their shares over then current market prices. As a result, stockholders who might desire to participate in such a transaction may not have any opportunity to do so. Such provisions will also make it more difficult to remove our board of directors and management. Our board of directors, however, has concluded that the potential benefits outweigh the possible disadvantages.

**Federal Conversion Regulations** 

Federal Reserve Board 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 acquire stock or subscription rights in a converting institution or its holding company from another person before completion of its conversion. Further, without the prior written approval of the Federal Reserve Board, 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 Federal Reserve Board has defined "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 bank or its holding company, or to 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 Law and Regulations** 

Under the Change in Bank Control Act, no person, or group of persons acting in concert, may acquire control of a bank holding company unless the Federal Reserve has been given 60 days' prior written notice and has not disapproved the proposed acquisition. The Federal Reserve considers several factors in evaluating a notice, including the financial and managerial resources of the acquirer and competitive effects. Control, as defined under the applicable regulations, means the power, directly or indirectly, to direct the management or policies of the company or to vote 25% or more of any class of voting securities of the company. Acquisition of more than 10% of any class of a bank holding company's voting securities constitutes a rebuttable presumption of control under certain circumstances, including where, as will be the case with BV Financial, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

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In addition, federal regulations provide that no company may acquire control (as defined in the Bank Holding Company Act) of a bank holding company without the prior approval of the Federal Reserve. Any company that acquires such control becomes a "bank holding company" subject to registration, examination and regulation by the Federal Reserve.

**DESCRIPTION OF CAPITAL STOCK OF BV FINANCIAL** 

**General** 

BV Financial is authorized to issue 45,000,000 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. BV Financial currently expects to issue in the offering and exchange up to 19,159,800 shares of common stock, at the adjusted maximum of the offering range. BV Financial will not issue shares of preferred stock in the conversion. Each share of 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, in accordance with the plan of conversion, all of the shares of common stock will be duly authorized, fully paid and non-assessable.

The shares of common stock will represent non-withdrawable capital, will not be an account of an insurable type, and will not be insured by the Federal Deposit Insurance Corporation or any other government agency.

**Common Stock** 

***Dividends.*** BV Financial may pay dividends on its common stock if, after giving effect to such dividends, it would be able to pay its debts in the usual course of business and its total assets would exceed the sum of its total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the dividends. However, even if BV Financial's assets are less than the amount necessary to satisfy the requirement set forth above, BV Financial may pay dividends from: its net earnings for the fiscal year in which the distribution is made; its net earnings for the preceding fiscal year; or the sum of its net earnings for the preceding eight fiscal quarters. The payment of dividends by BV Financial is also subject to limitations that are imposed by applicable regulation, including restrictions on payments of dividends that would reduce BV Financial's assets below the then-adjusted balance of its liquidation account. The holders of common stock of BV Financial will be entitled to receive and share equally in dividends as may be declared by our board of directors out of funds legally available therefor. If BV Financial issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

***Voting Rights.*** Upon completion of the offering and exchange, the holders of common stock of BV Financial will have exclusive voting rights in BV Financial. They will elect BV Financial's 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 BV Financial'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 BV Financial issues shares of preferred stock, holders of the preferred stock may also possess voting rights.

As a Maryland-chartered commercial bank, corporate powers and control of BayVanguard Bank following the conversion will be, as they are now, vested in its board of directors, who elect the officers of BayVanguard Bank and who fill any vacancies on the board of directors. Voting rights of BayVanguard Bank will be, as they are now, vested exclusively in the owners of the shares of capital stock of BayVanguard Bank, which will be BV Financial, and voted at the direction of BV Financial's board of directors. Consequently, the holders of the common stock of BV Financial will not have direct control of BayVanguard Bank.

***Liquidation.*** In the unlikely event of any liquidation, dissolution or winding up of BayVanguard Bank, BV Financial, as the holder of 100% of BayVanguard Bank's capital stock, would be entitled to receive all assets of

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BayVanguard Bank available for distribution, after payment or provision for payment of all debts and liabilities of BayVanguard Bank, 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 unlikely event of liquidation, dissolution or winding up of BV Financial, the holders of its common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities (including payments with respect to its liquidation account), all of the assets of BV Financial available for distribution. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

***Preemptive Rights.*** Holders of the common stock of BV Financial will not be entitled to preemptive rights with respect to any shares that may be issued. The common stock is not subject to redemption.

**Preferred Stock** 

None of BV Financial's authorized shares of preferred stock will be issued as part of the offering or the conversion. 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.

**TRANSFER AGENT** 

The transfer agent and registrar for BV Financial's common stock is Computershare Trust Company, N.A., Canton, Massachusetts.

**EXPERTS** 

The consolidated financial statements of BV Financial, Inc. as of December 31, 2022 and 2021 and for the years then ended, have been audited by FORVIS, LLP, independent registered public accounting firm, as set forth in their report thereon, included in this prospectus and in the registration statement. Such consolidated financial statements have been included herein in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

RP Financial has consented to the publication in this prospectus of the summary of its report setting forth its opinion as to the estimated pro forma market value of the shares of common stock of BV Financial upon completion of the conversion and offering and of its letters with respect to subscription rights and the liquidation accounts.

**LEGAL MATTERS** 

Luse Gorman, PC, Washington, DC, counsel to BV Financial, Bay-Vanguard, M.H.C. and BayVanguard Bank, has issued to BV Financial its opinions regarding the legality of the common stock and the federal income tax consequences of the conversion. FORVIS, LLP, Birmingham, Alabama, has provided an opinion to us regarding the Maryland income tax consequences of the conversion. Certain legal matters will be passed upon for Performance Trust and, in the event of a syndicated community offering, for any other co-managers, by Alston and Bird LLP, Atlanta, Georgia.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION** 

BV Financial has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 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 through the Securities and Exchange Commission's web site (*www.sec.gov*), which contains reports, proxy and information statements and other information regarding

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registrants that file electronically with the Securities and Exchange Commission, including BV Financial. 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.

Bay-Vanguard, M.H.C. has filed an application for conversion with the Federal Reserve Board, and BV Financial has filed a bank holding company application with the Federal Reserve Board. To obtain a copy of the applications filed with the Federal Reserve Board, you may contact Brent B. Hassell, Assistant Vice President of the Federal Reserve Bank of Atlanta, at (804) 697-2633. The plan of conversion is available for inspection, upon request, at each of BayVanguard Bank's offices.

In connection with the offering, BV Financial will register its common stock under Section 12 of the Securities Exchange Act of 1934 and, upon such registration, BV Financial 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, BV Financial has undertaken that it will not terminate such registration for a period of at least three years following the completion of the offering.

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BV Financial, Inc.

Baltimore, Maryland

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

CONTENTS

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| | |
|:---|:---|
|  [INDEPENDENT AUDITOR'S REPORT](#fin447808_1) | F-2 |
|  CONSOLIDATED FINANCIAL STATEMENTS |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CONSOLIDATED BALANCE SHEETS](#fin447808_2) | F-3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CONSOLIDATED STATEMENTS OF INCOME](#fin447808_3) | F-4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](#fin447808_4) | F-5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY](#fin447808_5) | F-6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [CONSOLIDATED STATEMENTS OF CASH FLOWS](#fin447808_6) | F-7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](#fin447808_7) | F-8 |

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**Report of Independent Registered Public Accounting Firm** 

Board of Directors and Stockholders

BV Financial, Inc.

***Opinion on the Consolidated Financial Statements***

We have audited the accompanying consolidated balance sheets of BV Financial, Inc. (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in stockholders' equity, and cash flows1F for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

***Basis for Opinion***

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company'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 Company 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 and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company 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 Company'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 include 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.

/s/ FORVIS, LLP (Formerly Dixon Hughes Goodman LLP)

We have served as the Company's auditor since 2021.

**Richmond, Virginia** 

**March 13, 2023** 

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**Consolidated Balance Sheets** 

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| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  | (In thousands, except share amounts) | (In thousands, except share amounts) |
| **Assets** | **Assets** | **Assets** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $**12704** | $8484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing deposits in other banks | **55948** | 102706 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | **68652** | 111190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity Investment | **221** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities available for sale | **33034** | 37793 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities held to maturity (fair value of **$9,660** and $4,102)  | **10461** | 4059 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans receivable, net of allowance for loan losses of **$3,813** and $2,666 | **659131** | 584438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreclosed real estate | **1987** | 1987 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, net | **15176** | 15050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank of Atlanta stock, at cost | **977** | 404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in life insurance | **19983** | 25966 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable | **2952** | 2583 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill | **14420** | 14420 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets, net | **1195** | 1293 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets, net | **9113** | 8322 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **7661** | 7625 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $**844963** | $815130 |
| **Liabilities and Stockholders' Equity** | **Liabilities and Stockholders' Equity** | **Liabilities and Stockholders' Equity** |
|  Liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noninterest-bearing deposits | $**167202** | $175019 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest-bearing deposits | **517416** | 505006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | **684618** | 680025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FHLB borrowings | **12000** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordinated Debentures | **37039** | 36828 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | **13555** | 14831 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | **747212** | 731684 |
|  Stockholders' equity |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, $0.01 par value; 14,000,000 shares authorized 2022 & 2021; **7,418,575** shares issued and **7,418,575** shares outstanding as of 2022; 7,138,221 issued and 7,138,221 outstanding as of 2021 | **74** | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Paid-in capital | **15406** | 9383 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | **84612** | 74088 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | **(2341)** | (96) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | **97751** | 83446 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity | $**844963** | $815130 |

---

*See notes to consolidated financial statements.* 

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**Consolidated Statements of Income** 

---

| | | |
|:---|:---|:---|
|  | **Year Ended,** | **Year Ended,** |
| (in thousands, except per share amounts)  | **12/31/2022** | 12/31/2021 |
|  **Interest Income** |  |  |
|  Loans, including fees | $**31259** | $28728 |
|  Investment securities | **855** | 511 |
|  Other interest income | **1236** | 139 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest income | **33350** | 29378 |
|  **Interest Expense** |  |  |
|  Interest on deposits | **1357** | 1896 |
|  Interest on FHLB borrowings | **11** |  |
|  Interest on Subordinated debentures | **2062** | 1837 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | **3430** | 3733 |
|  Net interest income | **29920** | 25645 |
|  **Provision for loan losses** | **1038** | 575 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net interest income after provision for loan losses | **28882** | 25070 |
|  **Noninterest Income** |  |  |
|  Service fees on deposits | **460** | 444 |
|  Fees from debit cards | **755** | 780 |
|  Income from investment in life insurance | **1492** | 683 |
|  Gain on sale of foreclosed real estate | **—** | 12 |
|  Gain on sale of mortgage loans held for sale | **1** | 57 |
|  Gain on sale of premises and equipment | **246** |  |
|  Gain on bargain purchase of North Arundel Savings Bank (NASB) | **1340** |  |
|  Other income | **1371** | 395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total noninterest income | **5665** | 2371 |
|  **Noninterest Expense** |  |  |
|  Compensation and related benefits | **10130** | 7907 |
|  Occupancy | **1661** | 1685 |
|  Data processing | **1419** | 1608 |
|  Advertising | **23** | 23 |
|  Professional fees | **607** | 587 |
|  Equipment | **436** | 453 |
|  Foreclosed real estate and repossessed assets holding costs | **965** | 227 |
|  Amortization of intangible assets | **183** | 176 |
|  FDIC insurance premiums | **219** | 190 |
|  Merger expenses | **1600** | 167 |
|  Other | **2751** | 1594 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total noninterest expense | **19994** | 14617 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income before tax | **14553** | 12824 |
|  Income tax expense | **4029** | 3383 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Net income** | $**10524** | $9441 |
|  **Basic earnings per share** | $**1.42** | $1.33 |
|  **Diluted earnings per share** | $**1.41** | $1.32 |

---

*See notes to consolidated financial statements.* 

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**Consolidated Statements of Comprehensive Income** 

**BV Financial, Inc. and Subsidiaries** 

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  **Net income** | $**10524** | $9441 |
|  **Other comprehensive loss** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unrealized loss on securities available for sale | **(3096)** | (630) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax relating to securities available for sale | **851** | 173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss | **(2245)** | (457) |
|  **Total comprehensive income** | $**8279** | $8984 |

---

*See notes to consolidated financial statements.* 

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |<br>Common<br>stock |<br>Paid-in<br>capital |<br>Treasury<br>stock |<br>Retained<br>earnings | Accumulated<br>other<br>comprehensive<br>income (loss) |<br><br>Total |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Balance, December 31, 2020** | $73 | $10919 | $(1979) | $64647 | $361 | $74021 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Income |  |  |  | 9441 |  | 9441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss (net of tax of $173) |  |  |  |  | (457) | (457) |
|  Retirement of Treasury Stock | (3) | (1976) | 1979 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock Compensation | 1 | 440 |  |  |  | 441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Balance, December 31, 2021** | **71** | **9383** | **—** | **74088** | **(96)** | **83446** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Income | **—** | **—** | **—** | **10524** | **—** | **10524** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares Issued to M.H.C. for NASB Merger | **2** | **5458** | **—** | **—** | **—** | **5460** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss (net of tax of $851) | **—** | **—** | **—** | **—** | **(2245)** | **(2245)** |
|  Retirement of Treasury Stock | **—** | **—** | **—** | **—** | **—** | **—** |
|  Stock Compensation | **1** | **565** | **—** | **—** | **—** | **566** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Balance, December 31, 2022** | $**74** | $**15406** | $**—** | $**84612** | $**(2341)** | $**97751** |

---

*See notes to consolidated financial statements.* 

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**STATEMENT OF CASH FLOWS** 

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  **Cash flows from operating activities** | (In thousands) | (In thousands) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**10524** | $9441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net accretion of discounts and premiums | **(681)** | (1453) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision for loan losses | **1038** | 575 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss (gain) on sale of foreclosed real estate and other repossessed assets | **—** | (12) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Originations of loans held for sale | **(111)** | (2101) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of loans held for sale | **110** | 2480 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of loans held for sale | **1** | (57) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on bargain purchase | **(1340)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of deferred loan fees/costs | **(1351)** | (1654) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of intangible assets | **183** | 176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt issuance costs | **155** | 155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation of premises and equipment | **860** | 847 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax expense | **308** | 273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in cash surrender value of life insurance | **(398)** | (683) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation expense | **258** | 404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in accrued interest and other assets | **852** | 1329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase in other liabilities | **(694)** | 858 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | **9714** | 10578 |
|  **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from maturities and principal payments of investment securities available for sale | **7860** | 8061 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of investment securities available for sale | **(5083)** | (15561) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from maturities and principal payments of investment securities held to maturity | **1790** | 1164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchases of investment securities held to maturity | **(6919)** | (2450) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (increase) decrease in loans | **(40209)** | 24978 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of premises and equipment | **(502)** | (415) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of premises and equipment | **939** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from life insurance benefits | **6415** | 912 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase in participation of foreclosed real estate | **—** | (145) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of foreclosed real estate | **—** | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of Federal Home Loan Bank Stock | **510** | 876 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchase of Federal Home Loan Bank of Atlanta stock | **(1083)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash received in acquisition | **8521** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) provided by investing activities | **(27761)** | 17449 |
|  **Cash flows provided by financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in official checks | **648** | 760 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (decrease) increase in deposits | **(35662)** | 5293 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase in advance payments by borrowers for taxes and insurance | **(1478)** | 2932 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock options exercised | **1** | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of subordinated debt | **—** | (4100) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advances from the Federal Home Loan Bank of Atlanta | **24000** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments of advances from the Federal Home Loan Bank of Atlanta | **(12000)** | (13748) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) financing activities | **(24491)** | (8827) |
|  **Net (decrease) increase in cash and cash equivalents** | **(42538)** | **19200** |
|  Cash and cash equivalents at beginning of year | **111190** | 91990 |
|  **Cash and cash equivalents at end of year** | $**68652** | $**111190** |
|  **Supplementary cash flows information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest paid | $**3431** | $4007 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income taxes paid | $**4029** | $2144 |
|  **Supplementary noncash transactions** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loans transferred to foreclosed real estate and repossessed assets | $**—** | $35 |

---

*See notes to consolidated financial statements.* 

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

**Business** 

BV Financial, Inc. (the "Company") was organized as a federally chartered corporation at the direction of BayVanguard Bank (the "Bank") in January 2005 to become the mid-tier stock holding company for Bay-Vanguard Federal Savings Bank upon the completion of its reorganization into the mutual holding company form of organization. Pursuant to the Plan of Reorganization, the Bank converted to stock form with all of its stock owned by the Company and organized Bay-Vanguard, M.H.C. (the "M.H.C.") as a federally chartered mutual holding company that owned 55% of the common stock of the Company. In February 2019, each of the M.H.C. and the Company became a Maryland chartered corporation. In February 2019, the Company issued 4,099,822 shares to the M.H.C. in connection with the acquisition of Kopernik Bank ("Kopernik"). In January 2022, the Company issued 251,004 shares to the M.H.C. in connection with the acquisition of North Arundel Savings Bank. At December 31, 2022 and December 31, 2021, the M.H.C. owned 86.28% and 86.55% of the common stock of the Company, respectively.

BayVanguard Bank is headquartered in Baltimore, Maryland and is a financial institution offering traditional financial services. The Bank is engaged primarily in the business of attracting deposits from the general public and using such funds to originate one-to-four family real estate, construction, multi-family, commercial real estate, farm, marine loans, commercial and consumer loans.

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

**Principles of Consolidation** 

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

**Basis of Financial Statement Presentation and Significant Estimates** 

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, the assessment of other than temporary impairment of investment securities, goodwill and intangible asset impairment, and the valuation of deferred tax assets.

**Cash and Cash Equivalents** 

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

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**Note 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

**Securities** 

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

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

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

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or until maturity. In analyzing the issuer's financial condition, management considers industry analysts' reports, financial performance, and projected target prices of investment analysts.

**Federal Home Loan Bank Stock** 

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

The Bank held approximately $976,600 and $404,000 of FHLB restricted stock at December 31, 2022 and December 31, 2021, respectively.

The restricted stock is carried at cost. Management evaluates whether this investment is impaired based on their assessment of the ultimate recoverability of the investment rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of the investment is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB.

**Loans Receivable** 

Loans receivable are stated at unpaid principal balances, adjusted for premiums and discounts on loans purchased, the undisbursed portion of loans in process, net deferred loan origination fees and costs, fair value adjustments on loans acquired in a merger, and the allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment to the yield of the related loans. The Company is amortizing these amounts over the contractual life of the loan using the interest method. For purchased loans, the related premium or discount is recognized over the contractual life of the purchased loan and is included as part of interest income. The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**Note 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Interest payments on impaired loans are recorded in the same manner as interest payments on nonaccrual loans.

Loans acquired in connection with business combinations are recorded at fair value with no carryover of any allowance for loan losses. Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable discount. These purchase credit impaired ("PCI") loans are accounted for under FASB's Accounting Standards Codification ("ASC 310-30"0, Loans and Debt Securities Acquired with Deteriorated Credit Quality. The non-accretable discount includes estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases in expected cash flows will require the Company to evaluate the need for an addition to the allowance for loan losses. Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the non-accretable discount, which will then be reclassified as accretable discount to be recognized into interest income over the remaining life of the loan.

Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30 are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. These loans are initially recorded at fair value, and include premiums and discounts as acquisition accounting adjustments. These purchase premiums or discounts are subsequently amortized as an adjustment to yield over the estimated contractual lives of the loans. An allowance for loan losses is recorded for any credit deterioration in these loans subsequent to acquisition.

Acquired loans that meet the criteria for impairment or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the borrower is contractually delinquent if the Company expects to fully collect the new carrying value (i.e., fair value) of the loans. At acquisition, these loans may have discounts to adjust the loans to fair value. These discounts are considered non-accretable until the loan is paid in full or until an improvement in expected cash flows is illustrated. As such, the Company may no longer consider the loan to be nonperforming and may accrue interest on these loans, including the impact of any accretable discount. In addition, charge-offs on such loans would be first applied to the non-accretable discount.

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

**Allowance for Loan Losses** 

The allowance for loan losses is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is maintained at a level to provide for losses that are probable and can be reasonably estimated. Management's periodic evaluation of the adequacy of the allowance is based on the Company's past loan loss experience, known and inherent losses in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, the composition and size of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change, including the amounts and timing of future cash flows expected to be received on impaired loans.

Management reviews the allowance for loan losses on no less than a quarterly basis in order to identify the inherent losses and to assess the overall collectability of the loan portfolio by reviewing the portfolio by various segments. The evaluation process by portfolio segment includes, among other things, an analysis of delinquency trends, nonperforming loan trends, the level of charge-offs and recoveries, prior loss experience, total loans outstanding, the composition of the loan portfolio, the value of collateral securing the loans, the borrower's ability to repay, repayment performance, and local economic conditions.

The establishment of the allowance for loan losses is significantly affected by management's judgment and uncertainties, and there is a likelihood that different amounts would be reported under different conditions or assumptions. The Federal Deposit Insurance Corporation and the Maryland Office of the Commissioner of Financial Regulation, as an integral part of their examination process, periodically review the allowance for loan losses for reasonableness.

The Company will continue to monitor and modify its allowance for loan losses as conditions dictate. No assurances can be given that the level of the allowance for loan losses will cover all of the inherent losses on the loans or that future adjustments to the allowance for loan losses will not be necessary if economic and other conditions differ substantially from the economic and other conditions used by management to determine the current level of the allowance for loan losses.

A loan is considered past due or delinquent when a contractual payment is not paid in the month that it is due. A loan is considered impaired when, based on current information and events, it is probable that the Company 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 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 multi-family, commercial real estate, construction and commercial loans by either the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the collateral if the loan is collateral dependent.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

**Mortgage Loans Held for sale** 

Mortgages originated for sale are carried at the lower of aggregate cost or fair value of each outstanding loan. Sales of loans are recorded when the proceeds are received. Any gain or loss is recorded in noninterest income. There were no mortgage loans held for sale on December 31, 2022 and 2021.

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

**Foreclosed Real Estate and Repossessed Assets** 

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

**Premises and Equipment** 

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

**Leases** 

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

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

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

**Investment in Life Insurance** 

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

**Goodwill** 

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill is evaluated for impairment at least annually. Any impairment of goodwill would be recorded against income in the period of impairment.

**Intangible Assets** 

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

**Deferred Income Taxes** 

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

**Statements of Cash Flows** 

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

**Transfers of Financial Assets** 

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

**Off-Balance Sheet Financial Instruments** 

In the ordinary course of business, the Company has entered into commitments to extend credit. Such financial instruments are recorded in the balance sheet when they are funded.

**Earnings Per Share** 

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the appropriate period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding as adjusted for the dilutive effect of stock options based on the treasury stock method. As of December 31, 2022 and December 31, 2021, the Company had **36,350** and 39,600 shares, respectively of unexercised stock options. Options with an exercise price greater than the average market price of the common shares are excluded from the calculation as their effect would be anti-dilutive.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

Information related to the calculation of earnings per share is summarized as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | December 31, 2021 | December 31, 2021 |
|  | **Basic** | **Diluted** | Basic | Diluted |
|  | (In thousands, except per share data) | (In thousands, except per share data) | (In thousands, except per share data) | (In thousands, except per share data) |
|  Net income | $**10524** | $**10524** | $9441 | $9441 |
|  Weighted average common shares outstanding  | **7409** | **7409** | 7119 | 7119 |
|  Dilutive securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock options |  | 22 |  | 21 |
|  Adjusted weighted average shares outstanding | **7409** | **7431** | 7119 | 7140 |
|  Earnings per share amount | $**1.42** | $**1.41** | $1.33 | $1.32 |

---

**Stock Based Compensation** 

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

**Revenue Recognition** 

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

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

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

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

**Reclassifications** 

Certain prior period amounts have been reclassified to conform with the current period's presentation. Such reclassifications had no effect on net income or stockholders' equity.

**Recent Accounting Pronouncements** 

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-03"). This ASU eliminates the delayed recognition of the full amount of credit losses until the loss was probable of occurring and instead will reflect an entity's current estimate of all expected credit losses. The amendments in this ASU broaden the information that an entity must consider in developing its expected estimate for assets measured either collectively or individually. The ASU does not specify a method for measuring expected credit losses and allows an entity to apply methods that reasonably reflect its expectations of the credit loss estimate based on the entity's size, complexity and risk profile. In November 2019, the FASB issued Accounting Standards Update 2019-10, Financial Instruments - Credit Losses (Topic 326, Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10). This ASU delayed the effective date of ASU 2016-13 to interim and annual periods beginning after December 15, 2022 for smaller reporting companies as defined by the Securities and Exchange Commission. Early adoption is allowed, and the Company has adopted the standard in January 2023. Management's current estimate of the day 1 adjustment upon adoption of this standard to be within the range of $500,000 - $1.5 million. We expect to recognize an increase in the opening allowance for credit losses in the range of $500,000 to $1.5 million.

**Subsequent Events** 

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of December 31, 2022 for items that should potentially be recognized or disclosed in these consolidated financial statements. This evaluation was conducted through March 13, 2023, the date these financial statements were available to be issued.

**NOTE 2 – MERGER** 

On January 1, 2022, North Arundel Savings Bank ("NASB") was merged into BayVanguard Bank. At Closing, NASB had approximately $34.2 million in loans and $40.8 million in deposits. As part of this transaction, BV Financial, Inc. issued 251,004 shares to the M.H.C.

The assets acquired and liabilities assumed were accounted for under the acquisition method of accounting. The assets and liabilities were recorded at their fair values as of January 1, 2022 based on management's best estimate using the information available as of the merger date. The application of the acquisition method of accounting resulted in the recognition of bargain purchase gain of $1.3 million and a core deposit intangible of $85,000.

In 2022, the Company incurred merger related expenses of $1.6 million and were recorded in the Consolidated Statements of Income. These costs were expensed as incurred.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 2 – MERGER (Continued)** 

A summary of the NASB transaction during the period ended December 31, 2022 follows:

**ACQUISITION OF NORTH ARUNDEL SAVINGS BANK (NASB)** 

---

| | | | |
|:---|:---|:---|:---|
|  | As recorded<br>by<br>NASB | Fair value<br>adjustments | As recorded at<br>acquisition |
|  Fair Value of Equity Acquired |  |  | $5460 |
|  Cash & Cash Equivalents | $8521 | $— | 8521 |
|  Securities held to maturity | 772 | 12 (a) | 784 |
|  Securities available for sale | 1500 | (36) (a) | 1464 |
|  Loans Receivable | 34258 | (85) (b) | 34173 |
|  Allowance for Loan Loss | (236) | 236 (c) |  |
|  Premises and equipment | 258 | 1017 (d) | 1275 |
|  Core deposit intangible |  | 85 (e) | 85 |
|  Deferred Taxes | 49 | 198 (f) | 247 |
|  Other Assets | 1259 |  | 1259 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Assets Acquired | 46381 | 1427 | 47808 |
|  Liabilities assumed |  |  |  |
|  Deposits | 40321 | 439 (g) | 40760 |
|  Advance payments by borrowers for taxes and insurance | 121 |  | 121 |
|  Accrued Expenses and other liabilities | 127 |  | 127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities assumed | $40569 | $439 | $41008 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net assets acquired |  |  | 6800 |
|  Bargain purchase gain recorded at merger |  |  | $1340 |

---

(a) Represents the fair value adjustments to the investment securities at the acquisition date.

(b) Represents the fair value adjustments on the net book value of loans, which includes an interest rate mark and
credit mark adjustment which will be amortized over the remaining life of the loans.

(c) Represents the elimination of the NASB allowance for loan loss.

(d) Represents the fair value adjustments to reflect fair value of land and buildings which will be amortized on a
straight line basis over the estimated useful lives of the assets.

(e) Represents the intangible asset recorded to reflect the fair value of core deposits. The core deposit asset was
recorded as an identified intangible asset and will be amortized on a straight line basis over ten years.

(f) represents the deferred tax asset resulting from the fair value adjustements related to the acquired assets,
liabilities assumed, identified intangibles recorded and for the net operating loss carry forward for NASB.

(g) Represents fair value adjustments on time deposits, which will be treated as a reduction in interest expense
over the remaining life of the time deposits.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 2 – MERGER (Continued)** 

The fair value of loans acquired from North Arundel Savings Bank was estimated using cash flow projections based on the remaining maturity and repricing terms. Cash flows were adjusted by estimating future credit losses and the rate of prepayments. Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. There was no carryover of North Arundel's allowance for loan losses associated with the loans that were acquired. The core deposit intangible asset recognized is being amortized over its estimated useful life of approximately 10 years utilizing the straight line method. The acquisition was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Accordingly, the Company recognizes amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair value.

There were no PCI loans acquired in this transaction.

The following table details the acquired loans as of January 1, 2022:

---

| | |
|:---|:---|
|  Contractually required principal at acquisition | $34258 |
|  Contractual cash flows not expected to be collected (credit mark) | (394) |
|  Expected cash flows at acquisition | 33864 |
|  Interest component of expected cash flows (accretable premium) | 309 |
|  Fair value of acquired loans | $34173 |

---

The NASB merger was a mutual transaction and no consideration was given.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3 – SECURITIES** 

Securities available for sale at December 31, 2022 and December 31, 2021 consisted of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2022** | **Amortized**<br>**cost** | **Gross**<br>**unrealized**<br>**gains** | **Gross**<br>**unrealized**<br>**losses** | **Fair value** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
|  ***Available for sale*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate securities** | $**2218** | $**—** | $**286** | $**1932** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities** | **34045** | **—** | **2943** | **31102** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**36263** | $**—** | $**3229** | $**33034** |
| December 31, 2021 | Amortized<br>cost | Gross<br>unrealized<br>gains | Gross<br>unrealized<br>losses | Fair value |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  *Available for sale* |  |  |  |  |
|  Corporate securities | $750 | $— | $— | $750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | 37176 | 110 | 243 | 37043 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $37926 | $110 | $243 | $37793 |

---

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3 – SECURITIES (CONTINUED)** 

The Company has pledged securities with an amortized cost of **$40.2 million** and a fair value of **$36.9 million** at December 31, 2022 to secure deposits from municipalities. At December 31, 2021, the Company pledged securities with an amortized cost of $28.5 million and a fair value of $28.4 million to secure deposits from municipalities.

Securities held to maturity at December 31, 2022 and December 31, 2021 consisted of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2022** | **Amortized**<br>**Cost** | **Gross**<br>**Unrealized**<br>**Gains** | **Gross**<br>**Unrealized**<br>**Losses** | **Fair**<br>**Value** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  ***Held to maturity*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate securities** | $**3200** | $**—** | $**408** | $**2792** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Agencies** | **4009** | **—** | **25** | **3984** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities** | **3252** | **3** | **371** | **2884** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**10461** | $**3** | $**804** | $**9660** |
| December 31, 2021 | Amortized<br>Cost | Gross<br>Unrealized<br>Gains | Gross<br>Unrealized<br>Losses | Fair<br>Value |
|  | (in thousands) | (in thousands) | (in thousands) | (in thousands) |
|  *Held to maturity* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate securities | $2450 | $12 | $26 | $2436 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | 1609 | 57 |  | 1666 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $4059 | $69 | $26 | $4102 |

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3 – SECURITIES (CONTINUED)** 

The amortized cost and fair value of securities as of December 31, 2022 and December 31, 2021, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Available for sale** | **Available for sale** | **Held to maturity** | **Held to maturity** |
| **December 31, 2022** | **Amortized**<br>**cost** | **Fair**<br>**value** | **Amortized**<br>**cost** | **Fair**<br>**value** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
|  **Maturing** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Due under one year** | $**509** | $**502** | $**—** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Due after one year through five years** | **9986** | **9477** | **4042** | **4015** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Due after five years through ten years** | **9160** | **8631** | **3840** | **3383** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Due after ten years** | **16608** | **14424** | **2579** | **2262** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**36263** | $**33034** | $**10461** | $**9660** |
|  | Available for sale | Available for sale | Held to maturity | Held to maturity |
| December 31, 2021 | Amortized<br>cost | Fair<br>value | Amortized<br>cost | Fair<br>value |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  Maturing |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due under one year | $15 | $15 | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due after one year through five years | 8175 | 8107 | 2 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due after five years through ten years | 10570 | 10571 | 2881 | 2874 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Due after ten years | 19166 | 19100 | 1176 | 1226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $37926 | $37793 | $4059 | $4102 |

---

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

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 3 – SECURITIES (CONTINUED)** 

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Less than 12 months** | **Less than 12 months** | **Over 12 months** | **Over 12 months** | **Total** | **Total** |
| **December 31, 2022** | **Unrealized**<br>**losses** | **Fair**<br>**value** | **Unrealized**<br>**losses** | **Fair**<br>**value** | **Unrealized**<br>**losses** | **Fair**<br>**value** |
|  | | | **(In thousands)** | **(In thousands)** | | |
|  ***Available for sale*** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate securities** | $**286** | $**1182** | $**—** | $**—** | $**286** | $**1182** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities** | **535** | **10595** | **2408** | **20400** | **2943** | **30995** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**821** | $**11777** | $**2408** | $**20400** | $**3229** | $**32177** |
|  ***Held to maturity*** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate securities** | $**244** | $**1706** | $**164** | $**1086** | $**408** | $**2792** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Agencies securities** | **25** | **3984** | **—** | **—** | **25** | **3984** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities** | **370** | **2811** | **—** | **—** | **371** | **2811** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**639** | $**8501** | $**164** | $**1086** | $**804** | $**9587** |
|  | Less than 12 months | Less than 12 months | Over 12 months | Over 12 months | Total | Total |
| December 31, 2021 | Unrealized<br>losses | Fair<br>value | Unrealized<br>losses | Fair<br>value | Unrealized<br>losses | Fair<br>value |
|  |  |  | (In thousands) | (In thousands) |  |  |
|  *Available for sale* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate securities | $— | $— | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | 243 | 25541 |  |  | 243 | 25541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $243 | $25541 | $— | $— | $243 | $25541 |
|  *Held to maturity* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate securities | $26 | $1724 | $— | $— | $29 | $1724 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $26 | $1724 | $— | $— | $29 | $1724 |

---

All of the securities with unrealized losses in the portfolio have modest duration risk, low credit risk, and minimal unrealized losses when compared to total amortized cost. The unrealized losses on debt securities that exist are the result of market changes in interest rates since original purchase and are not related to credit concerns. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be at maturity for debt securities, the Company considers the unrealized losses to be temporary and therefore no impairment has been recorded during the respective periods of presentation.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 4 – LOANS RECEIVABLE** 

Loans receivable at December 31, 2022 and December 31, 2021 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
|  | (In thousands) | (In thousands) |
|  Real Estate Loans: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | $**137742** | $140675 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | **125065** | 96556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial owner occupied | **91853** | 87077 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial investor | **226854** | 170795 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | **17937** | 18731 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm Loans | **13823** | 12048 |
|  Marine Loans | **15791** | 15923 |
|  Other Consumer | **2361** | 2529 |
|  Guaranteed by the U.S. Government | **4933** | 22566 |
|  Commercial | **28052** | 21590 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans receivable, gross | **664411** | 588490 |
|  Deferred Origination (Fees) Costs, net | **(1467)** | (1386) |
|  Allowance for loan losses | **(3813)** | (2666) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans receivable, net | $**659131** | $584438 |

---

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

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

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

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

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

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##### [**Table of Contents**](#toc)
***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 – LOANS RECEIVABLE (CONTINUED)** 

Guaranteed by the U.S. Government – Loans guaranteed by the U.S. government present similar risks as reflected in the other categories mentioned herein. However, the primary differentiating factor is that an explicit guarantee is provided by the government therefore substantially mitigating any risk of loss given default in the event of credit deterioration. Guaranteed by the U.S. Government loans in the table above include $488 thousand and $17.3 million of Paycheck Protection Program (PPP) loans at December 31, 2022 and 2021, respectively. The PPP loans are 100% guaranteed by the Small Business Administration (SBA). A substantial portion of these loans are expected to be forgiven by the SBA. Due to the guarantee from the Federal government and nature of the PPP initiative, there is no allowance for loan losses recorded for PPP loans.

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

A summary of transactions in the allowance for loan losses during the year ended December 31, 2022 follows:

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
|  | **One-to-four Family** | **One-to-four Family** | **Commercial** | **Commercial** | | | | | | | |
|  | **Owner**<br>**Occuplied** | **Non-owner**<br>**Occupied** | **Owner**<br>**Occuplied** | **Non-owner**<br>**Occupied** | **Construction**<br>**& Land** | **Farm** | **Marine** | **Other**<br>**Consumer** | **US Govt**<br>**Guarantee** | **Commercial** | **Total** |
|  **Allowance** |  |  |  |  |  |  |  |  |  |  |  |
|  **Beginning balance** | $**258** | $**695** | $**280** | $**1225** | $**93** | $**2** | $**48** | $**20** | $**—** | $**45** | $**2666** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Charge-offs** | **(7)** | **—** | **—** | **—** | **—** | **—** | **—** | **(39)** | **—** | **(10)** | **(56)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Recoveries** | **43** | **87** | **—** | **—** | **19** | **—** | **—** | **15** | **—** | **1** | **165** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Provision (credit)** | **50** | **(220)** | **86** | **1047** | **(19)** | **15** | **15** | **9** | **—** | **55** | **1038** |
|  **Ending balance** | $**344** | $**562** | $**366** | $**2272** | $**93** | $**17** | $**63** | $**5** | $**—** | $**91** | $**3813** |
|  **Ending balance individually evaluated for impairment** | $**28** | $**2** | $**—** | $**—** | $**—** | $**—** | $**—** | $**—** | $**—** | $**—** | $**30** |
|  **Ending balance collectively evaluated for impairment** | $**316** | $**560** | $**366** | $**2272** | $**93** | $**17** | $**63** | $**5** | $**—** | $**91** | $**3783** |
|  **Financing receivables:** |  |  |  |  |  |  |  |  |  |  |  |
|  **Ending balance individually evaluated for impairment** | $**2056** | $**655** | $**1854** | $**1432** | $**248** | $**—** | $**59** | $**45** | $**—** | $**—** | $**6349** |
|  **Ending balance collectively evaluated for impairment** | **135686** | **124410** | **89999** | **225422** | **17689** | **13823** | **15732** | **2316** | **4933** | **28052** | **658062** |
|  **Ending balance** | $**137742** | $**125065** | $**91853** | $**226854** | $**17937** | $**13823** | $**15791** | $**2361** | $**4933** | $**28052** | $**664411** |
|  |  |  |  |  |  |  |  | **Carrying Amount of PCI Loans** | **Carrying Amount of PCI Loans** | **Carrying Amount of PCI Loans** | $**5104** |

---

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##### [**Table of Contents**](#toc)
***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 – LOANS RECEIVABLE (CONTINUED)** 

A summary of transactions in the allowance for loan losses during the year ended December 31, 2021 follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  | One-to-four<br>family | One-to-four<br>family | Commercial | Commercial |  |  |  |  |  |  |  |  |
|  | Owner<br>occupied | Nonowner<br>occupied | Owner<br>Occupied | Nonowner<br>occupied | Construction<br>& Land | Farm | Marine | Other<br>consumer | US Govt<br>Guarantee | Commercial | Un-<br>Allocated | Total |
|  **Allowance** |  |  |  |  |  |  |  |  |  |  |  |  |
|  Beginning balance | $223 | $502 | $303 | $561 | $88 | $— | $38 | $111 | $— | $15 | $92 | $1841 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Charge offs | (28) | (88) |  |  |  |  |  | (12) |  |  |  | (128) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Recoveries | 207 | 93 |  |  | 33.00 |  |  | 45 |  |  |  | 378 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision (credit) | (144) | 188 | (23) | 664 | (28) | 2 | 10 | (124) |  | 30 | (92) | 575 |
|  Ending balance | $258 | $695 | $280 | $1225 | $93 | $2 | $48 | $20 | $— | $45 | $— | $2666 |
|  Ending balance individually evaluated for impairment | $29 | $2 | $— | $— | $— | $— | $— | $— | $— | $— | $— | $31 |
|  Ending balance collectively evaluated for impairment | $229 | $693 | $280 | $1225 | $93 | $2 | $48 | $20 | $— | $45 | $— | $2635 |
|  **Loans** |  |  |  |  |  |  |  |  |  |  |  |  |
|  Ending balance individually evaluated for impairment | $2009 | $343 | $320 | $1571 | $245 | $— | $— | $50 | $— | $— | $— | $4538 |
|  Ending balance collectively evaluated for impairment | 138666 | 96213 | 86757 | 169224 | 18486 | 12048 | 15923 | 2479 | 22566 | 21590 |  | 583952 |
|  | $140675 | $96556 | $87077 | $170795 | $18731 | $12048 | $15923 | $2529 | $22566 | $21590 | $— | $588490 |
|  |  |  |  |  |  |  |  |  | Carrying Amount of PCI Loans | Carrying Amount of PCI Loans | Carrying Amount of PCI Loans | $5469 |

---

For the years ended December 31, 2022 and December 31, 2021, no allowance for loan losses were recorded for PCI loans.

For purchased loans that are not deemed impaired at acquisition, credit marks representing losses expected over the life of the loans are a component of the initial fair value. Subsequent to the purchase date, the method utilized to estimate the required allowance for loan losses for these loans is similar to that for originated loans. The Company will only record a provision for loan losses when the required allowance exceeds any remaining credit mark. The differences between the initial fair value and the unpaid principal balance at the date of acquisition are recorded as interest income over the life of the loans. The following table presents changes in the non-accretable yield for PCI loans for the years ended December 31:

---

| | | |
|:---|:---|:---|
|  | **2022** | 2021 |
|  | (In thousands) | (In thousands) |
|  Balance at January 1 | $**1440** | $2488 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; From acquisitions | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accretion | **(190)** | (1048) |
|  Balance at December 31, | $**1250** | $1440 |

---

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##### [**Table of Contents**](#toc)
***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 – LOANS RECEIVABLE (CONTINUED)** 

The following table presents the outstanding balances and related carrying amounts for all purchased credit impaired loans at the end of the respective periods:

---

| | | |
|:---|:---|:---|
|  | Contractually<br>Required<br>Payments<br>Receivable | Carrying<br>Amount |
|  | (In thousands) | (In thousands) |
|  **At December 31, 2022** | $**6354** | $**5104** |
|  At December 31, 2021 | 6909 | 5469 |

---

At December 31, 2022 and 2021, non-accretable discounts totaled **$1.3 million** and $1.4 million, respectively, for PCI loans. Premiums on acquired loans related to the interest rate and maturities of the performing loans in the portfolios were also recognized. As of December 31, 2022 and December 31, 2021, the remaining premium, which will be amortized into income over the lives of these loans, was **$1.6 million** and $1.8 million, respectively.

The contractual and carrying balances of all acquired loans at December 31, 2022 was **$234.9 million** and **$233.7 million**, respectively. The contractual and carrying balances of acquired loans at December 31, 2021 was $279.7 million and $278.3 million, respectively.

The Company's policies, consistent with regulatory guidelines, provide for the classification of loans and other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. A loan 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 loans include those loans characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans 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. Loans (or portions of loans) classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Loans that do not expose the Company to risk sufficient to warrant classification in one of the aforementioned categories, but which possess potential weaknesses that deserve close attention, are required to be designated as special mention.

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##### [**Table of Contents**](#toc)
***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 - LOANS RECEIVABLE (CONTINUED)** 

The following table summarizes the classification of the gross loan portfolio at December 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  | **Pass** | **Special**<br>**Mention** | **Substandard** | **Doubtful** | **Total** |
|  **Real estate** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - owner occupied** | $**136910** | $**—** | $**832** | $**—** | $**137742** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - non-owner occupied** | **120712** | **—** | **4353** | **—** | **125065** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Commercial owner occupied** | **83923** | **—** | **7930** | **—** | **91853** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Commercial investor** | **220096** | **—** | **6758** | **—** | **226854** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Construction and land** | **15912** | **—** | **2025** | **—** | **17937** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Farm Loans** | **13823** | **—** | **—** | **—** | **13823** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total real estate loans** | **591376** | **—** | **21898** | **—** | **613274** |
|  **Marine loans** | **15732** | **—** | **59** | **—** | **15791** |
|  **Other Consumer** | **2339** | **—** | **22** | **—** | **2361** |
|  **Guaranteed by the U.S. government** | **4933** | **—** | **—** | **—** | **4933** |
|  **Commercial** | **27607** | **—** | **445** | **—** | **28052** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total consumer and commercial** | **50611** | **—** | **526** | **—** | **51137** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total loans** | $**641987** | $**—** | $**22424** | $**—** | $**664411** |

---

The following table summarizes classification of the gross loan portfolio at December 31, 2021:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  | Pass | Special<br>Mention | Substandard | Doubtful | Total |
|  Real estate |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | $139634 | $— | $1041 | $— | $140675 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | 93271 | 146 | 3139 |  | 96556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial owner occupied | 81806 |  | 5271 |  | 87077 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial investor | 168831 |  | 1964 |  | 170795 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 18356 |  | 375 |  | 18731 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm loans | 12048 |  |  |  | 12048 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total real estate loans | 513946 | 146 | 11790 |  | 525882 |
|  Marine loans | 15923 |  |  |  | 15923 |
|  Other consumer | 2503 |  | 26 |  | 2529 |
|  Guaranteed by the U.S. government | 22566 |  |  |  | 22566 |
|  Commercial | 21590 |  |  |  | 21590 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total consumer and commercial | 62582 |  | 26 |  | 62608 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans | $576528 | $146 | $11816 | $— | $588490 |

---

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##### [**Table of Contents**](#toc)
***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 - LOANS RECEIVABLE (CONTINUED)** 

The following tables set forth certain information with respect to our loan portfolio delinquencies by loan class**:**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
|  | **30-59 days**<br>**past due** | **60-89 days**<br>**past due** | **Greater than**<br>**90 days**<br>**past due** | **Total**<br>**past due** | **Current** | **Total**<br>**loans** | **Greater than**<br>**90 days and**<br>**accruing** |
|  **Real estate loans** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - owner occupied** | $**2311** | $**793** | $**896** | $**4000** | $**133742** | $**137742** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - non-owner occupied** | **777** | **170** | **379** | **1326** | **123739** | **125065** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Commercial owner occupied** | **1048** | **103** | **2056** | **3207** | **88646** | **91853** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Commercial investor** | **310** | **—** | **1433** | **1743** | **225111** | **226854** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Construction and land** | **—** | **43** | **160** | **203** | **17734** | **17937** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Farm loans** | **—** | **—** | **—** | **—** | **13823** | **13823** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total real estate loans** | **4446** | **1109** | **4924** | **10479** | **602795** | **613274** | **—** |
|  **Marine loans** | **—** | **—** | **59** | **59** | **15732** | **15791** | **—** |
|  **Other consumer** | **65** | **—** | **—** | **65** | **2296** | **2361** | **—** |
|  **Guaranteed by the U.S. government** | **—** | **—** | **—** | **—** | **4933** | **4933** | **—** |
|  **Commercial** | **—** | **—** | **—** | **—** | **28052** | **28052** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total consumer and commercial** | **65** | **—** | **59** | **124** | **51013** | **51137** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total loans** | $**4511** | $**1109** | $**4983** | $**10603** | $**653808** | $**664411** | $**—** |
|  | December 31, 2021 | December 31, 2021 | December 31, 2021 | December 31, 2021 | December 31, 2021 | December 31, 2021 | December 31, 2021 |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  | 30-59 days<br>past due | 60-89 days<br>past due | Greater than<br>90 days<br>past due | Total<br>past due | Current | Total<br>loans | Greater than<br>90 days and<br>accruing |
|  Real estate loans |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | $1449 | $1496 | $737 | $3682 | $136993 | $140675 | $214 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | 2027 | 138 | 202 | 2367 | 94189 | 96556 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial owner occupied | 468 | 178 | 315 | 961 | 86116 | 87077 | 315 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial investor |  |  |  |  | 170795 | 170795 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 56 |  | 245 | 301 | 18430 | 18731 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm loans |  |  |  |  | 12048 | 12048 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total real estate loans | 4000 | 1812 | 1499 | 7311 | 518571 | 525882 | 529 |
|  Marine loans |  |  |  |  | 15923 | 15923 |  |
|  Other consumer | 59 | 27 | 15 | 101 | 2428 | 2529 |  |
|  Guaranteed by the U.S. government |  | 3 |  | 3 | 22563 | 22566 |  |
|  Commercial |  | 8 |  | 8 | 21582 | 21590 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total consumer and commercial | 59 | 38 | 15 | 112 | 62496 | 62608 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans | $4059 | $1850 | $1514 | $7423 | $581067 | $588490 | $529 |

---

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##### [**Table of Contents**](#toc)
***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**Note 4 – LOANS RECEIVABLE (CONTINUED)** 

The following is a summary of nonaccrual loans by class as of the dates indicated:

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  Real estate loans |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | $**1371** | $1683 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | **585** | 270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial owner occupied | **2167** | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial investor | **1433** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | **247** | 245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm loans | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total real estate loans | **5803** | 2370 |
|  Marine loans | **59** |  |
|  Other consumer | **22** | 26 |
|  Guaranteed by the U.S. government | **—** |  |
|  Commercial | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total consumer and commercial loans | **81** | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total nonaccrual loans | $**5884** | $2396 |

---

Interest that would have been accrued under the terms of the nonaccrual loans was approximately **$240,000** at December 31, 2022 and $168,000 at December 31, 2021.

An impaired loan generally is one for which it is probable, based on current information, that the lender will not collect all the amounts due under the contractual terms of the loan. Loans are individually evaluated for impairment. When the Company classifies a problem loan as impaired, it records an impairment for that portion of the asset that is deemed uncollectible, based on the present value of the expected future cash flows discounted at the loan's original effective interest rate or based on the fair value of the collateral if the loan is collateral dependent.

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##### [**Table of Contents**](#toc)
***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 – LOANS RECEIVABLE (CONTINUED)** 

The following is a summary of impaired loans by class of loans as of December 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Recorded**<br>**Investment** | **Unpaid**<br>**Principal** | **Related**<br>**Allowance** | **Average**<br>**Recorded**<br>**Investment** | **Interest**<br>**Income**<br>**Recognized** |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
| **With an allowance recorded** |  |  |  |  |  |
|  **Real estate loans** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - owner occupied** | $**100** | $**100** | $**28** | $**103** | $**4** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - non-owner occupied** | **70** | **70** | **2** | **71** | **4** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | **170** | **170** | **30** | **174** | **8** |
|  **With no allowance recorded** |  |  |  |  |  |
|  **Real estate loans** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - owner occupied** | **1956** | **1956** | **—** | **2789** | **93** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - non-owner occupied** | **585** | **585** | **—** | **632** | **39** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Commercial owner occupied** | **1854** | **1854** | **—** | **1406** | **77** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Commercial investor** | **1432** | **1432** | **—** | **1889** | **99** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Construction and land** | **248** | **248** | **—** | **203** | **26** |
|  **Marine Loans** | **59** | **59** | **—** | **15** | **3** |
|  **Other consumer** | **45** | **49** | **—** | **56** | **7** |
|  **Guaranteed by the U.S. Government** | **—** | **—** | **—** | **15** | **—** |
|  **Commercial** | **—** | **—** | **—** | **2** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | **6179** | **6183** | **—** | **7006** | **344** |
|  **Combined** |  |  |  |  |  |
|  **Real estate loans** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - owner occupied** | **2056** | **2056** | **28** | **2892** | **97** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **One to four family - non-owner occupied** | **655** | **655** | **2** | **703** | **43** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Commercial owner occupied** | **1854** | **1854** | **—** | **1406** | **77** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Commercial investor** | **1432** | **1432** | **—** | **1889** | **99** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Construction and land** | **248** | **248** | **—** | **203** | **26** |
|  **Marine Loans** | **59** | **59** | **—** | **15** | **3** |
|  **Other consumer** | **45** | **49** | **—** | **56** | **7** |
|  **Guaranteed by the U.S. Government** | **—** | **—** | **—** | **15** | **—** |
|  **Commercial** | **—** | **—** | **—** | **2** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total** | $**6349** | $**6353** | $**30** | $**7180** | $**352** |

---

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 – LOANS RECEIVABLE (CONTINUED)** 

The following is a summary of impaired loans by class of loans as of December 31, 2021:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Recorded<br>Investment | Unpaid<br>Principal | Related<br>Allowance | Average<br>Recorded<br>Investment | Interest<br>Income<br>Recognized |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
| **With an allowance recorded** |  |  |  |  |  |
|  Real estate loans |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | $106 | $106 | $29 | $109 | $5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | 73 | 73 | 2 | 484 | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 179 | 179 | 31 | 593 | 9 |
|  **With no allowance recorded** |  |  |  |  |  |
|  Real estate loans |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | 1903 | 1903 |  | 1816 | 96 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | 270 | 270 |  | 516 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial owner occupied | 320 | 320 |  | 2942 | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial investor | 1571 | 1571 |  | 2041 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 245 | 245 |  | 252 | 17 |
|  Other consumer | 50 | 54 |  | 66 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 4359 | 4363 |  | 7633 | 166 |
|  **Combined** |  |  |  |  |  |
|  Real estate loans |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | 2009 | 2009 | 29 | 1925 | 101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | 343 | 343 | 2 | 1000 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial owner occupied | 320 | 320 |  | 2942 | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial investor | 1571 | 1571 |  | 2041 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 245 | 245 |  | 252 | 17 |
|  Other consumer | 50 | 54 |  | 66 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $4538 | $4542 | $31 | $8226 | $175 |

---

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 – LOANS RECEIVABLE (CONTINUED)** 

Loans that are modified to make concessions to help a borrower remain current and/or to avoid foreclosure are classified as troubled debt restructurings ("TDR"). Generally, we do not forgive principal or interest on a loan or modify the interest rate on loans to below market rates. When we modify loans in a TDR, we evaluate any possible impairment similar to other impaired loans. If we determine that the value of the modified loan is less than the recorded investment in the loan, impairment is recognized. The Company has no commitments to lend additional funds to borrowers whose loans have been modified.

The status of TDRs as of December 31, 2022 and December 31, 2021 follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | | recorded investment | recorded investment | recorded investment |
|  |<br>Number of<br>contracts | Performing | Nonperforming | Total |
|  | | (In thousands) | (In thousands) | (In thousands) |
|  Real estate loans |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | **8** | $**559** | $**256** | $**815** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | **1** | **70** | **—** | **70** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial owner occupied real estate | **2** | **320** | **—** | **320** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial investor real estate | **1** | **205** | **—** | **205** |
|  Other Consumer | **1** | **23** | **—** | **23** |
|  | **13** | $**1177** | $**256** | $**1433** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | December 31, 2021 | December 31, 2021 | December 31, 2021 |
|  | | recorded investment | recorded investment | recorded investment |
|  |<br>Number of<br>contracts | Performing | Nonperforming | Total |
|  | | (In thousands) | (In thousands) | (In thousands) |
|  Real estate loans |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | 6 | $515 | $198 | $713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - non-owner occupied | 1 | 73 |  | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial owner occupied real estate | 2 | 148 | 172 | 320 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial investor real estate | 1 | 1570 |  | 1570 |
|  Other Consumer | 1 | 24 |  | 24 |
|  | 11 | $2330 | $370 | $2700 |

---

In 2022, one TDR with a balance of $110,871 defaulted and was placed on nonaccrual. In 2021, four loans with a balance of $386,758 defaulted and were placed on nonaccrual.

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 4 – LOANS RECEIVABLE (CONTINUED)** 

The following TDRs were modified during the year ended December 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | | recorded investment | recorded investment | recorded investment |
|  |<br>Number of<br>contracts | Performing | Nonperforming | Total |
|  | | (In thousands) | (In thousands) | (In thousands) |
|  Real estate loans |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One to four family - owner occupied | **1** | $**29** | $**—** | $**29** |
|  | **1** | $**29** | $**—** | $**29** |

---

There were no TDRs modified during the year ended December 31, 2021.

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are limited to commitments to originate loans and unused lines of credit and involve, to varying degrees, elements of credit risk in excess of the amount recognized on the balance sheet. The Company's exposure to credit loss from nonperformance by the other party to the above mentioned financial instruments is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Company generally requires collateral or other security to support financial instruments with off-balance sheet credit risk.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Letters of credit are commitments issued to guarantee the performance of a customer to a third party.

---

| | | |
|:---|:---|:---|
| Amounts representing credit risk | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  Available lines of credit | $**66166** | $56396 |
|  Letters of credit | **978** | 1810 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $**67144** | $58206 |

---

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 5 – PREMISES AND EQUIPMENT** 

Premises and equipment at December 31, 2022 and December 31, 2021 are summarized by major classification as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | Useful life<br>in years |<br>**12/31/2022** |<br>12/31/2021 |
|  |  | (In thousands) | (In thousands) |
|  Land |  | $**3706** | $3718 |
|  Buildings | 15 - 40 | **12364** | 11829 |
|  Leasehold improvements | 5 - 10 | **306** | 306 |
|  Furniture, fixtures, and equipment | 3 - 10 | **2879** | 2496 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, gross |  | **19255** | 18349 |
|  Accumulated depreciation |  | **(4079)** | (3299) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premises and equipment, net of accumulated depreciation |  | $**15176** | $15050 |

---

Depreciation expense for the years ended December 31, 2022 and December 31, 2021 was **$860,000** and $847,000, respectively.

**NOTE 6 – GOODWILL AND INTANGIBLE ASSETS** 

In January 2022, the Company acquired North Arundel Savings Bank and recorded a core deposit intangible of $85,000 and the Bank recognized a bargain purchase gain of $1.3 million. The core deposit intangible is being amortized over ten years.

In October 2020, the Company acquired Delmarva Bancshares and its subsidiary, 1880 Bank. As a result of this transaction, the Company recorded goodwill totaling $13.3 million and a core deposit intangible of $215,000. The goodwill and core deposit intangible are not deductible for purposes due to the structure of the transaction. The core deposit intangible is being amortized over ten years. The goodwill and core deposit intangible are evaluated annually for impairment.

In February 2020, the Company acquired MB Bancorp, Inc. and its subsidiary, Madison Bank of Maryland. As a result of this transaction, the Bank recorded a core deposit intangible of $196,000 and the Company recognized a bargain purchase gain of $3.3 million. The core deposit intangible is not deductible for tax purposes due to the structure of the transaction. The core deposit intangible is being amortized over ten years. The core deposit intangible is evaluated annually for impairment.

The activity in acquired intangible assets related to the mergers for the years ended December 31, 2022 and ended December 31, 2021 is as follows:

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  Net carrying amount at beginning of period | $**1293** | $1469 |
|  Core deposit intangible from the mergers | **85** |  |
|  Amortization | **(183)** | (176) |
|  Net carrying amount at end of the period | $**1195** | $1293 |

---

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 6 – GOODWILL AND INTANGIBLE ASSETS (CONTINUED)** 

At December 31, 2022 future estimated annual amortization expense is as follows:

---

| | |
|:---|:---|
| Year ending |  |
| (in thousands) |  |
| 2023 | $184 |
| 2024 | 181 |
| 2025 | 180 |
| 2026 | 180 |
| 2027 | 180 |
|  Thereafter | 290 |
|  Total Estimated Amortization Expense | $1195 |

---

**NOTE 7 – DEPOSITS** 

Deposits are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  Noninterest-bearing checking accounts | $**167202** | $175019 |
|  Interest-bearing checking accounts | **96829** | 94059 |
|  Money market accounts | **102301** | 98639 |
|  Savings accounts | **171772** | 170391 |
|  Certificates of deposit | **146514** | 141917 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deposits | $**684618** | $680025 |

---

At December 31, 2022, the Bank had two account relationships from local government entities that comprised 3.5% and 3.1% of total deposits, respectively.

At December 31, 2022 and December 31, 2021, the Bank had **$28.6 million** and $28.4 million in certificates of deposit of $250,000 or more, respectively. Deposits in excess of $250,000 may not be insured by the FDIC.

At December 31, 2022 scheduled maturities of certificates of deposit are as follows (in thousands):

---

| | |
|:---|:---|
| Year ending December 31, |  |
| 2023 | $83295 |
| 2024 | 29561 |
| 2025 | 18192 |
| 2026 | 5139 |
| 2027 | 10038 |
|  Thereafter | 289 |
|  Total certificates of deposit | $146514 |

---

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 8 – BORROWINGS** 

A summary of the Company's borrowings at December 31 for the years indicated is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | **2022** | **2022** | 2021 | 2021 |
| *Dollars in thousands* | Maturity | **Balance** | **Rate** | Balance | Rate |
|  Federal Home Loan Bank Advance | 2023 | $**12000** | **4.58%** | $— |  |
|  BV Financial Inc. Series 2020 Notes | 2030 | **35000** | **4.88%** | 35000 | 4.88% |
|  Easton Capital Trust I | 2034 | **3093** | **LIBOR+2.85%** | 3093 | LIBOR+2.85% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total borrowings, gross |  | $**50093** |  | $38093 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: debt issuance costs |  | **(427)** |  | (583) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: net fair value adjustments on acquired borrowings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Add: net fair value adjustments on acquired borrowings | **627** |  | 682 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total borrowings, net |  | $**49039** |  | $36828 |  |

---

The Bank has an agreement under a blanket floating lien with the FHLB providing the Bank a line of credit of up to 25% of its total assets limited to the lendable collateral value of qualified assets the Bank has to pledge to support its borrowings. At December 31, 2022 and December 31, 2021, the Bank had credit availability of **$96.8 million** and $118.3 million, respectively.

At December 31, 2022 the Bank had **$12.0 million** in FHLB advances outstanding and no FHLB advances outstanding at December 31, 2021. Additionally, at December 31, 2022 and December 31, 2021, the Bank had **$40.0 million** in unfunded letters of credit used to secure municipal deposits outstanding against the FHLB line of credit.

The Bank is required to maintain qualified mortgage loans as collateral for its FHLB advances and letters of credit in an amount equal to 100% of the outstanding advances. As of December 31, 2022 and December 31, 2021, the Bank pledged **$148.9 million** and $172.0 million of gross loans to the FHLB for advances, respectively. Additionally, at December 31, 2022 and December 31, 2021, the Bank had a **$20.0 million** in an unsecured demand line of credit facility with a correspondent bank, which had no outstanding balance.

BV Financial Inc. issued $35.0 million in Fixed-to-Floating Rate Subordinated Notes Due 2030 on October 21, 2020. The proceeds were used in the purchase of Delmarva Bancshares and to retire the Delmarva 2015 Senior notes on January 4, 2021, the first payment date after the acquisition. The interest rate on these notes is fixed for the first five years at 4.875% and then will reset quarterly to an interest rate per annum equal to the then current three-month term Secured Overnight Financing Rate ("SOFR") (provided, however that in the event the three-month SOFR is less than zero, three-month term SOFR shall be deemed to be zero) plus 472 basis points, payable quarterly in arrears. The Company may begin redeeming these notes on the December 30, 2025 payment date. Issuance costs of $738,000 at December 31, 2020 are being amortized into expense on a monthly basis of which $427,000 remains at December 31, 2022.

The Easton Capital Trust Junior Subordinated Notes were issued by Easton Bank & Trust and assumed by Delmarva Bancshares, Inc. on July 15, 2015 and then assumed by the Company on October 31, 2020. The Company acquired $3.0 million of junior subordinated debt of Easton Capital Trust I, to fully and unconditionally guarantee the preferred securities issued by the Easton Trust. These long-term obligations, which qualify as Tier 1 capital, constitute a full and unconditional guarantee by the Company of the Easton Capital Trust obligations. The junior subordinated debt will mature on February 8, 2034, but may called no earlier than February 8, 2009, if certain conditions, including regulatory approvals, are met. The junior

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 8 – BORROWINGS (CONTINUED)** 

subordinated debentures, which are the only assets of the trust, are subordinate to all present and future senior indebtedness of the Company. The junior subordinated debt accrues interest at a floating rate equal to the 3-month LIBOR plus 2.85%, payable quarterly. The quarterly interest rate on the debentures was 7.29% at December 31, 2022. The quarterly distributions on the preferred securities will be paid at the same rate that interest is paid on the junior subordinated debentures. In accordance with ASC 810-10-15-14 "Consolidation-Overall-Scope and Scope Exceptions," the Company did not eliminate through consolidation the Company's $93,000 equity investment in Easton Capital Trust I. Instead, the Company reflected this equity investment in the "Other assets" line item in the consolidated balance sheets.

In conjunction with the Company's acquisition of Delmarva Bancshares, the Delmarva 2015 Senior notes had a fair market value premium of $203,000. The Easton Capital Trust I Notes had a fair market value discount of $739,000. The premium on the Delmarva 2015 notes was fully accreted into income upon payoff in January 2021. The discount on the Easton capital notes is being amortized as an adjustment to yield on a monthly basis.

**NOTE 9 – PROFIT SHARING AND DEFERRED COMPENSATION AGREEMENTS** 

The Bank has a profit sharing plan and a 401(k) plan for all eligible employees. Contributions to the plans are discretionary by the Board of Directors. For the year ended December 31, 2022 the Company had a maximum match contribution of 5%. For the years ended December 31, 2022 and December 31, 2021, expenses of **$72,000** and $61,000 were incurred for the 401(k) plan, respectively. In the years ended December 31, 2022 and 2021, the Company accrued **$0** for the profit-sharing plan.

The Company has supplemental executive retirement agreements with four retired executive officers. Under the agreements, each executive receives a stated annual benefit in monthly installments. All executives covered by these agreements are receiving benefits under the terms of the agreements. During the years ended December 31, 2022 and December 31, 2021, benefits of **$248,000** and $247,000 were paid in accordance with the agreements, respectively.

The Company has supplemental retirement agreements with certain directors. Under the agreements, each director will receive a stated annual benefit in monthly installments for ten years following his or her separation from service after attaining a normal retirement age of 70. If the director separates either voluntarily or involuntarily from service prior to reaching his or her normal retirement age, the director will receive an unreduced lump sum of the accrued liability balance (i.e., the amount accrued to fund the future benefit expense under the agreement) within thirty days of the separation from service. Upon a change in control, the director will receive a stated annual benefit in monthly installments for ten years following the change in control. If the director dies while actively serving as a director, the director's beneficiary will receive an unreduced lump sum of the accrued liability balance within thirty days of the director's death. If the director dies after monthly payments have commenced under the agreement, the director's beneficiary will receive the remaining installments in monthly payments in accordance with the schedule of payments due to the director.

The Company agreed to maintain post-retirement agreements with two former directors of Vigilant Federal Savings Bank that the Company acquired in 2013. The agreements call for the Company to pay the premiums for supplemental health insurance for the directors and their spouses for life.

The Company has entered into salary continuation agreements with the Co-CEOs of the Company. Under these agreements, the executives will receive a stated annual benefit in monthly installments for 15 years following separation from service subject to service time and age. If the executive dies after monthly payments have commenced under the agreement, the executive's beneficiary will receive the present value of the remaining installments.

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 9 – PROFIT SHARING AND DEFERRED COMPENSATION AGREEMENTS (CONTINUED)** 

The accrued liabilities for the executive retirement agreements were **$2.3 million** and $2.4 million and for the director retirement agreements were **$256,000** and $290,000 at December 31, 2022 and December 31, 2021, respectively. The Company recognized compensation expense related to these plans of **$182,000** and $179,000 during the years ended December 31, 2022 and December 31, 2021, respectively.

Accounting standards require the recognition of a liability and related compensation costs for endorsement split-dollar life insurance policies that provide a benefit to an employee that extends to post-retirement periods. Bank-owned life insurance policies purchased for this purpose do not effectively settle the Company's obligation to the employee in this regard and thus the Company records a benefit cost and a related liability. As of December 31, 2022 and December 31, 2021, the Company has recorded a liability of **$292,000** and $1.4 million, respectively, for this benefit.

**NOTE 10 – EQUITY INCENTIVE PLAN** 

**Stock Options** 

On December 14, 2017, the Company granted 52,000 stock options to officers and employees of the Company of which **36,350** and 30,600 were exercisable at December 31, 2022 and December 31, 2021, respectively. The options were granted with an exercise price at the then fair market value of the stock of $8.65, scheduled to vest over five years and expire ten years from the date of grant.

Information with respect to employee options outstanding during the years ended December 31, 2022 and December 31, 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **12/31/2022** | **12/31/2022** | 12/31/2021 | 12/31/2021 |
|  |<br><br>**Shares** | **Weighted**<br>**average**<br>**exercise**<br>**price** |<br><br>Shares | Weighted<br>average<br>exercise<br>price |
|  Outstanding at beginning of period | **39600** | $**8.65** | 51950 | $8.13 |
|  Granted | **—** | **—** |  |  |
|  Exercised | **3250** | **8.65** | 8350 | 5.52 |
|  Expired/cancelled/forfeited | **—** | **8.65** | 4000 | 8.65 |
|  Outstanding at end of period | **36350** | $**8.65** | 39600 | $8.65 |
|  Exercisable at end of period | **36350** | $**8.65** | 30600 | $8.65 |

---

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 10 – EQUITY INCENTIVE PLAN (CONTINUED)** 

A summary of information about stock options outstanding is as follows at December 31, 2022 and December 31, 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Weighted average**<br>**exercise price** | **Outstanding**<br>**shares** | **Remaining**<br>**life (years)** | **Exercisable**<br>**shares** |
|  | $**8.65** | **36350** | **6.0** | **36350** |
|  |  | **36350** |  | **36350** |
|  **Intrinsic value on December 31, 2022** |  | $**594323** |  | $**594323** |
|  | Weighted average | Outstanding | Remaining | Exercisable |
|  | exercise price | shares | life (years) | shares |
|  | $8.65 | 39600 | 6.0 | 30600 |
|  |  | 39600 |  | 30600 |
|  Intrinsic value on December 31, 2021 |  | $453420 |  | $350370 |

---

The aggregate intrinsic values are presented in the preceding tables are calculated as the difference between the estimated fair value of the stock as of December 31, 2022 and December 31, 2021, and the exercise price of the options multiplied by the number of options outstanding as of the aforementioned dates.

The Company recognized **$3,250** and $7,000 in compensation expense during the years ended December 31, 2022 and December 31, 2021, respectively, relating to the granting of stock options.

As of December 31, 2022 and December 31, 2021, there was **$1,850** and $5,100, respectively, in future compensation expense associated with outstanding stock options.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 10 – EQUITY INCENTIVE PLAN (CONTINUED)** 

**Restricted Stock** 

In 2022, the Company granted 14,840 shares of restricted stock to Board members and certain executive officers.

A summary of the activity for the years ended December 31, 2022 and December 31, 2021 is presented below:

---

| | | |
|:---|:---|:---|
|  |<br>**Number of**<br>**Common**<br>**Shares** | **Weighted**<br>**Average Grant**<br>**Date Fair**<br>**Value/Share** |
|  **Restricted Stock at January 1, 2022** | **14100** | $**18.06** |
|  **Granted** | **14840** | $**21.59** |
|  **Vested** | **(8636)** | $**19.27** |
|  **Forfeited** | **—** | $**—** |
|  **Restricted Stock at December 31, 2022** | **20304** | $**20.13** |

---

---

| | | |
|:---|:---|:---|
|  |<br>Number of<br>Common<br>Shares | Weighted<br>Average Grant<br>Date Fair<br>Value/Share |
|  Restricted Stock at January 1, 2021 |  | $— |
|  Granted | 18300 | $18.07 |
|  Vested | (4200) | $18.12 |
|  Forfeited |  | $— |
|  Restricted Stock at December 31, 2021 | 14100 | $18.06 |

---

The Company recognized **$253,000** and $155,000 in compensation expense during the years ended December 31, 2022 and December 31, 2021, respectively, relating to the granting of restricted stock.

As of December 31, 2022 and December 31, 2021, there was **$172,800** and $175,500, respectively, in future compensation expense associated with restricted stock.

**NOTE 11 – REGULATORY MATTERS** 

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

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 11 – REGULATORY MATTERS (CONTINUED)** 

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

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

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

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

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 11 – REGULATORY MATTERS (CONTINUED)** 

The following table presents the Bank's capital position based on the financial statements:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | To be well | To be well |
|  | | | | | capitalized under | capitalized under |
|  | | | For capital | For capital | prompt corrective | prompt corrective |
|  | Actual | Actual | adequacy purposes | adequacy purposes | action provisions | action provisions |
| **December 31, 2022** | Amount | Ratio | Amount | Ratio | Amount | Ratio |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  **Tier 1 Leverage ratio** | $**109939** | **13.39%** | $**32845** | **4.00%** | $**41057** | **5.00%** |
|  **Tier 1 capital (to risk-weighted assets)** | $**109939** | **16.76%** | $**55762** | **8.50%** | $**52482** | **8.00%** |
|  **Common Equity Tier 1 Capital Ratio (to risk-weighted assets)** | $**109939** | **16.76%** | $**45922** | **7.00%** | $**42642** | **6.50%** |
|  **Total Capital ratio (to risk-weighted assets)** | $**113757** | **17.34%** | $**68883** | **10.50%** | $**65602** | **10.00%** |
| December 31, 2021 |  |  |  |  |  |  |
|  Tier 1 Leverage ratio | $93211 | 11.79% | $31612 | 4.00% | $39516 | 5.00% |
|  Tier 1 capital (to risk-weighted assets) | $93211 | 17.57% | $46096 | 8.50% | $42443 | 8.00% |
|  Common Equity Tier 1 Capital Ratio (to risk-weighted assets) | $93211 | 17.57% | $37138 | 7.00% | $34485 | 6.50% |
|  Total Capital ratio (to risk-weighted assets) | $95890 | 18.07% | $55707 | 10.50% | $53054 | 10.00% |

---

As of December 31, 2022, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain ratios as set forth in the table. There have been no conditions or events since that notification that management believes have changed the Bank's category.

The Federal Deposit Insurance Corporation, through formal or informal agreement, has the authority to require an institution to maintain higher capital ratios than those provided by statute, to be categorized as well capitalized under the regulatory framework for prompt corrective action.

The Bank was allowed a special bad debt deduction at various percentages of otherwise taxable income for various years through December 1, 1987. If the amounts, which qualified as deductions for federal income tax purposes prior to December 31, 1987 are later used for purposes other than to absorb loan losses, including distributions in liquidations, they will be subject to federal and state income tax at the then current corporate rate. Retained earnings at December 31, 2022 and December 31, 2021 included **$1.5 million** for which no provision for income tax has been provided. The unrecorded deferred income tax liability on the above amount was approximately **$413,000**.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 11 – REGULATORY MATTERS (CONTINUED)** 

Federal regulations impose limitations upon all capital distributions by an insured depository institution, including cash dividends, payments to repurchase its shares and payments to shareholders of another institution in a cash-out merger. Under the regulations, an application to and prior approval of the Federal

Deposit Insurance Corporation is required prior to any capital distribution if the institution does not meet the criteria for "expedited treatment" of applications under Federal Deposit Insurance Corporation regulations (i.e., generally, examination and Community Reinvestment Act ratings in the two top categories), the total capital distributions for the calendar year exceed net income for that year plus the amount of retained net income for the preceding two years, the institution would be undercapitalized following the distribution or the distribution would otherwise be contrary to a statute, regulation or agreement with the Federal Deposit Insurance Corporation.

The Board of Directors of the M.H.C. determines whether the M.H.C. will waive or receive dividends declared by the Company each time the Company declares a dividend. The M.H.C. may elect to receive dividends and utilize such funds to pay general corporate expenses. The M.H.C. is required to apply to the Board of Governors of the Federal Reserve System with written notice of its intent to waive its dividends prior to the proposed declaration date of the dividend. The Board of Governors of the Federal Reserve System has issued an interim final rule providing that it will not object to dividend waivers under certain circumstances where the waiver is not detrimental to the safe and sound operation of the savings institution and a majority of the mutual holding company's members have approved the waiver of dividends by the mutual holding company within the previous twelve months. If a waiver is granted, dividends waived by the M.H.C. will be excluded from the Company's capital accounts for purposes of calculating dividend payments to minority shareholders. Through December 31, 2022, the M.H.C. waived the right to receive its portion of the cash dividends paid, which totaled $1.2 million on a cumulative basis.

In connection with the purchase of Kopernik Bank on February 28, 2019, the Company and Bay-Vanguard M.H.C. each became a Maryland chartered bank holding company. As such, Bay-Vanguard M.H.C. lost its ability to waive cash dividends paid by the Company.

Banks are required to carry noninterest-bearing cash reserves at specified percentages of deposit balances. The Bank's normal amount of cash on hand and on deposit with other banks is sufficient to satisfy the reserve requirements.

**NOTE 12– INCOME TAXES** 

The income tax provision consisted of the following for the years ended December 31, 2022 and December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  Current expense |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | $**2466** | $2181 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State | **1255** | 929 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Current Expense | **3721** | 3110 |
|  Deferred expense | **308** | 273 |
|  Income tax expense | $**4029** | $3383 |

---

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 12 – INCOME TAXES (CONTINUED)** 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and December 31, 2021 are presented below:

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  Deferred tax assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred compensation | $**715** | $743 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | **1061** | 746 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Merger fair value adjustments | **2497** | 3105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill impairment | **—** | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreclosed real estate write-downs and deferred gain | **273** | 273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net operating loss carryover | **7011** | 7075 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nonaccrual interest | **66** | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **1526** | 537 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deferred tax assets | **13149** | 12550 |
|  Deferred tax liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses | **145** | 146 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Core deposit intangible | **329** | 364 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | **3562** | 3718 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deferred tax liabilities | **4036** | 4228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deferred tax assets, net | $**9113** | $8322 |

---

The amount computed by applying the statutory federal income tax rate to income before income tax provision is different than the taxes provided for the following reasons:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **12/31/2022** | **12/31/2022** | 12/31/2021 | 12/31/2021 |
|  |<br>Amount | Percent of<br>pretax income |<br>Amount | Percent of<br>pretax income |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  Statutory federal income tax rate | $**3262** | **21.0%** | $2693 | 21.0% |
|  State tax, net of federal income tax provision | **1018** | **6.6** | 938 | 7.3 |
|  Tax exempt income | **(787)** | **(5.1)** | (144) | (1.1) |
|  Nondeductible merger expenses | **373** | **2.4** | 66 | 0.5 |
|  Other | **163** | **1.1** | (170) | (1.3) |
|  Income Tax Expense | $**4029** | **26.0%** | $3383 | 26.4% |

---

The estimated fair values of the Bank's financial instruments are summarized below. The fair values are estimates derived primarily from present value techniques and may not be indicative of the net realizable or liquidation values. The calculation of estimated fair values is based on market conditions at a specific point in time and may not reflect current or future fair values.

Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 13 – RELATED-PARTY TRANSACTIONS** 

The Bank has had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors, officers, their immediate families and affiliated companies (commonly referred to as related parties), on the same terms including interest rates and collateral, as those prevailing at the time for comparable transactions with others. The following table presents a summary of the activity of loans receivable from related parties during the years ended December 31, 2022 and December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  Balance, beginning | $**37** | $484 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advances | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; New related party | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: retired directors | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayments | **(20)** | (447) |
|  Balance, ending | $**17** | $37 |

---

Deposits of related parties totaled **$1.9 million** and $1.6 million as of December 31, 2022 and December 31, 2021, respectively.

**NOTE 14 – LEASING ARRANGEMENTS** 

The Company leases real estate properties for a portion of its network of bank branches. All of the Company's leases are currently classified as operating.

The following table shows the operating lease right of use assets and operating lease liabilities as of December 31, 2022 and 2021:

---

| | | | |
|:---|:---|:---|:---|
|  | Consolidated Balance<br>Sheet classification |<br>**December 31, 2022** |<br>December 31, 2021 |
|  | | (In thousands) | (In thousands) |
|  Operating lease right of use asset | Other assets | $**617** | $1203 |
|  Operating lease liabilities | Other liabilities | $**645** | $1231 |
|  Other information related to leases: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted average remaining lease term of operating leases |  | **3.9 years** | 4.9 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Weighted average discount rate of operating leases |  | **3.74%** | 3.56% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for amounts included in the measurement of lease liabilities |  | $**220000** | $221000 |

---

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 14 – LEASING ARRANGEMENTS (CONTINUED)** 

Operating lease costs included in occupancy expense in the Consolidated Statement of Income for the years ended December 31, 2022 and December 31, 2021 were **$273,000** and $344,000, respectively.

Future undiscounted lease payments for operating leases, including those option years for which the Company is reasonably certain to renew, are as follows:

---

| | |
|:---|:---|
| Year ending December 31, | Amount |
|  | (In thousands) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2023 | $171 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2024 | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025 | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2026 | 121 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2027 | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Thereafter |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total undiscounted lease payments | 635 |
|  Add: imputed interest | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Present value of operating lease liabilities | $645 |

---

**NOTE 15 – CONTINGENCIES** 

Various legal claims arise from time to time in the normal course of business, which, in the opinion of management, after consultation with legal counsel, will have no material effect on the Company's consolidated financial position or results of operations.

**NOTE 16 – FAIR VALUE MEASUREMENTS** 

The estimated fair values of the Bank's financial instruments are summarized below. The fair values are estimates derived primarily from present value techniques and may not be indicative of the net realizable or liquidation values. The calculation of estimated fair values is based on market conditions at a specific point in time and may not reflect current or future fair values.

Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 16 – FAIR VALUE MEASUREMENTS (CONTINUED)** 

An asset or liability's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Assets measured at fair value on a recurring basis by level within the fair value hierarchy used at December 31, 2022 and December 31, 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2022** | Total | Level 1<br>Quoted prices<br>in active<br>markets for<br>identical assets | Level 2<br>Significant<br>other<br>observable<br>inputs | Level 3<br>Significant<br>other<br>unobservable<br>inputs |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  **Securities available for sale** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Corporate securities** | $**1932** | $**—** | $**1932** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Mortgage-backed securities** | **31102** | **—** | **31102** | **—** |
|  | $**33034** | $**—** | $**33034** | $**—** |
| December 31, 2021 |  |  |  |  |
|  Securities available for sale |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U.S. government agency securities | $750 | $— | $750 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage-backed securities | 37043 |  | 37043 |  |
|  | $37793 | $— | $37793 | $— |

---

The following valuation techniques were used to measure the fair value of assets in the table above on a recurring basis as of December 31, 2022 and December 31, 2021.

*Securities available for sale* - The fair values of securities available for sale were based on available market pricing for the securities. We rely on third party brokers to obtain and provide us with this market pricing from a definitive security pricing source.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 16 – FAIR VALUE MEASUREMENTS (CONTINUED)** 

Assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy used at December 31, 2022 and December 31, 2021, are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2022** |  | Level 1<br>Quoted prices<br>in active<br>markets for<br>identical assets | Level 2<br>Significant<br>other<br>observable<br>inputs | Level 3<br>Significant<br>other<br>unobservable<br>inputs |
|  | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  **Impaired loans** | $**6349** | $**—** | $**—** | $**6349** |
|  **Foreclosed real estate and repossessed assets** | **1987** | **—** | **—** | **1987** |
|  | $**8336** | $**—** | $**—** | $**8336** |
| December 31, 2021 |  |  |  |  |
|  Impaired loans | $4538 | $— | $— | $4538 |
|  Foreclosed real estate and repossessed assets | 1987 |  |  | 1987 |
|  | $6525 | $— | $— | $6525 |

---

The following valuation techniques were used to measure the fair value of assets in the tables above on a nonrecurring basis as of December 31, 2022 and December 31, 2021.

*Impaired loans* - Loans included in the table have been measured for impairment generally based on the fair value of the loan's collateral. Fair value was determined based upon a discounted cash flow from the expected proceeds of the underlying collateral. These loans are included as Level 3 fair value, based upon the lowest level of input that is significant to the fair value measurements. The fair value consists of the loan balance reduced by any specific impairment reserve.

There were no transfers in or out of the Level 3 category after the loans were classified as impaired loans.

*Foreclosed real estate and repossessed assets -* Fair value of foreclosed assets was based on the Company's appraisal of the property less costs to sell. This value was determined from a current industry standard appraisal guide based on the value of similar properties adjusted for factors including condition and location of property.

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 16 – FAIR VALUE MEASUREMENTS (CONTINUED)** 

Changes in the balance of foreclosed real estate and repossessed assets during the years ended December 31, 2022 December 31, 2021, were as follows:

---

| | | |
|:---|:---|:---|
|  | **12/31/2022** | **12/31/2021** |
|  | (In thousands) | (In thousands) |
|  Beginning of period balance | $**1987** | $2790 |
|  Improvements and additions | **—** | 180 |
|  Merger fair market value adjustment | **—** | (966) |
|  Proceeds from sale | **—** | (29) |
|  Gain (loss) on sale | **—** | 12 |
|  End of period balance | $**1987** | $1987 |

---

At December 31, 2022 and December 31, 2021, the Company had **$100,000** and $900,000 million in residential mortgages in the process of foreclosure.

The following methods and assumptions were used by the Company in estimating the fair values of financial instruments:

**Cash and Cash Equivalents** 

The carrying amounts of cash and cash equivalents approximate fair value.

**Time Deposits in Other Banks** 

The fair value of time deposits in other banks is estimated using the rates currently available for deposits of similar remaining maturities.

**Investment Securities** 

Fair values for securities, excluding Federal Home Loan Bank stock, are based on available market prices. The carrying amount of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank.

**Loans Receivable** 

The fair value of loans receivable were determined using an exit price methodology as prescribed by FASB Accounting Standard Codifications. The exit price estimation of fair value is based on the present value of the expected cash flows. The projected cash flows are based on the contractual terms of the loans, adjusted for prepayments and use of a discount rate based on the relative risk of the cash flows, taking into account the loan type, maturity of the loan, liquidity risk, servicing costs, and a required return on debt and capital.

The Company follows ASC Topic 820, Fair Value Measurements which provides a framework for measuring and disclosing fair value under generally accepted accounting principles. ASC Topic 820 requires disclosures about the fair value of assets and liabilities recognized in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis or on a nonrecurring basis. ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 16 – FAIR VALUE MEASUREMENTS (CONTINUED)** 

**Deposits** 

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on such certificates to a schedule of aggregated expected monthly maturities on these deposits.

**Advances from the Federal Home Loan Bank of Atlanta** 

The fair value of advances is estimated discounting the contractual cash flows using rates currently offered for advances with similar terms and remaining maturities.

**Off-Balance Sheet Credit Related Instruments** 

Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair values of these instruments were not significant at December 31, 2022 and December 31, 2021.

The following table summarizes the carrying amounts and fair values of financial instruments at December 31, 2022 and December 31, 2021:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | December 31, 2021 | December 31, 2021 |
|  | Fair value<br>hierarchy | **Carrying**<br>**amount** | **Fair**<br>**value** | Carrying<br>amount | Fair<br>value |
|  | | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
|  **Financial assets** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | Level 1 | $**68652** | $**68652** | $111190 | $111190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities held to maturity | Level 2 | **10461** | **9906** | 4059 | 4102 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal Home Loan Bank of Atlanta stock | Level 2 | **977** | **977** | 404 | 404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans receivable | Level 3 | **659131** | **639027** | 584438 | 589064 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest receivable | Level 2 | **2952** | **2952** | 2583 | 2583 |
|  **Financial liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits | Level 3 | $**684618** | $**551348** | $680025 | $619350 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FHLB Borrowings | Level 3 | **12000** | **11976** |  |  |
|  Subordinated Debentures | Level 3 | **37039** | **33595** | 36828 | 37449 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued interest payable | Level 2 | **110** | **110** | 79 | 79 |

---

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 17 – CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)** 

Information as to the financial position of BV Financial, Inc. and its results of operations and cash flows as of and for the years ended December 31, 2022 and December 31, 2021, are summarized below.

---

| | | |
|:---|:---|:---|
| Statement of Financial Condition | **12/31/2022** | 12/31/2021 |
|  | *(In thousands)* | *(In thousands)* |
|  **Assets** |  |  |
|  Cash | $**3820** | $4073 |
|  Equity investment | **221** |  |
|  Investment in subsidiary | **123436** | 109320 |
|  Goodwill | **6326** | 6326 |
|  Other assets | **1056** | 592 |
|  Total Assets | $**134859** | $120311 |
|  **Liabilities and Stockholders Equity** |  |  |
|  Borrowings | $**37039** | $36828 |
|  Other Liabilities | **69** | 37 |
|  Total Liabilities | **37108** | 36865 |
|  Total Stockholders Equity | **97751** | 83446 |
|  Total Liabilities & Stockholders Equity | $**134859** | $120311 |
| Statement of Income | **12/31/2022** | 12/31/2021 |
|  Interest income | $**—** | $— |
|  Cash dividends from subsidiary | **1900** | 1350 |
|  Equity security valuation adjustment | **(28)** |  |
|  Total interest and dividend income | **1872** | 1350 |
|  Interest Expense | **2062** | 1807 |
|  Net interest and dividend income | **(190)** | (457) |
|  Noninterest expense | **111** | 163 |
|  Income (loss) before tax | **(301)** | (620) |
|  Income tax benefit | **462** | 414 |
|  Income (loss) before equity in net income if subsidiary | **161** | (206) |
|  Equity in undistributed net income of subsidiary | **10363** | 9647 |
|  Net Income | $**10524** | $9441 |

---

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***BV FINANCIAL, INC. AND SUBSIDIARIES***

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**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 17 - CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)** 

---

| | | |
|:---|:---|:---|
| **Statements of Cash Flows** | **12/31/2022** | 12/31/2021 |
|  | (In thousands) | (In thousands) |
|  **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | $**10524** | $9441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash used by operating activities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity in net income of subsidiary | **(10363)** | (9647) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt issuance costs and debt fair value adjustments | **211** | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-cash income-Equity security valuation adjustment | **28** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation expense | **—** | 183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase in other assets | **(463)** | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in other liabilities | **32** | (663) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) operating activities | **(31)** | (615) |
|  **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment in Equity Securities | **(250)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | **(250)** |  |
|  **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net proceeds from issuance of subordinated debt | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of subordinated debt | **—** | (4100) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock options exercised | **28** | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash (used in) provided by financing activities | **28** | (4064) |
|  Increase (decrease) in cash and cash equivalents | **(253)** | (4679) |
|  Cash and cash equivalents at beginning of period | **4073** | 8752 |
|  Cash and cash equivalents at end of period | $**3820** | $4073 |

---

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**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 BV Financial, Inc. or BayVanguard 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 imply that there has been no change in the affairs of BV Financial, Inc. or BayVanguard Bank since any of the dates as of which information is furnished herein or since the date hereof.** 

**Up to 14,375,000 Shares** 

**(Subject to Increase to up to 16,531,250 Shares)** 

## BV Financial, Inc.
**(Proposed Holding Company for BayVanguard Bank)** 

**COMMON STOCK** 

**par value $0.01 per share** 

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**PROSPECTUS** 

------

**PERFORMANCE TRUST** 

**[Prospectus date]** 

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**These securities are not deposits or accounts and are not federally insured or guaranteed.** 

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**Until , 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.** 

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**[Logo of BV Financial]** 

Dear Fellow Stockholder:

BV Financial, Inc. ("BV Financial"), a Maryland corporation and the bank holding company of BayVanguard Bank, is soliciting stockholder votes regarding the mutual-to-stock conversion of Bay-Vanguard, M.H.C, Inc. Pursuant to a Plan of Conversion and Reorganization (the "Plan of Conversion"), our organization will convert from a partially public company to a fully public company by selling a minimum of 10,625,000 shares of our common stock.

**<u>The Proxy Vote</u>**

We must receive the approval of our stockholders before we can proceed with the transactions contemplated by the Plan of Conversion. Enclosed is a proxy statement/prospectus describing the proposals being presented at our special meeting of stockholders. **Please vote the enclosed proxy card today. Our Board of Directors urges you to vote "<u>FOR</u>" approval of the Plan of Conversion and "<u>FOR</u>" approval to adjourn the special meeting if necessary to solicit additional votes to approve the Plan of Conversion.** 

**<u>The Exchange</u>**

Upon the completion of the conversion, your shares of BV Financial common stock will be exchanged for new shares of BV Financial common stock. The number of new shares that you receive will be based on an exchange ratio that is described in the proxy statement/prospectus. Shortly after the completion of the conversion, our transfer agent will send a transmittal form to each stockholder of BV Financial who holds stock certificates. The transmittal form will explain the procedure to follow to exchange your shares. **Do not deliver your certificate(s) before you receive the transmittal form.** Shares of BV Financial that are held in "street name" (*e.g.*, in a brokerage account) and shares that are held in "book entry form" (*i.e.*, electronically with the transfer agent) will be converted automatically at the completion of the conversion - no action or documentation will be required of you.

**<u>The Stock Offering</u>**

We are offering for sale shares of common stock of BV Financial at a price of $10.00 per share. The shares are first being offered in a subscription offering to eligible depositors of BayVanguard Bank. BV Financial public stockholders do not have priority rights to purchase shares in the subscription offering unless they are also eligible depositors of BayVanguard Bank. However, if we do not sell sufficient shares in the subscription offering to complete the offering, shares would be available for sale in a community offering to BV Financial public stockholders and others not eligible to subscribe for shares in the subscription offering. **If you are interested in subscribing for shares of our common stock, contact our Stock Information Center at [Information Center Phone Number] to receive a stock order form and a prospectus. The stock offering period is expected to expire on [Offering Period Expiration Date]*.***

If you have any questions, please refer to the Questions & Answers section in this document.

Thank you for your support as a stockholder of BV Financial, Inc.

Sincerely,

Timothy L. Prindle David M. Flair <br> *Co-President and Chief Executive Officer* *Co-President and Chief Executive Officer*

**These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Commissioner of Financial Regulation for the State of Maryland, nor any state securities regulator has approved or disapproved of these securities or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.** 

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**PROSPECTUS AND PROXY STATEMENT OF BV FINANCIAL, INC.** 

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BV Financial, Inc., which we refer to as "BV Financial" in this document, is converting from the mutual holding company structure to a fully public stock holding company structure. Currently, BayVanguard Bank is a wholly owned subsidiary of BV Financial, a Maryland corporation, and Bay-Vanguard, M.H.C, Inc., a Maryland mutual holding company, owns 86.3% of BV Financial's common stock. The remaining 13.7% of BV Financial's common stock is owned by public stockholders. As a result of the conversion, Bay-Vanguard, M.H.C, Inc. will merge with and into BV Financial and each share of BV Financial common stock owned by the public will be exchanged for between 1.6599 and 2.2458 (2.5827 at the adjusted maximum) new shares of common stock of BV Financial, so that immediately after the conversion BV Financial's public stockholders will own approximately the same percentage of BV Financial common stock as they owned of BV Financial's common stock immediately before the conversion, excluding any new shares purchased by them in the offering and their receipt of cash in lieu of fractional exchange shares, and reflecting certain assets held by Bay-Vanguard, M.H.C, Inc. The actual number of shares that you will receive will depend on the percentage of BV Financial common stock held by the public at the completion of the conversion, certain assets held by Bay-Vanguard, M.H.C, Inc., the final independent appraisal of BV Financial and the number of shares of BV Financial common stock sold in the offering described in the following paragraph. It will not depend on the market price of BV Financial common stock. See "Proposal 1—Approval of the Plan of Conversion and Reorganization—Share Exchange Ratio for Current Stockholders" for a discussion of the exchange ratio. Based on the $[______] per share closing price of BV Financial common stock as of the last trading day before the date of this proxy statement/prospectus, the initial value of the BV Financial common stock you receive in the share exchange would be less than the market value of the BV Financial common stock you currently own. See "Risk Factors—Risks Related to the Offering and the Exchange—The market value of BV Financial common stock received in the share exchange may be less than the market value of BV Financial common stock exchanged."

Concurrently with the exchange offer, we are offering for sale up to 16,531,250 shares of common stock of BV Financial, representing the ownership interest of Bay-Vanguard, M.H.C, Inc. in BV Financial as well as certain assets held by Bay-Vanguard, M.H.C, Inc. We are offering the shares of common stock to eligible depositors of BayVanguard Bank, to BayVanguard Bank's tax qualified benefit plans and, if necessary, to the public, including BV Financial stockholders, at a price of $10.00 per share. The conversion of Bay-Vanguard, M.H.C, Inc. and the offering and exchange of common stock by BV Financial is referred to herein as the "conversion and offering." When the conversion and offering are completed, BayVanguard Bank will continue to be a wholly owned subsidiary of BV Financial, and 100% of the common stock of BV Financial will be owned by public stockholders. As a result of the conversion and offering, Bay-Vanguard, M.H.C, Inc. will cease to exist.

BV Financial's common stock is currently traded on the Pink Open Market operated by OTC Markets Group under the trading symbol "BVFL." We expect the shares of BV Financial common stock will trade on the Nasdaq Capital Market under the symbol "BVFL."

The conversion and offering cannot be completed unless the stockholders of BV Financial approve the Plan of Conversion. BV Financial is holding a special meeting of stockholders at BayVanguard Bank's main office, 7114 North Point Road, Baltimore, Maryland 21219 on [Meeting Date], at [Meeting Time], Eastern Time, to consider and vote upon the Plan of Conversion. We must obtain the affirmative vote of (1) two-thirds of the total number of votes entitled to be cast at the special meeting by BV Financial stockholders, including votes representing shares held by Bay-Vanguard, M.H.C, Inc., and (2) a majority of the total number of votes entitled to be cast at the special meeting by BV Financial stockholders other than Bay-Vanguard, M.H.C, Inc. **BV Financial's board of directors unanimously recommends that stockholders vote "<u>FOR</u>" approval of the Plan of Conversion.** 

This document serves as the proxy statement for the special meeting of stockholders of BV Financial and the prospectus for the shares of BV Financial common stock to be issued in exchange for shares of BV Financial common stock. We urge you to read this entire document carefully. You can also obtain information about us from documents that we have filed with the Securities and Exchange Commission and the Board of Governors of the Federal Reserve System. This document does not serve as the prospectus relating to the offering by BV Financial of its shares of common stock in the offering, which is being made pursuant to a separate prospectus. Stockholders of BV Financial are not required to participate in the offering.

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**This proxy statement/prospectus contains information that you should consider in evaluating the Plan of Conversion. In particular, you should carefully read the section captioned "[Risk Factors](#ptx447808_2)" beginning on page _ for a discussion of certain risk factors relating to the conversion and offering.** 

**These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.** 

**Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Commissioner of Financial Regulation for the State of Maryland nor any state securities regulator has approved or disapproved of these securities or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.** 

**For answers to your questions, read this proxy statement/prospectus, including the Questions and Answers section, beginning on page 1. Questions about voting on the Plan of Conversion may be directed to Laurel Hill Advisory Group, LLC, Monday through Friday from 9:00 a.m. to 5:00 p.m., Eastern Time. Banks and brokers can call [•], and all others can call [•] (toll-free).** 

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**The date of this proxy statement/prospectus is [document date], and it is first being mailed to stockholders of BV Financial on or about [__________], 2023.** 

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##### [**Table of Contents**](#toc)
**BV FINANCIAL, INC.** 

**7114 North Point Road** 

**Baltimore, Maryland 21219** 

**(410) 477-5000** 

**NOTICE OF SPECIAL MEETING OF STOCKHOLDERS** 

On [Meeting Date] at [Meeting Time], Eastern Time, BV Financial, Inc. ("BV Financial") will hold a special meeting of stockholders at BayVanguard Bank's main office, 7114 North Point Road, Baltimore, Maryland 21219.

At the meeting, stockholders will consider and act on the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The approval of a Plan of Conversion and Reorganization, whereby Bay-Vanguard, M.H.C, Inc. and BV Financial will convert and reorganize from the mutual holding company structure to the stock holding company structure, including the merger of Bay-Vanguard, M.H.C, Inc. with and into BV Financial and amendments to BV Financial's articles of incorporation as a result of the conversion, as more fully described in the attached proxy
statement/prospectus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there
are not sufficient votes at the time of the special meeting to approve the Plan of Conversion; and

Such other business that may properly come before the meeting.

NOTE: The board of directors is not aware of any other business to come before the meeting.

The board of directors has fixed the close of business on [Voting Record Date], as the record date for the determination of stockholders entitled to notice of and to vote at the special meeting and at any adjournment or postponement thereof.

**Upon written request addressed to the Corporate Secretary of BV Financial at the above address, stockholders may obtain an additional copy of this proxy statement/prospectus and/or a copy of the Plan of Conversion. To assure timely receipt of these materials, BV Financial must receive the written request by [request date].** 

Please complete, sign and date the enclosed proxy card, which is solicited by the board of directors, and mail it in the enclosed envelope today. Alternatively, you may vote by telephone or Internet as described on the proxy card. Your proxy will not be used if you attend the meeting and vote in person.

---

| |
|:---|
| BY ORDER OF THE BOARD OF DIRECTORS |
| [NAME] |
| Corporate Secretary |

---

Baltimore, Maryland

[document date]

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##### [**Table of Contents**](#toc)
**TABLE OF CONTENTS** 

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| | |
|:---|:---|
|  **[SUMMARY](#ptx447808_1)** | **5** |
|  **[RISK FACTORS](#ptx447808_2)** | **9** |
|  **[INFORMATION ABOUT THE SPECIAL MEETING](#ptx447808_3)** | **9** |
|  **[PROPOSAL 1 — APPROVAL OF THE PLAN OF CONVERSION AND REORGANIZATION](#ptx447808_4)** | **12** |
|  **[PROPOSAL 2 — ADJOURNMENT OF THE SPECIAL MEETING](#ptx447808_5)** | **13** |
|  **[SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA](#ptx447808_6)** | **14** |
|  **[FORWARD-LOOKING STATEMENTS](#ptx447808_7)** | **14** |
|  **[HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING](#ptx447808_8)** | **14** |
|  **[OUR DIVIDEND POLICY](#ptx447808_9)** | **14** |
|  **[MARKET FOR THE COMMON STOCK](#ptx447808_10)** | **14** |
|  **[HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE](#ptx447808_11)** | **14** |
|  **[CAPITALIZATION](#ptx447808_12)** | **14** |
|  **[PRO FORMA DATA](#ptx447808_13)** | **14** |
|  **[MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#ptx447808_14)** | **14** |
|  **[BUSINESS OF BV FINANCIAL](#ptx447808_15)** | **14** |
|  **[BUSINESS OF BAYVANGUARD BANK](#ptx447808_16)** | **14** |
|  **[SUPERVISION AND REGULATION](#ptx447808_17)** | **14** |
|  **[TAXATION](#ptx447808_18)** | **14** |
|  **[MANAGEMENT](#ptx447808_19)** | **15** |
|  **[BENEFICIAL OWNERSHIP OF COMMON STOCK](#ptx447808_20)** | **15** |
|  **[SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS](#ptx447808_21)** | **15** |
|  **[COMPARISON OF STOCKHOLDERS' RIGHTS FOR STOCKHOLDERS OF BV FINANCIAL BEFORE AND AFTER THE CONVERSION](#ptx447808_22)** | **15** |
|  **[RESTRICTIONS ON ACQUISITION OF BV FINANCIAL](#ptx447808_23)** | **15** |
|  **[DESCRIPTION OF CAPITAL STOCK OF BV FINANCIAL](#ptx447808_24)** | **15** |
|  **[TRANSFER AGENT](#ptx447808_25)** | **15** |
|  **[EXPERTS](#ptx447808_26)** | **15** |
|  **[LEGAL MATTERS](#ptx447808_27)** | **15** |
|  **[WHERE YOU CAN FIND ADDITIONAL INFORMATION](#ptx447808_28)** | **15** |
|  **[STOCKHOLDER PROPOSALS](#ptx447808_29)** | **15** |
|  **[ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING](#ptx447808_30)** | **15** |
|  **[IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING](#ptx447808_31)** | **17** |
|  **[OTHER MATTERS](#ptx447808_32)** | **17** |

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##### [**Table of Contents**](#toc)
**QUESTIONS AND ANSWERS** 

**FOR STOCKHOLDERS OF BV FINANCIAL, INC.** 

**REGARDING THE PLAN OF CONVERSION AND REORGANIZATION** 

You should read this document for more information about the conversion and offering. We have filed applications with the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and the Office of the Commissioner of Financial Regulation for the State of Maryland (the "OCFR") with respect to the conversion and offering. We have also filed an application with the OCFR with respect to the conversion of BayVanguard Bank from a state-chartered stock savings bank to a state-chartered commercial bank. The approvals of the Federal Reserve Board and the OCFR are required before we can consummate the conversion and offering. Any approval by the Federal Reserve Board or the OCFR does not constitute a recommendation or endorsement of the Plan of Conversion and Reorganization (the "Plan of Conversion"). Consummation of the conversion is also subject to approval of the Plan of Conversion by BV Financial's stockholders, and to the satisfaction of certain other conditions.

**Q.** **WHAT ARE STOCKHOLDERS BEING ASKED TO APPROVE?** 

**A.** BV Financial stockholders as of the close of business on [Voting Record Date] are being asked to
vote on the Plan of Conversion pursuant to which Bay-Vanguard, M.H.C, Inc. will convert from the mutual to the stock form of organization, which includes the merger of Bay-Vanguard, M.H.C, Inc. with and into BV Financial and the adoption of amendments to BV Financial's articles of incorporation as a result of the conversion, as more fully described in the attached proxy
statement/prospectus. As part of the conversion, BV Financial is offering its common stock to eligible depositors of BayVanguard Bank, to BayVanguard Bank's tax qualified benefit plans and to the public. The shares offered represent Bay-Vanguard, M.H.C, Inc.'s current ownership interest in BV Financial, adjusted for certain assets held by Bay-Vanguard, M.H.C, Inc. **Your vote is very important. Without sufficient votes " <u>FOR</u> " approval of the Plan of Conversion, we cannot implement the Plan of Conversion and complete the offering.** 

In addition, BV Financial stockholders are being asked to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Plan of Conversion.

**Q.** **WHAT ARE THE REASONS FOR THE CONVERSION AND RELATED OFFERING?** 

**A**. The primary reasons for the conversion and offering are to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• facilitate future mergers and acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• support our planned growth and strengthen our regulatory capital position with the additional capital we will
raise in the offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• improve the liquidity of our shares of common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• facilitate our stock holding company's ability to pay dividends to our public stockholders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transition our organization to a stock holding company structure, which gives us greater flexibility to access
the capital markets compared to our existing mutual holding company structure.

As a fully converted stock holding company, we will have greater flexibility in structuring mergers and acquisitions, including the form of consideration that we can use to pay for an acquisition. Our current mutual holding company structure limits our ability to offer shares of our common stock as consideration in a merger or acquisition since Bay-Vanguard, M.H.C, Inc. is required to own a majority of BV Financial's outstanding shares of common stock. Potential sellers often want stock for at least part of the purchase price. Our new stock holding company structure will enable us to offer stock or cash consideration, or a

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combination of stock and cash, and therefore will enhance our ability to compete with other bidders when acquisition opportunities arise. We currently have no arrangements or understandings regarding any specific acquisition. See "Proposal 1—Approval of the Plan of Conversion and Reorganization—Reasons for the Conversion" for a more complete discussion of our reasons for conducting the conversion and offering.

**Q.** **WHAT WILL STOCKHOLDERS RECEIVE FOR THEIR EXISTING BV FINANCIAL SHARES?** 

**A.** As more fully described in "Proposal 1—Approval of the Plan of Conversion and
Reorganization—Share Exchange Ratio for Current Stockholders," depending on the number of shares sold in the offering, each share of common stock that you own at the time of the completion of the conversion will be exchanged for between
1.6599 shares at the minimum and 2.2458 shares at the maximum (2.5827 at the adjusted maximum) of the offering range of BV Financial common stock (cash will be paid in lieu of any fractional shares). For example, if you own 100 shares of BV
Financial common stock, and the exchange ratio is 2.2458 (at the maximum of the offering range), after the conversion you will receive 224 shares of BV Financial common stock and $5.80 in cash, the value of the fractional share based on the $10.00
per share purchase price of stock in the offering.

If you own shares of BV Financial common stock in a brokerage account in "street name" or electronically with our transfer agent in "book entry" form, your shares will be automatically exchanged within your account, and you do not need to take any action to exchange your shares of common stock or receive cash in lieu of fractional shares. If you own shares in the form of BV Financial stock certificates, after the completion of the conversion and offering, our transfer agent will mail to you a transmittal form with instructions to surrender your stock certificates. A statement reflecting your ownership of shares of common stock of BV Financial and a check representing cash in lieu of fractional shares will be mailed to you within five business days after the transfer agent receives a properly executed transmittal form and your existing BV Financial stock certificate(s). All shares of BV Financial common stock will be issued in book-entry form, meaning that BV Financial will not issue stock certificates. **Do not submit your stock certificate(s) until you receive a transmittal form.**

**Q.** **WHY WILL THE SHARES THAT I RECEIVE BE BASED ON A PRICE OF $10.00 PER SHARE RATHER THAN THE TRADING PRICE OF THE COMMON STOCK BEFORE COMPLETION OF THE CONVERSION?** 

**A.** The shares will be based on a price of $10.00 per share because that is the price at which BV Financial will
sell shares in its offering. The amount of common stock BV Financial will issue at $10.00 per share in the offering and the exchange is based on an independent appraisal of the estimated market value of BV Financial by RP Financial, LC., an
appraisal firm experienced in the appraisal of financial institutions. RP Financial, LC. has estimated that, as of February 24, 2023, this market value was $144.9 million. Based on federal regulations, the market value forms the midpoint
of a range with a minimum of $123.1 million and a maximum of $166.6 million ($191.6 million at the adjusted maximum). Based on this valuation and the valuation range, the number of shares of common stock of BV Financial that existing
public stockholders of BV Financial will receive in exchange for their shares of BV Financial common stock is expected to range from 1,689,427 to 2,285,696, with a midpoint of 1,987,562 (a value of approximately $16.9 million to
$22.9 million, with a midpoint of $19.9 million, based on a price of $10.00 per share). The number of shares received by the existing public stockholders of BV Financial is intended to maintain their existing ownership in our organization
(excluding any new shares purchased by them in the offering and their receipt of cash in lieu of fractional exchange shares, and as adjusted to reflect certain assets held by Bay-Vanguard, M.H.C, Inc.). The
independent appraisal is based in part on BV Financial's financial condition and results of operations, the pro forma impact of the additional capital raised by the sale of shares of common stock in the offering, and an analysis of a peer group
of ten publicly traded savings and loan and bank holding companies that RP Financial, LC. considered comparable to BV Financial.

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**Q.** **DOES THE EXCHANGE RATIO DEPEND ON THE TRADING PRICE OF BV FINANCIAL COMMON STOCK?** 

**A.** No. The exchange ratio will not be based on the trading price of BV Financial common stock. Instead, the
exchange ratio will be based on the appraised value of BV Financial. The purpose of the exchange ratio is to maintain the ownership percentage of public stockholders of BV Financial (excluding any new shares purchased by them in the offering, their
receipt of cash in lieu of fractional exchange shares and any adjustment to reflect certain assets held by Bay-Vanguard, M.H.C, Inc.). Therefore, changes in the trading price of BV Financial common stock
between now and the completion of the conversion and offering will not affect the calculation of the exchange ratio.

**Q.** **SHOULD I SUBMIT MY STOCK CERTIFICATE(S) NOW?** 

**A.** No. If you hold stock certificate(s), instructions for exchanging the certificates will be sent to you by our
transfer agent *after* the completion of the conversion and offering. If your shares are held in "street name" (*e.g.,* in a brokerage account) or electronically with our transfer agent in "book entry" form, in either
case rather than in certificate form, the share exchange will be reflected automatically in your account upon completion of the conversion.

**Q.** **HOW DO I VOTE?** 

A. Mark, sign and date each proxy card enclosed, and return the card(s) to us in the enclosed proxy reply
envelope. Alternatively, you may vote by Internet or telephone by following the instructions on the proxy card. For information on submitting your proxy, please refer to instructions on the enclosed proxy card. **YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE TODAY.** 

**Q.** **IF MY SHARES ARE HELD IN STREET NAME, WILL MY BROKER, BANK OR OTHER NOMINEE AUTOMATICALLY VOTE ON THE PLAN ON MY BEHALF?** 

**A.** No. Your broker, bank or other nominee will not be able to vote your shares without instructions from you. You
should instruct your broker, bank or other nominee to vote your shares, using the directions that they provide to you.

**Q.** **WHY SHOULD I VOTE? WHAT HAPPENS IF I DON'T VOTE?** 

**A.** **Your vote is very important. We believe the conversion and offering are in the best interests of our stockholders. Not voting all the proxy card(s) you receive will have the same effect as voting *"against"* the approval of the Plan of Conversion.** Without sufficient favorable votes **" <u>FOR</u> "** approval of the Plan of Conversion, we cannot complete the conversion and offering.

**Q.** **WHAT IF I DO NOT GIVE VOTING INSTRUCTIONS TO MY BROKER, BANK OR OTHER NOMINEE?** 

**A.** Your vote is important. If you do not instruct your broker, bank or other nominee to vote your shares,
the unvoted proxy will have the same effect as a vote *"against"* the Plan of Conversion.

**Q.** **MAY I PLACE AN ORDER TO PURCHASE SHARES IN THE COMMUNITY OFFERING, IN ADDITION TO THE SHARES THAT I WILL RECEIVE IN THE EXCHANGE?** 

**A.** Yes. If you would like to receive a prospectus and stock order form, you must call our Stock Information Center
at [Information Center Phone Number], Monday through Friday between 9:00 a.m. and 4:30 p.m., Eastern Time, except for bank holidays.

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Eligible depositors of BayVanguard Bank have priority subscription rights allowing them to purchase common stock in a subscription offering. Shares not purchased in the subscription offering may be available for sale to the public in a community offering, as described in this document. If orders for BV Financial common stock in a community offering exceed the number of shares available for sale, shares will be allocated (to the extent shares remain available) as follows: first, to cover orders of natural persons (including trusts of natural persons) residing in Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland, and then to existing stockholders of BV Financial at the close of business on [Voting Record Date] and then to the general public.

Stockholders of BV Financial are subject to an ownership limitation. Shares of common stock purchased in the offering by a stockholder and his or her associates or individuals acting in concert with the stockholder, *plus* any shares a stockholder and these individuals receive in the exchange for existing shares of BV Financial common stock, may not exceed 9.9% of the total shares of common stock of BV Financial to be issued and outstanding after the completion of the conversion and offering.

**Properly completed and signed stock order forms, with full payment, must be received (not postmarked) no later than 4:00 p.m., Eastern Time, on [Offering Period Expiration Date].** 

**Q.** **WILL THE CONVERSION HAVE ANY EFFECT ON DEPOSIT AND LOAN ACCOUNTS AT BAYVANGUARD BANK?** 

**A.** No. The account number, amount, interest rate and withdrawal rights of deposit accounts will remain unchanged.
Deposits will continue to be federally insured by the Federal Deposit Insurance Corporation up to the legal limit. Loans and rights of borrowers will not be affected. Members will no longer have voting rights in Bay-Vanguard, M.H.C, Inc. as to matters currently requiring such vote. Bay-Vanguard, M.H.C, Inc. will cease to exist after the conversion and offering. Only stockholders
of BV Financial will have voting rights after the conversion and offering.

**OTHER QUESTIONS?** 

**For answers to other questions, please read this proxy statement/prospectus. Questions about voting on the Plan of Conversion may be directed to Laurel Hill Advisory Group, LLC, Monday through Friday from 9:00 a.m. to 5:00 p.m., Eastern Time. Banks and brokers can call [•], and all others can call [•] (toll-free). Questions about the stock offering may be directed to our Stock Information Center at [Information Center Phone Number], Monday through Friday between 9:00 a.m. and 4:30 p.m., Eastern Time, except for bank holidays.** 

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**SUMMARY** 

*This summary highlights material information from this proxy statement/prospectus and may not contain all the information that is important to you. To understand the conversion and offering and other proposal fully, you should read this entire document carefully, including the sections entitled "Risk Factors," "Proposal 1 — Approval of The Plan of Conversion and Reorganization," "Proposal 2 —Adjournment of the Special Meeting" and the consolidated financial statements and the notes to the consolidated financial statements.* 

**The Special Meeting** 

**Date, Time and Place.**BV Financial will hold its special meeting of stockholders at BayVanguard Bank's main office, 7114 North Point Road, Baltimore, Maryland 21219 on [Meeting Date], at [Meeting Time], Eastern Time.

**The Proposals.** Stockholders will be voting on the following proposals at the special meeting:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The approval of a Plan of Conversion whereby: (a) Bay-Vanguard, M.H.C, Inc. will convert and BV Financial will reorganize from the mutual holding company structure to the stock holding company structure; (b) Bay-Vanguard, M.H.C, Inc. will merge into BV Financial, and
BV Financial's articles of incorporation will be amended as described in this proxy statement/prospectus; (c) the outstanding shares of BV Financial, other than those held by Bay-Vanguard, M.H.C,
Inc., will be converted into new shares of common stock of BV Financial; and (d) BV Financial will offer shares of its common stock for sale in a subscription offering, a community offering and, if necessary, a syndicated offering. A vote to
approve the Plan of Conversion includes a vote to approve the merger of Bay-Vanguard, M.H.C, Inc. into BV Financial and the amendments to the articles of incorporation of BV Financial;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there
are not sufficient votes at the time of the special meeting to approve the Plan of Conversion; and

Such other business that may properly come before the meeting.

**Vote Required for Approval of Proposals by the Stockholders of BV Financial** 

**Proposal 1: Approval of the Plan of Conversion.** We must obtain the affirmative vote of (1) two-thirds of the total number of votes entitled to be cast at the special meeting by BV Financial stockholders, including shares owned representing shares held by Bay-Vanguard, M.H.C, Inc., and (2) a majority of the total number of votes entitled to be cast at the special meeting by BV Financial stockholders other than Bay-Vanguard, M.H.C, Inc.

Proposal 1 must also be approved by the members of Bay-Vanguard, M.H.C., Inc. at a special meeting called for that purpose. Members will receive separate proxy materials from Bay-Vanguard, M.H.C, Inc. regarding the conversion.

**Proposal 2: Approval of the adjournment of the special meeting.** We must obtain the affirmative vote of at least a majority of the votes cast by BV Financial stockholders at the special meeting to adjourn the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the proposal to approve the Plan of Conversion.

**Other Matters.** We must obtain the affirmative vote of the majority of the votes cast by holders of outstanding shares of common stock of BV Financial. At this time, we know of no other matters that may be presented at the special meeting.

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**Revocability of Proxies** 

You may revoke your proxy at any time before the vote is taken at the special meeting. To revoke your proxy, you must advise the corporate secretary of BV Financial in writing before your common stock has been voted at the special meeting, deliver a signed, later-dated proxy or attend the special meeting and vote your shares in person. Attendance at the special meeting will not in itself constitute revocation of your proxy.

**Vote by Bay-Vanguard, M.H.C, Inc.** 

Bay-Vanguard, M.H.C, Inc., our majority stockholder, will vote all of its shares of common stock in favor of all the matters set forth above. If Bay-Vanguard, M.H.C, Inc. votes all of its shares in favor of each proposal, the approval of the adjournment of the special meeting, if necessary, would be assured.

As of [Voting Record Date], the directors and executive officers of BV Financial beneficially owned 213,286 shares, or approximately 2.9% of the outstanding shares of BV Financial common stock, and Bay-Vanguard, M.H.C, Inc. owned 6,400,814 shares, or approximately 86.3% of the outstanding shares of BV Financial common stock.

**Vote Recommendations** 

**Your board of directors unanimously recommends that you vote "<u>FOR</u>" approval of the Plan of Conversion, which includes approval of the merger of Bay-Vanguard, M.H.C, Inc. into BV Financial and approval of the amendments to BV Financial's articles of incorporation, and "<u>FOR</u>" approval of the adjournment of the special meeting, if necessary.** 

**Our Business** 

[same as prospectus]

**Plan of Conversion and Reorganization** 

The boards of directors of Bay-Vanguard, M.H.C, Inc., BV Financial and BayVanguard Bank have adopted the Plan of Conversion, pursuant to which BayVanguard Bank will reorganize from a mutual holding company structure to a stock holding company structure. Public stockholders of BV Financial will receive new shares in BV Financial in exchange for their existing shares of BV Financial common stock based on an exchange ratio. See "—The Exchange of Existing Shares of BV Financial Common Stock." This conversion to a stock holding company structure also includes the offering by BV Financial of shares of its common stock to eligible depositors of BayVanguard Bank and to the public, including BV Financial stockholders, in a subscription offering and, if necessary, in a community offering and/or in a separate offering through a syndicate of broker-dealers, referred to in this proxy statement/prospectus as the syndicated offering. Following the conversion and offering, Bay-Vanguard, M.H.C, Inc. will no longer exist, and BV Financial will continue to be the parent company of BayVanguard Bank.

The conversion and offering cannot be completed unless the stockholders of BV Financial approve the Plan of Conversion. BV Financial's stockholders will vote on the Plan of Conversion at BV Financial's special meeting. This document is the proxy statement used by BV Financial's board of directors to solicit proxies for the special meeting. It is also the prospectus of BV Financial regarding the shares of BV Financial common stock to be issued to BV Financial's stockholders in the share exchange. This document does not serve as the prospectus relating to the offering by BV Financial of its shares of common stock in the offering, which will be made pursuant to a separate prospectus.

**Our Organizational Structure** 

[same as prospectus]

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**Business Strategy** 

[same as prospectus]

**Reasons for the Conversion** 

[same as prospectus]

See "Proposal 1 — Approval of the Plan of Conversion and Reorganization" for a more complete discussion of our reasons for conducting the conversion and offering.

**Conditions to Completion of the Conversion** 

[same as prospectus]

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

[same as prospectus]

**The Exchange of Existing Shares of BV Financial Common Stock** 

[same as prospectus]

**How We Determined the Offering Range, the Exchange Ratio and the $10.00 Per Share Stock Price** 

[same as prospectus]

For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see "Proposal 1 — Approval of the Plan of Conversion and Reorganization — Stock Pricing and Number of Shares to be Issued."

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

[same as prospectus]

**Our Dividend Policy** 

[same as prospectus]

**Purchases and Ownership by Officers and Directors** 

[same as prospectus]

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

[same as prospectus]

**Market for Common Stock** 

[same as prospectus]

**Tax Consequences** 

[same as prospectus]

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**Dissenters' Rights** 

Stockholders of BV Financial do not have dissenters' rights in connection with the conversion and offering.

**Important Risks in Owning BV Financial's Common Stock** 

Before you vote on the conversion, you should read the "Risk Factors" section beginning on page [•] of this proxy statement/prospectus.

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**RISK FACTORS** 

*You should consider carefully the following risk factors when deciding how to vote on the conversion.* 

**<u>Risks Related to Our Business</u>**

[same as prospectus]

**<u>Risks Related to the Offering and the Exchange</u>**

**The market value of BV Financial common stock received in the share exchange may be less than the market value of BV Financial common stock exchanged.** 

The number of shares of BV Financial common stock you receive will be based on an exchange ratio that will be determined as of the date of completion of the conversion and offering. The exchange ratio will be based on the percentage of BV Financial common stock held by the public before the completion of the conversion and offering, the final independent appraisal of BV Financial common stock prepared by RP Financial and the number of shares of common stock sold in the offering. The exchange ratio will ensure that public stockholders of BV Financial common stock will own the same percentage of BV Financial common stock after the conversion and offering as they owned of BV Financial common stock immediately before completion of the conversion and offering (excluding any new shares purchased by them in the offering and their receipt of cash in lieu of fractional exchange shares, any adjustment to reflect certain assets held by Bay-Vanguard, M.H.C, Inc.). The exchange ratio will not depend on the market price of BV Financial common stock.

The exchange ratio ranges from 1.6599 shares at the minimum and 2.2458 (2.5827 at the adjusted maximum) new shares at the maximum of the offering range of BV Financial common stock per share of BV Financial common stock. Shares of BV Financial common stock issued in the share exchange will have an initial value of $10.00 per share. Depending on the exchange ratio and the market value of BV Financial common stock at the time of the exchange, the initial market value of the BV Financial common stock that you receive in the share exchange could be less than the market value of the BV Financial common stock that you currently own. Based on the most recent closing price of BV Financial common stock before the date of this proxy statement/prospectus, which was $[_______], the initial value of the BV Financial common stock you receive in the share exchange would be less than the market value of the BV Financial common stock you currently own.

[remaining risk factors related to the offering are the same as prospectus]

**INFORMATION ABOUT THE SPECIAL MEETING** 

**General** 

This proxy statement/prospectus is being furnished to you in connection with the solicitation by the board of directors of BV Financial of proxies to be voted at the special meeting of stockholders to be held at BayVanguard Bank's main office, 7114 North Point Road, Baltimore, Maryland 21219 on [Meeting Date], at [Meeting Time], Eastern Time, and any adjournment or postponement thereof.

The primary purpose of the special meeting is to consider and vote upon the Plan of Conversion.

In addition, stockholders will vote on a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Plan of Conversion.

**Voting on the Plan of Conversion includes a vote on the conversion of Bay-Vanguard, M.H.C, Inc. to a stock holding company as contemplated by the Plan of Conversion, including the merger of Bay-Vanguard, M.H.C, Inc. into BV Financial and the proposed amendments to the articles of incorporation of BV Financial.** 

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 **Voting in favor of the Plan of Conversion will not obligate you to purchase any shares of common stock in the offering and will not affect the balance, interest rate or federal deposit insurance of any deposits at BayVanguard Bank.** 

**Who Can Vote at the Meeting** 

You are entitled to vote your BV Financial common stock if our records show that you held your shares as of the close of business on [Voting Record Date]. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name and these proxy materials are being forwarded to you by your broker or nominee. As the beneficial owner, you have the right to direct your broker or nominee how to vote.

As of the close of business on [Voting Record Date], there were 7,418,575 shares of BV Financial common stock outstanding. Each share of common stock has one vote.

**Attending the Meeting** 

If you are a stockholder as of the close of business on [Voting Record Date], you may attend the meeting. However, if you hold your shares in street name (*i.e.*, through a bank or broker), you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of BV Financial common stock held in street name in person at the meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.

**Quorum; Vote Required** 

The special meeting will be held only if there is a quorum. A quorum exists if a majority of the outstanding shares of common stock entitled to vote, represented in person or by proxy, is present at the meeting. If you return valid proxy instructions or attend the meeting in person, your shares will be counted to determine whether there is a quorum, even if you abstain from voting. Broker non-votes also will be counted to determine the existence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.

**Proposal 1: Approval of the Plan of Conversion and Reorganization.** We must obtain the affirmative vote of (1) two-thirds of the votes entitled to be cast at the special meeting, including shares owned by Bay-Vanguard, M.H.C, Inc., and (2) a majority of the votes entitled to be cast at the special meeting, other than shares held by Bay-Vanguard, M.H.C, Inc.

**Proposal 2: Approval of the adjournment of the special meeting.** We must obtain the affirmative vote of a majority of the votes cast by BV Financial stockholders entitled to vote at the special meeting to adjourn the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the proposal to approve the Plan of Conversion.

**Other Matters.** We must obtain the affirmative vote of the majority of the votes cast by holders of outstanding shares of common stock of BV Financial. At this time, we know of no other matters that may be presented at the special meeting.

**Shares Held by Bay-Vanguard, M.H.C, Inc. and Our Officers and Directors** 

As of [Voting Record Date], Bay-Vanguard, M.H.C, Inc. beneficially owned 6,400,814 shares of BV Financial common stock, or approximately 86.3% of our outstanding shares. Bay-Vanguard, M.H.C, Inc. will vote all of its shares in favor of each of the proposals presented.

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As of [Voting Record Date], our officers and directors beneficially owned 213,286 shares of BV Financial common stock, or approximately 2.9% of our outstanding shares and 21.0% of the outstanding shares held by stockholders other than Bay-Vanguard, M.H.C, Inc.

**Voting by Proxy** 

Our board of directors is sending you this proxy statement/prospectus to request that you allow your shares of BV Financial common stock to be represented at the special meeting by the persons named in the enclosed proxy card. All shares of BV Financial common stock represented at the meeting by properly executed and dated proxies will be voted according to the instructions indicated on the proxy card. If you sign, date and return a proxy card without giving voting instructions, your shares will be voted as recommended by our board of directors. Our board of directors recommends that you vote **"<u>FOR</u>"** approval of the Plan of Conversion and **"<u>FOR</u>"** approval of the adjournment of the special meeting, if necessary.

If any matters not described in this proxy statement/prospectus are properly presented at the special meeting, the board of directors will use their judgment to determine how to vote your shares. We do not know of any other matters to be presented at the special meeting.

If your BV Financial common stock is held in street name, you will receive instructions from your broker, bank or other nominee that you must follow to have your shares voted. Your broker, bank or other nominee may allow you to deliver your voting instructions via telephone or the Internet. Refer to the instruction form provided by your broker, bank or other nominee that accompanies this proxy statement/prospectus.

**Revocability of Proxies** 

You may revoke your proxy at any time before the vote is taken at the special meeting. To revoke your proxy, you must advise the corporate secretary of BV Financial in writing before your common stock has been voted at the special meeting, deliver a signed, later-dated proxy or attend the special meeting and vote your shares in person. Attendance at the special meeting will not in itself constitute revocation of your proxy.

**Solicitation of Proxies** 

This proxy statement/prospectus and the accompanying proxy card are being furnished to you in connection with the solicitation of proxies for the special meeting by the board of directors. BV Financial will pay the costs of soliciting proxies from its stockholders. To the extent necessary to permit approval of the Plan of Conversion and the other proposals being considered, Laurel Hill Advisory Group, LLC, our proxy solicitor, and directors, officers or employees of BV Financial and BayVanguard Bank may solicit proxies by mail, telephone and other forms of communication. We will reimburse such persons for their reasonable out-of-pocket expenses incurred in connection with such solicitation. For its services as information agent and stockholder proxy solicitor, we will pay Laurel Hill Advisory Group, LLC $5,500 plus out-of-pocket expenses and charges for telephone calls made and received in connection with the solicitation.

We will also reimburse banks, brokers, nominees and other fiduciaries for the expenses they incur in forwarding the proxy materials to you.

**Participants in the ESOP or 401(k) Plan** 

If you participate in the Employee Stock Ownership Plan (the "ESOP") or if you invest in the BV Financial Stock Fund in our 401(k) Plan, you will receive a voting form for each plan that reflects the shares you may direct the trustees to vote on your behalf under the respective plans. Under the terms of the ESOP, all allocated shares of BV Financial common stock held by the ESOP are voted by the ESOP trustee, as directed by plan participants. All allocated shares for which no timely voting instructions are received are voted by the ESOP trustee in the same proportion as shares for which the trustee has received timely voting instructions, subject to the exercise of its fiduciary duties. Under the terms of the 401(k) Plan, a participant may direct the stock fund trustee how to vote the shares in the BV Financial Stock Fund credited to his or her account. The stock fund trustee will vote all shares for which it does not receive timely instructions from participants in the same proportion as shares for which the trustee received voting instructions. **The deadline for returning your voting instructions for shares held through the ESOP or 401(k) Plan is _________, 2023.**

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**The board of directors unanimously recommends that you sign, date and mark the enclosed proxy "<u>FOR</u>" approval of each of the above described proposals, including the adoption of the Plan of Conversion, and return it in the enclosed envelope today. Voting the proxy card will not prevent you from voting in person at the special meeting. For information on submitting your proxy, refer to the instructions on the enclosed proxy card.** 

**Your prompt vote is very important. Failure to vote will have the same effect as voting against the Plan of Conversion.** 

**PROPOSAL 1 — APPROVAL OF THE PLAN OF CONVERSION AND REORGANIZATION**

The boards of directors of BV Financial and Bay-Vanguard, M.H.C, Inc. have approved the Plan of Conversion. The Plan of Conversion must also be approved by the members of Bay-Vanguard, M.H.C., Inc. and the stockholders of BV Financial, and is subject to the satisfaction of certain other conditions. Special meetings of members and stockholders have been called for this purpose. The approval of the Federal Reserve Board and the OCFR is required before we can consummate the conversion and stock offering. We have also filed an application with the OCFR with respect to the conversion of BayVanguard Bank's to that of a Maryland commercial bank. Any approval by the Federal Reserve Board or the OCFR does not constitute a recommendation or endorsement of the plan of reorganization.

**General** 

[same as prospectus]

**The board of directors unanimously recommends that you vote "<u>FOR</u>" approval of the Plan of Conversion and Reorganization of Bay-Vanguard, M.H.C, Inc.** 

[remaining sections same as prospectus under "The Conversion and Offering," with the following added:]

**Exchange of Existing Stockholders' Stock Certificates** 

The conversion of existing outstanding shares of BV Financial common stock into the right to receive shares of BV Financial common stock will occur automatically at the completion of the conversion. As soon as practicable after the completion of the conversion, our transfer agent will send a transmittal form to each public stockholder of BV Financial who holds physical stock certificates. The transmittal form will contain instructions on how to surrender certificates evidencing BV Financial common stock in exchange for shares of BV Financial common stock in book entry form, to be held electronically on the books of our transfer agent. BV Financial will not issue stock certificates. We expect that a statement reflecting your ownership of shares of common stock of BV Financial common stock will be distributed within five business days after the transfer agent receives properly executed transmittal forms, BV Financial stock certificates and other required documents. Shares held by public stockholders in street name (such as in a brokerage account) or electronically with our transfer agent in "book entry" form will be exchanged automatically upon the completion of the conversion; no transmittal forms will be mailed relating to these shares.

No fractional shares of BV Financial common stock will be issued to any public stockholder of BV Financial when the conversion is completed. For each fractional share that would otherwise be issued to a stockholder who holds a stock certificate, we will pay by check an amount equal to the product obtained by multiplying the fractional share interest to which the holder would otherwise be entitled by the $10.00 offering purchase price per share. Payment for fractional shares will be made as soon as practicable after the receipt by the transfer agent of the transmittal forms and the surrendered BV Financial stock certificates. If your shares of common stock are held in street name, you will automatically receive cash in lieu of fractional shares in your account.

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**Do not forward your stock certificates until you have received transmittal forms, which will include forwarding instructions.** After the conversion, stockholders will not receive new shares of BV Financial common stock and will not be paid dividends on those shares of BV Financial common stock until existing certificates representing existing shares of BV Financial common stock are surrendered for exchange in compliance with the terms of the transmittal form. When stockholders surrender their certificates, any unpaid dividends will be paid without interest. For all other purposes, however, each certificate that represents shares of BV Financial common stock outstanding at the effective date of the conversion will be considered to evidence ownership of shares of BV Financial common stock into which those shares have been converted by virtue of the conversion.

If a certificate for BV Financial common stock has been lost, stolen or destroyed, our transfer agent will issue a new stock certificate upon receipt of appropriate evidence as to the loss, theft or destruction of the certificate, appropriate evidence as to the ownership of the certificate by the claimant, and appropriate and customary indemnification, which is normally effected by the purchase of a bond from a surety company at the stockholder's expense.

All shares of BV Financial common stock that we issue in exchange for existing shares of BV Financial common stock will be considered to have been issued in full satisfaction of all rights pertaining to such shares of common stock, subject, however, to our obligation to pay any dividends or make any other distributions with a record date before the effective date of the conversion that may have been declared by us on or before the effective date, and that remain unpaid at the effective date.

**PROPOSAL 2 — ADJOURNMENT OF THE SPECIAL MEETING** 

If there are not sufficient votes to constitute a quorum or to approve the Plan of Conversion at the time of the special meeting, the proposal may not be approved unless the special meeting is adjourned to a later date or dates to permit further solicitation of proxies. To allow proxies that have been received by BV Financial at the time of the special meeting to be voted for an adjournment, if necessary, BV Financial has submitted the question of adjournment to its stockholders as a separate matter for their consideration. The board of directors of BV Financial recommends that stockholders vote **"<u>FOR</u>"** approval of the adjournment proposal. If it is necessary to adjourn the special meeting, no notice of the adjourned special meeting is required to be given to stockholders (unless the adjournment is for more than 120 days after the original record date or if a new record date is fixed), other than an announcement at the special meeting of the hour, date and place to which the special meeting is adjourned.

**The board of directors unanimously recommends that you vote "<u>FOR</u>" approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Plan of Conversion.** 

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##### [**Table of Contents**](#toc)
**SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA** 

[same as prospectus]

**FORWARD-LOOKING STATEMENTS** 

[same as prospectus]

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

[same as prospectus]

**OUR DIVIDEND POLICY** 

[same as prospectus]

**MARKET FOR THE COMMON STOCK** 

[same as prospectus]

**HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE** 

[same as prospectus]

**CAPITALIZATION** 

[same as prospectus]

**PRO FORMA DATA** 

[same as prospectus]

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

**AND RESULTS OF OPERATIONS** 

[same as prospectus]

**BUSINESS OF BV FINANCIAL** 

[same as prospectus]

**BUSINESS OF BAYVANGUARD BANK** 

[same as prospectus]

**SUPERVISION AND REGULATION** 

[same as prospectus]

**TAXATION** 

[same as prospectus]

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##### [**Table of Contents**](#toc)
**MANAGEMENT** 

[same as prospectus]

**BENEFICIAL OWNERSHIP OF COMMON STOCK** 

[same as prospectus]

**SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS** 

[same as prospectus]

**COMPARISON OF STOCKHOLDERS' RIGHTS FOR** 

**STOCKHOLDERS OF BV FINANCIAL BEFORE AND AFTER THE CONVERSION** 

[same as prospectus]

**RESTRICTIONS ON ACQUISITION OF BV FINANCIAL** 

[same as prospectus]

**DESCRIPTION OF CAPITAL STOCK OF BV FINANCIAL** 

[same as prospectus]

**TRANSFER AGENT** 

[same as prospectus]

**EXPERTS** 

[same as prospectus]

**LEGAL MATTERS** 

[same as prospectus]

**WHERE YOU CAN FIND ADDITIONAL INFORMATION** 

[same as prospectus]

**STOCKHOLDER PROPOSALS** 

To be eligible for inclusion in the proxy materials for next year's Annual Meeting of Stockholders, under SEC Rule 14a-8, any stockholder proposal to take action at such meeting must be received at the Company's Executive Office, 7114 North Point Road, Baltimore, Maryland 21219, no later than ________________. Any such proposals w be subject to the requirements of the proxy rules adopted under the Exchange Act.

**ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING** 

Under SEC Rule 14a-19, a stockholder intending to engage in a director election contest with respect to next year's Annual Meeting of Stockholders must give BV Financial notice of its intent to solicit proxies by providing the names of its nominees and certain other information at least 60 calendar days before the anniversary of the previous year's annual meeting. This deadline is _________________.

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##### [**Table of Contents**](#toc)
**Provisions of BV Financial's Bylaws.** BV Financial's Bylaws provide an advance notice procedure for certain business, or nominations to the Board of Directors, to be brought before an annual meeting of stockholders. In order for a stockholder to properly bring business before an annual meeting, or to propose a nominee to the board of directors, BV Financial's Secretary must receive written notice not earlier than the 90<sup>th</sup> day nor later than the 100<sup>th</sup> day before date of the annual meeting; provided, however, that if the date of the annual meeting is advanced more than 30 days before the anniversary of the prior year's annual meeting of stockholders, such written notice will be timely only if delivered or mailed to and received by the Secretary of BV Financial at the principal executive office of BV Financial 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 day following the earlier of the day notice of the meeting was mailed to stockholders or such public disclosure was made.

The notice with respect to stockholder proposals that are not nominations for director must set forth as to each matter such stockholder proposes to bring before the annual meeting: (1) 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; (2) the name and address of such stockholder as they appear on the BV Financial's books and of the beneficial owner, if any, on whose behalf the proposal is made; (3) the class or series and number of shares of capital stock of the BV Financial which are owned beneficially or of record by such stockholder and such beneficial owner; (4) 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 (5) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

The notice with respect to director nominations must include: (a) as to each person whom the stockholder proposes to nominate for election as a director, (1) all information relating to such person that would indicate such person's qualification to serve on the Board of Directors of BV Financial; (2) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12 of these Bylaws; (3) 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 (4) 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 (b) as to the stockholder giving the notice: (1) the name and address of such stockholder as they appear on BV Financial's books and of the beneficial owner, if any, on whose behalf the nomination is made; (2) the class or series and number of shares of capital stock of BV Financial which are owned beneficially or of record by such stockholder and such beneficial owner; (3) 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; (4) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; (5) whether such stockholder intends to solicit proxies in support of director nominees other than BV Financial's nominees in accordance with the Exchange Act and the rules and regulations promulgated thereunder; and (6) 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.

The 2024 annual meeting of stockholders is expected to be held on ____________, 2024. Advance written notice for certain business, or nominations to the Board of Directors, to be brought before the next annual meeting must be given to us no earlier than _____________ and no later than ______________. If notice is received before _____________ or after ____________, it will be considered untimely, and we will not be required to present the matter at the stockholders meeting.

Nothing in this proxy statement/prospectus will be deemed to require us to include in our proxy statement and proxy relating to an annual meeting any stockholder proposal that does not meet all of the requirements for inclusion established by the Securities and Exchange Commission in effect at the time such proposal is received.

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##### [**Table of Contents**](#toc)
**IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS** 

**FOR THE SPECIAL MEETING** 

**The Notice of Special Meeting of Stockholders, Proxy Statement/Prospectus, and Proxy Card are available at [meeting materials website].** 

**OTHER MATTERS** 

As of the date of this document, the board of directors is not aware of any business to come before the special meeting other than the matters described above in the proxy statement/prospectus. However, if any matters should properly come before the special meeting, it is intended that the holders of the proxies will act in accordance with their best judgment.

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##### [**Table of Contents**](#toc)
**PART II** 

**INFORMATION NOT REQUIRED IN PROSPECTUS** 

**Item 13.** **Other Expenses of Issuance and Distribution** <br>

---

| | |
|:---|:---|
| Amount | Estimated |
|  Registrant's Legal Fees and Expenses | $585000 |
|  Registrant's Accounting Fees and Expenses | 125000 |
|  Marketing Agent's Fees and Expenses <sup>(1)</sup> | 1600000 |
|  Records Management Agent's Fees and Expenses | 80000 |
|  Independent Appraiser's Fees and Expenses | 135000 |
|  Printing, Postage, Mailing and EDGAR Fees and Expenses | 205000 |
|  Filing Fees (NASDAQ, FINRA, SEC) | 125000 |
|  Transfer Agent's Fees and Expenses | 30000 |
|  Business Plan Consultant's Fees and Expenses | 40000 |
|  Proxy solicitation fees and expenses | 15000 |
|  Other | 10000 |
|  Total | $2950000 |

---

------

(1) Assumes all shares are sold in the subscription offering at the adjusted maximum of the offering range.

**Item 14.** **Indemnification of Directors and Officers** <br>

Articles 9 and 10 of the Amended and Restated Articles of Incorporation of BV Financial, 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. References to the "MGCL" refer to Maryland General Corporation Law:

**<u>ARTICLE 9. Indemnification, etc. of Directors and Officers.</u>** 

&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 9 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. The right to indemnification conferred in Section A of this Article 9 shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that if the MGCL requires an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan), it shall be made only upon delivery to the Corporation of a written undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by a final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under Section A of this Article 9 or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. Procedure.** If a claim under Section A of this Article 9 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

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##### [**Table of Contents**](#toc)
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 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 9 or otherwise, shall be on the Corporation.

&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 9 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;**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;**E. Miscellaneous.** The Corporation shall not be liable for any payment under this Article 0 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 9 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;**F. Limitations Imposed by Federal Law.** Notwithstanding any other provision set forth in this Article 9, in no event shall any payments made by the Corporation pursuant to this Article 9 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 modification of this Article 9 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 9 is in force.

**ARTICLE 10. 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 personal liability of officers and directors of the Corporation shall be eliminated or limited to the extent required by the MGCL, as so amended.

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##### [**Table of Contents**](#toc)
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.

**Item 15.** **Recent Sales of Unregistered Securities** <br>

Not Applicable.

**Item 16.** **Exhibits and Financial Statement Schedules** <br>

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) | List of Exhibits |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 | [Engagement Letters among BayVanguard Bank, BV Financial, Inc. and Performance Trust Capital Partners (Marketing Agent Services)](d447808dex11.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 | [Engagement Letters among BayVanguard Bank, BV Financial, Inc. and Performance Trust Capital Partners (Records Agent and Stock Information Center Manager Services)](d447808dex12.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 | Form of Agency Agreement among BayVanguard Bank, BV Financial, Inc. and Performance Trust Capital Partners\* |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2 | [Plan of Conversion and Reorganization of Bay-Vanguard, M.H.C., Inc.](d447808dex2.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 | [Amended and Restated Articles of Incorporation of BV Financial, Inc.](d447808dex31.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 | [Amended and Restated Bylaws of BV Financial, Inc.](d447808dex32.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 | [Proposed Amended and Restated Articles of Incorporation of BV Financial, Inc.\*\*](d447808dex33.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4 | [Form of Common Stock Certificate of BV Financial, Inc.](d447808dex4.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5 | [Opinion of Luse Gorman, PC regarding legality of securities being registered](d447808dex5.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 | [Federal Income Tax Opinion of Luse Gorman, PC](d447808dex81.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 | [State Income Tax Opinion of FORVIS, LLP](d447808dex82.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.1 | [Employment Agreement between BayVanguard Bank, BV Financial, Inc., Bay-Vanguard, M.H.C. and David M. Flair†](d447808dex101.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.2 | [Employment Agreement between BayVanguard Bank, BV Financial, Inc., Bay-Vanguard, M.H.C. and Timothy L. Prindle†](d447808dex102.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.3 | [Change in Control Agreement between BayVanguard Bank and Michael J. Dee†](d447808dex103.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.4 | [Salary Continuation Agreement between BayVanguard Bank and David M. Flair†](d447808dex104.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.5 | [Salary Continuation Agreement between BayVanguard Bank and Timothy L. Prindle†](d447808dex105.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.6 | [Split Dollar Agreement for David M. Flair†](d447808dex106.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.7 | [BV Financial, Inc. 2017 Equity Incentive Plan†](d447808dex107.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.8 | [BV Financial, Inc. 2021 Equity Incentive Plan†](d447808dex108.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;10.9 | [Amended and Restated Supplemental Director Retirement Agreement with Brian K. McHale†](d447808dex109.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;21 | [Subsidiaries of BV Financial, Inc.](d447808dex21.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;23.1 | Consent of Luse Gorman, PC (contained in Opinions included as [Exhibits 5](d447808dex5.htm) and [8.1](d447808dex81.htm)) |
| &nbsp;&nbsp;&nbsp;&nbsp;23.2 | [Consent of RP Financial, LC.](d447808dex232.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;23.3 | [Consent of FORVIS, LLP](d447808dex233.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;24 | [Power of Attorney (set forth on signature page)](#sig) |
| &nbsp;&nbsp;&nbsp;&nbsp;99.1 | [Engagement Letter between BV Financial, Inc. and RP Financial, LC. to serve as independent appraiser](d447808dex991.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;99.2 | [Letter of RP Financial, LC. with respect to value of Subscription Rights](d447808dex992.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;99.3 | [Appraisal Report of RP Financial, LC.](d447808dex993.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;99.4 | Marketing Materials\* |
| &nbsp;&nbsp;&nbsp;&nbsp;99.5 | Stock Order and Certification Form\* |
| &nbsp;&nbsp;&nbsp;&nbsp;99.6 | [Letter of RP Financial, LC. with respect to Liquidation Rights](d447808dex996.htm) |
| &nbsp;&nbsp;&nbsp;&nbsp;99.7 | Form of BV Financial, Inc. Stockholder Proxy Card\* |
| 107 | [Filing Fee Table](d447808dexfilingfees.htm) |

---

------

† Management contract or compensation plan or arrangement.

\* To be filed by amendment.

\*\* Reflects amendments to the Amend and Restated Articles of Incorporation that will become effective at the effective time of the conversion.

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##### [**Table of Contents**](#toc)
(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** <br>

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;(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;(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;

(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;(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;(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;(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;(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);

(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;

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##### [**Table of Contents**](#toc)
(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

(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;(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;(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;(7) 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.

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**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 Baltimore, State of Maryland, on March<u> </u>13, 2023.

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| | |
|:---|:---|
| BV FINANCIAL, INC. | BV FINANCIAL, INC. |
| By: | /s/ David M. Flair |
|  | David M. Flair |
|  | Co-President and Chief Executive Officer |
|  | (Duly Authorized Representative) |

---

**POWER OF ATTORNEY** 

We, the undersigned directors and officers of BV Financial, Inc. (the "Corporation"), hereby severally constitute and appoint David M. Flair and Timothy L. Prindle as our true and lawful attorneys and agents, 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/ David M. Flair<br> David M. Flair | Co-President, Co-Chief Executive Officer and Director (Principal Executive Officer) | March 13, 2023 |
| /s/ Timothy L.Prindle<br> Timothy L. Prindle | Co-President, Co-Chief Executive Officer and Director (Principal Executive Officer) | March 13, 2023 |
| /s/ Michael J. Dee<br> Michael J. Dee | Executive Vice President and Chief Financial Officer<br> (Principal Financial and Accounting Officer) | March 13, 2023 |
| /s/ Gary T. Amereihn<br> Gary T. Amereihn | Chairman of the Board | March 13, 2023 |
| /s/ William Streett Baldwin<br> William Streett Baldwin | Director | March 13, 2023 |
| /s/ William B. Crompton, III<br> William B. Crompton, III | Director | March 13, 2023 |
| /s/ Joseph S. Galli<br> Joseph S. Galli | Director | March 13, 2023 |
| /s/ Kim C. Liddell<br> Kim C. Liddell | Director | March 13, 2023 |

---

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##### [**Table of Contents**](#toc)

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| | | |
|:---|:---|:---|
| /s/ Brian K. McHale<br> Brian K. McHale | Director | March 13, 2023 |
| /s/ Joshua W. Posnick<br> Joshua W. Posnick | Director | March 13, 2023 |
| /s/ Michael L. Synder<br> Michael L. Synder | Director | March 13, 2023 |
| /s/ Machteld V. Thomas<br> Machteld V. Thomas | Director | March 13, 2023 |

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## Exhibit 1.1

**Exhibit 1.1**![LOGO](g447808dsp1.jpg)

CONFIDENTIAL

October 5, 2022

David M. Flair

Co-President & Co-CEO

BayVanguard Bank

7114 North Point Road

Sparrows Point, MD 21219

Dear Mr. Flair:

We understand that the Boards of Directors of Bay-Vanguard, MHC (the "<u>MHC</u>"), BV Financial, Inc. (the "<u>Holding Company</u>") and BayVanguard Bank (the "<u>Bank</u>") are considering the adoption of a Plan of Conversion and Reorganization (the "<u>Plan</u>") pursuant to which the MHC will be converted from the mutual holding company form of organization to the stock holding company form (the "<u>Conversion</u>") and in connection therewith (A) all of the shares of the Holding Company currently outstanding will be exchanged for shares of common stock (the "<u>Common Stock</u>") of a successor stock holding company to be formed in connection with the conversion ("<u>Newco</u>"), and (B) Newco will offer and sell certain shares of its Common Stock (the "Shares") in a public offering. The MHC, the Holding Company, Newco and the Bank are sometimes collectively referred to herein as the "<u>Company</u>" and their respective Boards of Directors are sometimes collectively referred to as the "<u>Boards</u>." Performance Trust Capital Partners, LLC ("<u>Performance Trust</u>") is pleased to assist the Company on a best efforts basis with the Offering (as defined below), and this letter (the "<u>Agreement</u>") shall confirm the terms and conditions of our engagement as exclusive marketing agent to the Company.

Under the terms of the Plan and applicable regulations, the Shares will be offered first to eligible members of the MHC and the Company's tax-qualified employee stock benefit plans (the "<u>Subscription Offering</u>"). Subject to the prior rights of subscribers in the Subscription Offering, the Shares may be offered in a community offering, with a preference given in the community offering to residents of the communities served by the Bank (the "<u>Community Offering</u>," and together with the Subscription Offering, the "<u>Subscription and Community Offering</u>"). Shares not subscribed for in the Subscription and Community Offering, if any, may be offered to the general public by Performance Trust on a best efforts basis ("<u>Syndicated Offering</u>" and together with the Subscription and Community Offering and Syndicated Offering, the "<u>Offering</u>"). Performance Trust may, in consultation with the Company, form a syndicate of registered dealers to assist in any Syndicated Offering.

<u>SERVICES</u> 

Performance Trust will act as exclusive marketing agent for the Company in the Offering. We will work with the Company and its management, counsel, accountants and other advisors on the Offering and anticipate that our services (the "Services") will include the following, each as may be necessary and as the Company may reasonably request:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Consulting as to the marketing implications of any aspect of the Plan, including the percentage of Common Stock
to be offered to the public in the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Reviewing with the Boards the financial impact of the Offering on the Company, based upon an independent
appraiser's appraisal of the common stock;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Reviewing all offering documents, including the prospectus, stock order forms and 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;&nbsp;&nbsp;&nbsp;&nbsp;4. Assisting in the design and implementation of a marketing strategy for the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Assisting Company management in scheduling and preparing for meetings with potential investors and/or other
broker-dealers in connection with the Offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Providing such other general advice and assistance as may be reasonably requested to promote the successful
completion of the Offering.

<u>SUBSCRIPTION AND COMMUNITY OFFERING FEES</u> 

If the Offering is consummated, the Company agrees to pay Performance Trust a Success Fee equal to 0.95% of the aggregate Actual Purchase Price of the Shares sold in the Subscription Offering and 1.50% of the aggregate Actual Purchase Price of the Shares sold in the Community Offering, excluding Shares purchased by or on behalf of (i) any employee benefit plan or trust of the Company established for the benefit of its directors, officers and employees, (ii) any charitable foundation established by the Company (or any shares contributed to such a charitable foundation); and (iii) any director, trustee, corporator, officer or employee of the Company ("Insiders") or members of the Immediate Family of such persons (whether directly or through a personal trust) (the "Service Fee"). "Immediate Family" includes the spouse, parents, siblings and children of Insiders who live in the same house as the Insiders. For purposes of this letter, the term "Actual Purchase Price" shall mean the price at which the Shares of Common Stock are sold in the Offering.

If (a) Performance Trust's engagement hereunder is terminated for any of the reasons provided for under the second paragraph of the section of this letter captioned "Definitive Agreement," or (b) the Offering is terminated by the Company, no fees shall be payable by the Company to Performance Trust hereunder; however, the Company shall reimburse Performance Trust for the reasonable out-of-pocket expenses (including legal fees) incurred by or on behalf of Performance Trust in connection with its engagement hereunder and for any fees and expenses incurred by Performance Trust on behalf of the Company pursuant to the second paragraph under the section captioned "Costs and Expenses" below.

All fees and expense reimbursements payable to Performance Trust hereunder shall be payable in immediately available funds at the time of the closing of the Offering, or upon the termination of Performance Trust's engagement hereunder or termination of the Offering, as the case may be. In recognition of the long lead times involved in the stock offering process, the Company has agreed to make an advance payment to Performance Trust in the amount of Thirty Thousand Dollars ($30,000). The amount of such advance payment, once paid, will be credited against any payment hereunder of the Success Fee, and in the event that such advance payment exceeds the aggregate amount due in payment of all fees and reimbursement of expenses hereunder, Performance Trust shall promptly refund such excess amount to the Company.

<u>SYNDICATED OFFERING</u> 

If any shares of the Common Stock remain available after the expiration of the Subscription and Community Offering, at the request of the Company and subject to the continued satisfaction of the conditions set forth in the second paragraph under the section captioned "Definitive Agreement" below, Performance Trust will seek to sell such Common Stock in a Syndicated Offering on a best efforts basis, subject to the terms and conditions to be set forth in a selected dealers agreement, and may, in consultation with the Company, form a syndicate of registered dealers to assist in such efforts. With respect to any Shares of Common Stock sold by Performance Trust or any other FINRA member firm under any selected dealers agreements in a Syndicated Offering, the Company agrees to pay a commission

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of five percent (5.00%) of the aggregate Actual Purchase Price of the Shares of Common Stock sold in such Syndicated Offering. Performance Trust will endeavor to distribute the Common Stock among dealers in a fashion that best meets the distribution objectives of the Company and the requirements of the Plan, which may result in limiting the allocation of stock to certain selected dealers. It is understood that in no event shall Performance Trust or any other member of the syndicate be obligated to take or purchase any shares of the Common Stock in the Offering.

<u>COSTS AND EXPENSES</u> 

In addition to any fees that may be payable to Performance Trust hereunder and the expenses to be borne by the Company pursuant to the following paragraph, the Company agrees to reimburse Performance Trust, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder, regardless of whether the Offering is consummated, including, without limitation, legal fees and expenses, communications, syndication and travel expenses, up to a maximum of One Hundred and Twenty-Five Thousand Dollars ($125,000) for legal fees and expenses, and Fifty Thousand Dollars ($50,000) for all other out-of-pocket expenses, which may be increased to Seventy-Five Thousand Dollars ($75,000) in the event of re-solicitation of subscribers; *provided, however*, that Performance Trust shall document such expenses to the reasonable satisfaction of the Company. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this letter.

As is customary, the Company will bear all other expenses incurred in connection with the Offering, including, without limitation, (i) the cost of obtaining all securities and bank regulatory approvals, including any required FINRA filing fees; (ii) the cost of printing and distributing the offering materials; (iii) the costs of blue sky qualification (including fees and expenses of blue sky counsel) of the Shares in the various states; (iv) listing fees; (v) all fees and disbursements of the Company's counsel, accountants, records management agent, proxy tabulators and solicitors, transfer agent and other advisors; and (vi) the establishment and operational expenses for the Stock Information Center (e.g., postage, telephones, supplies, temporary employees, etc.). In the event Performance Trust incurs any such fees and expenses on behalf of the Company, the Company will reimburse Performance Trust for such fees and expenses whether or not the Offering is consummated.

<u>DUE DILIGENCE REVIEW</u> 

Performance Trust's obligation to perform the services contemplated by this letter shall be subject to the satisfactory completion of such investigation and inquiries relating to the Company and its directors, trustees, officers, agents and employees, as Performance Trust and its counsel in their sole discretion may deem appropriate under the circumstances. In this regard, the Company agrees that, at its expense, it will make available to Performance Trust all information that Performance Trust requests, and will allow Performance Trust the opportunity to discuss with the management of the Company the financial condition, business and operations of the Company. The Company acknowledges that Performance Trust will rely upon the accuracy and completeness of all information received from the Company and its directors, trustees, officers, employees, agents, independent accountants and counsel.

<u>BLUE SKY MATTERS</u> 

Performance Trust and the Company agree that the Company's counsel shall serve as counsel with respect to blue sky matters in connection with the Offering. The Company will cause such counsel to prepare a Blue Sky Memorandum related to the Offering, including Performance Trust 's participation therein, and shall furnish Performance Trust a copy thereof addressed to Performance Trust or upon which such counsel shall state Performance Trust may rely.

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<u>CONFIDENTIALITY</u> 

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, legal process or order of any court or governmental or regulatory authority, Performance Trust agrees that it will treat as confidential all material, non-public information relating to the Company obtained in connection with its engagement hereunder (the "<u>Confidential Information</u>"); *provided, however*, that Performance Trust may disclose such information to its employees, consultants, agents and advisors who are assisting or advising Performance Trust in performing its services hereunder. As used in this paragraph, the term "Confidential Information" shall not include information that (a) is or becomes generally available to the public other than as a result of a disclosure by Performance Trust in breach of the confidentiality obligations contained herein, (b) was available to Performance Trust on a non-confidential basis prior to its disclosure to Performance Trust by the Company, (c) becomes available to Performance Trust on a non-confidential basis from a person other than the Company who is not otherwise known to Performance Trust to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation owed to the Company, or (d) is independently developed by Performance Trust without use of or reference to the Confidential Information disclosed hereunder.

Upon the written request of the Company, Performance Trust will promptly return, destroy or cause the return or destruction of all Confidential Information in written form or set forth in other tangible media provided to it by or on behalf of the Company (in each case including all copies); *provided, however*, that nothing herein will be construed to limit Performance Trust's ability to retain archival or backup copies of Confidential Information as may be required to fulfill its legal and regulatory obligations or its compliance and recordkeeping obligations, policies or procedures. Performance Trust shall confirm to the Company in writing any destruction of materials. Confidential Information not returned or destroyed (including oral Confidential Information) shall remain subject to the confidentiality obligations set forth in this Agreement. The Company represents that it has all rights necessary to disclose or provide Confidential Information to Performance Trust under the terms hereof and that such Confidential Information will not contain or reflect any material inaccuracies or omissions.

If Performance Trust is requested or required under applicable law or regulation, or by questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other legal process, to disclose any Confidential Information relating to the Company, Performance Trust (if practicable and legally permitted to do so) will provide the Company with prompt notice of any such request or requirement and otherwise provide commercially reasonable cooperation to the Company (at the Company's expense) so that the Company may seek an appropriate protective order or other appropriate remedy or waive compliance with the provisions of this Agreement. Notwithstanding the foregoing, no such notice shall be required in the case of a routine audit or regulatory or administrative exam or review not specifically targeting the Company. Performance Trust (A) may furnish that portion of the Confidential Information that it is legally compelled to disclose and shall if practicable request that confidential treatment will be accorded to such information by the party compelling such disclosure, and (B) will not oppose action by the Company to obtain an appropriate protective order or other assurance that confidential treatment will be accorded the Confidential Information.

In the event that Performance Trust discloses to the Company any non-public or proprietary information, including any models, strategies, analyses, methodologies, projections, databases, reports and other materials, the Company agrees that it will (a) use such information only for purposes related to the Transaction, (b) maintain such information in confidence in accordance with policies and procedures no less stringent than those it employs to protect its own confidential information and (c) not disclose such information to any person other than its employees, directors, agents, advisers and consultants having a need to know such information in connection with the Transaction.

<u>INDEMNIFICATION</u> 

Each of the Bank and the Holding Company, jointly and severally, agrees to indemnify and hold Performance Trust and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (collectively the "<u>Performance Trust Indemnified Parties</u>" and each such person being an "<u>Performance Trust Indemnified Party</u>") harmless from and against any and all losses, claims, damages and liabilities, joint or several, to which such Performance Trust Indemnified Party may become subject under applicable federal or state law, or otherwise, (i) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the offering documents, including documents described or incorporated by reference therein, or in any other written or oral communication provided

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by or on behalf of the Holding Company or the Bank to any actual or prospective purchaser of the Shares or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, (ii) arising out of or based in whole or in part on any inaccuracy in the representations or warranties of the Holding Company or the Bank contained in any agency agreement, or any failure of the Holding Company or the Bank to perform its respective obligations thereunder or (iii) related to or arising out of the Offering or the engagement of Performance Trust pursuant to, or the performance by Performance Trust of the services contemplated by, this letter, and will reimburse any Performance Trust Indemnified Party for all expenses (including reasonable legal fees and expenses) as they are incurred, including expenses incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party; *provided, however*, that the Company will not be liable to Performance Trust in its capacity as marketing agent (a) to the extent that any such loss, claim, damage, liability or expense 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 Performance Trust expressly for use therein, or (b) under clause (iii) of this paragraph to the extent that it is finally determined by the non-appealable decision of a court of competent jurisdiction that any such loss, claim, damage, liability or expense is primarily attributable to the gross negligence, willful misconduct of Performance Trust. If the foregoing indemnification is unavailable for any reason other than for the reasons stated in subparagraph (a) or (b) above, the Company agrees to contribute to such losses, claims, damages, liabilities and expenses in the proportion that its financial interest in the Offering bears to that of Performance Trust; *provided, however,* in no event shall Performance Trust's aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by Performance Trust pursuant to the provisions of this a Agreement. The Company further agrees that neither Performance Trust nor any of its controlling persons, affiliates, partners, directors, officers, employees or consultants shall have any liability to the Holding Company or the Bank or any person asserting claims on behalf of or in right of the Holding Company or the Bank for any losses, claims, damages, liabilities or expenses arising out of or relating to this agreement or the services to be rendered by Performance Trust hereunder, unless it is finally judicially determined by the non-appealable decision of a court of competent jurisdiction, that such losses, claims, damages, liabilities or expenses resulted directly from the gross negligence or willful misconduct of Performance Trust.

Each of the Bank and the Holding Company agrees to notify Performance Trust promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to any transaction contemplated by this Agreement. Each of the Bank and the Holding Company will not, without Performance Trust's prior written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any claim, action or proceeding in respect of which indemnity may be sought hereunder, whether or not any Performance Trust Indemnified Party is an actual or potential party thereto, unless such settlement, compromise, consent or termination (i) includes an explicit and unconditional release of each Performance Trust Indemnified Party from any liabilities arising out of such claim, action or proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Performance Trust Indemnified Party. If the Holding Company or the Bank enters into any agreement or arrangement with respect to, or effects, any proposed sale, exchange, dividend or other distribution or liquidation of all or substantially all of its assets in one or a series of transactions, the Bank or the Holding Company, as the case may be, shall provide for the assumption of its obligations under this section by the purchaser or transferee of such assets or another party reasonably satisfactory to Performance Trust.

In no event shall a Performance Trust Indemnified Party be liable for any consequential, indirect, incidental, or special damages. The defense, indemnity, reimbursement, contribution and other obligations and agreements of Bank and the Holding Company set forth herein shall apply to any modifications of this Agreement, and shall be in addition to any liability which Performance Trust may otherwise have. The rights of the indemnified parties under this Agreement shall be in addition to any rights that any Performance Trust Indemnified Party may have at common law, in equity, or otherwise. For the sole purpose of enforcing and otherwise giving effect to the provisions of this Agreement, the Bank and the Holding Company hereby consent to personal jurisdiction and service and venue in any court in which any claim which is subject to this Agreement is brought against the Performance Trust Indemnified Parties.

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The reimbursement, indemnity and contribution obligations of each of the Bank and the Holding Company set forth herein shall apply to any modification of this Agreement and shall remain in full force and effect regardless of any termination of, or the completion of any indemnified person's services hereunder.

Notwithstanding any other provision set forth in this Agreement, in no event shall any payments made by the Bank or the Holding Company pursuant to this Agreement 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.

<u>MATTERS RELATING TO ENGAGEMENT</u> 

The Company acknowledges and agrees that Performance Trust has been engaged solely as an independent contractor to provide the Services set forth herein. In rendering such Services, Performance Trust will be acting solely pursuant to a contractual relationship on an arm's length basis with respect to such Services (including in connection with determining the terms of each Investment) and not as a fiduciary to the Company or any other person. Additionally, the Company acknowledges that Performance Trust is not advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own advisors concerning such matters and Performance Trust shall have no responsibility or liability to the Company with respect thereto. The Company also acknowledges that nothing in this Agreement is intended to create duties to the Company beyond those expressly provided for in this Agreement or to create duties of any kind to the Company's creditors or security holders, and Performance Trust and the Company specifically disclaim the creation of any fiduciary relationship between, or the imposition of any fiduciary duties on, either party. Finally, the Company agrees that Performance Trust may perform the Services contemplated hereby in conjunction with its affiliates, and that any affiliates of Performance Trust performing Services hereunder shall be entitled to the benefits and be subject to the terms of this Agreement.

The Company acknowledges that Performance Trust is a securities firm engaged in securities, trading and brokerage activities and providing investment banking and financial advisory services. In addition, Performance Trust 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 you. The Company also acknowledges that Performance Trust and its affiliates have no obligation to use in connection with this engagement or to furnish the Company, confidential information obtained from other persons.

The parties agree that the provisions herein relating to payment of fees and expenses and governing law and submission to jurisdiction, and those set forth under the caption "Indemnification" will survive any termination of this Agreement.

<u>REPRESENTATIONS</u> 

Each of the Bank and the Holding Company represents and warrants that it has all requisite power and authority to enter into and carry out the terms and provisions of this Agreement, the execution, delivery and performance of this Agreement does not breach or conflict with any agreement, document or instrument to which it is a party or bound and this Agreement has been duly authorized, executed and delivered by it.

<u>DEFINITIVE AGREEMENT</u> 

Performance Trust and the Company agree that (a) except as set forth in clause (b), the foregoing represents the general intention of the Company and Performance Trust with respect to the Services to be provided by Performance Trust in connection with the Offering, which will serve as a basis for Performance Trust commencing activities, and (b) the only legal and binding obligations of the Company and Performance Trust with respect to the Offering shall be (1) the Company's obligation to pay all fees and reimburse costs and expenses as described in the sections herein

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captioned "Subscription and Community Offering Fees," "Syndicated Offering" and "Costs and Expenses," (2) those set forth under the captions "Confidentiality", "Representations" and "Indemnification," and (3) as set forth in a duly negotiated and executed definitive agency agreement (the "Agency Agreement") to be entered into prior to the commencement of the Offering relating to the services of Performance Trust in connection with the Offering. Such Agency Agreement shall be in form and content satisfactory to Performance Trust and the Company and their respective counsel and shall contain standard indemnification and contribution provisions consistent herewith.

Performance Trust's execution of such Agency Agreement shall also be subject to (i) Performance Trust's satisfaction with its investigation of the Company's business, financial condition and results of operations, (ii) preparation of offering materials that are satisfactory to Performance Trust and its counsel, (iii) compliance with all relevant legal and regulatory requirements to the reasonable satisfaction of Performance Trust, (iv) agreement that the price established by the independent appraiser is reasonable, and (v) market conditions at the time of the commencement of the proposed Offering. Performance Trust may terminate this agreement if such Agency Agreement is not entered into prior to September 30, 2023.

This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without giving effect to the conflicts of laws principles thereof. **THE COMPANY AND PERFORMANCE TRUST IRREVOCABLY AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF EITHER PARTY RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE PERFORMANCE OF SERVICES HEREUNDER**.

Each of the parties hereto irrevocably agrees that, except as otherwise set forth in this paragraph, any state or federal court sitting in the City of Chicago shall have exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute arising out of or relating to this Agreement and, for such purposes, irrevocably submits to the jurisdiction of such courts. The Company hereby agrees that service of any process, summons, notice or document by hand delivery or registered mail addressed to the Company, shall be effective service of process for any suit, action or proceeding brought in any such court. The Company irrevocably and unconditionally waives any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. The Company agrees that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other court to whose jurisdiction the Company is or may in the future be subject, by suit upon judgment. The Company further agrees that nothing herein shall affect Performance Trust's right to effect service of process in any other manner permitted by law or to bring a suit, action or proceeding (including a proceeding for enforcement of a judgment) in any other court or jurisdiction in accordance with applicable law. 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.

*(Remainder of Page Intentionally Left Blank)* 

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Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Performance Trust the duplicate copy of this letter enclosed herewith.

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| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| **PERFORMANCE TRUST CAPITAL PARTNERS, LLC** | **PERFORMANCE TRUST CAPITAL PARTNERS, LLC** |
| By: | /s/ Andy Hitt |
| Name: | Andy Hitt |
| Title: | Managing Director |

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Accepted and agreed to as of the date first above written:

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| | |
|:---|:---|
| **BAYVANGUARD BANK** | **BAYVANGUARD BANK** |
| By: | /s/ David M. Flair |
| Name: | David M. Flair |
| Title: | Co-President & Co-CEO |
| **BV FINANCIAL, INC.** | **BV FINANCIAL, INC.** |
| By: | /s/ David M. Flair |
| Name: | David M. Flair |
| Title: | Co-President & Co-CEO |

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## Exhibit 1.2

**Exhibit 1.2**![LOGO](g447808dsp9a.jpg)

CONFIDENTIAL

October 5, 2022

David M. Flair

Co-President & Co-CEO

BayVanguard Bank

7114 North Point Road

Sparrows Point, MD 21219

Dear Mr. Flair:

We understand that the Boards of Directors of Bay-Vanguard, MHC (the "<u>MHC</u>"), BV Financial, Inc. (the "<u>Holding Company</u>") and BayVanguard Bank (the "<u>Bank</u>") are considering the adoption of a Plan of Conversion and Reorganization (the "<u>Plan</u>") pursuant to which the MHC will be converted from the mutual holding company form of organization to the stock holding company form (the "<u>Conversion</u>") and in connection therewith (A) all of the shares of the Holding Company currently outstanding will be exchanged for shares of common stock (the "<u>Common Stock</u>") of a successor stock holding company to be formed in connection with the conversion ("<u>Newco</u>"), and (B) Newco will offer and sell certain shares of its Common Stock (the "Shares") in a public offering. The MHC, the Holding Company, Newco and the Bank are sometimes collectively referred to herein as the "<u>Company</u>" and their respective Boards of Directors are sometimes collectively referred to as the "<u>Boards</u>." Performance Trust Capital Partners, LLC ("<u>Performance Trust</u>") is pleased to assist the Company on a best efforts basis with the Offering (as defined below), and this letter (the "<u>Agreement</u>") shall confirm the terms and conditions of our engagement as exclusive marketing agent to the Company.

Under the terms of the Plan and applicable regulations, the Shares will be offered first to eligible members of the MHC and the Company's tax-qualified employee stock benefit plans (the "<u>Subscription Offering</u>"). Subject to the prior rights of subscribers in the Subscription Offering, the Shares may be offered in a community offering, with a preference given in the community offering to residents of the communities served by the Bank (the "<u>Community Offering</u>," and together with the Subscription Offering, the "<u>Subscription and Community Offering</u>"). Shares not subscribed for in the Subscription and Community Offering, if any, may be offered to the general public by Performance Trust on a best efforts basis ("<u>Syndicated Offering</u>" and together with the Subscription and Community Offering and Syndicated Offering, the "<u>Offering</u>"). Performance Trust may, in consultation with the Company, form a syndicate of registered dealers to assist in any Syndicated Offering.

**<u>SERVICES AND FEES</u>**

In our role as Records Agent and Stock Information Center Manager in relation to the transaction contemplated by this Agreement, we anticipate that our services will include the services outlined below, each as may be necessary and as the Company may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Records Agent services including but not limited to -

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Consolidation of customer accounts for voting and offering purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Coordination with the Company's financial printer for labeling and mailing of all proxy and offering
materials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Provide supporting account information to the Company's legal counsel for "blue sky" research and
applicable registration;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Assist the Company's transfer agent with the generation and mailing of statements of ownership, interest and
refund checks, and 1099-INT statements as required;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Coordinate proxy tabulation and solicitation efforts to be provided by third parties; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Subscription Services

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Stock Information Center Manager services including but not limited to -

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Coordinating vote solicitation and the special meeting of members (if applicable);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Design of the stock order forms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Organization and supervision of the Stock Information Center;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employee training.

Performance Trust will provide the records agent services contemplated hereby. The parties hereto expressly acknowledge and agree that Performance Trust may, in its discretion as it sees fit, subcontract certain records agent services, including without limitation certain integral data processing functions, to any one or more of its affiliates or any non-affiliate third parties. For its services hereunder, the Company agrees to pay Performance Trust a fee of Forty Thousand Dollars ($40,000), with Twenty Thousand Dollars ($20,000) payable upon the mailing of Offering materials to prospective subscribers and the balance paid on the day of the closing of the Offering. This fee is based upon the requirements of current regulations and the Plan as currently contemplated. Any unusual or additional items or duplication of service required as a result of a material change in the regulations or the Plan, a material delay, required resolicitation of the Offering or other similar events may result in extra charges that will be covered in a separate agreement if and when they occur and shall not exceed Ten Thousand Dollars ($10,000). The Company will inform Performance Trust within a reasonable period of any changes in the Plan that require changes in Performance Trust's services. Fees under this Agreement shall be payable by the Company to Performance Trust in immediately available funds when invoiced.

It is understood that all expenses associated with the operation of the Stock Information Center will be borne by the Company. The Company also agrees to reimburse Performance Trust, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder, regardless of whether the Offering is consummated, including, without limitation, travel, lodging, food, telephone, postage, data processing and data entry services, communications and other similar expenses, up to a maximum of Thirty Thousand Dollars ($30,000); *provided, however,* that Performance Trust shall document such expenses to the reasonable satisfaction of the Company. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this Agreement.

**<u>RELIANCE ON INFORMATION PROVIDED</u>** 

The Company will provide Performance Trust with such information as Performance Trust may reasonably require to carry out its duties hereunder. The Company recognizes and confirms that Performance Trust (a) will use and rely on such information in performing the services contemplated by this Agreement without having independently verified the same, and (b) does not assume responsibility for the accuracy or completeness of the information provided by the Company.

To help the United States government fight the funding of terrorism and money laundering activities, the federal law of the United States requires all financial institutions to obtain, verify and record information that identifies each person with whom they do business. This means Performance Trust may ask the Company and its significant shareholders or equity holders for certain identifying information and documents, including a government-issued identification number (e.g., a U.S. taxpayer identification number) and copies of documents containing personal identifying information, and such other information or documents that Performance Trust and its counsel consider appropriate to verify the bona fide existence of the Company (e.g., certified articles of incorporation, a government-issued business license, a partnership agreement or a trust instrument) and the identities of its significant shareholders or equity holders.

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**<u>CONFIDENTIALITY</u>**

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, legal process or order of any court or governmental or regulatory authority, Performance Trust agrees that it will treat as confidential all material, non-public information relating to the Company obtained in connection with its engagement hereunder (the "Confidential Information"); provided, however, that Performance Trust may disclose such information to its affiliates, partners, directors, employees, agents and advisors who are assisting or advising Performance Trust in performing its services hereunder and who have been directed to comply with the terms and conditions of this paragraph. As used in this paragraph, the term "Confidential Information" shall not include information which (a) is or becomes generally available to the public other than as a result of a disclosure by Performance Trust in breach of the confidentiality obligations contained herein, (b) was available to Performance Trust on a non-confidential basis prior to its disclosure to Performance Trust by the Company, (c) becomes available to Performance Trust on a non-confidential basis from a person other than the Company who is not otherwise known to Performance Trust to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation owed to the Company, or (d) is independently developed by Performance Trust without use of or reference to the Confidential Information disclosed hereunder.

Upon the written request of the Company, Performance Trust will promptly, but in any event within ten (10) business days after receipt of such request, return, destroy (to the extent technically practicable) or cause the return or destruction of all Confidential Information in written form or set forth in other tangible media provided to it by or on behalf of the Company (in each case including all copies); *provided, however*, that nothing herein will be construed to limit Performance Trust's ability to retain archival copies of Confidential Information as may be required to fulfill its legal and regulatory obligations and its compliance and recordkeeping obligations policies or procedures. Any destruction of materials shall be verified promptly to the Company by Performance Trust in writing. Any Confidential Information that has not been returned or destroyed, including, without limitation, any oral Confidential Information, shall remain subject to the confidentiality obligations set forth in this Agreement.

If Performance Trust is requested or required under applicable law or by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or other legally binding process, to disclose any Confidential Information relating to the Company, it is agreed that Performance Trust (if legally permitted to do so) will provide the Company with prompt notice of any such request or requirement (written, if practical) and otherwise provide reasonable cooperation the Company (at the Company's expense) in order to enable the Company to seek an appropriate protective order or other appropriate remedy or to waive compliance with the provisions of this Agreement. Notwithstanding the foregoing, no such notice shall be required in the case of a routine audit or regulatory or administrative review of Performance Trust not specifically related to the Company. In the event that such protective order or other remedy is not obtained, or that the Company grants a waiver as provide hereby, Performance Trust may furnish that portion (and only that portion) of the Confidential Information, which it is legally compelled to disclose and with respect to which it agrees to exercise its commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to such information by the receiving party compelling such disclosure. In any event, Performance Trust will not oppose action by the Company to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Information.

In the event that Performance Trust discloses to the Company any non-public or proprietary information, including any models, strategies, analyses, methodologies, projections, databases, reports and other materials, the Company agrees that it will (a) use such information only for purposes related to the Transaction, (b) maintain such information in confidence in accordance with policies and procedures no less stringent than those it employs to protect its own confidential information and (c) not disclose such information to any person other than its employees, directors, agents, advisers and consultants having a need to know such information in connection with the Transaction.

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**<u>LIMITATIONS</u>**

Performance Trust, as Records Agent and Stock Information Center Manager hereunder, (a) shall have no duties or obligations other than those 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 represented thereby, and will not be required to and will make no representations as to the validity, value or genuineness of the Offering; (c) shall not be liable to any person or entity, including the Company, by reason of any error of judgment or for any act done by it in good faith, or for any mistake of law or fact in connection with this Agreement and the performance hereof; (d) will not be obliged to take any legal action hereunder which might in its judgment involve any expense or liability, unless it shall have been furnished with reasonable indemnity satisfactory to it (as provided for in the Indemnification section below); and (e) 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.

Anything in this Agreement to the contrary notwithstanding, in no event shall Performance Trust be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if Performance Trust has been advised of the likelihood of such loss or damage and regardless of the form of action.

**<u>INDEMNIFICATION</u>** 

In connection with Performance Trust's engagement to advise and assist the Company as provided herein, each of the Bank, the MHC and the Holding Company jointly and severally agrees to indemnify and hold Performance Trust and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 (Performance Trust and each such person being an "Indemnified Party") harmless, to the fullest extent permitted by law, from and against any and all losses, direct or class action claims, damages, costs 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 Performance Trust's role as Records Agent and Stock Information Center Manager or the Offering or the engagement of Performance Trust pursuant to, or the performance by Performance Trust of the services contemplated by, this Agreement, and will reimburse any Indemnified Party for all expenses (including reasonable legal fees and expenses and costs of production or response) as they are incurred, including expenses incurred in connection with the investigation, responding, preparation for or defense of any pending or threatened regulatory inquiry, subpoena or discovery response, claim or any action or other proceeding arising therefrom, whether or not in connection with pending or threatened litigation in which Indemnified Party is a party or inquiry of which Indemnified Party is subject; *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 which are finally judicially determined by the non-appealable decision of a court of competent jurisdiction to have resulted primarily from Performance Trust's gross negligence or willful misconduct.

If the foregoing indemnification is determined to be unavailable for any reason (other than the applicability of the proviso to the immediately preceding sentence), then, in lieu of indemnifying such Indemnified Party, the Company agrees to contribute to such losses, claims, damages, costs, liabilities and expenses (a) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and Performance Trust, on the other hand, of the engagement provided for in this Agreement or (b) if the allocation provided for in clause (a) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (a) but also the relative fault of each of the Company and Performance Trust, as well as any other relevant equitable consideration; *provided, however*, in no event shall Performance Trust's aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by Performance Trust under this Agreement. For the purposes of this Agreement, the relative benefits to the Company and to Performance Trust 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 or the Company's members or other stakeholders, as the case may be, in the Offering that are [is] the subject of the engagement hereunder, whether or not any such Offering is consummated, bears to (b) the fees paid or to be paid to Performance Trust under this Agreement.

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The Company agrees to notify Performance Trust promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to any transaction contemplated by this Agreement. The Company will not, without Performance Trust's prior written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any claim, action or proceeding in respect of which indemnity may be sought hereunder, whether or not any Indemnified Party is an actual or potential party thereto, unless such settlement, compromise, consent or termination (a) includes an explicit and unconditional release of each Indemnified Party from any liabilities arising out of such claim, action or proceeding and (b) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.

Notwithstanding any other provision set forth in this Agreement, in no event shall any payments made by the Bank or the MHC pursuant to this Agreement 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.

**<u>MISCELLANEOUS</u>**

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 and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without giving effect to the conflicts of laws principles thereof. **THE COMPANY AND PERFORMANCE TRUST IRREVOCABLY AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF EITHER PARTY RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE PERFORMANCE OF SERVICES HEREUNDER.**

Each of the parties hereto irrevocably agrees that, except as otherwise set forth in this paragraph, any state or federal court sitting in the City of Chicago shall have exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute arising out of or relating to this Agreement and, for such purposes, irrevocably submits to the jurisdiction of such courts. The Company hereby agrees that service of any process, summons, notice or document by hand delivery or registered mail addressed to the Company, shall be effective service of process for any suit, action or proceeding brought in any such court. The Company irrevocably and unconditionally waives any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. The Company agrees that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other court to whose jurisdiction the Company is or may in the future be subject, by suit upon judgment. The Company further agrees that nothing herein shall affect Performance Trust's right to effect service of process in any other manner permitted by law or to bring a suit, action or proceeding (including a proceeding for enforcement of a judgment) in any other court or jurisdiction in accordance with applicable law. 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.

If the Holding Company or the Bank enters into any agreement or arrangement with respect to, or effects, any proposed sale, exchange, dividend or other distribution or liquidation of all or substantially all of its assets in one or a series of transactions, the Bank or the Holding Company shall provide for the assumption of its obligations under this section by the purchaser or transferee of such assets or another party reasonably satisfactory to Performance Trust.

It is understood that the provisions herein relating to the payment of fees and expenses and those relating to governing law and submission to jurisdiction, and those contained under the captions "Reliance on Information Provided", "Limitations" and "Indemnification," will survive any termination of this Agreement.

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Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Performance Trust the duplicate copy of this Agreement enclosed herewith.

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| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| **PERFORMANCE TRUST CAPITAL PARTNERS, LLC** | **PERFORMANCE TRUST CAPITAL PARTNERS, LLC** |
| By: | /s/ Andy Hitt |
| Name: | Andy Hitt |
| Title: | Managing Director |

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Accepted and agreed to as of the date first above written:

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| | |
|:---|:---|
| **BAYVANGUARD BANK** | **BAYVANGUARD BANK** |
| By: | /s/ David M. Flair |
| Name: | David M. Flair |
| Title: | Co-President & Co-CEO |
| **BV FINANCIAL, INC.** | **BV FINANCIAL, INC.** |
| By: | /s/ David M. Flair |
| Name: | David M. Flair |
| Title: | Co-President & Co-CEO |

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## Ex-2

**Exhibit 2** 

**PLAN OF CONVERSION AND REORGANIZATION** 

**OF** 

**BAY-VANGUARD, M.H.C., INC.** 

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**TABLE OF CONTENTS** 

1. INTRODUCTION 1

2. DEFINITIONS 2

3. PROCEDURES FOR CONVERSION 8

4. APPLICATIONS AND APPROVALS 10

5. SALE OF SUBSCRIPTION SHARES 10

6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES 11

7. RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY 12

8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY) 12

9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY) 13

10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY) 13

11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY) 14

12. COMMUNITY OFFERING 14

13. SYNDICATED COMMUNITY OFFERING 15

14. LIMITATIONS ON PURCHASES 16

15. PAYMENT FOR SUBSCRIPTION SHARES 17

16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS 18

17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT 19

18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES 19

19. ESTABLISHMENT OF LIQUIDATION ACCOUNTS 20

20. VOTING RIGHTS OF STOCKHOLDERS 22

21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION OF SUBSCRIPTION SHARES 22

22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION 23

23. TRANSFER OF DEPOSIT ACCOUNTS 23

24. REGISTRATION AND MARKETING 24

25. TAX RULINGS OR OPINIONS 24

26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS 24

27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY 25

28. PAYMENT OF DIVIDENDS AND THE REPURCHASE OF STOCK 26

29. ARTICLES OF INCORPORATION AND BYLAWS 26

30. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE 26

31. EXPENSES OF CONVERSION 26

32. AMENDMENT OR TERMINATION OF PLAN 27

33. CONDITIONS TO CONSUMMATION OF CONVERSION 27

34. INTERPRETATION 27

(i) ------

Exhibit A Form of Merger Agreement between Bay-Vanguard, M.H.C., Inc. and BV Financial, Inc.

(ii) ------

**PLAN OF CONVERSION AND REORGANIZATION** 

**OF** 

**BAY-VANGUARD, M.H.C., INC.** 

**1.** **INTRODUCTION** 

This Plan of Conversion and Reorganization (the "Plan") provides for the conversion and reorganization of Bay-Vanguard, M.H.C., Inc., a Maryland-chartered mutual holding company (the "Mutual Holding Company"), from the mutual to the capital stock form of organization (the "Conversion"). Currently, the Mutual Holding Company owns a majority of the outstanding shares of common stock of BV Financial, Inc., a Maryland-chartered stock corporation (the "Mid-Tier Holding Company" or the "Holding Company"), and the Mid-Tier Holding Company owns 100% of the outstanding shares of common stock of BayVanguard Bank (the "Bank"), a Maryland-chartered stock savings bank.

In connection with the Conversion, the Bank will convert its charter to that of a Maryland commercial bank and the Mutual Holding Company will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the surviving entity (the "MHC Merger"). In connection with the Conversion, each Minority Stockholder will receive Holding Company Common Stock in exchange for Minority Shares pursuant to the Exchange Ratio. In addition, the Holding Company will offer shares of Conversion Stock on a priority basis in the Offering as provided herein. The subscription rights granted to Participants in the Subscription Offering are set forth in Sections 8 through 11 hereof. All sales of Subscription Shares in the Community Offering or the Syndicated Community Offering, or in any other manner permitted by the Bank Regulators, will be at the sole discretion of the Boards of Directors of the Holding Company and the Bank. The Conversion will have no impact on depositors, borrowers or other customers of the Bank. After the Conversion, the Bank's insured deposits will continue to be insured by the FDIC to the extent provided by applicable law.

The capital raised in the Conversion will provide the Bank and the Holding Company with additional resources to support growth, the opening or acquisition of additional branch offices, and the acquisition of other financial institutions or businesses related to banking, and for other general corporate purposes. The Conversion will also provide the Bank and the Holding Company greater corporate flexibility to effect mergers, acquisitions and other business combinations. The Holding Company may choose to pay regular quarterly dividends to its stockholders, and the Conversion will enable the Holding Company to pay such dividends without complications associated with the mutual holding company structure.

This Plan has been unanimously adopted by the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and the Bank. This Plan also must be approved by at least: (i) a majority of the total votes eligible to be cast by Voting Members at the Members Meeting; (ii) two-thirds of the total votes eligible to be cast by Stockholders at the Stockholders Meeting; and (iii) a majority of the total votes eligible to be cast by Minority Stockholders at the Stockholders Meeting. Approval of this Plan by the Voting Members and by the Stockholders shall constitute approval of each of the constituent transactions necessary to implement this Plan, including the MHC Merger and any amendments to the Certificate of Incorporation of the Holding Company. The Federal Reserve and OCFR must approve this Plan before it is presented to Voting Members and Stockholders for their approval.

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**2.** **DEFINITIONS** 

For the purposes of this Plan, the following terms have the following meanings:

**Account Holder** – Any Person holding a Deposit Account in the Bank.

**Acting in Concert** – The term Acting in Concert means: (i) knowing participation in a joint activity or interdependent conscious 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 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 stock held by the trustee and stock held by such plan will be aggregated.

**Affiliate** – Any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another 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 shares of Conversion Stock 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.

**Articles of Merger** – The Articles of Merger filed with the Maryland Department, and any similar documents filed in connection with the consummation of any merger relating to the Conversion.

**Associate** – The term Associate when used to indicate a relationship with any Person, means (i) any corporation or organization (other than the Mutual Holding Company, the Mid-Tier Holding Company, the Bank or a majority-owned subsidiary of the Mutual Holding Company, the Mid-Tier Holding Company or the 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, 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 (A) who lives in the same home as such person or (B) who is a Director or Officer of the Mutual Holding Company, the Mid-Tier Holding Company or the Bank, or any of their parents or subsidiaries.

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**Bank** – BayVanguard Bank, a Maryland-chartered stock savings bank.

**Bank Liquidation Account** – The account established by the Bank representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders in connection with the Conversion.

**Bank Regulators** – The Federal Reserve and other bank regulatory agencies, if any, responsible for reviewing and approving the Conversion, including the ownership of the Bank by the Holding Company.

**Charter Conversion:** The conversion of the charter of the Bank from a Maryland savings association to a Maryland commercial bank.

**Code** – The Internal Revenue Code of 1986, as amended.

**Community Offering** – The direct offering by the Holding Company of Subscription Shares not subscribed for in the Subscription Offering for sale to certain members of the general public. The Community Offering may commence concurrently with or during the Subscription Offering or any Syndicated Community Offering or both, or upon the conclusion of the Subscription Offering.

**Control –** (including the terms "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. Part 238.

**Conversion** – The conversion and reorganization of the Mutual Holding Company to stock form pursuant to this Plan, and all steps incident or necessary thereto, including the Offering and the Exchange Offering.

**Conversion Stock** – The Subscription Shares and the Exchange Shares.

**Deposit Account** – Any withdrawable account, including, without limitation, savings, time, demand, NOW accounts, money market, certificate and passbook accounts.

**Director** – A member of the Board of Directors of the Bank, the Mid-Tier Holding Company or the Mutual 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 and the Bank Liquidation Account.

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**Eligibility Record Date** – The date for determining Eligible Account Holders of the Bank, which is December 31, 2021.

**Employee Plans** – Any one or more Tax-Qualified Employee Stock Benefit Plans of the Bank or its subsidiaries or the Holding Company, including the ESOP and the 401(k) Plan.

**Employees** – All Persons employed by the Bank, the Mid-Tier Holding Company or the Mutual Holding Company.

**ESOP** – The Bank's Employee Stock Ownership Plan, and related trust.

**Exchange Offering** – The offering of Exchange Shares to Minority Stockholders in exchange for Minority Shares.

**Exchange Ratio** – The ratio at which a Minority Share is exchanged for an Exchange Share upon consummation of the Conversion. The Exchange Ratio (which shall be rounded to four decimal places) shall be determined such that as of the closing of the Conversion, the Minority Stockholders will own in the aggregate the same percentage of the outstanding shares of Holding Company Common Stock immediately upon completion of the Conversion as the percentage of Mid-Tier Holding Company common stock owned by the Minority Stockholders in the aggregate immediately before the consummation of the Conversion before giving effect to (a) cash paid in lieu of any fractional Exchange Shares and (b) any Subscription Shares purchased by Minority Stockholders in the Offering; provided that the Exchange Ratio will be adjusted to reflect assets held by the Mutual Holding Company (other than shares of common stock of the Mid-Tier Holding Company).

**Exchange Shares** – The shares of Holding Company Common Stock issued to Minority Stockholders in the Exchange Offering.

**FDIC** – The Federal Deposit Insurance Corporation.

**Federal Reserve –** The Board of Governors of the Federal Reserve System and/or the Federal Reserve Bank of Richmond.

**Holding Company** – The Mid-Tier Holding Company, but sometimes referred to as the "Holding Company" in the context of the Offering or after consummation of the Conversion.

**Holding Company Common Stock** – The common stock, par value $0.01 per share, of the Holding Company. Shares of Holding Company Common Stock will be issued in the Offering and Exchange Offering.

**Independent Appraiser** – The appraiser retained by the Mutual Holding Company, Mid-Tier Holding Company and the Bank to prepare an appraisal of the pro forma market value of the Holding Company.

**Liquidation Account** – The account established by the Holding Company 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 Mutual Holding Company immediately before the Conversion.

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**Local Community** – Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland.

**Majority Ownership Interest** – A fraction, the numerator of which is the number of shares of Mid-Tier Holding Company common stock owned by the Mutual Holding Company immediately before the completion of the Conversion, and the denominator of which is the total number of shares of Mid-Tier Holding Company common stock issued and outstanding immediately before the completion of the Conversion.

**Maryland Department** – The Maryland State Department of Assessments and Taxation.

**Member** – Any Person who qualifies as a member of the Mutual Holding Company pursuant to its Articles of Incorporation.

**Members Meeting** – The special meeting of Voting Members, and any adjournments thereof, held to consider and vote upon this Plan.

**Member Voting Record Date** – The date fixed by the Board of Directors of the Mutual Holding Company for determining eligibility to vote at the Members Meeting.

**MHC Merger** – The merger of the Mutual Holding Company with and into the Mid-Tier Holding Company, with the Mid-Tier Holding Company as the surviving entity. The MHC Merger shall occur immediately before the completion of the Conversion, as set forth in this Plan.

**Mid-Tier Holding Company** – BV Financial, Inc., the Maryland-chartered corporation that owns 100% of the outstanding shares of common stock of the Bank, and any successor thereto.

**Minority Shares** – All outstanding shares of common stock of the Mid-Tier Holding Company and shares of common stock of the Mid-Tier Holding Company issuable upon the exercise of options or the grant of stock awards, owned by persons other than the Mutual Holding Company.

**Minority Stockholder** – Any owner of Minority Shares.

**Mutual Holding Company** – Bay-Vanguard, M.H.C., Inc., the Maryland-chartered mutual holding company of the Mid-Tier Holding Company and the Bank and that owns a majority of the outstanding shares of common stock of the Mid-Tier Holding Company.

**OCFR –** The Office of the Commissioner of Financial Regulation for the State of Maryland.

**Offering** – The offering and issuance, pursuant to this Plan, of shares of Holding Company Common Stock in a Subscription Offering, Community Offering and/or Syndicated Community Offering, as the case may be. The term "Offering" does not include the Exchange Offering.

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**Offering Range** – The range of Subscription Shares offered for sale in the Offering multiplied by the Subscription Price. The Offering Range shall be equal to the Appraised Value Range multiplied by the Majority Ownership Interest (as adjusted to reflect assets held by the Mutual Holding Company (other than shares of common stock of the Mid-Tier Holding Company)). The maximum and minimum of the Offering Range may vary as much as 15% above and 15% below, respectively, the midpoint of the Offering Range.

**Officer** – The term Officer means, with respect to Mutual Holding Company, the Mid-Tier Holding Company or the Bank, the chairman of the board, president, any vice president, treasurer, secretary, or comptroller, or any other person who participates in its major policy decisions.

**Order Form** – Any form (together with any cover letter and acknowledgments) sent to any Participant or Person containing among other things a description of the alternatives available to such Participant or Person under this Plan and by which any such Participant or Person may make elections regarding subscriptions for Subscription Shares.

**Other Member** – Any Person holding a Deposit Account at the close of business on the Member Voting Record Date (other than 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 and Reorganization of the Mutual Holding Company 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 the Subscription Shares.

**Qualifying Deposit** – The aggregate balance of all Deposit Accounts in the Bank or in another entity, described below, of (i) an Eligible Account Holder at the close of business on the Eligibility Record Date, provided such aggregate balance is not less than $50.00, or (ii) a Supplemental Eligible Account Holder at the close of business on the Supplemental Eligibility Record Date, provided such aggregate balance is not less than $50.00. The term "Qualifying Deposit" shall also include the aggregate balance of all Deposit Accounts of not less than $50.00 held by Persons at the close of business on the Eligibility Record Date or Supplemental Eligibility Record Date in any entity merged with the Bank, the Mid-Tier Holding Company or the Mutual Holding Company prior to the closing of the Conversion, which merger would result in such Persons having the subscription rights of an Eligible Account Holder or Supplemental Eligible Account Holder under applicable rules of the Bank Regulators.

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**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. To the extent the Person is a corporation or other business entity, to be a Resident the principal place of business or headquarters of the corporation or business 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 Mutual Holding Company and the Bank may utilize deposit or loan records or such other evidence provided to it to determine whether a Person is a Resident. In all cases, however, such a determination shall be in the sole discretion of the Mutual Holding Company and the 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.

**SEC** – The United States Securities and Exchange Commission.

**Stockholder** – Any owner of outstanding common stock of the Mid-Tier Holding Company, including the Mutual Holding Company.

**Stockholders Meeting** – The special or annual meeting of Stockholders, and any adjournments thereof, held to consider and vote upon this Plan.

**Stockholder Voting Record Date** – The date fixed by the Directors of the Mid-Tier Holding Company for determining eligibility to vote at the Stockholders Meeting.

**Subscription Offering** – The offering of Subscription Shares to Participants.

**Subscription Price** – The price per Subscription Share to be paid by Participants and others in the Offering. The Subscription Price will be $10.00, unless otherwise determined by the Board of Directors of the Holding Company, and it will be fixed before the commencement of the Subscription Offering.

**Subscription Shares** – Shares of Holding Company Common Stock offered for sale in the Offering. Subscription Shares do not include Exchange Shares.

**Supplemental Eligible Account Holder** – Any Person (other than Directors and Officers of the Mutual Holding Company, the Bank and/or the Mid-Tier Holding Company and their Associates) holding a Qualifying Deposit at the close of business on the Supplemental Eligibility Record Date and 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 Federal Reserve approval of the application for conversion. The Supplemental Eligibility Record Date will be used only if the Federal Reserve has not approved the Conversion within 15 months after the Eligibility Record Date.

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**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 commence concurrently with, during or after 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. A "Non-Tax-Qualified Employee Stock Benefit Plan" is any defined benefit plan or defined contribution plan which is not so qualified.

**Voting Member** – Any Member who at the close of business on the Member Voting Record Date is entitled to vote as a Member.

**3.** **PROCEDURES FOR CONVERSION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. After adoption of this Plan by the Boards of Directors of the Bank, the Mid-Tier Holding Company and the Mutual Holding Company, this Plan, together with all other requisite material, shall be submitted to the Bank Regulators for approval. Notice of the adoption of this Plan by the Boards of Directors of the Bank, the Mutual Holding Company and the Mid-Tier Holding Company will be published in a newspaper having general circulation in each community in which an office of the Bank is located, and copies of this Plan will be made available at each office of the Bank for inspection by Members. The Mutual Holding Company will publish a notice of the filing with the Bank Regulators of an application to convert in accordance with the provisions of this Plan as well as notices required in connection with any holding company application, merger application or other application required to complete the Conversion. The Bank will also file an application to the OCFR in connection with the Charter Conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Promptly following approval by the Bank Regulators, this Plan will be submitted to: (i) a vote of the Voting Members at the Members Meeting and (ii) a vote of the Stockholders at the Stockholders Meeting. The Mutual Holding Company will mail to all Voting Members, at their last known address appearing on the records of the Bank as of the Member Voting Record Date, a proxy statement describing this Plan. The Mid-Tier Holding Company will mail to all Stockholders as of the Stockholder Voting Record Date a proxy statement describing this Plan. The Holding Company also will mail to all Participants a Prospectus and Order Form for the purchase of Subscription Shares. In addition, all Participants will receive, or will be given the opportunity to request by either telephone or by letter addressed to the Bank's Secretary, a copy of this Plan as well as the articles of incorporation and bylaws of the Holding Company. This Plan must be approved by at least: (i) a majority of the total votes eligible to be cast by Voting Members at the Members Meeting; (ii) two-thirds of the total votes eligible to be cast by Stockholders at the Stockholders Meeting; and (iii) a majority of the total votes eligible to be cast by Minority Stockholders at the Stockholders Meeting. Upon such approval of this Plan, the Mutual Holding Company, the Mid-Tier Holding Company and the Bank will take all other necessary steps pursuant to applicable laws and regulations to consummate the Conversion and the Charter Conversion. The Conversion must be completed within twenty-four (24) months of the approval of this Plan by Voting Members.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The period for the Subscription Offering will be not less than twenty (20) days nor more than forty-five (45) days from the date Participants are first mailed a Prospectus and Order Form, unless extended. Any Subscription Shares for which subscriptions have not been received in the Subscription Offering may be issued in a Community Offering and/or a Syndicated Community Offering, or in any other manner permitted by the Bank Regulators. All sales of Subscription Shares must be completed within forty-five (45) days after the last day of the Subscription Offering, unless the offering period is extended by the Mutual Holding Company and the Holding Company with the approval of the Bank Regulators.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. 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. The choice of which method to effect the Conversion will be made by the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and the Bank no later than immediately before the closing of the Conversion. 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 Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and the Bank, and applicable federal and state regulations and policy. Approval of this Plan by Voting Members and Stockholders also shall constitute approval of each of the transactions necessary to implement this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Bank will convert its charter to that of a Maryland commercial bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Mutual Holding Company will merge with the Mid-Tier Holding
Company, with the Mid-Tier Holding Company as the surviving entity, pursuant to the Agreement of Merger attached hereto as <u>Exhibit A</u>, whereby the shares of Mid-Tier Holding Company common stock held by the Mutual Holding Company will be canceled and Members will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their ownership interests in the Mutual Holding Company. As part of the MHC Merger, each of the Minority Shares shall automatically, without further action on the part of the holders thereof, be converted into and
become the right to receive Holding Company Common Stock based upon the Exchange Ratio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Immediately after the MHC Merger, the Holding Company will sell the Subscription Shares in the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in
constructive exchange for additional shares of common stock of the Bank and in exchange for the Bank Liquidation Account.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. As part of the Conversion and as set forth in (2), above, the Minority Shares outstanding immediately before the consummation of the Conversion shall automatically, without further action on the part of the holders thereof, be converted into and become the right to receive Exchange Shares based upon the Exchange Ratio. The basis for exchange of Minority Shares for Exchange Shares shall be fair and reasonable. Options to purchase shares of Mid-Tier Holding Company common stock that are outstanding immediately before the consummation of the Conversion shall be maintained with the number of shares subject to the option and the exercise price per share to be adjusted based upon the Exchange Ratio so that the aggregate exercise price of the option remains unchanged, and with the duration of the option remaining unchanged.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. The Holding Company shall register the Conversion Stock with the SEC and any appropriate state securities authorities. In addition, the Mid-Tier Holding Company shall prepare preliminary proxy materials as well as other applications and information for review by the SEC in connection with the solicitation of Stockholder approval of this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mutual Holding Company shall be automatically transferred to and vested in the Mid-Tier Holding Company by virtue of the Conversion without any deed or other document of transfer. The Holding Company, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, and interests and powers were held or enjoyed by the Mutual Holding Company. The Holding Company shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mutual Holding Company immediately before the consummation of the Conversion, including liabilities for all debts, obligations and contracts of the Mutual Holding Company, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mutual Holding Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. The home office and branch offices of the Bank shall be unaffected by the Conversion. The executive offices of the Mid-Tier Holding Company shall be unaffected by the Conversion.

**4.** **APPLICATIONS AND APPROVALS** 

The Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and the Bank will take all necessary steps to convert the Mutual Holding Company to stock form and complete the Charter Conversion and the Offering. The Mutual Holding Company, Mid-Tier Holding Company and the Bank shall make timely applications to the Bank Regulators and filings with the SEC for any requisite regulatory approvals to complete the Conversion and the Charter Conversion.

**5.** **SALE OF SUBSCRIPTION SHARES** 

The Subscription Shares will be offered for sale 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 proxy statement for the Members Meeting. The Holding Company Common Stock will not be insured by the FDIC. The Bank will not extend credit to any Person to purchase shares of Holding Company Common Stock.

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Any Subscription Shares for which subscriptions have not been received in the Subscription Offering may be issued in the Community Offering, subject to the terms and conditions of this Plan. The Community Offering, if any, will involve an offering of unsubscribed Subscription Shares directly to the general public with a first preference given to natural persons and trusts of natural persons residing in the Local Community. The Community Offering may begin concurrently with, during or after the Subscription Offering. The offer and sale of Subscription Shares before the Members Meeting, however, is subject to the approval of this Plan by the Voting Members and by the Stockholders, including Minority Stockholders.

If feasible, any Subscription Shares remaining unsold after the Subscription Offering and any Community Offering may be offered for sale in a Syndicated Community Offering or in any manner approved by the Bank Regulators that will achieve a widespread distribution of the Subscription Shares. The issuance of Subscription Shares in the Subscription Offering and any Community Offering will be consummated simultaneously on the date the sale of Subscription Shares is consummated in any Syndicated Community Offering, and only if the required minimum number of Subscription Shares will be issued.

**6.** **PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES** 

The total number of shares of Conversion Stock to be offered in the Conversion will be determined jointly by the Boards of Directors of the Mutual Holding Company and the Mid-Tier 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 be equal to the Appraised Value Range multiplied by the Majority Ownership Interest (as adjusted to reflect assets held by the Mutual Holding Company (other than shares of common stock of the Mid-Tier Holding Company)). 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 shares of Conversion Stock issued in the Conversion will be equal to the estimated pro forma consolidated market value of the Holding Company, as may be amended, divided by the Subscription Price, and the number of Subscription Shares issued in the Offering will be equal to the product of (i) the estimated pro forma consolidated market value of the Holding Company, as may be amended, divided by the Subscription Price, and (ii) the Majority Ownership Interest (as adjusted to reflect assets held by the Mutual Holding Company (other than shares of common stock of the Mid-Tier Holding Company)).

If the product of the Subscription Price multiplied by the number of shares of Conversion Stock to be issued in the Conversion is below the minimum of the Appraised Value Range, or materially above the maximum of the Appraised Value Range, a resolicitation of purchasers may be required, provided that up to a 15% increase above the maximum of the Appraised Value Range will not be deemed material so as to require a resolicitation. Any resolicitation shall be effected in such manner and within such time as the Mutual Holding Company and the Mid-Tier Holding Company shall establish, provided that all required regulatory approvals have been obtained.

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Notwithstanding the foregoing, shares of Conversion Stock will not be issued unless, before the consummation of the Conversion, the Independent Appraiser confirms to the Bank, the Mutual Holding Company, the Holding Company and the Bank Regulators, that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred that, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the number of shares of Conversion Stock issued in the Conversion 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 and the Exchange Offering, extend the Offering and establish a new Subscription Price and/or Appraised Value Range, hold a new Offering and Exchange Offering after canceling the Offering and the Exchange Offering, or take such other action as the Bank Regulators may permit.

The Holding Company Common Stock to be issued in the Conversion shall be fully paid and nonassessable.

**7.** **RETENTION OF CONVERSION 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 economic strength to the Holding Company and the Bank for the future in a highly competitive and regulated financial services environment, and will support the growth in the operations of the Holding Company and the Bank through increased lending, acquisitions of financial service organizations, continued diversification into other related businesses and other business and investment activities, including the possible payment of dividends and possible repurchases of the Holding Company Common Stock as permitted by applicable state law and by applicable federal regulations and policy.

**8.** **SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)** 

&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 $350,000 of 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 issued 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 purchase limitations specified in Section 14.

&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 one hundred (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

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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;C. Subscription rights as Eligible Account Holders received by Directors and Officers and their Associates that are based on deposits made by such persons during the twelve (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 shall have subscription rights to purchase in the aggregate up to 10% of the Subscription Shares issued in the Offering, 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 Bank and/or borrowed from an independent financial institution or from the Holding Company to exercise such subscription rights, and the Holding Company and the Bank may make scheduled discretionary contributions thereto, provided that such contributions do not cause the Holding Company or the 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 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 completion of the Conversion.

**10.** **SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)** 

&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 $350,000 of 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 issued 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 Eligible Account Holders and Employee Plans and subject to the purchase limitations specified in Section 14.

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&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 following subscriptions by Eligible Account Holders and Employee Plans, Subscription Shares shall be allocated among the subscribing Supplemental Eligible Account Holders so as to permit each 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 one hundred (100) shares or the number of shares for which 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 such Supplemental Eligible Account Holder whose subscription remains unsatisfied 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;A. Each Other Member shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the greater of $350,000 of Subscription Shares or 0.10% of the total number of shares 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 subject to the purchase limitations specified in Section 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. If Other Members exercise subscription rights for a number of Subscription Shares in excess of the total number of such shares available for subscription following subscriptions by Eligible Account Holders, Employee Plans and Supplemental Eligible Account Holders, Subscription Shares will be allocated among 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 one hundred (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 securities of savings institutions and/or their holding companies. 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 shall 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 cover orders of other members of the general public. If orders for Subscription

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Shares exceed the number of shares available for sale in a category pursuant to the purchase priorities described above, shares will be allocated within the category so that each member of that category will receive the lesser of one hundred (100) shares or the amount ordered, and thereafter remaining shares will be allocated on an equal number of shares basis per order. In connection with the allocation, orders received for Subscription Shares in the 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. The Mutual Holding Company and the Holding Company shall use their 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 shares. 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 $350,000 of Subscription Shares in the Community Offering, subject to the purchase limitations specified in Section 14.

**13.** **SYNDICATED COMMUNITY OFFERING** 

If feasible, the Boards of Directors of the Mutual Holding Company and the Holding Company may determine to offer Subscription Shares not sold in the Subscription Offering or the Community Offering, if any, for sale in a Syndicated Community Offering using a broker, dealer, consultant or investment banking firm experienced and expert in the sale of securities of savings institutions and/or their holding companies. Such entities may be compensated on a fixed fee basis or on a commission basis, or a combination thereof. The Syndicated Community Offering shall be subject to such terms, conditions and procedures as may be determined by the Mutual Holding Company and the Holding Company, in a manner that will achieve the widest distribution of Subscription Shares. In the Syndicated Community Offering, any Person may purchase up to $350,000 of Subscription Shares in the Syndicated Community Offering, subject to the purchase limitations specified in Section 14. In addition, unless otherwise approved or permitted by the Federal Reserve, orders received for Subscription Shares in the 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. The Holding Company reserves the right to reject any or all orders, in whole or in part, that are received in the Syndicated Community Offering.

If, for any reason, a Syndicated Community Offering of Subscription Shares not sold in the Subscription Offering or any Community Offering cannot be effected, or if any insignificant residue of Subscription Shares is not sold in the Subscription Offering, Community Offering or any Syndicated Community Offering, the Holding Company will use its best efforts to 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.

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**14.** **LIMITATIONS ON PURCHASES** 

The following limitations shall apply to all purchases and issuances of shares of Conversion Stock:

&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, shall not exceed $700,000 of Subscription Shares, except that the Employee Plans may subscribe for up to 10% of the Subscription Shares issued in the Offering (including shares issued in the event of an increase in the maximum of the Offering Range of 15%).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The maximum number of shares of Holding Company Common Stock 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 25% of the shares of Conversion Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The maximum number of Subscription Shares that may be subscribed for or purchased in all categories of the Offering by any Person or Participant together with purchases by any Associate or group of Persons Acting in Concert, combined with Exchange Shares received by any such Person or Participant together with any Associate or group of Persons Acting in Concert, shall not exceed 9.9% of the shares of Conversion Stock, except that this ownership limitation shall not apply to the Employee Plans. However, Minority Stockholders will not be required to sell any shares of Holding Company Common Stock or be limited from receiving any Exchange Shares or be required to divest themselves of any Exchange Shares as a result of this limitation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. A minimum of twenty-five (25) Subscription Shares must be purchased by each Person or Participant purchasing shares in the Offering to the extent those shares are available; provided, however, that if the product of the minimum number of Subscription Shares purchased multiplied the Subscription Price exceeds $500, then such minimum purchase requirement shall be reduced to such number of shares that when multiplied by the price per share shall not exceed $500, as determined by the Boards of the Mutual Holding Company and the Holding Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. If the number of shares of Holding Company Common Stock otherwise allocable pursuant to Sections 8 through 13, inclusive, to any Person or that Person's Associates would be in excess of the maximum number of shares permitted as set forth above, the number of shares of Holding Company Common Stock allocated to each such person shall be reduced to the lowest limitation applicable to that Person, and then the number of shares allocated to each group consisting of a Person and that Person's Associates shall be reduced so that the aggregate allocation to that Person and his or her Associates complies with the above limits.

Depending upon market or financial conditions, the Boards of Directors of the Holding Company and the Mutual Holding Company, with the receipt of any required approvals of the Bank Regulators and without further approval of Voting Members, may decrease or increase the purchase limitations in this Plan, provided that the maximum purchase limitations may not be increased to a percentage in excess of 5% of the Subscription Shares issued in the Offering except as provided below. If the Mutual Holding Company and the Holding Company increase

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the maximum purchase limitations, the Mutual Holding Company and the Holding Company are only required to resolicit Participants who subscribed for the maximum purchase amount in the Subscription Offering and who indicated a desire to be resolicited on the Order Form. In the event of such a resolicitation, the Mutual Holding Company and the Holding Company shall have the right, in their sole discretion, to require such persons to supply immediately available funds for the purchase of additional Subscription Shares. Such persons will be prohibited from paying with a personal check, but the Mutual Holding Company and the Holding Company may allow payment by wire transfer. If the maximum purchase limitation is increased to 5% of the shares issued in the Offering, such limitation may be further increased to 9.99%, provided that orders for Subscription Shares exceeding 5% of the Subscription Shares issued in the Offering shall not exceed in the aggregate 10% of the total Subscription Shares issued in the Offering. Decisions on whether to fulfill requests to purchase additional Subscription Shares, if the purchase limitation is so increased, will be determined by the Boards of Directors of the Mutual Holding Company and the Holding Company in their 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 Offering Range of up to 15%, the additional shares may be used to fill the Employee Plans' orders before all other orders and then will be allocated in accordance with the priorities set forth in this Plan.

For purposes of this Section 14, (i) Directors, Officers and Employees of the Bank, the Mid-Tier Holding Company and the Mutual 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 Bank qualified under Section 401(k) of the Code, 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 Community Offering must be delivered in full to the Bank or Holding Company, 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, such plans will not be required to pay for the shares at the time they subscribe but rather may pay for such shares subscribed for by such plans at the Subscription Price upon consummation of the Conversion. Subscription funds will be held in a segregated account at the Bank.

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Except as set forth in Section 14.E., above, payment for Subscription Shares shall be made by personal check, money order or bank draft. Alternatively, subscribers in the Subscription and Community Offerings may pay for the shares for which they have subscribed by authorizing the Bank on the Order Form to make a withdrawal from the designated types of Deposit Accounts at the 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 but may not be used by the subscriber during the 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. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Interest on funds received by check, draft or money order will be paid by the Bank at not less than the passbook rate. Such interest will be paid from the date payment is processed by the 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 and Community Offerings 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 Bank is prohibited by regulation from knowingly making any loans or granting any lines of credit for the purchase of Subscription Shares in the Offering.

**16.** **MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS** 

As soon as practicable after the registration statement prepared by the Holding Company has been declared effective by the SEC and the stock offering materials have been approved by the Bank Regulators, Order Forms will be distributed to the Participants at their last known addresses appearing on the records of the Bank to subscribe for shares of Holding Company Common Stock in the Subscription Offering and will be made available for use by any other Persons to whom a Prospectus is delivered. Each Order Form will be preceded or accompanied by a Prospectus describing the Mutual Holding Company, the Holding Company, the Bank, the Holding Company Common Stock and the Offering. Each Order Form will contain, among other things, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. A specified date by which all Order Forms must be received by the Holding Company, or its agent, which date shall be not less than twenty (20) days, nor more than forty-five (45) days, following the date on which the Order Forms are first mailed to Participants by the Mutual Holding Company or the Holding Company, and which date will constitute the termination of the Subscription Offering unless extended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Subscription Price for the Subscription Shares to be sold in the Offering;

&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 and Community Offerings;

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&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 Person elects to subscribe and the available alternative methods of payment therefor;

&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;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 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 Subscription Shares for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the Order Form that the Bank withdraw said amount from the subscriber's Deposit Account(s) at the Bank); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. A statement to the effect that the executed Order Form, once received by the Mutual Holding Company or the Holding Company, may not be modified or amended by the subscriber without the consent of the Holding Company.

Notwithstanding the above, the Mutual Holding Company and the Holding Company reserve the right in their sole discretion to accept or reject orders received on photocopied or facsimiled order forms.

**17.** **UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT** 

If Order Forms (a) are not delivered or are not timely delivered by the United States Postal Service, (b) are not received by the Holding Company 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 for the Subscription Shares 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 corrected Order Forms or the remittance of full payment for subscribed shares by such date as the Holding Company may specify. The interpretation by 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 Subscription Shares pursuant to this Plan reside. However, no such Person will be issued subscription rights or be permitted to purchase Subscription Shares in the Subscription Offering if such Person resides in a foreign country or in a state or other jurisdiction of the United States with respect to which any

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of the following apply: (a) a small number of Persons otherwise eligible to subscribe for shares under this Plan reside in such state; (b) the issuance of subscription rights or the offer or sale of Subscription Shares 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; or (c) such registration or qualification would be impracticable for reasons of cost or otherwise.

**19.** **ESTABLISHMENT OF LIQUIDATION ACCOUNTS** 

The Holding Company shall establish a Liquidation Account at the time of the Conversion in an amount equal to the product of (i) the Majority Ownership Interest and (ii) the Mid-Tier Holding Company's total stockholders' equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the Conversion, plus the value of the net assets of the Mutual Holding Company as reflected in the latest statement of financial condition of the Mutual Holding Company before the effective date of the Conversion (excluding its ownership of Mid-Tier Holding Company common stock). Following the Conversion, the Liquidation Account will be maintained for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their Deposit Accounts at the Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to his or her Deposit Account, hold a related inchoate interest in a portion of the Liquidation Account balance in relation to his or her Deposit Account balance at the Eligibility Record Date or the Supplemental Eligibility Record Date, respectively, or to such balance as it may be subsequently reduced, as hereinafter provided. The Holding Company also shall cause the Bank to establish and maintain the Bank Liquidation Account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their Deposit Accounts at the Bank.

In the unlikely event of a complete liquidation of (i) the Bank or (ii) the Bank and the Holding Company (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 such Eligible Account Holder's or Supplemental Eligible Account Holder's Deposit Account, before any liquidation distribution may be made to any holders of the Holding Company's capital stock. A merger, consolidation or similar combination with another FDIC-insured depository institution or holding company thereof, in which the Holding Company and/or the Bank is not the surviving entity, shall not be deemed to be a complete liquidation for this purpose. In such transactions, the Liquidation Account shall be assumed by the surviving holding company or institution.

In the unlikely event of a complete liquidation of either (i) the Bank or (ii) the Bank and the Holding Company (and only in such event) following all liquidation payments to creditors of the Bank (including those to Account Holders to the extent of their Deposit Accounts), at a time when the Bank has a positive net worth and the Holding Company does not have sufficient assets (other than the stock of the Bank) at the time of liquidation to fund its obligations under the Liquidation Account, the Bank, with respect to the Bank Liquidation Account shall immediately pay directly to each Eligible Account Holder and Supplemental Eligible Account Holder an

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amount necessary to fund the Holding Company's remaining obligations under the Liquidation Account before any liquidating distribution may be made to any holders of the Bank's capital stock and without making such amount subject to the Holding Company's creditors. Each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a distribution from the Bank Liquidation Account, in the amount of the then adjusted subaccount balance for his or her Deposit Account then held, before any distribution may be made to any holders of the Holding Company's or Bank's capital stock.

In the event of a complete liquidation of the Holding Company where the Bank is not also completely liquidating, or in the event of a sale or other disposition of the Holding Company apart from the Bank, each Eligible Account Holder and Supplemental Eligible Account Holder shall be treated as surrendering such Person's rights to the Liquidation Account and receiving from the Holding Company an equivalent interest in the Bank Liquidation Account. Each such holder's interest in the Bank Liquidation Account shall be subject to the same rights and terms as if the Bank Liquidation Account were the Liquidation Account (except that the Holding Company shall cease to exist).

The initial subaccount balance for a Deposit Account held by an Eligible Account Holder and Supplemental Eligible Account Holder shall be determined by multiplying the opening balance in the Liquidation Account by a fraction, the numerator of which is the amount of the Qualifying Deposits of such Eligible Account Holder or Supplemental Eligible Account Holder and the denominator of which is the total amount of all Qualifying Deposits of all Eligible Account Holders and Supplemental Eligible Account Holders. For Deposit Accounts in existence at both the Eligibility Record Date and the Supplemental Eligibility Record Date, separate initial subaccount balances shall be determined on the basis of the Qualifying Deposits in such Deposit Account on each such record date. Such initial subaccount balance shall not be increased, but shall be subject to downward adjustment as described below.

If, at the close of business on any fiscal year end closing date, commencing on or after the effective date of the Conversion, the deposit balance in the Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder is less than the lesser of (i) the balance in the Deposit Account at the close of business on any other annual closing date after the Eligibility Record Date or Supplemental Eligibility Record Date, or (ii) the amount of the Qualifying Deposit in such Deposit Account as of the Eligibility Record Date or Supplemental Eligibility Record Date, then the subaccount balance for such Deposit Account shall be adjusted downward by reducing such subaccount balance in an amount proportionate to the reduction in such deposit balance. In the event of a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any subsequent increase in the deposit balance of the related Deposit Account. If any such Deposit Account is closed, the related subaccount shall be reduced to zero.

The creation and maintenance of the Liquidation Account and the Bank Liquidation Account shall not operate to restrict the use or application of any capital of the Holding Company or the Bank, except that neither the Holding Company nor the Bank shall 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: (i) the amount required for the Liquidation Account or the Bank Liquidation Account, as applicable; or (ii) the regulatory capital requirements of the Holding

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Company (to the extent applicable) or the Bank. Neither the Holding Company nor the Bank shall be required to set aside funds in connection with its obligations hereunder relating to the Liquidation Account and the Bank Liquidation Account, respectively. Eligible Account Holders and Supplemental Eligible Account Holders do not retain any voting rights in either the Holding Company or the Bank based on their interests in the Liquidation Account or the Bank Liquidation Account.

The amount of the Bank Liquidation Account shall equal at all times the amount of the Liquidation Account, and the Bank Liquidation Account shall be reduced by the same amount and upon the same terms as any reduction in the Liquidation Account. In no event will any Eligible Account Holder or Supplemental Eligible Account Holder be entitled to a distribution that exceeds such holder's subaccount balance in the Liquidation Account.

For a period of three (3) years following the completion of the Conversion, the Holding Company will not without prior Federal Reserve approval (i) sell or liquidate the Holding Company, or (ii) cause the Bank to be sold or liquidated. Upon the written request of the Federal Reserve, the Holding Company shall, or upon the prior written approval of the Federal Reserve the Holding Company may, at any time after two (2) years from the completion of the Conversion, transfer the Liquidation Account to the Bank, at which time the Liquidation Account shall be assumed by the Bank and the interests of Eligible Account Holders and Supplemental Eligible Account Holders will be solely and exclusively established in the Bank Liquidation Account. In the event such transfer occurs, the Holding Company shall be deemed to have transferred the Liquidation Account to the Bank and such Liquidation Account shall be subsumed into the Bank Liquidation Account and shall not be subject in any manner or amount to the claims of the Holding Company's creditors. Approval of this Plan by the Voting Members and Stockholders shall constitute approval of the transactions described herein.

**20.** **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.

**21.** **RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION OF SUBSCRIPTION SHARES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. All Subscription Shares purchased by Directors or Officers of the Mutual Holding Company, the Mid-Tier Holding Company or the Bank in the Offering shall be subject to the restriction that, except as provided in this Section 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 (1) year following the date of purchase in the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The restriction on disposition of Subscription Shares set forth above in this Section shall not apply to the following:

&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 Bank or the Holding
Company, as the case may be, which has been approved by a federal regulatory agency; and

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&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;C. With respect to 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;1. Each certificate (or record of ownership) representing shares restricted by this Section shall bear a legend
(or appropriate notation) giving notice of the restriction;

&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;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.

**22.** **REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION** 

For a period of three (3) years following the Conversion, no Officer, Director or their Associates shall purchase, without the prior written approval of the Bank Regulators, any outstanding shares of Holding Company 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 Holding Company Common Stock, the exercise of any options pursuant to a stock option plan or purchases of Holding Company Common Stock made by or held by any Tax-Qualified Employee Stock Benefit Plan or Non-Tax-Qualified Employee Stock Benefit Plan of the Bank or the Holding Company (including the Employee Plans) that 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.

**23.** **TRANSFER OF DEPOSIT ACCOUNTS** 

Each person holding a Deposit Account at the Bank at the time of Conversion shall retain an identical Deposit Account at the Bank following Conversion in the same amount and subject to the same terms and conditions (except as to voting and liquidation rights) applicable to such Deposit Account in the Bank immediately before the completion of the Conversion.

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**24.** **REGISTRATION AND MARKETING** 

For 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 and will not deregister such securities for a period of at least three (3) years from the date of the Conversion, except that the requirement to maintain the registration of such securities for three (3) 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 Conversion Stock and to list those securities on a national or regional securities exchange unless otherwise permitted by the Federal Reserve.

**25.** **TAX RULINGS OR OPINIONS** 

Consummation of the Conversion is expressly conditioned upon prior receipt by the Mutual Holding Company, the Mid-Tier Holding Company and the Bank of either a ruling, an opinion of counsel or a letter of advice from their tax advisor(s) regarding the federal and state income tax consequences of the Conversion to the Mutual Holding Company, the Mid-Tier Holding Company, the Bank and the Account Holders and Voting Members receiving subscription rights in the Conversion.

**26.** **STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Holding Company and the 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 Holding Company 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;B. As a result of the Conversion, the Holding Company shall be deemed to have ratified and approved all employee stock benefit plans maintained by the Bank and shall have agreed to issue (and reserve for issuance) Holding Company Common Stock pursuant to the terms of such benefit plans. Upon consummation of the Conversion, the Mid-Tier Holding Company common stock held by such benefit plans shall be converted into the right to receive Holding Company Common Stock based upon the Exchange Ratio. Also upon consummation of the Conversion, (i) rights to purchase, sell or receive Mid-Tier Holding Company common stock and rights to elect to make payment in Mid-Tier Holding Company common stock under any agreement between the Bank or the Mid-Tier Holding Company and any Director, Officer or Employee thereof or under any plan or program of the Bank or the Mid-Tier Holding Company, shall automatically, by operation of law, be converted into and shall become an identical right to purchase, sell or receive Holding Company Common Stock and an identical right to make payment in Holding Company Common Stock under any such agreement between the Bank or the Mid-Tier Holding Company and any Director, Officer or Employee thereof or under such plan or program of the Bank, and (ii) rights outstanding under all stock option plans shall be converted into the right for a number of shares of Holding Company Common Stock based upon the Exchange Ratio and the number of shares of Mid-Tier Holding Company common stock that were available thereunder immediately before the consummation of the Conversion, with the price adjusted to reflect the Exchange Ratio but with no change in any other term or condition of such right.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The Holding Company and the Bank are authorized to adopt stock option plans, restricted stock award plans and other Non-Tax-Qualified Employee Stock Benefit Plans, provided that such plans conform to any applicable regulations. The Holding Company and the Bank intend to implement a stock option plan and a restricted stock award plan no earlier than six (6) months after completion of the Conversion. Stockholder approval of these plans will be required. If adopted within twelve (12) months following the completion of the Conversion, the stock option plan will reserve a number of shares equal to up to 10% of the shares sold in the Offering and the stock award plan will reserve a number of shares equal to up to 4% of the shares sold in the Offering for awards to Employees and Directors at no cost to the recipients (unless the Bank's tangible capital is less than 10% upon completion of the Offering in which case the stock award plan will reserve a number of shares equal to up to 3% of the shares sold in the Offering), subject to adjustment, if any, as may be required by Federal Reserve regulations or policy in effect to reflect stock options or restricted stock granted by the Mid-Tier Holding Company before the completion of the Conversion. Non-Tax-Qualified Employee Stock Benefit Plans implemented more than twelve (12) months following the completion of the Conversion are not subject to the restrictions set forth in the preceding sentence. Shares for such plans may be issued from authorized but unissued shares, treasury shares or repurchased shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. The Holding Company and the Bank are authorized to enter into employment agreements and/or change in control agreements with their executive officers.

**27.** **RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. For a period of three (3) years from the date of consummation of the Conversion, no person, other than the Holding Company, shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of equity security of the Bank without the prior written consent of the Federal Reserve. Nothing in this Plan shall prohibit the Holding Company from taking actions permitted under 12 C.F.R. 239.63(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Articles of Incorporation of the Holding Company may contain a provision stipulating that in no event shall any record owner of any outstanding shares of Holding Company Common Stock who beneficially owns in excess of 10% of such outstanding shares be entitled or permitted to vote any shares held in excess of 10% of the Holding Company's outstanding shares. In addition, the Articles of Incorporation and Bylaws of the Holding Company may contain provisions that provide for, or prohibit, as the case may be, staggered terms of the directors, qualifications for directors, noncumulative voting for directors, limitations on the calling of special meetings, a fair price provision for certain business combinations and certain notice requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. For the purposes of this Section:

&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;

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&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;(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;(4) The term "security" includes non-transferable subscription
rights issued pursuant to a plan of conversion as well as a "security" as defined in 15 U.S.C. § 77b(a)(1).

**28.** **PAYMENT OF DIVIDENDS AND THE REPURCHASE OF STOCK** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Holding Company shall comply with applicable regulations in the repurchase of any shares of its capital stock following consummation of the Conversion. The Holding Company shall not declare or pay a cash dividend on, or repurchase any of, its capital stock, if such dividend or repurchase would reduce its capital below the amount then required for the Liquidation Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The 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 its applicable regulatory capital requirements.

**29.** **ARTICLES OF INCORPORATION AND BYLAWS** 

By voting to approve this Plan, Voting Members and Stockholders will be voting to adopt the Bylaws of the Holding Company and to adopt the amendments to the Articles of Incorporation of the Holding Company.

**30.** **CONSUMMATION OF CONVERSION AND EFFECTIVE DATE** 

The effective date of the Conversion shall be the date upon which the Articles of Merger shall be filed with the Maryland Department. The Articles of Merger shall be filed after all requisite regulatory Voting Member and Stockholder approvals have been obtained, all applicable waiting periods have expired, and sufficient subscriptions and orders for Subscription Shares have been received. The closing of the sale of all shares of Holding Company Common Stock sold in the Offering and the Exchange Offering shall occur simultaneously on the effective date of the closing.

**31.** **EXPENSES OF CONVERSION** 

The Mutual Holding Company, the Mid-Tier Holding Company and the Bank 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 shall be reasonable.

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**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 otherwise at any time before the meetings of Voting Members and Stockholders to vote on this Plan by the Board of Directors of the Mutual Holding Company, and at any time thereafter by the Board of Directors of the Mutual Holding Company with the concurrence of the Bank Regulators. Any amendment to this Plan made after approval by Voting Members and Stockholders with the approval of the Bank Regulators shall not necessitate further approval by Voting Members or Stockholders unless otherwise required by the Bank Regulators. The Board of Directors of the Mutual Holding Company may terminate this Plan at any time before the Members Meeting and the Stockholders Meeting, and at any time thereafter with the concurrence of the Bank Regulators.

By adoption of this Plan, Voting Members and Stockholders authorize the Board of Directors of the Mutual Holding Company to amend or terminate this Plan under the circumstances set forth in this Section.

**33.** **CONDITIONS TO CONSUMMATION OF CONVERSION** 

Consummation of the Conversion pursuant to this Plan is expressly conditioned upon the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Prior receipt by the Mutual Holding Company, the Mid-Tier Holding Company and the Bank of rulings of the United States Internal Revenue Service and the state taxing authorities, or opinions of counsel or tax advisors as described in Section 25 hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The issuance of the Subscription Shares offered in the Conversion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The issuance of Exchange Shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. The completion of the Conversion within the time period specified in Section 3 of this Plan.

**34.** **INTERPRETATION** 

All interpretations of this Plan and application of its provisions to particular circumstances by a majority of the Board of Directors of the Mutual Holding Company, and to the extent otherwise provided herein, the Board of Directors of the Holding Company, shall be final, subject to the authority of the Bank Regulators.

Dated: January 19, 2023

Amended: February 16, 2023

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**EXHIBIT A** 

**FORM OF MERGER AGREEMENT BETWEEN** 

**BAY-VANGUARD, M.H.C., INC. AND** 

**BV FINANCIAL, INC.** 

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**MERGER AGREEMENT BETWEEN** 

**BAY-VANGUARD, M.H.C., INC.** 

**AND** 

**BV FINANCIAL, INC.** 

**THIS MERGER AGREEMENT** (the "MHC Merger Agreement"), dated as of ______________, 2023, is made by and between Bay-Vanguard, M.H.C., Inc. (the "Mutual Holding Company") and BV Financial, Inc. (the "Mid-Tier Holding Company"). Capitalized terms have the respective meanings given them in the Plan of Conversion and Reorganization of Bay-Vanguard, M.H.C., Inc. (the "Plan"), unless otherwise defined herein.

**RECITALS:** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Mutual Holding Company is a Maryland-chartered mutual holding company that owns approximately [86.3]% of the outstanding common stock of the Mid-Tier Holding Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Mid-Tier Holding Company is a Maryland-chartered corporation that owns 100% of the outstanding common stock of BayVanguard Bank (the "Bank").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. At least two-thirds of the members of the boards of directors of the Mutual Holding Company and the Mid-Tier Holding Company have approved this MHC Merger Agreement whereby the Mutual Holding Company shall merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the surviving or resulting corporation (the "MHC Merger"), and have authorized the execution and delivery thereof.

**NOW, THEREFORE,** in consideration of the premises and mutual agreements contained herein, the parties hereto have agreed as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. **Merger**. At and on the effective date of the MHC Merger (the "Effective Date"), the Mutual Holding Company will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (the "Resulting Corporation") whereby the shares of Mid-Tier Holding Company common stock held by the Mutual Holding Company will be canceled and Members, who are deemed for these purposes to be owners of the Mutual Holding Company, will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their ownership interests in the Mutual Holding Company , and Minority Stockholders immediately before the consummation of the Conversion will exchange their Minority Shares for Exchange Shares in the Exchange Offering pursuant to the Exchange Ratio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. **Articles of Incorporation and Bylaws of Mid-Tier Holding Company.** The Articles of Incorporation of the Mid-Tier Holding Company shall be amended to increase the number of authorized shares of common stock and to establish a liquidation account. The bylaws of the Mid-Tier Company shall be unchanged as the result of the MHC Merger.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. **Effective Date**. The MHC Merger shall not be effective until and unless: (x) the Plan is approved by (A) the Board of Governors of the Federal Reserve System, (B) the Office of the Commissioner of Financial Regulation for the State of Maryland and (C) by at least: (i) two-thirds of the total votes eligible to be cast by the Stockholders; (ii) a majority of the total votes eligible to be cast by Minority Stockholders; and (iii) a majority of the votes eligible to be cast by Voting Members; and (y) the Articles of Merger with respect to the MHC Merger shall have been filed with the Maryland Department. Approval of the Plan by the Voting Members shall constitute approval of this MHC Merger Agreement by the Voting Members. Approval of the Plan by Stockholders, including the Minority Stockholders, shall constitute approval of this MHC Merger Agreement by the Stockholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. **Name**. The name of the Resulting Corporation shall be BV Financial, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. **Offices**. The main office of the Resulting Corporation shall be 7114 North Point Road, Baltimore, Maryland 21219.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. **Directors and Officers**. The directors and officers of the Mid-Tier Holding Company immediately before the Effective Date shall be the directors and officers of the Resulting Corporation after the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. **Rights and Duties of the Resulting Corporation**. At the Effective Date, the Mutual Holding Company shall be merged with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the Resulting Corporation. The business of the Resulting Corporation shall be that of a Maryland-chartered corporation as provided in its Articles of Incorporation. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mid-Tier Holding Company and the Mutual Holding Company shall be transferred automatically to and vested in the Resulting Corporation by virtue of the MHC Merger without any deed or other document of transfer. The Resulting Corporation, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, interests and powers were held or enjoyed by the Mid-Tier Holding Company and the Mutual Holding Company. The Resulting Corporation shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mid-Tier Holding Company and the Mutual Holding Company immediately before the consummation of the MHC Merger, including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and the Mutual Holding Company, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mid-Tier Holding Company or the Mutual Holding Company. The Stockholders of the Mid-Tier Holding Company shall possess all voting rights with respect to the shares of stock of the Resulting Corporation. All rights of creditors and other obligees and all liens on property of the Mid-Tier Holding Company and the Mutual Holding Company shall be preserved and shall not be released or impaired.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. **Rights of Members and Stockholders**. At the Effective Date, the shares of Mid-Tier Holding Company common stock held by the Mutual Holding Company will be canceled and Members will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their ownership interests in the Mutual Holding Company and the Minority Stockholders immediately before the consummation of the Conversion will exchange their

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Minority Shares for Exchange Shares in the Exchange Offering pursuant to the Exchange Ratio. All shares of Mid-Tier Holding Company Common Stock held in the treasury and each share of Mid-Tier Holding Company Common Stock owned by the Holding Company, or any direct or indirect wholly owned subsidiary of the Holding Company or of the Mid-Tier Holding Company, immediately before the Effective Date (other than shares held in a fiduciary capacity or in connection with debts previously contracted) shall, at the Effective Date, cease to exist, and the certificates for such shares shall be canceled as promptly as practicable thereafter, and no payment or distribution shall be made in consideration therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. **Other Terms**. The Plan is incorporated herein by this reference and made a part hereof to the extent necessary or appropriate to effect and consummate the terms of this MHC Merger Agreement and the Conversion.

*[Signature page immediately follows]* 

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**IN WITNESS WHEREOF**, the Mutual Holding Company and the Mid-Tier Holding Company have caused this MHC Merger Agreement to be executed as of the date first above written.

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| | | |
|:---|:---|:---|
|  | **Bay-Vanguard, M.H.C., Inc.** | **Bay-Vanguard, M.H.C., Inc.** |
| ATTEST: |  |  |
|  | By: |  |
| [NAME] |  | David M. Flair |
| Secretary |  | Co-President and |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Executive Officer |
|  | **BV Financial, Inc.** | **BV Financial, Inc.** |
| ATTEST: |  |  |
|  | By: |  |
| [NAME] |  | David M. Flair |
| Secretary |  | Co-President and |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Executive Officer |

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## Exhibit 3.1

**Exhibit 3.1** 

**AMENDED AND RESTATED** 

**ARTICLES OF INCORPORATION** 

**OF** 

**BV FINANCIAL, INC.** 

The undersigned, Zachary Davis, whose address is 10314 Strathmore Hall Street, Apartment 101, North Bethesda, Maryland 20852, being at least eighteen (18) years of age, 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 BV Financial, Inc. (herein, the "Corporation").

**ARTICLE 2. Principal Office.** The street address of the principal office of the Corporation in the State of Maryland is 7114 North Point Road, Baltimore, Maryland 21219.

**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;**A. Authorized Capital Stock.** The total number of shares of capital stock of all classes that the Corporation has authority to issue is forty-six million (46,000,000) shares, consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. One million (1,000,000) shares of preferred stock, par value one cent ($0.01) per share (the "Preferred Stock"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. forty-five million (45,000,000) shares of common stock, par value one cent ($0.01) per share (the "Common Stock").

The aggregate par value of all the authorized shares of capital stock is four hundred and sixty thousand dollars ($460,000). 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.

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Except for the shares issued in the initial offering of shares of the Corporation, no shares of capital stock (including shares issuable upon conversion, exchange or exercise of other securities) shall be issued, directly or indirectly, to officers, directors, or controlling persons of the Corporation (other than to Bay-Vanguard, M.H.C.) other than as part of a general public offering or as qualifying shares to a director, unless their issuance or the plan under which they would be issued has been approved by a majority of the total votes eligible to be cast at a legal meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. Common Stock.** Except as provided under the terms of any series of the 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 for in these Articles, each holder of the Common Stock shall be entitled to one (1) 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 the 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 the 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;**C. Preferred Stock.** The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for the issuance of shares of the 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 the 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;**D. Restrictions on Voting Rights of the Corporation's Equity Securities.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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.

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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 prior to 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;&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;(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;(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, 2020; 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;(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;(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

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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;(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;(c) A "Person" shall mean any individual, firm, corporation, or other entity.

&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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;**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;**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.

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**ARTICLE 6. Preemptive Rights and Appraisal Rights.** 

&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;**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;**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;**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 ten (10), 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 (3) 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.

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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:

Gary T. Amereihn

William B. Crompton

Edmund T. Leonard

Edmond B. Nolley

Joshua W. Posnick

Timothy L. Prindle

Michael L. Snyder

Joseph S. Galli

Brian K. McHale

George Philippou

William S. Baldwin

David M. Flair

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;**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;**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 a majority 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;**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. Standards for Board of Directors' Evaluation of Offers.** The Board of Directors of the Corporation, in determining whether the interests of the Corporation and its stockholders will be served by any offer of another Person, including an individual, 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 formed for the purpose of acquiring, holding or disposing of securities or any other entity,

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to (i) make a tender or exchange offer for any equity security of the Corporation (i) merge or consolidate the Corporation with or into another institution, or (ii) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation, may consider the interests of the employees, suppliers, creditors and customers of the Corporation and its direct and indirect subsidiaries, the economy of the state, region and nation, community and societal considerations, and the long-term and short-term interests of the Corporation and its stockholders, including the possibility that these interests may be best served by the continued independence of the Corporation.

For purposes of this Article 8, 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 to acquire, hold or dispose of securities.

**ARTICLE 9. Indemnification, etc. of Directors and Officers.** 

&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 9 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. The right to indemnification conferred in Section A of this Article 9 shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that if the MGCL requires an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan), it shall be made only upon delivery to the Corporation of a written undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by a final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under Section A of this Article 9 or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. Procedure.** If a claim under Section A of this Article 9 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

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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 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 9 or otherwise, shall be on the Corporation.

&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 9 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;**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;**E. Miscellaneous.** The Corporation shall not be liable for any payment under this Article 9 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 9 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;**F. Limitations Imposed by Federal Law.** Notwithstanding any other provision set forth in this Article 9, in no event shall any payments made by the Corporation pursuant to this Article 9 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 9 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 9 is in force.

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**ARTICLE 10. 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 personal liability of officers and directors of the Corporation shall be eliminated or limited to the extent required 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 11. 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).

Other than as stated above, the proposed amendment or repeal of any provision of these Articles must 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 a majority of the Whole Board (rounded up to the nearest whole number).

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**ARTICLE 12. Name and Address of Incorporator.** The name and mailing address of the sole incorporator are as follows:

Zachary Davis

10314 Strathmore Hall Street, Apartment 101

North Bethesda, Maryland 20852

*[Remainder of Page Intentionally Left Blank]*

## Exhibit 3.2

**Exhibit 3.2** 

**BV FINANCIAL, INC.** 

**AMENDED AND RESTATED** 

**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, 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 10 nor more than 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 his or her 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

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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 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 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 days prior to 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 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 the Corporation 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.

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**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;(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 (1) 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 (2) 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 90 days nor more than 100 days prior to 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 30 days prior to 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 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 paragraph, 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.

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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;(b) Only persons who are nominated in accordance 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), 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 90 days nor more than 100 days prior to 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 30 days prior to 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 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 paragraph, 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.

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A stockholder's notice must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) all information relating to such person that would indicate such person's qualification to serve on the Board of Directors of the Corporation; (ii) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12 of these Bylaws; (iii) 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 (iv) 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 (b) as to the stockholder giving the notice: (i) 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; (ii) 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; (iii) 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; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; (v) 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 (vi) 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 their 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, such stockholder shall deliver to the Corporation, no later than five 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;(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 U.S. 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.

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**Section 7. Proxies and Voting.** 

Unless the Articles of the Corporation provide for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of 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 the Corporation, 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 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, it 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 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.

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**Section 9. Control Share Acquisition Act.** 

Notwithstanding any other provision of the Articles of the Corporation 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 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** 

**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, 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.

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**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 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), the Chairperson of the Board, 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 days before the meeting, or by facsimile or other electronic transmission of the same not less than 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.** 

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 other 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.

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**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 Corporation's Articles 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 of the Corporation. 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.

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**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 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 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;(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; or (iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime. No person shall continue to serve as a Director after the annual meeting immediately following his or her seventy-fifth (75<sup>th</sup>) birthday.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each director shall at all times be the beneficial owner of not less than 100 shares of capital stock of the Corporation unless the Corporation is a wholly owned subsidiary of a holding company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) 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.

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**ARTICLE III** 

**COMMITTEES** 

**Section 1. Committees of the Board of Directors.** 

&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;(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 Nominating Committee shall 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;(c) *Issuance of Stock.* If the Board of Directors has given general authorization for the issuance of 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 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 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.

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**ARTICLE IV** 

**OFFICERS** 

**Section 1. Generally.** 

&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, Chief Executive Officer, President, one or more Vice Presidents, 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;(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;(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.** 

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.

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**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** 

Stock 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.

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**ARTICLE V** 

**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 he or she 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 Corporation's Articles, 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 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 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.

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**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 prior to 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 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 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 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** 

**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.

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**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 prior to an event or that an act be done during a period of a specified number of days prior to 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.

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**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 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** 

**AMENDMENTS** 

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 of the Corporations Articles of Incorporation), 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.

## Exhibit 3.3

**Exhibit 3.3** 

**AMENDED AND RESTATED** 

**ARTICLES OF INCORPORATION** 

**OF** 

**BV FINANCIAL, INC.** 

The undersigned, Zachary Davis, whose address is 10314 Strathmore Hall Street, Apartment 101, North Bethesda, Maryland 20852, being at least eighteen (18) years of age, 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 BV Financial, Inc. (herein, the "Corporation").

**ARTICLE 2. Principal Office.** The street address of the principal office of the Corporation in the State of Maryland is 7114 North Point Road, Baltimore, Maryland 21219.

**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;**A. Authorized Capital Stock.** The total number of shares of capital stock of all classes that the Corporation has authority to issue is forty-six million (46,000,000) shares, consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. One million (1,000,000) shares of preferred stock, par value one cent ($0.01) per share (the "Preferred Stock"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. forty-five million (45,000,000) shares of common stock, par value one cent ($0.01) per share (the "Common Stock").

The aggregate par value of all the authorized shares of capital stock is four hundred and sixty thousand dollars ($460,000). 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.

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Except for the shares issued in the initial offering of shares of the Corporation, no shares of capital stock (including shares issuable upon conversion, exchange or exercise of other securities) shall be issued, directly or indirectly, to officers, directors, or controlling persons of the Corporation (other than to Bay-Vanguard, M.H.C.) other than as part of a general public offering or as qualifying shares to a director, unless their issuance or the plan under which they would be issued has been approved by a majority of the total votes eligible to be cast at a legal meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. Common Stock.** Except as provided under the terms of any series of the 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 for in these Articles, each holder of the Common Stock shall be entitled to one (1) 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 the 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 the 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;**C. Preferred Stock.** The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for the issuance of shares of the 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 the 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;**D. Restrictions on Voting Rights of the Corporation's Equity Securities.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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.

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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 prior to 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;&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;(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;(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, 2020; 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;(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;(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

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&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;(c) A "Person" shall mean any individual, firm, corporation, or other entity.

&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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;**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;**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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G. Liquidation Account.** The Corporation shall establish and maintain a liquidation account (the "Liquidation Account") for the benefit of certain Eligible Account Holders and Supplemental Eligible Account Holders as defined in the Plan of Conversion and Reorganization of Bay-Vanguard, M.H.C., Inc. (as may be amended from time to time, the "Plan of Conversion"). In the event of a complete liquidation involving (i) the Corporation or (ii) BayVanguard Bank, a Maryland-chartered bank that is the wholly-owned subsidiary of the Corporation, the Corporation must comply with the regulations of the Board of Governors of the Federal Reserve System and the provisions of the Plan of Conversion with respect to the amount and priorities of each Eligible Account Holder's and Supplemental Eligible Account Holder's interests in the Liquidation Account. The interest of an Eligible Account Holder or Supplemental Eligible Account Holder in the Liquidation Account does not entitle such account holders to voting rights.

**ARTICLE 6. Preemptive Rights and Appraisal Rights.** 

&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;**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;**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.

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&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 ten (10), 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 (3) 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:

Gary T. Amereihn

William B. Crompton

Edmund T. Leonard

Edmond B. Nolley

Joshua W. Posnick

Timothy L. Prindle

Michael L. Snyder

Joseph S. Galli

Brian K. McHale

George Philippou

William S. Baldwin

David M. Flair

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;**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;**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 a majority 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;**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.

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**ARTICLE 8. Standards for Board of Directors' Evaluation of Offers.** The Board of Directors of the Corporation, in determining whether the interests of the Corporation and its stockholders will be served by any offer of another Person, including an individual, 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 formed for the purpose of acquiring, holding or disposing of securities or any other entity, to (i) make a tender or exchange offer for any equity security of the Corporation (i) merge or consolidate the Corporation with or into another institution, or (ii) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation, may consider the interests of the employees, suppliers, creditors and customers of the Corporation and its direct and indirect subsidiaries, the economy of the state, region and nation, community and societal considerations, and the long-term and short-term interests of the Corporation and its stockholders, including the possibility that these interests may be best served by the continued independence of the Corporation.

For purposes of this Article 8, 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 to acquire, hold or dispose of securities.

**ARTICLE 9. Indemnification, etc. of Directors and Officers.** 

&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 9 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. The right to indemnification conferred in Section A of this Article 9 shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that if the MGCL requires an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan), it shall be made only upon delivery to the Corporation of a written undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by a final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under Section A of this Article 9 or otherwise.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B. Procedure.** If a claim under Section A of this Article 9 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 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 9 or otherwise, shall be on the Corporation.

&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 9 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;**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;**E. Miscellaneous.** The Corporation shall not be liable for any payment under this Article 9 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 9 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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F. Limitations Imposed by Federal Law.** Notwithstanding any other provision set forth in this Article 9, in no event shall any payments made by the Corporation pursuant to this Article 9 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 9 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 9 is in force.

**ARTICLE 10. 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 personal liability of officers and directors of the Corporation shall be eliminated or limited to the extent required 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 11. 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).

------

Other than as stated above, the proposed amendment or repeal of any provision of these Articles must 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 a majority of the Whole Board (rounded up to the nearest whole number).

**ARTICLE 12. Name and Address of Incorporator.** The name and mailing address of the sole incorporator are as follows:

Zachary Davis

10314 Strathmore Hall Street, Apartment 101

North Bethesda, Maryland 20852

*[Remainder of Page Intentionally Left Blank]*

## Ex-4

**Exhibit 4** 

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| | | |
|:---|:---|:---|
| ![LOGO](g447808snap1.jpg)  | **BV FINANCIAL, INC.**<br>**INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND** | ![LOGO](g447808snap2.jpg) |
|  |  | **CUSIP:** |

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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 BV Financial, 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, BV Financial, 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

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| | | | |
|:---|:---|:---|:---|
| By: |  | [SEAL] |  |
|  | Samantha Perouty |  | David M. Flair |
|  | Assistant Corporate Secretary |  | Co-President and Chief Executive Officer |

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The Board of Directors of BV Financial, 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.

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 |  |  |
|  | &nbsp;&nbsp; of survivorship and not as |  |  |
|  | &nbsp;&nbsp; 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)* 

------

 <br> Shares of

the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ____________________________________

___________________________________ Attorney to transfer the said shares on the books of the within named corporation with full power of substitution in the premises.

Dated,<u> </u>

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 13, 2023

The Board of Directors

BV Financial, Inc.

7114 North Point Road

Baltimore, Maryland 21219

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| | |
|:---|:---|
| **Re:** | **BV Financial, Inc.**  |

---

**Common Stock, Par Value $0.01 Per Share**

Ladies and Gentlemen:

You have requested the opinion of this firm as to certain matters in connection with the offer and sale of the shares of common stock, par value $0.01 per share (the "Common Stock"), of BV Financial, Inc. (the "Company"), as well as the registration of participation interests in the Common Stock (the "Participation Interests") to be purchased by the BayVanguard Bank 401(k) Profit Sharing Plan. We have reviewed the Company's Amended and Restated Articles of Incorporation, the Company's Registration Statement on Form S-1 (the "Form S-1"), the Plan of Conversion and Reorganization of BayVanguard, M.H.C., Inc. (the "Plan"), as well as applicable statutes and regulations governing the Company and the offer and sale of the Common Stock and the registration of the Participation Interests. 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. We are also of the opinion that upon the declaration of effectiveness of the Form S-1, the Participation Interests will be validly offered in the manner described in the Form S-1 and will be binding obligations of the Company.

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 |

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## 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 9, 2023

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

7114 North Point Road

Baltimore, Maryland 21219

Boards of Directors:

You have requested this firm's opinion regarding the material federal income tax consequences that will result from the conversion of Bay-Vanguard, M.H.C., Inc., a Maryland-chartered mutual holding company (the "Mutual Holding Company"), from the mutual to the capital stock form of organization (the "Conversion"), pursuant to the Plan of Conversion and Reorganization of Bay-Vanguard, M.H.C., Inc., dated January 19, 2023 (the "Plan"), and the integrated transactions described below.

In connection with our opinion, we have made such investigations as we have deemed relevant or necessary. In our examination, we have assumed the authenticity of original documents, the accuracy of copies and the genuineness of signatures. We have further assumed the absence of adverse facts not apparent from the face of the instruments and documents we examined and we have relied upon the accuracy of the factual matters set forth in the Plan, the Registration Statement filed by BV Financial, Inc., a Maryland stock corporation (the "Holding Company"), with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended, the Application for Conversion filed by the Mutual Holding Company and the Application on Form FR Y-3 filed by the Holding Company, each with the Board of Governors of the Federal Reserve System (the "Federal Reserve"). In addition, we are relying on a letter from RP Financial, LC. to you, dated March 9, 2023, stating its belief as to certain valuation matters described below. Capitalized terms used but not defined herein shall have the same meaning as set forth in the Plan. Furthermore, we assume that each of the parties to the Conversion will comply with all reporting obligations with respect to the Conversion required under the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder (the "Treasury Regulations").

------

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

Our opinion is based upon the existing provisions of the Code, the Treasury Regulations, and upon current Internal Revenue Service ("IRS") published rulings and existing court decisions, any of which could be changed at any time. Any such changes may be retroactive and could significantly modify the statements and opinions expressed herein. Similarly, any change in the facts and assumptions stated herein, upon which this opinion is based, could modify the conclusions herein. 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.

We opine only as to the matters we expressly set forth herein, and no opinion should be inferred as to any other matters or as to the tax treatment of the transactions that we do not specifically address. We express no opinion as to other federal laws and regulations, or as to laws and regulations of other jurisdictions, or as to factual or legal matters other than as set forth herein.

For purposes of this opinion, we are relying on the representations as to factual matters provided to us by the Mutual Holding Company, the Holding Company and BayVanguard Bank (the "Bank"), as set forth in the certificates for the aforementioned entities, which are signed by an authorized officer of each of the aforementioned entities and incorporated herein by reference.

**<u>Description of Proposed Transactions</u>**

Based upon our review of, and in reliance upon, the documents described above, we understand that the relevant facts are as follows. The Bank became the wholly-owned subsidiary of the Holding Company in 2005. The Holding Company is a stock holding company, and 86.3% of its outstanding shares are owned by the Mutual Holding Company. The owners of the Mutual Holding Company are the depositors of the Bank, who are entitled upon the complete liquidation of the Mutual Holding Company to any liquidation proceeds after the payment of creditors. At December 31, 2022, the Holding Company had 7,418,575 shares of common stock outstanding, of which 1,017,761 shares, or 13.7%, were owned by the public ("Minority Shares") and the remaining 6,400,814 shares of common stock of the Holding Company were owned by the Mutual Holding Company.

The Boards of Directors of the Mutual Holding Company, the Holding Company and the Bank have adopted the Plan providing for the conversion of the Mutual Holding Company from a Maryland-chartered mutual holding company to the capital stock form of organization. As part of the Conversion, the Holding Company will succeed to all the rights and obligations of the Mutual Holding Company and will offer shares of Holding Company Common Stock to depositors of the Bank and members of the general public in the Offering.

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Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

Pursuant to the Plan, the Conversion will be effected as follows and in such order as is necessary to consummate the Conversion:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Bank will convert its charter to a Maryland commercial bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Mutual Holding Company will merge with and into the Holding Company with the Holding Company as the
surviving entity (the "Merger") whereby the shares of Holding Company common stock held by the Mutual Holding Company will be cancelled and certain owners of the Mutual Holding Company (e.g., Eligible Account Holders and Supplemental
Eligible Account Holders of the Bank) will constructively receive an interest in a Liquidation Account established in the Holding Company in exchange for their liquidation interests in the Mutual Holding Company. As part of the Merger, each of the
Minority Shares will automatically, without further action on the part of the holders thereof, be converted into and become the right to receive the Exchange Shares (i.e., new Holding Company Common Stock, based on the Exchange Ratio, as further
described herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Immediately after the Merger, the Holding Company will offer for sale the Subscription Shares in the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in
constructive exchange for additional common stock of the Bank and in exchange for the Bank Liquidation Account.

Following the Conversion, the Liquidation Account will be maintained by the Holding Company for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their deposit accounts with the Bank. Pursuant to Section 19 of the Plan, the initial balance of the Liquidation Account will be equal to the product of (i) the Majority Ownership Interest and (ii) the Holding Company's total stockholders' equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the Conversion, plus the value of the net assets of the Mutual Holding Company (excluding its ownership of Holding Company common stock) as reflected in the latest statement of financial condition of the Mutual Holding Company before the effective date of the Conversion. The terms of the Liquidation Account and the Bank Liquidation Account, which supports the payment of the Liquidation Account in the event the Holding Company lacks sufficient net assets, are set forth in Section 19 of the Plan.

As part of the Conversion, all of the then-outstanding shares of Holding Company common stock owned by Minority Stockholders will be exchanged for new shares of Holding Company Common Stock pursuant to the Exchange Ratio that ensures that after the Conversion, Minority Stockholders will own in the aggregate the same percentage of Holding Company Common Stock as they held immediately prior to the Conversion, exclusive of (i) Minority Stockholders' purchases of additional shares of Holding Company Common Stock in the Offering, and (ii) cash received in lieu of fractional shares.

------

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

Upon completion of the Conversion and Offering, the Holding Company will continue to be a publicly-held corporation, its common stock will continue to be registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, and it will continue to be subject to the rules and regulations thereunder and will continue to file periodic reports and proxy statements with the SEC. The Bank will continue to be a wholly-owned subsidiary of the Holding Company and will continue to carry on its business and activities as conducted immediately prior to the Conversion.

The stockholders of the Holding Company will be the former Minority Stockholders of the Holding Company immediately prior to the Conversion, plus those persons who purchase shares of Holding Company Common Stock in the Offering. Nontransferable rights to subscribe for the Holding Company Common Stock have been granted, in order of priority, to Eligible Account Holders, the Bank's tax-qualified employee plans, Supplemental Eligible Account Holders, and certain depositors of the Bank as of the Voting Record Date who qualify as Voting Members ("Other Members"). The Holding Company will also offer shares of Holding Company Common Stock not subscribed for in the Subscription Offering, if any, for sale in a Community Offering (with preferences given first to persons residing in Baltimore City, Maryland and the Maryland Counties of Anne Arundel, Baltimore, Dorchester, Harford and Talbot, and if shares remain after the subscription and community offerings, shares may be offered, at the sole discretion of the Holding Company, to members of the general public in a Syndicated Community Offering.

**<u>Opinions</u>**

Based on the foregoing description of the Conversion, and subject to the qualifications and limitations set forth in this letter, we are of the opinion that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Merger will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code. (Section 368(a)(l)(A) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The constructive exchange of the Eligible Account Holders and Supplemental Eligible Account Holders liquidation interests in the Mutual Holding Company for a Liquidation Account in the Holding Company in the Merger will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Income Tax Regulations. (*cf.* Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54).

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Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. No gain or loss will be recognized by the Mutual Holding Company on the transfer of its assets to the Holding Company and the Holding Company's assumption of its liabilities, if any, in constructive exchange for interests in the Liquidation Account in the Holding Company or on the constructive distribution of such Liquidation Account interests to certain depositors of the Bank (i.e., the former owners of the Mutual Holding Company who are either Eligible Account Holders or Supplemental Eligible Account Holders of the Bank). (Section 361(a), 361(c) and 357(a) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. No gain or loss will be recognized by the Holding Company upon the receipt of the assets of the Mutual Holding Company in the Merger in constructive exchange for the transfer of the Liquidation Account interests in the Holding Company to the certain depositors of the Bank. (Section 1032(a) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Depositors of the Bank who have liquidation interests in the Mutual Holding Company will recognize no gain or loss upon the constructive receipt of an interest in the Liquidation Account in the Holding Company in exchange for their liquidation interests in the Mutual Holding Company. (Section 354(a) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. The basis of the assets of the Mutual Holding Company (other than stock in the Holding Company) to be received by the Holding Company will be the same as the basis of such assets in the Mutual Holding Company immediately prior to the transfer. (Section 362(b) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. The Holding Company's holding period of the assets transferred from the Mutual Holding Company will include the holding period of those assets for the period held by Mutual Holding Company. (Section 1223(2) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Except with respect to the receipt of cash in lieu of fractional share interests, the Minority Stockholders will not recognize any gain or loss upon their exchange of Holding Company common stock for new shares of Holding Company Common Stock. (Section 354 of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. The payment of cash to the Minority Stockholders in lieu of fractional shares of Holding Company Common Stock will be treated as though the fractional shares were distributed as part of the Merger and then redeemed by the Holding Company. The cash payments will be treated as distributions in full payment for the fractional shares deemed redeemed under Section 302(a) of the Code, with the result that such stockholders will have short-term or long-term capital gain or loss to the extent that the cash they receive differs from the basis allocable to such fractional shares. (Rev. Rul. 66-365, 1966-2 C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574).

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Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. It is more likely than not that the fair market value of the nontransferable subscription rights to purchase Holding Company Common Stock is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members upon distribution to them of nontransferable subscription rights to purchase shares of Holding Company Common Stock. (Section 356(a) of the Code). Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will not realize any taxable income as a result of their exercise of the nontransferable subscription rights. (Rev. Rul. 56-572, 1956-2 C.B. 182).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. It is more likely than not that the fair market value at the effective date of the Conversion of the benefit to Eligible Account Holders and Supplemental Eligible Account Holders provided by an interest in the Bank Liquidation Account which they receive is zero. Pursuant to the Plan, the Bank Liquidation Account supports the payment of the Liquidation Account in the unlikely event that either the Bank (or the Holding Company and the Bank) were to liquidate after the Conversion (including a liquidation of the Bank or the Bank and the Holding Company in a purchase and assumption transaction with a credit union acquiror) when the Holding Company lacks sufficient net assets to pay the distributions from the Liquidation Account when due. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and Supplemental Eligible Account Holders upon the distribution to them of such rights in the Bank Liquidation Account as of the effective date of the Conversion. (Section 356(a) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. Each stockholder's aggregate basis in such stockholder's new Holding Company Common Stock received in the exchange will be the same as such stockholder's aggregate basis in the Holding Company common stock surrendered in exchange therefore. (Section 358(a) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. It is more likely than not that the basis of the Holding Company Common Stock purchased in the Offering by the exercise of the nontransferable subscription rights will be the purchase price thereof. (Section 1012 of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. Each stockholder's holding period in such stockholder' Holding Company Common Stock received in the exchange will include the period during which the Holding Company common stock surrendered was held, provided that the common stock surrendered is a capital asset in the hands of the stockholder on the date of the exchange. (Section 1223(1) of the Code).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. The holding period of the Holding Company Common Stock purchased pursuant to the exercise of nontransferable subscriptions rights will commence on the date on which the right to acquire such stock was exercised. (Section 1223(5) of the Code).

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Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. No gain or loss will be recognized by the Holding Company on the receipt of money in exchange for Holding Company Common Stock sold in the Offering. (Section 1032 of the Code).

Our opinion under paragraph 13 above is predicated on the representation that no person will receive any payment, whether in money or property, in lieu of the issuance of nontransferable subscription rights. Our opinions under paragraphs 10 and 12 are based on the position that the subscription rights to purchase shares of Holding Company Common Stock received by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members have a fair market value of zero. We understand that the subscription rights will be granted at no cost to the recipients, will be legally nontransferable and of short duration, and will provide the recipient with the right only to purchase shares of Holding Company Common Stock at the same price to be paid by members of the general public in any Community Offering or Syndicated Community Offering. We also note that the IRS has not in the past concluded that subscription rights have value. In addition, we are relying on a letter from RP Financial, LC. to you stating its belief that subscription rights do not have any economic value at the time of distribution or at the time the rights are exercised in the Subscription Offering. Based on the foregoing, we believe it is more likely than not that the nontransferable subscription rights to purchase Holding Company Common Stock have no value.

If the subscription rights are subsequently found to have an economic 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 the Bank may be subject to tax on the distribution of the subscription rights.

Our opinion under paragraph 11 above is based on the premise that the benefit provided by the Bank Liquidation Account supporting the payment of the Liquidation Account in the event the Holding Company lacks sufficient net assets has a fair market value of zero at the time of the Conversion. The Bank Liquidation Account payment obligation arises only if the Holding Company lacks sufficient net assets to fund the Liquidation Account in a solvent liquidation of the Bank and/or Holding Company or if the Bank (or Bank and Holding Company) 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 and/or holding company (other than as set forth below); (ii) the interests in the Liquidation Account and Bank Liquidation Account are not transferable by an Eligible Account Holder or Supplemental Eligible Account Holder; (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 the Bank are reduced, as described in the Plan; and (iv) holders of an

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Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

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 the bank's assets by a credit union. However, not all states permit the sale of a bank's assets to credit unions, 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 of the Bank will, at some undetermined time in the future, realize value from the sale of the 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 a handful of 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."

In addition, we are relying on a letter from RP Financial, LC. to you stating its belief that the benefit provided by the Bank Liquidation Account supporting the payment of the 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 such rights in the Bank Liquidation Account have no value.

------

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

If the IRS were to subsequently find that the 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 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 of a mutual bank or a second-step conversion of a mutual holding company.

[Signature Page Follows]

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Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

March 9, 2023

**<u>CONSENT</u>**

We hereby consent to the filing of this opinion as an exhibit to the Mutual Holding Company's Application for Conversion and the Holding Company's Application on Form FR Y-3, each as filed with the Federal Reserve, and to the Holding Company's Registration Statement on Form S-1 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Application for Conversion and the Form S-1 under the captions "The Conversion and Offering-Material Income Tax Consequences" and "Legal Matters."

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| |
|:---|
| Very truly yours, |
| /s/ Luse Gorman, PC |
| Luse Gorman, PC |

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## Exhibit 8.2

**Exhibit 8.2**![LOGO](g447808dsp46a.jpg)

March 9, 2023

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVangaurd Bank

7114 North Point Road

Baltimore, Maryland 21219

Directors:

You have requested our opinion ("Maryland Income Tax Opinion") regarding the Maryland state income tax consequences of the conversion (Conversion) of Bay-Vanguard, M.H.C., Inc., a Maryland-chartered mutual holding company ("the Mutual Holding Company"), from a Maryland-chartered mutual holding company into the capital stock form of organization, pursuant to the Plan of Conversion and Reorganization of Bay-Vanguard, M.H.C., Inc., dated January 19, 2023 (the "Plan") and the integrated transactions described in the Federal Tax Opinion (the "Federal Opinion") prepared by Luse Gorman, PC dated March 9, 2023.

Our opinion is limited solely to Maryland state income tax consequences, and will not apply to any other taxes, jurisdictions, transactions, or issues.

In rendering the opinion set forth below, we have relied on the Federal Opinion of Luse Gorman, PC related to the federal tax consequences of the Plan, without undertaking to verify the federal tax consequences by independent investigation and the representations contained in the FORVIS, LLP Representation letter dated March 9, 2023. Our opinion is subject to the truth and accuracy of certain representations made by you to us and Luse Gorman, PC and the consummation of the proposed reorganization in accordance with the terms of the Plan. All capitalized terms used, but not defined herein, shall have the meanings assigned to them in the Plan. Should it be determined the facts and federal income tax consequences are not as outlined in the Federal Opinion and in the FORVIS, LLP Representation Letter, the Maryland income tax consequences and our Maryland Income Tax Opinion may differ from what is contained herein.

Our opinion is based upon the existing provisions of the Maryland Code Annotated Tax-Gen. (the "MD Code") Title 10, Subtitles 2 and 3, and regulations thereunder, Maryland revenue rulings, Maryland revenue directives, and existing Maryland court decisions (collectively, the "Current Tax Law"), any of which could be changed at any time. Any such changes may be retroactive and could significantly modify the statements and opinions expressed herein. Similarly, any change in the facts and assumptions stated below, upon which this opinion is based, could modify the conclusions.

The conclusions of the Maryland Tax Opinion are as of the date hereof and we assume no obligation to advise you of any change in any matter considered herein after the date hereof. The Maryland Tax Opinion is rendered for the benefit of you and your shareholders in connection with the proposed Plan and may not be used or relied upon for any other purpose and may not be circulated, quoted, or otherwise referred to for any other purpose without our prior express written consent. We opine only as to the matters we expressly set forth, and no opinions should be inferred as to any other matters or as to the tax treatment of the transactions that we do not specifically address. We express no opinion as to laws and regulations of any jurisdictions other than Maryland or as to factual or legal matters other than as set forth herein.

![LOGO](g447808dsp46b.jpg)

------

![LOGO](g447808dsp46a.jpg)

The level of assurance contained in the Maryland Tax Opinion is "more likely than not" for conclusions 10, 11, and 13. A "more likely than not" level of assurance means that FORVIS believes there is a greater than 50% likelihood of the position being sustained by the taxing authorities with full knowledge of the position. While other terms may be used in this memorandum (e.g., "will" or "should"), those terms are used for stylistic ease and readability and should not be read as leading to a higher or different level of assurance. Note that no specific level of assurance is given for conclusions other than conclusions 10, 11, and 13.

![LOGO](g447808dsp46b.jpg)

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Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVangaurd Bank

March 9, 2023

**Opinion** 

Our analysis of Current Tax Law provides that no deviation will be required from the federal income tax treatment regarding the Conversion. MD Code § 10-304(1) provides that the Maryland modified income of a corporation is "the corporation's federal taxable income for the taxable year as determined under the Internal Revenue Code and as adjusted" for state modifications to federal taxable income pursuant to MD Code §§ 10-305 - 10-310. MD Code § 1-101(k) defines "Internal Revenue Code" as "Title 26 of the United States Code." MD Codes § 10-305 - § 10-310 do not contain any state modifications to federal taxable income that would alter the federal income tax treatment of the Conversion for a corporation.

In addition, as it relates to individual taxpayers, MD Code § 10-203 provides that the Maryland adjusted gross income is "the individual's federal adjusted gross income for the taxable year as adjusted" for state modifications pursuant to MD Code §§ 10-204 - 10-210. MD Code § 10-101(i)(1) provides that the federal adjusted gross income is the individual's adjusted gross income as determined under the Internal Revenue Code. MD Codes §§ 10-204 - 10-210 do not contain any state modifications to federal adjusted gross income that would alter the federal income tax treatment of the Conversion. The Federal Opinion, which states no income or loss is recognized for federal income tax purposes by any of the parties participating in the Conversion, provides the basis upon which we conclude the aforementioned Maryland statutes and regulations hold that such Conversion results in no gain or loss to the Holding Company, to the Depositors of the Bank who have liquidation interests in the Mutual Holding Company and to the Minority Shareholder who do not receive cash.

1. The merger of the Mutual Holding Company into BV Financial, Inc. (the Holding Company) (the Merger) qualifies
as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code. Maryland conforms to the Internal Revenue Code. (MD Code § 10-304).

2. The constructive exchange of the Eligible Account Holders and Supplemental Eligible Account Holders liquidation
interests in the Mutual Holding Company for a Liquidation Account in the Holding Company in the Merger will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Income Tax
Regulations. (cf. Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54).
For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304).

3. No gain or loss will be recognized by the Mutual Holding Company on the transfer of its assets to the Holding
Company and the Holding Company's assumption of its liabilities, if any, in constructive exchange for interests in the Liquidation Account in the Holding Company or on the constructive distribution of such Liquidation Account interests to
certain depositors of the Bank (i.e., the former owners of the Mutual Holding Company who are either Eligible Account Holders or Supplemental Eligible Account Holders of the Bank). (Sections 361(a), 361(c) and 357(a) of the Internal Revenue Code).
For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304).

4. No gain or loss will be recognized by the Holding Company upon the receipt of the assets of the Mutual Holding
Company in the Merger in constructive exchange for the transfer of the Liquidation Account interests in the Holding Company to the certain depositors of the Bank. (Section 1032(a) of the Internal Revenue Code). For income tax purposes, Maryland
conforms to the Internal Revenue Code. (MD Code § 10-304).

5. Depositors of the Bank who have liquidation interests in the Mutual Holding Company will recognize no gain or
loss upon the constructive receipt of an interest in the Liquidation Account in the Holding Company in exchange for their liquidation interests in the Mutual Holding Company. (Section 354(a) of the Internal Revenue Code).

------

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVangaurd Bank

March 9, 2023

For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

6. The basis of the assets of the Mutual Holding Company (other than stock in the Holding Company) to be received
by the Holding Company will be the same as the basis of such assets in the Mutual Holding Company immediately prior to the transfer. (Section 362(b) of the Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal Revenue
Code. (MD Code § 10-304).

7. The Holding Company's holding period of the assets transferred from the Mutual Holding Company will
include the holding period of those assets for the period held by Mutual Holding Company. (Section 1223(2) of the Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304).

8. Except with respect to the receipt of cash in lieu of fractional share interests, the Minority Stockholders
will not recognize any gain or loss upon their exchange of Holding Company common stock for new shares of Holding Company Common Stock. (Section 354 of the Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal Revenue
Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

9. The payment of cash to the Minority Stockholders in lieu of fractional shares of Holding Company Common Stock
will be treated as though the fractional shares were distributed as part of the Merger and then redeemed by the Holding Company. The cash payments will be treated as distributions in full payment for the fractional shares deemed redeemed under
Section 302(a) of the Internal Revenue Code, provided the redemption is not essentially equivalent to a dividend, with the result that such stockholders will have short-term or long-term capital gain or loss to the extent that the cash they
receive differs from the basis allocable to such fractional shares. (Rev. Rul. 66-365, 1966-2 C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574). For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted
gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

10. It is more likely than not that the fair market value of the nontransferable subscription rights to purchase
Holding Company Common Stock is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members upon distribution to them of nontransferable
subscription rights to purchase shares of Holding Company Common Stock. (Section 356(a) of the Internal Revenue Code). Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will not realize any taxable income as a result
of their exercise of the nontransferable subscription rights. (Rev. Rul. 56-572, 1956-2 C.B. 182). For income tax purposes, Maryland conforms to the Internal Revenue
Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

11. It is more likely than not that the fair market value at the effective date of the Conversion of the benefit to
Eligible Account Holders and Supplemental Eligible Account Holders provided by an interest in the Bank Liquidation Account which they receive is zero. Pursuant to the Plan, the Bank Liquidation Account supports the payment of the Liquidation Account
in the unlikely event that either the Bank (or the Holding Company and the Bank) were to liquidate after the Conversion (including a liquidation of the Bank or the Bank and

------

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVangaurd Bank

March 9, 2023

the Holding Company in a purchase and assumption transaction with a credit union acquiror) when the Holding Company lacks sufficient net assets to pay the distributions from the Liquidation Account when due. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and Supplemental Eligible Account Holders upon the distribution to them of such rights in the Bank Liquidation Account as of the effective date of the Conversion. (Section 356(a) of the Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

12. Each stockholder's aggregate basis in such stockholder's new Holding Company Common Stock received in
the exchange will be the same as such stockholder's aggregate basis in the Holding Company common stock surrendered in exchange therefore. (Section 358(a) of the Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal
Revenue Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

13. It is more likely than not that the basis of the Holding Company Common Stock purchased in the Offering by the
exercise of the nontransferable subscription rights will be the purchase price thereof. (Section 1012 of the Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

14. Each stockholder's holding period in such stockholder's Holding Company Common Stock received in the
exchange will include the period during which the Holding Company common stock surrendered was held, provided that the common stock surrendered is a capital asset in the hands of the stockholder on the date of the exchange. (Section 1223(1) of the
Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted gross income is equal to
federal adjusted gross income, with certain modifications. (MD Code § 10-203).

15. The holding period of the Holding Company Common Stock purchased pursuant to the exercise of nontransferable
subscriptions rights will commence on the date on which the right to acquire such stock was exercised. (Section 1223(5) of the Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304). Also, in the case of all individuals, the Maryland adjusted gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

16. No gain or loss will be recognized by the Holding Company on the receipt of money in exchange for Holding
Company Common Stock sold in the Offering. (Section 1032 of the Internal Revenue Code). For income tax purposes, Maryland conforms to the Internal Revenue Code. (MD Code § 10-304). Also, in the case of
all individuals, the Maryland adjusted gross income is equal to federal adjusted gross income, with certain modifications. (MD Code § 10-203).

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Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVangaurd Bank

March 9, 2023

**Consent** 

We hereby consent to the filing of the opinion as an exhibit to the Mutual Holding Company's Registration Statement on Form S-1 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Application for Conversion and the Form S-1 under the captions "Tax Consequences", "Material Income Tax Consequences" and "Legal Matters."

**FORVIS, LLP** 

/s/ FORVIS, LLP

## Exhibit 10.1

**Exhibit 10.1** 

**EMPLOYMENT AGREEMENT** 

This Employment Agreement (the "<u>Agreement</u>") is made and entered into on August 28, 2018, by and between BayVanguard Bank (the "<u>Bank</u>"), BV Financial, Inc. ("BVFI"), the stock holding company of the Bank, Bay-Vanguard, M.H.C., a federal mutual holding company and David M. Flair ("<u>Executive</u>"). Any reference to the "<u>Company</u>" shall mean BVFI and Bay-Vanguard, M.H.C.

**WHEREAS**, the Bank, the Company and Kopernik Bank ("Kopernik") are parties to an Agreement and Plan of Merger, dated as of August 29, 2018 (the "Merger Agreement"); and

**WHEREAS,** Executive recognizes that the Bank's willingness to enter into the Merger Agreement is dependent on Executive's continued services for the period provided in this Agreement; and

**WHEREAS,** Executive wishes to continue to serve in the employ of the Bank for the period provided in this Agreement and upon the terms and conditions provided for in this Agreement; and

**WHEREAS,** Executive and the Bank are currently parties to an employment agreement, dated as of July 1, 2014 (the "Prior Agreement").

**NOW, THEREFORE**, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

**1.** **POSITION AND RESPONSIBILITIES.** 

During the term of this Agreement, Executive agrees to serve as Co-President and Co-Chief Executive Officer of the Bank and the Company or any successor position(s) as mutually agreed to by Executive and the Bank and the Company (the "<u>Executive Positions</u>"), and will perform the duties and will have all powers normally associated with those positions and as may be set forth in the bylaws of the Bank and the Company. Executive will report directly to the Board of Directors of the Bank and the Company, as applicable. During the period provided in this Agreement, Executive also agrees to serve, if elected, as an officer or director of any subsidiary or affiliate of the Bank and the Company and in that capacity carry out the duties and responsibilities reasonably appropriate as an officer or director of the subsidiary or affiliate.

**2.** **TERM AND DUTIES.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Term and Annual Renewal</u>**. The initial term of this Agreement and the period of Executive's employment hereunder shall begin on the date on which the Effective Time (as defined in the Merger Agreement) occurs (the "Effective Date") and shall continue through the third anniversary of the Effective Date (the "Term"). Commencing on the first anniversary of the Effective Date and continuing on each anniversary date thereafter (the "<u>Renewal Date</u>"), the Term will extend automatically for one additional year, so that the Term will be three years from such Renewal Date, unless either the Bank or Executive by written notice to the other given at least ninety (90) days prior to such Renewal Date notifies the other of its intent not to extend the same. In the event that notice not to extend is given by either the Bank or the Executive, this Agreement shall terminate as of the last day of the then current Term.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Change in Control</u>**. Notwithstanding the foregoing, in the event the Bank or the Company has entered into an agreement to effect a transaction that would be considered a Change in Control as defined under Section 5 hereof, the term of this Agreement shall be extended automatically so that it will expire no less than three (3) years beyond the effective date of the Change in Control, subject to extensions as set forth in Section 2(a) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **<u>Membership on Other Boards or Organizations</u>**. During the period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence, Executive will devote all of his business time, attention, skill and efforts to the faithful performance of his duties under this Agreement, including activities and duties related to the Executive Positions. Notwithstanding the preceding sentence, subject to the approval of the Board of Directors, Executive may serve as a member of the board of directors of business, community and charitable organizations, provided that in each case the service will not materially interfere with the performance of his duties under this Agreement, adversely affect the reputation of the Bank or any affiliates of the Bank (as determined by the Board of Directors), or present any conflict of interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) **<u>Continued Employment Following Expiration of Term</u>**. Nothing in this Agreement shall mandate or prohibit a continuation of Executive's employment following the expiration of the term of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) **<u>Failure of Transaction to Close</u>.** This Agreement shall become null and void and the parties will have no obligations hereunder if (i) the Merger Agreement is terminated in accordance with its terms, (ii) either party to the Merger Agreement fails to complete the transactions contemplated by the Merger Agreement for any reason or (iii) if Executive terminates employment with the Bank for any reason prior to the Effective Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) **<u>Prior Agreement</u>.** The prior Agreement shall terminate and have no further force and effect upon the Effective Date of this Agreement. If the transactions contemplated by the Merger Agreement do not occur pursuant to Sections 3(e)(i) or 3(e)(ii) hereof and, therefore this Agreement does not become effective, then the Prior Agreement shall continue in accordance with it terms.

**3.** **COMPENSATION, BENEFITS AND REIMBURSEMENT.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Base Salary</u>**. In consideration of Executive's performance of the responsibilities and duties set forth in this Agreement, the Bank will provide Executive the compensation specified in this Agreement. The Bank will pay Executive a salary of $215,000 per year ("<u>Base Salary</u>"). Executive's Base Salary will be payable in accordance with the customary payroll practices of the Bank. During the term of this Agreement, the Board of Directors will consider increasing, but may not decrease, Executive's Base Salary, as the Board of Directors deems appropriate. Notwithstanding the foregoing, following a Change in Control, the Compensation Committee (or other applicable committee of the Board of Directors as a whole) shall continue to review annually the rate of Executive's Base Salary, and shall increase the Base Salary by a percentage that is not less than the average annual percentage increase in Base Salary received by Executive over the three calendar years immediately preceding the year in which the Change in Control occurs. Any change in Base Salary will become the new "Base Salary" for purposes of this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Bonus or Incentive Plans</u>**. Executive will be eligible to participate in any bonus or incentive plan or arrangement of the Bank or the Company in which senior management is eligible to participate. Nothing paid to Executive under any bonus or incentive plan or arrangement will be deemed to be in lieu of the other compensation to which Executive is entitled under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **<u>Benefit Plans</u>**. Executive will be entitled to participate in all employee benefit plans, arrangements and perquisites offered to employees and officers of the Bank, on the same terms and conditions as the plans are available to other employees and officers of the Bank. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive also will be entitled to participate in any employee benefit plan, including but not limited to retirement plans, pension plans, profit-sharing plans, health-and-accident plans, or any other employee benefit plan or arrangement made available by the Bank in the future to management employees, subject to and on a basis consistent with the terms, conditions and overall administration of the plans and arrangements as applicable to other management employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) **<u>Vacation</u>**. Executive will be entitled to paid vacation time each year during the term of this Agreement measured on a calendar year basis, in accordance with the Bank's customary practices for his positions, as well as sick leave, holidays and other paid absences in accordance with the Bank's policies and procedures for officers. Any unused paid time off during an annual period will be treated in accordance with the Bank's personnel policies as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) **<u>Expense Reimbursements</u>**. The Bank will reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing his obligations under this Agreement, including, without limitation, fees for memberships in organizations as Executive and the Board of Directors mutually agree are necessary and appropriate in connection with the performance of his duties under this Agreement, upon substantiation of the expenses in accordance with applicable policies and procedures of the Bank. All reimbursements pursuant to this Section 3(e) will be paid promptly by the Bank and in any event no later than 30 days following the date on which the expense was incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) **<u>Automobile Allowance, Cellular Phone and Conference Attendance</u>.** During the term of this Agreement, the Bank will reimburse Executive for all costs associated with the business use of any automobile. Executive agrees to comply with reasonable reporting and expense limitations on the use of any automobile as may be established by the Bank from time to time, and the Bank will include any amount of income attributable to Executive's personal use of an automobile on Executive's IRS Forms W-2. The Bank will also provide Executive with a cellular phone and will pay (or reimburse Executive) for all reasonable expenses related to the business use of such phone. In addition to the foregoing, Executive and his spouse, will be entitled to attend one annual banking conference and such other conferences as may be approved by the Board of Directors of the Bank from time to time.

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**4.** **TERMINATION AND TERMINATION PAY.** 

Subject to Section 5 of this Agreement which governs the occurrence of a Change in Control, Executive's employment under this Agreement may be terminated in the following circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Death</u>**. Executive's employment under this Agreement will terminate upon his death during the term of this Agreement, in which event Executive's estate or beneficiary shall be paid Executive's Base Salary at the rate in effect at the time of Executive's death through the end of the month in which Executive's death occurred. In addition, for one (1) year following Executive's death, the Bank will continue to provide non-taxable medical and dental coverage substantially comparable to the coverage maintained by the Bank for Executive and his family immediately prior to Executive's death. The continued benefits will be fully paid for by the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Disability</u>**. This Agreement shall terminate in the event of Executive's "Disability" as determined by the Board of Directors in its sole discretion, in which event Executive shall be entitled to receive the compensation and vested benefits due to Executive as of the date of Executive's Disability, and Executive shall have no right to receive any other compensation or benefits under this Agreement. "<u>Disability</u>" shall mean Executive's permanent and totally physical or mental impairment that restricts Executive from performing all the essential functions of normal employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **<u>Termination for Cause</u>**. The Board of Directors may terminate Executive's employment at any time for "Cause" as provided herein. Executive shall have no right to receive compensation or other benefits for any period after termination for Cause, except for benefits that have vested prior to the date of termination for Cause. Termination for "<u>Cause</u>" shall mean termination because of, in the good faith determination of the Board of Directors, Executive's:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) personal dishonesty of a material and substantial nature that results in a direct financial loss to the Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) willful misconduct in the performance of his duties with the Bank, which has a material and adverse effect upon the Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) breach of fiduciary duty involving personal profit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) intentional failure to perform stated duties with the Bank, which has a material and adverse effect upon the Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that results in Executive's conviction of, or pleading guilty or nolo contendere to, a felony or a crime involving moral turpitude, fraud, or embezzlement or final cease-and-desist order; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) material breach by Executive of any provision of this Agreement.

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Termination for Cause shall not include or be predicated upon any act or omission by Executive, which is taken or made either: (i) at the direction of the Board of Directors; (ii) in good faith, under Executive's reasonable belief that the act or omission was in the best interests of the Bank; (iii) pursuant to the advice of the Bank's counsel; or (iv) to comply with a lawful court order, directive from a federal, state or local government agency or industry regulatory authority, or subpoena.

The Bank may not terminate Executive for Cause unless and until it shall deliver to him a written notice of Cause indicating the grounds constituting Just Cause, describing in reasonable detail the date, place and underlying facts constituting cause given within ninety (90) days after becoming aware of the event giving rise to said right to terminate for Cause and failure of Executive to cure Cause as identified by the Board within sixty (60) days after receipt of such written notice. The Bank may terminate Executive's employment for Cause by providing a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for that purpose, finding that in the good faith opinion of the Board of Directors, Executive had engaged in or committed the conduct justifying termination for Cause. Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause, unless it is determined that the Bank was not entitled to terminate Executive's employment for Cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) **<u>Voluntary Termination by Executive Without Good Reason</u>**. Executive may voluntarily terminate employment during the term of this Agreement upon at least thirty (30) days prior written notice to the Board of Directors. Except upon Executive's voluntary termination "With Good Reason" (as defined below), Executive shall have no right to receive any compensation or benefits under this Agreement or otherwise upon his voluntary termination of employment, except for the compensation or benefits that have already been earned or vested. The Bank may accelerate the date of termination upon receipt of written notice of Executive's voluntary termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) **<u>Termination Without Cause or With Good Reason</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Board of Directors may immediately terminate Executive's employment at any time for a reason other than Cause (a termination "<u>Without Cause</u>"), and Executive may, by written notice to the Board of Directors, terminate this Agreement at any time within 90 days following an event constituting "Good Reason," as defined below (a termination "<u>With Good Reason</u>"); provided, however, that the Bank shall have thirty (30) days to cure the "Good Reason" condition, but the Bank may waive its right to cure. Any termination of Executive's employment shall have no effect on or prejudice the vested rights of Executive under the Bank's qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long-term disability insurance plans or other employee benefit plans or programs, or compensation plans or programs in which Executive was a participant.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) In the event of termination as described under Section 4(e)(i) and subject to the requirements of Section 4(e)(v), the Bank shall pay Executive, or in the event of Executive's subsequent death, Executive's beneficiary or estate, as the case may be, as severance pay, a cash lump sum payment equal to three times the average taxable income reported on Form W-2 (Box 1) for the five taxable years immediately preceding the year in which the termination of employment occurs. Notwithstanding the foregoing, the determination under this Section 4(e)(ii) of Executive's average taxable income shall not take into account or include the payment made pursuant to Section 3(d) of this Agreement. The payment will be made to Executive within 30 days following Executive's date of termination, and will be subject to applicable withholding taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) In addition, the Bank will continue to provide to Executive life insurance coverage and non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to his termination under the same cost-sharing arrangements that apply for active employees of the Bank as of Executive's date of termination. The continued coverage will cease upon the earlier of: (A) the expiration of the term of the Agreement; or (B) the date on which Executive becomes a full-time employee of another employer, provided Executive is entitled to benefits that are substantially similar to the health and welfare benefits provided by the Bank. The period of continued health coverage required by Section 4980B(f) of the Internal Revenue Code of 1986, as amended (the "<u>Code</u>"), shall run concurrently with the coverage period provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) "<u>Good Reason</u>" exists if, without Executive's express written consent, any of the following occurs during the Term:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) the failure to appoint or reappoint Executive to the Executive Position(s) set forth under Section 1,
failure to appoint or reappoint Executive as Co-President and Co-Chief Executive Officer of the Company, failure to elect Executive to a three year term as a director of
the Bank or the Company or, failure to re-nominate Executive as a director of the Bank or the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) a material change in Executive's functions, duties, reporting or responsibilities with the Bank or the
Company, which change would cause Executive's position(s) to become of lesser responsibility, importance, or scope from the Executive Position(s) and attributes thereof described in Section 1;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) a material increase in Executive's functions, duties, or responsibilities with the Bank or the Company,
without an increase in Base Salary (if appropriate) that is commensurate with compensation paid for said functions, duties, or responsibilities to a senior executive in the depository finance industry in the Baltimore-Washington, DC area;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) a relocation of Executive's principal place of employment by more than twenty (20) miles from its
location at the Effective Date of this Agreement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) a material reduction in the benefits and perquisites to Executive from those being provided as of the later of
the Effective Date or any subsequent Renewal Date, other than an employee-wide reduction in benefits and perquisites;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) a liquidation or dissolution of the Bank or the Company, other than liquidations or dissolutions that are
caused by reorganizations that do not negatively affect the status of Executive; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G) a breach of this Agreement by the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Executive shall not be entitled to any payments or benefits under this Section 4(e) unless and until Executive executes a release of claims (the "<u>Release</u>") against the Bank and the Company and any affiliate, and their officers, directors, successors and assigns, releasing said persons from any and all claims, rights, demands, causes of action, suits, arbitrations or grievances relating to the employment relationship, including claims under the Age Discrimination in Employment Act, but not including claims for benefits under tax-qualified plans or other benefit plans in which Executive is vested, claims for benefits required by applicable law or claims with respect to obligations set forth in this Agreement that survive the termination of this Agreement. The Release must be executed and become irrevocable by the 60<sup>th</sup> day following the date of Executive's termination of employment, provided that if the 60 day period spans two (2) calendar years, then, to the extent necessary to comply with Code Section 409A, the payments and benefits described in this Section 4(e) will be paid, or commence, in the second calendar year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) **<u>Effect on Status as a Director</u>**. In the event of Executive's termination of employment under this Agreement for any reason, the termination shall also constitute Executive's resignation as a director of the Bank or the Company, or any subsidiary or affiliate thereof, to the extent Executive is acting as a director of any of the aforementioned entities.

**5.** **CHANGE IN CONTROL.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Change in Control Defined</u>**. For purposes of this Agreement, a "Change in Control shall mean (i) a change in the ownership of the Company or the Bank, (ii) a change in the effective control of the Company or the Bank, or (c) a change in the ownership of a substantial portion of the assets of the Company or the Bank as defined in accordance with Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A change in the ownership 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 Company or the Bank that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Bank.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) A change in the effective control of the Company or the Bank occurs on the date that either (i) 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 Company or the Bank possessing 30 percent or more of the total voting power of the stock of the Company or the Bank, or (ii) a majority of the members of the Board of Directors is replaced during any 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 "(ii)" is inapplicable where a majority shareholder of the Bank is another corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) A change in a substantial portion of the Bank'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 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of (i) all of the assets of the Bank, or (ii) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) 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, the reorganization of the Bank as the wholly-owned subsidiary of a holding company in a second-step mutual-to-stock conversion of Bay-Vanguard, M.H.C. shall not be deemed to be a Change in Control. Nor, for purposes of this Agreement, shall the transactions contemplated by the Merger Agreement constitute a Change in Control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Change in Control Benefits</u>**. Upon a Change in Control, the Bank (or any successor) shall pay Executive, or in the event of Executive's subsequent death, Executive's beneficiary or estate, an amount equal to three (3) times the sum of (i) the average annual taxable compensation paid to Executive by the Bank (or its successor) (as reported in Box 1, Form W-2) for the five taxable years immediately preceding the year in which the Change in Control occurs and (ii) the matching contribution made by the Bank to Executive's account under the "401(k)" plan sponsored by the Bank for the plan year immediately preceding the year in which the Change in Control occurs and (iii) the contribution made by the Bank to Executive's account under the employee stock ownership plan sponsored by the Bank for the plan year immediately preceding the year in which the Change in Control occurs. Notwithstanding the foregoing, the determination under this Section 5(b) of Executive's average taxable income shall not take into account or include the payment made pursuant to Section 3(d) of this Agreement. The payments will be made in a lump sum within ten days following the Change in Control, and will be subject to applicable withholding taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the
contrary, if any of the payments or benefits provided or to be provided by the Bank or the Company or their affiliates to Executive or for Executive's benefit pursuant to the terms of this Agreement or otherwise ("Covered Payments")
constitute parachute payments ("Parachute Payments") within the meaning of Section 280G of

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the Code and would, but for this Section 5(b) be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the "Excise Tax"), then prior to making the Covered Payments, a calculation shall be made comparing (x) the Net Benefit (as defined below) to Executive of the Covered Payments after payment of the Excise Tax to (y) the Net Benefit to Executive if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount calculated under (x) above is less than the amount under (y) above will the Covered Payments be reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the "Reduced Amount"). "Net Benefit" shall mean the present value of the Covered Payments net of all federal, state, local, foreign income, employment and excise taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Covered Payments shall be reduced in a manner that maximizes Executive's economic position. In
applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts
shall be reduced on a pro rata basis but not below zero.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Any determination required under this Section 5(b), including whether any payments or benefits are
parachute payments, shall be made by the Bank in its sole discretion. Executive shall provide the Bank with such information and documents as the Bank may reasonably request in order to make a determination under this Section 5(b). The
Bank's determination shall be final and binding on Executive.

**6.** **COVENANTS OF EXECUTIVE.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Confidentiality</u>**. Executive recognizes and acknowledges that the knowledge of the business activities, plans for business activities, and all other proprietary information of the Bank, as it may exist from time to time, are valuable, special and unique assets of the business of the Bank. Executive will not, during or after the term of Executive's employment, disclose any knowledge of the past, present, planned or considered business activities or any other similar proprietary information of the Bank to any person, firm, corporation, or other entity for any reason or purpose whatsoever unless expressly authorized by the Board of Directors or required by law. Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank. Further, Executive may disclose information regarding the business activities of the Bank to any bank regulator having regulatory jurisdiction over the activities of the Bank. In the event of a breach or threatened breach by Executive of the provisions of this Section, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Bank or any other similar proprietary information, or from rendering any services to any person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to the Bank for such breach or threatened breach, including the recovery of damages from Executive.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Information/Cooperation</u>**. Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may be reasonably required by the Bank, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between Executive and the Bank or any other subsidiaries or affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **<u>Reliance</u>**. Except as otherwise provided, all payments and benefits to Executive under this Agreement shall be subject to Executive's compliance with this Section 6, to the extent applicable. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive's breach of this Section 6, agree that, in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive and all persons acting for or with Executive. Executive represents and admits that Executive's experience and capabilities are such that Executive can obtain employment in a business engaged in other lines of business than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

**7.** **SOURCE OF PAYMENTS.** 

All payments provided in this Agreement shall be timely paid by check or direct deposit from the general funds of the Bank (or any successor of the Bank).

**8.** **EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.** 

This Agreement contains the entire understanding between the parties hereto and shall, as of the Effective Date, supersede any prior employment agreement between the Bank or any predecessor of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive under another plan, program or agreement (other than an employment agreement) between the Bank and Executive.

**9.** **NO ATTACHMENT; BINDING ON SUCCESSORS.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank's obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place.

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**10.** **MODIFICATION AND WAIVER.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

**11.** **REQUIRED PROVISIONS.** 

Notwithstanding anything herein contained to the contrary, the following provisions shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding anything else in this Agreement to the contrary (with the exception of Section 4(c)(i)), Executive's employment shall not be deemed to have been terminated unless and until Executive has a Separation from Service within the meaning of Code Section 409A. For purposes of this Agreement, a "<u>Separation from Service</u>" shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after the date of termination (whether as an employee or as an independent contractor) or the level of further services performed is less than 50 percent of the average level of bona fide services in the 36 months immediately preceding the termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii). Notwithstanding the foregoing, this Section 11(g) shall not apply in the event of Executive's termination for Cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding the foregoing, if Executive is a "<u>specified employee</u>" (i.e., a "key employee" of a publicly traded company within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this Agreement is triggered due to Executive's Separation from Service, then solely to the extent necessary to avoid penalties under Section 409A of the Code, no payment shall be made during the first six (6) months following Executive's Separation from Service. Rather, any payment which would otherwise be paid to Executive during such period shall be accumulated and paid to Executive in a lump sum on the first day of the seventh month following such Separation from Service. All subsequent payments shall be paid in the manner specified in this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Bank cannot provide Executive or Executive's dependents any continued health insurance or other welfare benefits as required by this Agreement because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive or Executive's beneficiary or estate in the event of death a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. Such cash payment shall be made in a lump sum within 30 days after the later of Executive's date of termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to penalties. Notwithstanding the foregoing, if such cash payment would violate the requirements of Treasury Regulation Section 1.409A-3(j), Executive's cash payment in lieu of the continued health insurance or welfare benefits as required by this Agreement shall be payable at the same time the related premium payments would have been paid by the Bank and will be payable for the duration of the applicable coverage period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) To the extent not specifically provided in this Agreement, any compensation or reimbursements payable to Executive shall be paid or provided no later than two and one-half (2.5) months after the calendar year in which such compensation is no longer subject to a substantial risk of forfeiture within the meaning of Treasury Regulation Section 1.409A-1(d).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding anything in this Agreement to the contrary, Executive understands that nothing contained in this Agreement limits Executive's ability to file a charge or complaint with the Securities and Exchange Commission or any other federal, state or local governmental agency or commission ("<u>Government Agencies</u>") about a possible securities law violation without approval of the Bank (or any affiliate). Executive further understands that this Agreement does not limit Executive's ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Bank (or any affiliate) related to the possible securities law violation. This Agreement does not limit Executive's right to receive any resulting monetary award for information provided to any Government Agency.

**12.** **SEVERABILITY.** 

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

**13.** **GOVERNING LAW.** 

This Agreement shall be governed by the laws of the State of Maryland, but only to the extent not superseded by federal law.

**14.** **ARBITRATION.** 

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator mutually acceptable to the Bank and Executive, sitting in a location selected by the Bank within 50 miles from the main office of the Bank, in accordance with the rules of the American Arbitration Association's National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The cost of the arbitrator shall be paid by the Bank; all other costs of arbitration shall be borne by the respective parties, except as otherwise provided in Section 14.

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**15.** **PAYMENT OF LEGAL FEES.** 

To the extent that such payment(s) may be made without triggering penalty under Code Section 409A, all reasonable legal fees paid or incurred by Executive pursuant to any dispute relating to this Agreement shall be paid or reimbursed by the Bank provided that the dispute is resolved substantially in Executive's favor, and such reimbursement shall occur no later than 60 days after the end of the year in which the dispute is settled or resolved in Executive's favor.

**16.** **INDEMNIFICATION.** 

The Bank shall provide Executive (including Executive's heirs, executors and administrators) with coverage under a standard directors' and officers' liability insurance policy at its expense, and shall indemnify Executive (and Executive's heirs, executors and administrators) in accordance with the charter and bylaws of the Bank and to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by Executive in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of Executive having been a director or officer of the Bank or any subsidiary or affiliate of the Bank.

**17.** **NOTICE.** 

For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

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| | |
|:---|:---|
| To the Bank or<br> the Company: | BayVanguard Bank/BV Financial, Inc.<br> 7114 North Point Road<br> Baltimore, MD 21219<br> Attention: Chairman of the Board of Directors |
| To Executive: | Most recent address on file with the Bank |

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[Signature Page Follows]

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**IN WITNESS WHEREOF**, the parties have executed this Agreement as of the date first written above.

---

| | |
|:---|:---|
| **BAYVANGUARD BANK** | **BAYVANGUARD BANK** |
| By: | /s/ Edmund T. Leonard |
| Name: | Edmund T. Leonard |
| Title: | Chairman of the Board |
| **BV FINANCIAL, INC.** | **BV FINANCIAL, INC.** |
| By: | /s/ Edmund T. Leonard |
| Name: | Edmund T. Leonard |
| Title: | Chairman of the Board |
| **BAY-VANGUARD, M.H.C.** | **BAY-VANGUARD, M.H.C.** |
| By: | /s/ Edmund T. Leonard |
| Name: | Edmund T. Leonard |
| Title: | Chairman of the Board |
| **EXECUTIVE** | **EXECUTIVE** |
| /s/ David M. Flair | /s/ David M. Flair |
| **David M. Flair** | **David M. Flair** |

---

## Exhibit 10.2

**Exhibit 10.2** 

**EMPLOYMENT AGREEMENT** 

This Employment Agreement (the "<u>Agreement</u>") is made and entered into on August 29, 2018, by and between BayVanguard Bank (the "<u>Bank</u>"), BV Financial, Inc., ("BVFI"), the stock holding company of the Bank, Bay-Vanguard, M.H.C. a federal mutual holding company and Timothy L. Prindle ("<u>Executive</u>"). Any reference to the "<u>Company</u>" shall mean BVFI and Bay-Vanguard, M.H.C.

**WHEREAS**, the Bank, the Company and Kopernik Bank ("Kopernik") are parties to an Agreement and Plan of Merger, dated as of August 29, 2018 (the "Merger Agreement"); and

**WHEREAS,** Executive recognizes that the Bank's willingness to enter into the Merger Agreement is dependent on Executive's continued services for the period provided in this Agreement; and

**WHEREAS,** Executive wishes to continue to serve in the employ of the Bank for the period provided in this Agreement and upon the terms and conditions provided for in this Agreement; and

**WHEREAS,** Executive and Kopernik are currently parties to an employment agreement, dated as of February 27, 2018 (the "Prior Agreement").

**NOW, THEREFORE**, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

**1.** **POSITION AND RESPONSIBILITIES.** 

During the term of this Agreement, Executive agrees to serve as Co-President and Co-Chief Executive Officer of the Bank and the Company or any successor position(s) as mutually agreed to by Executive and the Bank and the Company (the "<u>Executive Positions</u>"), and will perform the duties and will have all powers normally associated with those positions and as may be set forth in the bylaws of the Bank and the Company. Executive will report directly to the Board of Directors of the Bank and the Company, as applicable. During the period provided in this Agreement, Executive also agrees to serve, if elected, as an officer or director of any subsidiary or affiliate of the Bank or the Company and in that capacity carry out the duties and responsibilities reasonably appropriate as an officer or director of the subsidiary or affiliate.

**2.** **TERM AND DUTIES.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Term and Annual Renewal</u>**. The initial term of this Agreement and the period of Executive's employment hereunder shall begin on the date on which the Effective Time (as defined in the Merger Agreement) occurs (the "Effective Date") and shall continue through the third anniversary of the Effective Date (the "Term"). Commencing on the first anniversary of the Effective Date and continuing on each anniversary date thereafter (the "<u>Renewal Date</u>"), the Term will extend automatically for one additional year, so that the Term will be three years from such Renewal Date, unless either the Bank or Executive by written notice to the other given at least ninety (90) days prior to such Renewal Date notifies the other of its intent not to extend the same. In the event that notice not to extend is given by either the Bank or the Executive, this Agreement shall terminate as of the last day of the then current Term.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Change in Control</u>**. Notwithstanding the foregoing, in the event the Bank or the Company has entered into an agreement to effect a transaction that would be considered a Change in Control as defined under Section 5 hereof, the term of this Agreement shall be extended automatically so that it will expire no less than three (3) years beyond the effective date of the Change in Control, subject to extensions as set forth in Section 2(a) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **<u>Membership on Other Boards or Organizations</u>**. During the period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence, Executive will devote all of his business time, attention, skill and efforts to the faithful performance of his duties under this Agreement, including activities and duties related to the Executive Positions. Notwithstanding the preceding sentence, subject to the approval of the Board of Directors, Executive may serve as a member of the board of directors of business, community and charitable organizations, provided that in each case the service will not materially interfere with the performance of his duties under this Agreement, adversely affect the reputation of the Bank or any affiliates of the Bank (as determined by the Board of Directors), or present any conflict of interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) **<u>Continued Employment Following Expiration of Term</u>**. Nothing in this Agreement shall mandate or prohibit a continuation of Executive's employment following the expiration of the term of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) **<u>Failure of Transaction to Close</u>.** This Agreement shall become null and void and the parties will have no obligations hereunder if (i) the Merger Agreement is terminated in accordance with its terms, (ii) either party to the Merger Agreement fails to complete the transactions contemplated by the Merger Agreement for any reason or (iii) if Executive terminates employment with the Bank for any reason prior to the Effective Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) **<u>Prior Agreement</u>.** The prior Agreement shall terminate and have no further force and effect upon the Effective Date of this Agreement. If the transactions contemplated by the Merger Agreement do not occur pursuant to Sections 3(e)(i) or 3(e)(ii) hereof and, therefore this Agreement does not become effective, then the Prior Agreement shall continue in accordance with it terms.

**3.** **COMPENSATION, BENEFITS AND REIMBURSEMENT.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Base Salary</u>**. In consideration of Executive's performance of the responsibilities and duties set forth in this Agreement, the Bank will provide Executive the compensation specified in this Agreement. The Bank will pay Executive a salary of $215,000 per year ("<u>Base Salary</u>"). Executive's Base Salary will be payable in accordance with the customary payroll practices of the Bank. During the term of this Agreement, the Board of Directors will consider increasing, but may not decrease Executive's Base Salary, as the Board of Directors deems appropriate. Notwithstanding the foregoing, following a Change in Control, the Compensation Committee (or other applicable committee of the Board of Directors as a whole) shall continue to review annually the rate of Executive's Base Salary, and shall increase the Base Salary by a percentage that is not less than the average annual percentage increase in Base Salary received by Executive over the three calendar years immediately preceding the year in which the Change in Control occurs. Any change in Base Salary will become the new "Base Salary" for purposes of this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Bonus or Incentive Plans</u>**. Executive will be eligible to participate in any bonus or incentive plan or arrangement of the Bank or the Company in which senior management is eligible to participate. Nothing paid to Executive under any bonus or incentive plan or arrangement will be deemed to be in lieu of the other compensation to which Executive is entitled under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **<u>Benefit Plans</u>**. Executive will be entitled to participate in all employee benefit plans, arrangements and perquisites offered to employees and officers of the Bank, on the same terms and conditions as the plans are available to other employees and officers of the Bank. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive also will be entitled to participate in any employee benefit plan, including but not limited to retirement plans, pension plans, profit-sharing plans, health-and-accident plans, or any other employee benefit plan or arrangement made available by the Bank in the future to management employees, subject to and on a basis consistent with the terms, conditions and overall administration of the plans and arrangements as applicable to other management employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) **<u>Initial Payment</u>**. In full satisfaction of any and all obligations under the Prior Agreement, the Bank will pay (unless the amount is paid by Kopernik prior to the Effective Date) Executive a lump sum cash payment on the Effective Date equal to 2.99 times the average taxable income reported by Kopernik on Form W-2 (Box 1) for Executive for the five completed taxable years immediately preceding the year in which the Effective Date occurs, subject to any application withholding of taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) **<u>Vacation</u>**. Executive will be entitled to paid vacation time each year during the term of this Agreement measured on a calendar year basis, in accordance with the Bank's customary practices for his positions, as well as sick leave, holidays and other paid absences in accordance with the Bank's policies and procedures for officers. Any unused paid time off during an annual period will be treated in accordance with the Bank's personnel policies as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) **<u>Expense Reimbursements</u>**. The Bank will reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing his obligations under this Agreement, including, without limitation, fees for memberships in organizations as Executive and the Board of Directors mutually agree are necessary and appropriate in connection with the performance of his duties under this Agreement, upon substantiation of the expenses in accordance with applicable policies and procedures of the Bank. All reimbursements pursuant to this Section 3(f) will be paid promptly by the Bank and in any event no later than 30 days following the date on which the expense was incurred.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) **<u>Automobile Allowance, Cellular Phone and Conference Attendance</u>.** During the term of this Agreement, the Bank will reimburse Executive for all costs associated with the business use of any automobile. Executive agrees to comply with reasonable reporting and expense limitations on the use of any automobile as may be established by the Bank from time to time, and the Bank will include any amount of income attributable to Executive's personal use of an automobile on Executive's IRS Forms W-2. The Bank will also provide Executive with a cellular phone and will pay (or reimburse Executive) for all reasonable expenses related to the business use of such phone. In addition to the foregoing, Executive and his spouse, will be entitled to attend one annual banking conference and such other conferences as may be approved by the Board of Directors of the Bank from time to time.

**4.** **TERMINATION AND TERMINATION PAY.** 

Subject to Section 5 of this Agreement which governs the occurrence of a Change in Control, Executive's employment under this Agreement may be terminated in the following circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Death</u>**. Executive's employment under this Agreement will terminate upon his death during the term of this Agreement, in which event Executive's estate or beneficiary shall be paid Executive's Base Salary at the rate in effect at the time of Executive's death through the end of the month in which Executive's death occurred. In addition, for one (1) year following Executive's death, the Bank will continue to provide non-taxable medical and dental coverage substantially comparable to the coverage maintained by the Bank for Executive and his family immediately prior to Executive's death. The continued benefits will be fully paid for by the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Disability</u>**. This Agreement shall terminate in the event of Executive's "Disability" as determined by the Board of Directors in its sole discretion, in which event Executive shall be entitled to receive the compensation and vested benefits due to Executive as of the date of Executive's Disability, and Executive shall have no right to receive any other compensation or benefits under this Agreement. "<u>Disability</u>" shall mean Executive's permanent and totally physical or mental impairment that restricts Executive from performing all the essential functions of normal employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **<u>Termination for Cause</u>**. The Board of Directors may terminate Executive's employment at any time for "Cause" as provided herein. Executive shall have no right to receive compensation or other benefits for any period after termination for Cause, except for benefits that have vested prior to the date of termination for Cause. Termination for "<u>Cause</u>" shall mean termination because of, in the good faith determination of the Board of Directors, Executive's:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) personal dishonesty of a material and substantial nature that results in a direct financial loss to the Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) willful misconduct in the performance of his duties with the Bank, which has a material and adverse effect upon
the Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) breach of fiduciary duty involving personal profit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) intentional failure to perform stated duties with the Bank, which has a material and adverse effect upon the
Bank;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that
results in Executive's conviction of, or pleading guilty or nolo contendere to, a felony or a crime involving moral turpitude, fraud, or embezzlement or final cease-and-desist order; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) material breach by Executive of any provision of this Agreement.

Termination for Cause shall not include or be predicated upon any act or omission by Executive, which is taken or made either: (i) at the direction of the Board of Directors; (ii) in good faith, under Executive's reasonable belief that the act or omission was in the best interests of the Bank; (iii) pursuant to the advice of the Bank's counsel; or (iv) to comply with a lawful court order, directive from a federal, state or local government agency or industry regulatory authority, or subpoena.

The Bank may not terminate Executive for Cause unless and until it shall deliver to him a written notice of Cause indicating the grounds constituting Cause, describing in reasonable detail the date, place and underlying facts constituting cause given within ninety (90) days after becoming aware of the event giving rise to said right to terminate for Cause and failure of Executive to cure Cause as identified by the Board within sixty (60) days after receipt of such written notice. The Bank may terminate Executive's employment for Cause by providing a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for that purpose, finding that in the good faith opinion of the Board of Directors, Executive had engaged in or committed the conduct justifying termination for Cause. Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause, unless it is determined that the Bank was not entitled to terminate Executive's employment for Cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) **<u>Voluntary Termination by Executive Without Good Reason</u>**. Executive may voluntarily terminate employment during the term of this Agreement upon at least thirty (30) days prior written notice to the Board of Directors. Except upon Executive's voluntary termination "With Good Reason" (as defined below), Executive shall have no right to receive any compensation or benefits under this Agreement or otherwise upon his voluntary termination of employment, except for the compensation or benefits that have already been earned or vested. The Bank may accelerate the date of termination upon receipt of written notice of Executive's voluntary termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) **<u>Termination Without Cause or With Good Reason</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Board of Directors may immediately terminate Executive's employment at any time for a reason other
than Cause (a termination " <u>Without Cause</u> "), and Executive may, by written notice to the Board of Directors, terminate this Agreement at any time within 90 days following an event constituting "Good Reason," as defined
below (a termination " <u>With Good Reason</u> "); provided, however, that the Bank shall have thirty (30) days to cure the "Good Reason" condition, but the Bank may waive its right to cure. Any termination of Executive's
employment shall have no

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effect on or prejudice the vested rights of Executive under the Bank's qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long-term disability insurance plans or other employee benefit plans or programs, or compensation plans or programs in which Executive was a participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) In the event of termination as described under Section 4(e)(i) and subject to the requirements of
Section 4(e)(v), the Bank shall pay Executive, or in the event of Executive's subsequent death, Executive's beneficiary or estate, as the case may be, as severance pay, a cash lump sum payment equal to three times the average taxable
income reported on Form W-2 (Box 1) for the five taxable years immediately preceding the year in which the termination of employment occurs. Notwithstanding the foregoing, the determination under this
Section 4(e)(ii) of Executive's average taxable income shall not take into account or include the payment made pursuant to Section 3(d) of this Agreement. The payment will be made to Executive within 30 days following Executive's
date of termination and will be subject to applicable withholding taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) In addition, the Bank will continue to provide to Executive life insurance coverage and non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to his
termination under the same cost-sharing arrangements that apply for active employees of the Bank as of Executive's date of termination. The continued coverage will cease upon the earlier of: (A) the expiration of the term of the Agreement;
or (B) the date on which Executive becomes a full-time employee of another employer, provided Executive is entitled to benefits that are substantially similar to the health and welfare benefits provided by the Bank. The period of continued
health coverage required by Section 4980B(f) of the Internal Revenue Code of 1986, as amended (the " <u>Code</u> "), shall run concurrently with the coverage period provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) " <u>Good Reason</u> " exists if, without Executive's express written consent, any of the
following occurs during the Term:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) the failure to appoint or reappoint Executive to the Executive Position(s) set forth under Section 1,
failure to appoint or reappoint Executive as Co-President and Co-Chief Executive Officer of the Company, failure to elect Executive to a three year term as a director of
the Bank or the Company or, failure to re-nominate Executive as a director of the Bank or the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) a material change in Executive's functions, duties, reporting or responsibilities with the Bank or the
Company, which change would cause Executive's position(s) to become of lesser responsibility, importance, or scope from the Executive Position(s) and attributes thereof described in Section 1;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) a material increase in Executive's functions, duties, or responsibilities with the Bank or the Company,
without an increase in Base Salary (if appropriate) that is commensurate with compensation paid for said functions, duties, or responsibilities to a senior executive in the depository finance industry in the Baltimore-Washington, DC area;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) a relocation of Executive's principal place of employment by more than twenty (20) miles from its
location at the Effective Date of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) a material reduction in the benefits and perquisites to Executive from those being provided as of the later of
the Effective Date or any subsequent Renewal Date, other than an employee-wide reduction in benefits and perquisites;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) a liquidation or dissolution of the Bank or the Company, other than liquidations or dissolutions that are
caused by reorganizations that do not negatively affect the status of Executive; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G) a breach of this Agreement by the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Executive shall not be entitled to any payments or benefits under this Section 4(e) unless and until
Executive executes a release of claims (the " <u>Release</u> ") against the Bank and the Company and any affiliate, and their officers, directors, successors and assigns, releasing said persons from any and all claims, rights, demands,
causes of action, suits, arbitrations or grievances relating to the employment relationship, including claims under the Age Discrimination in Employment Act, but not including claims for benefits under tax-qualified plans or other benefit plans in which Executive is vested, claims for benefits required by applicable law or claims with respect to obligations set forth in this Agreement that survive the
termination of this Agreement. The Release must be executed and become irrevocable by the 60<sup>th</sup> day following the date of Executive's termination of employment, provided that if the 60 day
period spans two (2) calendar years, then, to the extent necessary to comply with Code Section 409A, the payments and benefits described in this Section 4(e) will be paid, or commence, in the second calendar year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) **<u>Effect on Status as a Director</u>**. In the event of Executive's termination of employment under this Agreement for any reason, the termination shall also constitute Executive's resignation as a director of the Bank or the Company, or any subsidiary or affiliate thereof, to the extent Executive is acting as a director of any of the aforementioned entities.

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**5.** **CHANGE IN CONTROL.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Change in Control Defined</u>**. For purposes of this Agreement, a "Change in Control shall mean (i) a change in the ownership of the Company or the Bank, (ii) a change in the effective control of the Company or the Bank, or (c) a change in the ownership of a substantial portion of the assets of the Company or the Bank as defined in accordance with Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A change in the ownership 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 Company or the Bank that, together with stock held by such person or group, constitutes more than 50 percent of the
total fair market value or total voting power of the stock of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) A change in the effective control of the Company or the Bank occurs on the date that either (i) 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 Company or the Bank possessing 30 percent or more of the total voting power of the stock of the Company or the Bank, or (ii) a majority of the
members of the Board of Directors is replaced during any 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 "(ii)" is inapplicable where a majority shareholder of the Bank is another corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) A change in a substantial portion of the Bank'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 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Bank that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of (i) all of the assets of the Bank, or (ii) the
value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) 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, the reorganization of the Bank as the wholly-owned subsidiary of a holding company in a second-step mutual-to-stock conversion of Bay-Vanguard, M.H.C. shall not be deemed to be a Change in Control. Nor, for purposes of this Agreement, shall the transactions contemplated by the Merger Agreement constitute a Change in Control.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Change in Control Benefits</u>**. Upon a Change in Control, the Bank (or any successor) shall pay Executive, or in the event of Executive's subsequent death, Executive's beneficiary or estate, an amount equal to three (3) times the sum of (i) the average annual taxable compensation paid to Executive by the Bank (or its successor) (as reported in Box 1, Form W-2) for the five taxable years immediately preceding the year in which the Change in Control occurs and (ii) the matching contribution made by the Bank to Executive's account under the "401(k)" plan sponsored by the Bank for the plan year immediately preceding the year in which the Change in Control occurs and (iii) the contribution made by the Bank to Executive's account under the employee stock ownership plan sponsored by the Bank for the plan year immediately preceding the year in which the Change in Control occurs. Notwithstanding the foregoing, the determination under this Section 5(b) of Executive's average taxable income shall not take into account or include the payment made pursuant to Section 3(d) of this Agreement. The payments will be made in a lump sum within ten days following the Change in Control and will be subject to applicable withholding taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the
contrary, if any of the payments or benefits provided or to be provided by the Bank or the Company or their affiliates to Executive or for Executive's benefit pursuant to the terms of this Agreement or otherwise ("Covered Payments")
constitute parachute payments ("Parachute Payments") within the meaning of Section 280G of the Code and would, but for this Section 5(b) be subject to the excise tax imposed under Section 4999 of the Code (or any successor
provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the "Excise Tax"), then prior to making the Covered Payments, a calculation shall be made comparing
(x) the Net Benefit (as defined below) to Executive of the Covered Payments after payment of the Excise Tax to (y) the Net Benefit to Executive if the Covered Payments are limited to the extent necessary to avoid being subject to the
Excise Tax. Only if the amount calculated under (x) above is less than the amount under (y) above will the Covered Payments be reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the
Excise Tax (that amount, the "Reduced Amount"). "Net Benefit" shall mean the present value of the Covered Payments net of all federal, state, local, foreign income, employment and excise taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Covered Payments shall be reduced in a manner that maximizes Executive's economic position. In
applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts
shall be reduced on a pro rata basis but not below zero.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Any determination required under this Section 5(b), including whether any payments or benefits are
parachute payments, shall be made by the Bank in its sole discretion. Executive shall provide the Bank with such information and documents as the Bank may reasonably request in order to make a determination under this Section 5(b). The
Bank's determination shall be final and binding on Executive.

**6.** **COVENANTS OF EXECUTIVE.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **<u>Confidentiality</u>**. Executive recognizes and acknowledges that the knowledge of the business activities, plans for business activities, and all other proprietary information of the Bank, as it may exist from time to time, are valuable, special and unique assets of the business of the Bank. Executive will not, during or after the term of Executive's employment, disclose any knowledge of the past, present, planned or considered business activities or any other similar proprietary information of the Bank to any person, firm, corporation, or other entity for any reason or purpose whatsoever unless expressly authorized by the Board of Directors or required by law. Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank. Further, Executive may disclose information regarding the business activities of the Bank to any bank regulator having regulatory jurisdiction over the activities of the Bank. In the event of a breach or threatened breach by Executive of the provisions of this Section, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Bank or any other similar proprietary information, or from rendering any services to any person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to the Bank for such breach or threatened breach, including the recovery of damages from Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Information/Cooperation</u>**. Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may be reasonably required by the Bank, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between Executive and the Bank or any other subsidiaries or affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **<u>Reliance</u>**. Except as otherwise provided, all payments and benefits to Executive under this Agreement shall be subject to Executive's compliance with this Section 6, to the extent applicable. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive's breach of this Section 6, agree that, in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive and all persons acting for or with Executive. Executive represents and admits that Executive's experience and capabilities are such that Executive can obtain employment in a business engaged in other lines of business than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

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**7.** **SOURCE OF PAYMENTS.** 

All payments provided in this Agreement shall be timely paid by check or direct deposit from the general funds of the Bank (or any successor of the Bank).

**8.** **EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.** 

This Agreement contains the entire understanding between the parties hereto and shall, as of the Effective Date, supersede any prior employment agreement between the Bank or any predecessor of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive under another plan, program or agreement (other than an employment agreement) between the Bank and Executive.

**9.** **NO ATTACHMENT; BINDING ON SUCCESSORS.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank's obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place.

**10.** **MODIFICATION AND WAIVER.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

**11.** **REQUIRED PROVISIONS.** 

Notwithstanding anything herein contained to the contrary, the following provisions shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding anything else in this Agreement to the contrary (with the exception of Section 4(c)(i)), Executive's employment shall not be deemed to have been terminated unless and until Executive has a Separation from Service within the meaning of Code Section 409A. For purposes of this Agreement, a "<u>Separation from Service</u>" shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after the date of termination (whether as an employee or as an independent contractor) or the level of further services performed is less than 50 percent of the average level of bona fide services in the 36 months immediately preceding the termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii). Notwithstanding the foregoing, this Section 11(g) shall not apply in the event of the Executive's termination for Cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding the foregoing, if Executive is a "<u>specified employee</u>" (i.e., a "key employee" of a publicly traded company within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this Agreement is triggered due to Executive's Separation from Service, then solely to the extent necessary to avoid penalties under Section 409A of the Code, no payment shall be made during the first six (6) months following Executive's Separation from Service. Rather, any payment which would otherwise be paid to Executive during such period shall be accumulated and paid to Executive in a lump sum on the first day of the seventh month following such Separation from Service. All subsequent payments shall be paid in the manner specified in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If the Bank cannot provide Executive or Executive's dependents any continued health insurance or other welfare benefits as required by this Agreement because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive or Executive's beneficiary or estate in the event of death a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. Such cash payment shall be made in a lump sum within 30 days after the later of Executive's date of termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to penalties. Notwithstanding the foregoing, if such cash payment would violate the requirements of Treasury Regulation Section 1.409A-3(j), Executive's cash payment in lieu of the continued health insurance or welfare benefits as required by this Agreement shall be payable at the same time the related premium payments would have been paid by the Bank and will be payable for the duration of the applicable coverage period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) To the extent not specifically provided in this Agreement, any compensation or reimbursements payable to Executive shall be paid or provided no later than two and one-half (2.5) months after the calendar year in which such compensation is no longer subject to a substantial risk of forfeiture within the meaning of Treasury Regulation Section 1.409A-1(d).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding anything in this Agreement to the contrary, Executive understands that nothing contained in this Agreement limits Executive's ability to file a charge or complaint with the Securities and Exchange Commission or any other federal, state or local governmental agency or commission ("<u>Government Agencies</u>") about a possible securities law violation without approval of the Bank (or any affiliate). Executive further understands that this Agreement does not limit Executive's ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Bank (or any affiliate) related to the possible securities law violation. This Agreement does not limit Executive's right to receive any resulting monetary award for information provided to any Government Agency.

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**12.** **SEVERABILITY.** 

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

**13.** **GOVERNING LAW.** 

This Agreement shall be governed by the laws of the State of Maryland, but only to the extent not superseded by federal law.

**14.** **ARBITRATION.** 

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator mutually acceptable to the Bank and Executive, sitting in a location selected by the Bank within 50 miles from the main office of the Bank, in accordance with the rules of the American Arbitration Association's National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The cost of the arbitrator shall be paid by the Bank; all other costs of arbitration shall be borne by the respective parties, except as otherwise provided in Section 14.

**15.** **PAYMENT OF LEGAL FEES.** 

To the extent that such payment(s) may be made without triggering penalty under Code Section 409A, all reasonable legal fees paid or incurred by Executive pursuant to any dispute relating to this Agreement shall be paid or reimbursed by the Bank provided that the dispute is resolved substantially in Executive's favor and such reimbursement shall occur no later than 60 days after the end of the year in which the dispute is settled or resolved in Executive's favor.

**16.** **INDEMNIFICATION.** 

The Bank shall provide Executive (including Executive's heirs, executors and administrators) with coverage under a standard directors' and officers' liability insurance policy at its expense, and shall indemnify Executive (and Executive's heirs, executors and administrators) in accordance with the charter and bylaws of the Bank and to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by Executive in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of Executive having been a director or officer of the Bank or any subsidiary or affiliate of the Bank.

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**17.** **NOTICE.** 

For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

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| | |
|:---|:---|
| To the Bank or the Company | BayVanguard Bank/BV Financial, Inc.<br> 7114 North Point Road<br> Baltimore, MD 21219<br> Attention: Chairman of the Board of Directors |
| To Executive: | Most recent address on file with the Bank |

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**[Signature Page Follows]** 

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**IN WITNESS WHEREOF**, the parties have executed this Agreement as of the date first

written above.

---

| | |
|:---|:---|
| **BAYVANGUARD BANK** | **BAYVANGUARD BANK** |
| By: | /s/ Edmund T. Leonard |
| Name: | Edmund T. Leonard |
| Title: | Chairman of the Board |
| **BV FINANCIAL, INC.** | **BV FINANCIAL, INC.** |
| By: | /s/ Edmund T. Leonard |
| Name: | Edmund T. Leonard |
| Title: | Chairman of the Board |
| **BAY-VANGUARD, M.H.C.** | **BAY-VANGUARD, M.H.C.** |
| By: | /s/ Edmund T. Leonard |
| Name: | Edmund T. Leonard |
| Title: | Chairman of the Board |
| **EXECUTIVE** | **EXECUTIVE** |
| /s/ Timothy L. Prindle | /s/ Timothy L. Prindle |
| **Timothy L. Prindle** | **Timothy L. Prindle** |

---

## Exhibit 10.3

**Exhibit 10.3** 

**BAY-VANGUARD FEDERAL SAVINGS BANK** 

**THREE-YEAR CHANGE IN CONTROL AGREEMENT** 

This **AGREEMENT** ("Agreement") is hereby entered into as of July 1, 2014 by and between **BAY-VANGUARD FEDERAL SAVINGS BANK** (the "Bank"), a federally-chartered savings bank, with its principal offices at 7114 North Point Road, Baltimore, Maryland 21219, **MICHAEL J. DEE** ("Executive"), and **BV FINANCIAL, INC.** (the "Company"), a federally-chartered corporation and the holding company of the Bank, as guarantor.

**WHEREAS,** the Bank recognizes the importance of Executive to the Bank's operations and wishes to protect his position with the Bank in the event of a change in control of the Bank or the Company for the period provided for in this Agreement; and

**WHEREAS,** Executive and the Board of Directors of the Bank desire to enter into an agreement setting forth the terms and conditions of payments due to Executive in the event of a change in control and the related rights and obligations of each of the parties.

**NOW, THEREFORE,** in consideration of the promises and mutual covenants herein contained, it is hereby agreed as follows:

**1.**  **<u>Term of Agreement</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The term of this Agreement shall be (i) the initial term, consisting of the period commencing on the date of this Agreement (the "Effective Date") and ending on the third anniversary of the Effective Date, plus (ii) any and all extensions of the initial term made pursuant to this Section 1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Commencing on July 1, 2015 (the "Renewal Date"), and continuing each anniversary date thereafter, the Board of Directors of the Bank (the "Board of Directors") may extend the term of this Agreement for an additional one (1) year period (from the Renewal Date) beyond the then effective expiration date, provided that Executive shall not have given at least sixty (60) days' written notice of his desire that the term not be extended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Notwithstanding anything in this Section to the contrary, this Agreement shall terminate if Executive or the Bank terminates Executive's employment prior to a Change in Control.

**2.**  **<u>Change in Control</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Upon the occurrence of a Change in Control of the Bank or the Company followed at any time during the term of this Agreement by the termination of Executive's employment in accordance with the terms of this Agreement, other than for Cause, as defined in Section 2c. of this Agreement, the provisions of Section 3 of this Agreement shall apply. Upon the occurrence of a Change in Control, Executive shall have the right to elect to voluntarily terminate his employment at any time during the term of this Agreement for "Good Reason."

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For the purposes of this Agreement "Good Reason" shall mean the occurrence of any of the following events without Executive's consent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. The assignment to Executive of duties that constitute a material diminution of Executive's authority,
duties, or responsibilities (including reporting requirements);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. A material reduction in Executive's Base Salary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Relocation of Executive to a location outside a radius of twenty-five (25) miles of the Bank's
principal office; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. Any other action or inaction by the Bank that constitutes a material breach of this Agreement;

provided, that within ninety (90) days after the initial existence of such event, the Bank shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted "Good Reason" by Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. For purposes of this Agreement, a "Change in Control" shall be deemed to occur on the earliest of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. <u>Merger</u>: The Company merges into or consolidates with another corporation, or merges another corporation
into the Company, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or
consolidation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. <u>Acquisition of Significant Share Ownership</u>: There is filed, or is required to be filed, a report on
Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the
beneficial owner of 25% or more of a class of the Company's voting securities, but this clause (b) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or
indirectly beneficially owns 50% or more of its outstanding voting securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. <u>Change in Board Composition</u>: During any period of two consecutive years, individuals who constitute the
Company's or the Bank's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company's or the Bank's board of directors;
provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. <u>Sale of Assets</u>: The Company or the Bank sells to a third party all or substantially all of its assets.

------

Notwithstanding anything in this Agreement to the contrary, in no event shall the reorganization of the Bank from the mutual holding company form of organization to the full stock holding company form of organization (including the elimination of the mutual holding company) constitute a "Change in Control" for purposes of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Executive shall not have the right to receive termination benefits pursuant to Section 3 hereof upon termination for "Cause". Termination for Cause shall mean termination because of, in the good faith determination of the Board of Directors, Executive's:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. material act of dishonesty or fraud in performing Executive's duties on behalf of the Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. willful misconduct that in the judgment of the Board of Directors will likely cause economic damage to the Bank
or injury to the business reputation of the Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. incompetence (in determining incompetence, the acts or omissions shall be measured against standards generally
prevailing in the savings institutions industry);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. breach of fiduciary duty involving personal profit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. intentional failure to perform stated duties under this Agreement after written notice thereof from the Board
of Directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi. willful violation of any law, rule or regulation (other than traffic violations or similar offenses which
results only in a fine or other non-custodial penalty) that reflect adversely on the reputation of the Bank, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; any violation of the policies and procedures of the Bank as outlined in the Bank's employee handbook, which would result in termination of the
Bank employees, as from time to time amended and incorporated herein by reference, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii. material breach by Executive of any provision of this Agreement.

For purposes of this paragraph, no act or failure to act on the part of Executive shall be considered "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive's action or omission was in the best interest of the Bank. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the members of the Board of Directors at a meeting of the Board of Directors called and held for that purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that in the good faith opinion of the Board of Directors, Executive was guilty of conduct justifying termination for Cause and specifying the particulars thereof in detail.

Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause. During the period beginning on the date of the Notice of Termination for Cause pursuant to Section 4 hereof through the Date of Termination (as defined in Section 4), stock options granted to Executive under any stock option plan shall not be exercisable nor shall any unvested

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stock awards granted to Executive under any stock benefit plan of the Bank, the Company or any subsidiary or affiliate thereof, vest. At the Date of Termination, such stock options and any such unvested stock awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such termination for Cause.

**3.**  **<u>Termination Benefits</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. If Executive's employment is voluntarily for Good Reason (in accordance with Section 2a. of this Agreement) or involuntarily terminated, either within one (1) year of a Change in Control, Executive shall receive:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. The Bank shall pay Executive a lump sum cash payment equal to three (3) times the Executive's
"base amount," within the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Such payment shall be made not later than five (5) days following Executive's termination of
employment under this Section 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. The Bank will continue to provide to Executive life insurance coverage and non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to his
termination under the same cost-sharing arrangements that apply for active employees of the Bank as of Executive's date of termination. Such continued coverage shall cease thirty-six (36) months
following Executive's termination of employment. The period of continued health coverage required by Section 4980B(f) of the Internal Revenue Code of 1986, as amended (the "Code"), shall run concurrently with the coverage period
provided herein. If the Bank cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner
contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such
determination. Such cash payment shall be made in a lump sum within thirty (30) days after the later of Executive's date of termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to
penalties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. In no event shall the aggregate payments or benefits to be made or afforded to Executive under this Agreement, either as a stand-alone benefit or when aggregated with other payments to, or for the benefit of Executive that are contingent on a Change in Control (the "Termination Benefits") constitute an "excess parachute payment" under Section 280G of the Code, or any successor thereto, and in order to avoid such a result, the Termination Benefits will be reduced, if necessary, to an amount (the "Non-Triggering Amount"), the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive's "base amount," as determined in accordance with Section 280G of the Code. In the event a reduction is necessary, Executive shall be entitled to determine which benefits or payments shall be reduced or eliminated so the total parachute payments do not result in an excess parachute payment. If Executive does not make this determination within five (5) business days after receiving a written request from the Bank (or by the time that benefits or payments are due hereunder, if later), the Bank may make such determination, and shall notify Executive promptly thereof. In the event it is determined that permitting Executive or the Bank to make the determination regarding the form or manner of reduction would violate Section 409A Code, such reduction shall be made first from the cash severance provided for under this Agreement.

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**4.**  **<u>Notice of Termination</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Any termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. "Date of Termination" shall mean the date specified in the Notice of Termination (which, in the case of a termination for Cause, shall not be less than thirty (30) days from the date such Notice of Termination is given).

**5.**  **<u>Source of Payments</u>.** 

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

**6.**  **<u>Effect on Prior Agreements and Existing Benefit Plans</u>.** 

This Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. Nothing in this Agreement shall confer upon Executive the right to continue in the employ of the Bank or shall impose on the Bank any obligation to employ or retain Executive in its employ for any period.

**7.**  **<u>No Attachment</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void and of no effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank and their respective successors and assigns.

**8.**  **<u>Modification and Waiver</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

------

**9.**  **<u>Severability</u>.** 

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

**10.**  **<u>Headings for Reference Only</u>.** 

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. In addition, references herein to the masculine shall apply to both the masculine and the feminine.

**11.**  **<u>Governing Law</u>.** 

Except to the extent preempted by federal law, the validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Maryland, without regard to principles of conflicts of law of that state.

**12.**  **<u>Arbitration</u>.** 

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by Executive within fifty (50) miles from the location of the Bank, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

**13.**  **<u>Payment of Legal Fees</u>.** 

All reasonable legal fees and expenses paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, only if Executive is successful pursuant to a legal judgment, arbitration or settlement.

**14.**  **<u>Indemnification</u>.** 

The Company or the Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors' and officers' liability insurance policy at its expense and shall indemnify Executive (and his heirs, executors and administrators) to the fullest extent permitted under applicable law, including 12 C.F.R. Section 145.121, against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of having been a director or officer of the Company or the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs, attorneys' fees and the costs of reasonable settlements.

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**15.**  **<u>Successors to the Bank and the Company</u>.** 

The Bank and the Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Bank or the Company, expressly and unconditionally to assume and agree to perform the Bank's and the Company's obligations under this Agreement, in the same manner and to the same extent that the Bank and the Company would be required to perform if no such succession or assignment had taken place.

**16. <u>Required Provisions</u>.** In the event any of the foregoing provisions of this Section 16 are in conflict with the terms of this Agreement, this Section 16 shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The Board of Directors may terminate Executive's employment at any time, but any termination by the Bank, other than termination for Cause, shall not prejudice Executive's right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after a termination for Cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank's obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while the contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the Bank: (i) by the Comptroller of the Currency or his designee (the "Comptroller"), at the time the Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Comptroller at the time the Comptroller approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Comptroller to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

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**17.**  **<u>Section 409A of the Code</u>.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the "short-term deferral exception" under Treasury Regulation Section 1.409A-1(b)(4) and the "separation pay exception" under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a "separation from service" (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. If when separation from service occurs Executive is a "specified employee" within the meaning of Section 409A of the Code, and if the cash severance payment under Section 3a.i. would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the "short-term deferral exception" under Treasury Regulations Section 1.409A-1(b)(4) or the "separation pay exception" under Treasury Section 1.409A-1(b)(9)(iii)), the Bank will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 3a.i. to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

[signature page follows]

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**SIGNATURES** 

**IN WITNESS WHEREOF,** the parties hereto have executed this Agreement effective as of July 1, 2014.

---

| | | | |
|:---|:---|:---|:---|
| Attest: |  | **BAY-VANGUARD FEDERAL SAVINGS BANK** | **BAY-VANGUARD FEDERAL SAVINGS BANK** |
|  | /s/ Samantha M. Perouty | By: | /s/ David M. Flair |
| Attest: |  | **BV FINANCIAL, INC.** | **BV FINANCIAL, INC.** |
|  |  | **(Guarantor)** | **(Guarantor)** |
|  | /s/ Samantha M. Perouty | By: | /s/ David M. Flair |
| Attest: |  | **EXECUTIVE** | **EXECUTIVE** |
|  | /s/ Samantha M. Perouty | /s/ Michael J. Dee | /s/ Michael J. Dee |
|  |  | Michael J. Dee | Michael J. Dee |

---

## Exhibit 10.4

**Exhibit 10.4** 

**BAY-VANGUARD FEDERAL SAVINGS BANK** 

**SALARY CONTINUATION AGREEMENT** 

**FOR** 

**DAVID M. FLAIR** 

**THIS SALARY CONTINUATION PLAN FOR DAVID M. FLAIR** (the "Plan") is effective as of **[date]**, and is entered into by Bay-Vanguard Federal Savings Bank (the "Bank") and David M. Flair ("Executive").

**WHEREAS**, the purpose of the Plan is to provide additional retirement benefits to 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 Sections 451 and 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 Executive under the Plan.

1.2 "Administrator" means the Bank and/or its Board of Directors, provided, however, the Board of
Directors can designate a committee of the Board of Directors ("Committee") as the Administrator.

1.3 "Bank" means Bay-Vanguard 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 Executive
as the beneficiary to whom the deceased Executive's benefits are payable. The beneficiary designation shall be made on the form attached hereto as Exhibit A (or a similar form acceptable to the Administrator) and filed with the Administrator.
If no Beneficiary is so designated, then Executive's Spouse, if living, will be deemed the Beneficiary. If Executive's Spouse is not living at the time of Executive's death or dies prior to payment to her of the Survivor's
Benefit, then the Children of Executive will be deemed the Beneficiaries and will take on a per stirpes basis. If there are no living Children, then Executive's estate will be deemed the Beneficiary. For this purpose, the term
"Children" means 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 Executive is legally married at the time of Executive's death, provided, however, that the term "Spouse" shall not refer to an
individual to whom Executive is legally married at the time of death if 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.

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1.5 "Benefit Eligibility Date" shall be the date on which 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 Executive's Separation from Service on or after his
Normal Retirement Age, the Benefit Eligibility Date shall be the first day of the second month following Executive's Separation from Service, subject to Section 1.5(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event the Accrued Benefit becomes payable to Executive in the event of Executive's Separation from
Service prior to his Normal Retirement Age, the Benefit Eligibility Date shall be the first day of the second month following the attainment of his Normal Retirement Age, subject to Section 1.5(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event the Survivor's Benefit becomes payable under Section 2.3(a) of the Plan on account of
Executive's death, the Benefit Eligibility Date shall be the first day of the second month following Executive's death.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event a benefit becomes payable pursuant to Section 2.5 of the Plan on account of Executive's
Involuntary Separation from Service or resignation for Good Reason coincident with or within two (2) years following a Change in Control, the Benefit Eligibility Date shall be the first day of the second month following Separation from Service,
subject to Section 1.5(f) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event Executive suffers a Disability while employed by the Bank, the Benefit Eligibility Date shall be
the first day of the second month following the date Executive attains his Normal Retirement Age.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding anything in this Section 1.5 to the contrary, if Executive is a Specified Employee of a
publicly-traded company and the payment(s) are due to Executive's Separation from Service (other than due to death or Disability), then the Benefit Eligibility Date shall be the first day of the seventh month following 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 on the same date as the initial payment (e.g., on the first day of the seventh month) and all remaining payments shall be made as otherwise scheduled. For purposes of Section 409A of the Code, 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 mean, if Executive is subject to a written employment agreement (or other similar
written agreement) with the Bank or its holding company that provides a definition of "Cause," then, for purposes of this Plan, the term "Cause" shall have meaning set forth in such agreement. Otherwise, the term
"Cause" shall mean Executive's (i) personal dishonesty; (ii) willful misconduct; (iii) incompetence; (iv) breach of fiduciary duty involving personal profit; (v) intentional failure to perform his stated duties; or
(vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.

------

For purposes of this paragraph, no act or failure to act on the part of Executive shall be considered "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive's action or omission was in the best interest of the Bank.

1.8 "Change in Control" shall mean (a) a change in the ownership of BV Financial, Inc. (the
"Company") or the Bank, (b) a change in the effective control of the Company or the Bank, or (c) a change in the ownership of a substantial portion of the assets of the Company or the Bank as defined in accordance with
Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A change in the ownership 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 Company or the Bank that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A change in the effective control of the Company or the Bank occurs on the date that either (i) 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 Company or the Bank possessing 30 percent or more of the total voting power of the stock of the Company or the Bank, or (ii) a majority of the members of the Board of Directors is replaced during any 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 "(ii)" is inapplicable where a majority shareholder of the Bank is another corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A change in a substantial portion of the Bank'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 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of (i) all of the assets of the Bank, or (ii) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything herein to the contrary, the reorganization of the Bank as the wholly-owned subsidiary of a holding company in a second-step conversion shall not be deemed to be a Change in Control.

1.9 "Disability" means, with respect to Executive, that, in the good faith determination of the Board of
Directors, Executive is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of
not less than 12 months, or (ii) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank, or (iii) determined to be totally disabled by the Social Security Administration.

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1.10 "Executive" means David M. Flair, who has been selected and approved by the Board of Directors to
participate in the Plan.

1.11 "Good Reason" shall mean: (i) a material diminution in Executive's base salary; (ii) a
material diminution in Executive's authority, duties, or responsibilities; or (iii) a material change in the geographic location at which Executive must perform his duties to the Bank; provided, however, that any such occurrence shall not
be deemed a "Good Reason" if Executive consents thereto. A termination by Executive shall not constitute Good Reason unless 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 90 days after the initial occurrence of such event), and the Bank has failed within 60 days of such notice to correct the circumstance that would
otherwise constitute Good Reason.

1.12 "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.

1.13 "Normal Retirement Age" means age 68.

1.14 "Payout Period" means the time frame during which benefits payable under the Plan shall be
distributed. The Payout Period shall be for fifteen (15) years, commencing on the Benefit Eligibility Date and, if paid in installments, on each anniversary thereafter.

1.15 "Separation from Service" means Executive's death, retirement or other termination of employment
with the Bank within the meaning of Section 409A of the Code. 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 Executive's right to reemployment is provided by law or contract. If the leave exceeds six months and Executive's right to reemployment is not provided by law or by contract, then Executive shall have a Separation from
Service on the first date immediately following the six-month period.

Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of *bona fide* services 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 Executive performed services for the Bank). The determination of whether Executive has had a Separation from Service shall be made by applying the presumptions set forth in the Treasury Regulations under Section 409A of the Code.

1.16 "Specified Employee" means an individual who also satisfies the definition of "key
employee" as that term is defined in Section 416(i) of the Code (without regard to paragraph (5) thereof).

1.17 "Survivor's Benefit" means the benefit payable to Executive's Beneficiary following his
death in accordance with Section 2.3 of the Plan.

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**ARTICLE II** 

**BENEFITS** 

2.1 <u>Benefit on Separation from Service on or after Normal Retirement Age</u>.

If Executive has a Separation from Service after reaching his Normal Retirement Age, Executive shall be entitled to an annual benefit equal to $100,000. The benefit under this Section 2.1 shall commence on Executive's Benefit Eligibility Date specified in Section 1.5(a) and shall be payable in annual installments over the Payout Period specified in Section 1.14 of the Plan.

2.2 <u>Separation from Service Before Normal Retirement Age</u>.

If Executive has a Separation from Service (other than due to Cause or death or Disability) prior to the attainment of his Normal Retirement Age, Executive shall be entitled to the Accrued Benefit payable commencing on the Benefit Eligibility Date specified in Section 1.5(b) of the Plan and payable in annual installments over the Payout Period specified in Section 1.14 of the Plan.

2.3 <u>Survivor's Benefit</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If Executive dies while in the active service of the Bank and prior to attaining his Normal Retirement Age,
Executive's Beneficiary shall be entitled to the Accrued Benefit less the benefit described in any endorsement split-dollar life insurance agreement between Executive and the Bank and in effect at the time of his death (but not an amount less
than zero). If Executive is not a party to an endorsement split-dollar life insurance agreement at the time of his death, the Bank shall pay Executive's Beneficiary the Accrued Benefit, payable in a single lump sum on the Benefit Eligibility
Date specified in Section 1.5(c) of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If Executive dies following a Separation from Service or while in service after reaching his Normal Retirement
Age but prior to the commencement of benefit payments to Executive, Executive's Beneficiary shall be entitled to the present value of the benefit payments that would have been made to Executive less the benefit described in any endorsement
split-dollar life insurance agreement between Executive and the Bank and in effect at the time of his death (but not an amount less than zero). If Executive is not a party to an endorsement split-dollar life insurance agreement at the time of his
death, the Bank shall pay Executive's Beneficiary the present value of the benefit payments that would have been made to Executive, payable in a lump sum on the first day of the second month following Executive's death. If Executive dies
following a Separation of Service and after the commencement of benefit payments, Executive's Beneficiary shall be entitled to the present value of the remaining benefit payments that would have been made to Executive less the benefit described
in any endorsement split-dollar life insurance agreement between Executive and the Bank and in effect at the time of his death (but not an amount less than zero). If Executive is not a party to an endorsement split-dollar life insurance agreement at
the time of his death, the Bank shall pay Executive's Beneficiary the present value of the benefit remaining payments that would have been made to Executive, payable in a lump sum on the first day of the second month following Executive's
death. For purposes of this provision, the discount rate used for accounting purposes shall also be used as the discount rate to determine the present value of any benefit.

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2.4 <u>Termination for Cause</u>. Notwithstanding any other provision of this Plan to the contrary, if Executive is
terminated for Cause prior to the attainment of his Normal Retirement Age, all benefits under this Plan shall be forfeited by Executive and 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
a Change in Control occurs followed by Executive's Involuntary Separation from Service or resignation for Good Reason within two (2) years, Executive shall be entitled to his present value of the benefit that would otherwise be due under
Section 2.1 of the Plan payable commencing on the Benefit Eligibility Date specified in Section 1.5(d), in a lump sum. The calculation of the present value of the benefit shall be made by determining the present value of the normal
retirement benefit as of Executive's Normal Retirement Age and then discounting such amount to its present value as of Executive's date of Separation from Service. For purposes of this provision, the discount rate used for accounting
purposes shall also be used as the discount rate to determine the present value of any benefit.

2.6 <u>Benefit on Disability</u>. If Executive suffers a Disability prior to his Normal Retirement Age, Executive
shall be entitled to receive the benefit due under Section 2.1 of the Plan, as if Executive has attained his Normal Retirement Age, commencing on the Benefit Eligibility Date set forth in Section 1.5(e) of the Plan and paid over the Payout
Period specified in Section 1.14 of the Plan.

**ARTICLE III** 

**BENEFICIARY DESIGNATION** 

Executive shall make an initial designation of primary and secondary Beneficiaries upon initial participation in the Plan by completion of a Beneficiary form substantially in the form attached as Exhibit A, 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 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 Executive, any Beneficiary, or any other person claiming through Executive under this Plan, shall be solely those of an unsecured general creditor of the Bank. Executive, the Beneficiary, or any other person claiming through Executive, shall only have the right to receive from the Bank those payments so specified under this Plan. Neither 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 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 Executive
(or to his Beneficiary in the case of 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 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 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
Maryland, 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

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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>. Executive shall keep the Bank informed of his or her current address and the current
address of his Beneficiaries. If the location of Executive is not made known to the Bank, the Bank shall delay payment of Executive's benefit payment(s) until the location of Executive is made known to the Bank; however, the Bank shall only be
obligated to hold the benefit payment(s) for 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 Executive's Beneficiary. If the location
of Executive's Beneficiary is not known to the Bank, Executive and his Beneficiary(ies) shall thereupon forfeit any rights to the balance, if any, of any benefits provided for such 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 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
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 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. Accordingly, payments may be accelerated, in accordance with requirements and conditions of the Treasury
Regulations

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(or subsequent guidance) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the Federal Government; (iii) in compliance with ethics laws or conflicts of interest laws; (iv) in limited cash-outs (but not in excess of the limit under Code Section 402(g)(1)(B)); (v) in the case of certain distributions to avoid a non-allocation year under Code Section 409(p); (vi) to apply certain offsets in satisfaction of a debt of Executive to the Bank; (vii) in satisfaction of certain *bona fide* disputes between Executive and the Bank; or (viii) for any other purpose set forth in the Treasury Regulations and subsequent guidance.

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.</u> <u>§</u> <u>1828(k</u>). Any payments made to 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</u> <u>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 Executive retains legal counsel to enforce any of the terms of the Plan, the
Bank will pay the reasonable legal fees and related expenses reasonably incurred by him, but only if 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
Executive and the Bank. Notwithstanding anything to the contrary herein, the Plan may be amended without Executive's consent to the extent necessary to comply with existing tax laws or changes to existing tax laws or to amend or terminate the
Plan in accordance with Section 7.2 below.

7.2 <u>Termination of Plan</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Partial Termination</u>. The Board of Directors, at its discretion, may partially terminate the Plan by
freezing future accruals if, in its sole judgment, the tax, accounting, or other effects of the continuance of the Plan, or potential payments thereunder, would not be in the best interests of the Bank.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Complete Termination</u>. Subject to the requirements of Code Section 409A, in the event of complete
termination of the Plan, the Plan shall cease to operate and the Bank shall pay out to Executive his benefits as if Executive had terminated employment as of the effective date of the complete termination. A complete termination of the Plan shall
occur only under the following circumstances and conditions:

&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 Executive's (or his Beneficiary's) gross income (and paid to 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;(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 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;(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
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., 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 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 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]

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IN WITNESS WHEREOF, the Bank has caused this Plan to be executed, effective as of the day and date first above written.

---

| | | |
|:---|:---|:---|
| ATTEST: | **BAY-VANGUARD FEDERAL SAVINGS BANK** | **BAY-VANGUARD FEDERAL SAVINGS BANK** |
| /s/ David M. Flair | By: | /s/ Michael J. Dee |
| **DAVID M. FLAIR** | Title: | SVP-CFO |
| <br> April 10, 2017 | Date: | April 10, 2017 |
| Date |  |  |

---

## Exhibit 10.5

**Exhibit 10.5** 

**BAYVANGUARD BANK** 

**SALARY CONTINUATION AGREEMENT** 

**FOR** 

**TIMOTHY L. PRINDLE** 

**THIS SALARY CONTINUATION PLAN FOR TIMOTHY L. PRINDLE** (the "Plan") is effective as of August 29, 2018, and is entered into by BayVanguard Bank (the "Bank") and Timothy L. Prindle ("Executive").

**WHEREAS**, the purpose of the Plan is to provide additional retirement benefits to 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 Sections 451 and 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 Executive under the Plan.

1.2 "Administrator" means the Bank and/or its Board of Directors, provided, however, the Board of
Directors can designate a committee of the Board of Directors ("Committee") as the Administrator.

1.3 "Bank" means BayVanguard 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 Executive
as the beneficiary to whom the deceased Executive's benefits are payable. The beneficiary designation shall be made on the form attached hereto as Exhibit A (or a similar form acceptable to the Administrator) and filed with the Administrator.
If no Beneficiary is so designated, then Executive's Spouse, if living, will be deemed the Beneficiary. If Executive's Spouse is not living at the time of Executive's death or dies prior to payment to her of the Survivor's
Benefit, then the Children of Executive will be deemed the Beneficiaries and will take on a per stirpes basis. If there are no living Children, then Executive's estate will be deemed the Beneficiary. For this purpose, the term
"Children" means 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 Executive is legally married at the time of Executive's death, provided, however, that the term "Spouse" shall not refer to an
individual to whom Executive is legally married at the time of death if 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.

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1.5 "Benefit Eligibility Date" shall be the date on which 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 Executive's Separation from Service on or after his
Normal Retirement Age, the Benefit Eligibility Date shall be the first day of the second month following Executive's Separation from Service, subject to Section 1.5(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event the Accrued Benefit becomes payable to Executive in the event of Executive's Separation from
Service prior to his Normal Retirement Age, the Benefit Eligibility Date shall be the first day of the second month following the attainment of his Normal Retirement Age, subject to Section 1.5(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event the Survivor's Benefit becomes payable under Section 2.3(a) of the Plan on account of
Executive's death, the Benefit Eligibility Date shall be the first day of the second month following Executive's death.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event a benefit becomes payable pursuant to Section 2.5 of the Plan on account of Executive's
Involuntary Separation from Service or resignation for Good Reason coincident with or within two (2) years following a Change in Control, the Benefit Eligibility Date shall be the first day of the second month following Separation from Service,
subject to Section 1.5(f) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event Executive suffers a Disability while employed by the Bank, the Benefit Eligibility Date shall be
the first day of the second month following the date Executive attains his Normal Retirement Age.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding anything in this Section 1.5 to the contrary, if Executive is a Specified Employee of a
publicly-traded company and the payment(s) are due to Executive's Separation from Service (other than due to death or Disability), then the Benefit Eligibility Date shall be the first day of the seventh month following 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 on the same date as the initial payment (e.g., on the first day of the seventh month) and all remaining payments shall be made as otherwise scheduled. For purposes of Section 409A of the Code, 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 mean, if Executive is subject to a written employment agreement (or other similar
written agreement) with the Bank or its holding company that provides a definition of "Cause," then, for purposes of this Plan, the term "Cause" shall have meaning set forth in such agreement. Otherwise, the term
"Cause" shall mean Executive's (i) personal dishonesty; (ii) willful misconduct; (iii) incompetence; (iv) breach of fiduciary duty involving personal profit; (v) intentional failure to perform his stated duties; or
(vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.

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For purposes of this paragraph, no act or failure to act on the part of Executive shall be considered "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive's action or omission was in the best interest of the Bank.

1.8 "Change in Control" shall mean (a) a change in the ownership of BV Financial, Inc. (the
"Company") or the Bank, (b) a change in the effective control of the Company or the Bank, or (c) a change in the ownership of a substantial portion of the assets of the Company or the Bank as defined in accordance with
Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A change in the ownership 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 Company or the Bank that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A change in the effective control of the Company or the Bank occurs on the date that either (i) 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 Company or the Bank possessing 30 percent or more of the total voting power of the stock of the Company or the Bank, or (ii) a majority of the members of the Board of Directors is replaced during any 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 "(ii)" is inapplicable where a majority shareholder of the Bank is another corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A change in a substantial portion of the Bank'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 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of (i) all of the assets of the Bank, or (ii) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything herein to the contrary, the reorganization of the Bank as the wholly-owned subsidiary of a holding company in a second-step conversion shall not be deemed to be a Change in Control.

1.9 "Disability" means, with respect to Executive, that Executive is determined to be totally disabled by
the Social Security Administration.

1.10 "Executive" means Timothy L. Prindle, who has been selected and approved by the Board of Directors to
participate in the Plan.

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1.11 "Good Reason" shall mean: (i) a material diminution in Executive's base salary; (ii) a
material diminution in Executive's authority, duties, or responsibilities; or (iii) a material change in the geographic location at which Executive must perform his duties to the Bank; provided, however, that any such occurrence shall not
be deemed a "Good Reason" if Executive consents thereto. A termination by Executive shall not constitute Good Reason unless 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 90 days after the initial occurrence of such event), and the Bank has failed within 60 days of such notice to correct the circumstance that would
otherwise constitute Good Reason.

1.12 "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.

1.13 "Normal Retirement Age" means age 48.

1.14 "Payout Period" means the time frame during which benefits payable under the Plan shall be
distributed. The Payout Period shall be for fifteen (15) years, commencing on the Benefit Eligibility Date and, if paid in installments, on each anniversary thereafter.

1.15 "Separation from Service" means Executive's death, retirement or other termination of employment
with the Bank within the meaning of Section 409A of the Code. 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 Executive's right to reemployment is provided by law or contract. If the leave exceeds six months and Executive's right to reemployment is not provided by law or by contract, then Executive shall have a Separation from
Service on the first date immediately following the six-month period.

Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of *bona fide* services 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 Executive performed services for the Bank). The determination of whether Executive has had a Separation from Service shall be made by applying the presumptions set forth in the Treasury Regulations under Section 409A of the Code.

1.16 "Specified Employee" means an individual who also satisfies the definition of "key
employee" as that term is defined in Section 416(i) of the Code (without regard to paragraph (5) thereof).

1.17 "Survivor's Benefit" means the benefit payable to 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 Executive has a Separation from Service after reaching his Normal Retirement Age, Executive shall be entitled to an annual benefit equal to $100,000. The benefit under this Section 2.1 shall commence on Executive's Benefit Eligibility Date specified in Section 1.5(a) and shall be payable in annual installments over the Payout Period specified in Section 1.14 of the Plan.

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2.2 <u>Separation from Service Before Normal Retirement Age</u>.

If Executive has a Separation from Service (other than due to Cause or death or Disability) prior to the attainment of his Normal Retirement Age, Executive shall be entitled to the Accrued Benefit payable commencing on the Benefit Eligibility Date specified in Section 1.5(b) of the Plan and payable in annual installments over the Payout Period specified in Section 1.14 of the Plan.

2.3 <u>Survivor's Benefit</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If Executive dies while in the active service of the Bank and prior to attaining his Normal Retirement Age,
Executive's Beneficiary shall be entitled to the Accrued Benefit less the benefit described in any endorsement split-dollar life insurance agreement between Executive and the Bank and in effect at the time of his death (but not an amount less
than zero). If Executive is not a party to an endorsement split-dollar life insurance agreement at the time of his death, the Bank shall pay Executive's Beneficiary the Accrued Benefit. In either scenario, the benefit shall be payable in a
single lump sum on the Benefit Eligibility Date specified in Section 1.5(c) of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If Executive dies following a Separation from Service or while in service after reaching his Normal Retirement
Age but prior to the commencement of benefit payments to Executive, Executive's Beneficiary shall be entitled to the present value of the benefit payments that would have been made to Executive less the benefit described in any endorsement
split-dollar life insurance agreement between Executive and the Bank and in effect at the time of his death (but not an amount less than zero). If Executive is not a party to an endorsement split-dollar life insurance agreement at the time of his
death, the Bank shall pay Executive's Beneficiary the present value of the benefit payments that would have been made to Executive, payable in a lump sum on the first day of the second month following Executive's death. If Executive dies
following a Separation of Service and after the commencement of benefit payments, Executive's Beneficiary shall be entitled to the present value of the remaining benefit payments that would have been made to Executive less the benefit described
in any endorsement split-dollar life insurance agreement between Executive and the Bank and in effect at the time of his death (but not an amount less than zero). If Executive is not a party to an endorsement split-dollar life insurance agreement at
the time of his death, the Bank shall pay Executive's Beneficiary the present value of the benefit remaining payments that would have been made to Executive, payable in a lump sum on the first day of the second month following Executive's
death. For purposes of this provision, the discount rate used for accounting purposes shall also be used as the discount rate to determine the present value of any benefit.

2.4 <u>Termination for Cause</u>. Notwithstanding any other provision of this Plan to the contrary, if Executive is
terminated for Cause prior to the attainment of his Normal Retirement Age, all benefits under this Plan shall be forfeited by Executive and 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
a Change in Control occurs followed by Executive's Involuntary Separation from Service or resignation for Good Reason within two (2) years, Executive shall be entitled to his present value of the benefit that would otherwise be due under
Section 2.1 of the Plan payable

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commencing on the Benefit Eligibility Date specified in Section 1.5(d), in a lump sum. The calculation of the present value of the benefit shall be made by determining the present value of the normal retirement benefit as of Executive's Normal Retirement Age and then discounting such amount to its present value as of Executive's date of Separation from Service. For purposes of this provision, the discount rate used for accounting purposes shall also be used as the discount rate to determine the present value of any benefit.

2.6 <u>Benefit on Disability</u>. If Executive suffers a Disability prior to his Normal Retirement Age, Executive
shall be entitled to receive the benefit due under Section 2.1 of the Plan, as if Executive has attained his Normal Retirement Age, commencing on the Benefit Eligibility Date set forth in Section 1.5(e) of the Plan and paid over the Payout
Period specified in Section 1.14 of the Plan.

**ARTICLE III** 

**BENEFICIARY DESIGNATION** 

Executive shall make an initial designation of primary and secondary Beneficiaries upon initial participation in the Plan by completion of a Beneficiary form substantially in the form attached as Exhibit A, 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 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 Executive, any Beneficiary, or any other person claiming through Executive under this Plan, shall be solely those of an unsecured general creditor of the Bank. Executive, the Beneficiary, or any other person claiming through Executive, shall only have the right to receive from the Bank those payments so specified under this Plan. Neither 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 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 Executive
(or to his Beneficiary in the case of 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 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 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
Maryland, 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 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.

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6.5 <u>Unclaimed Benefit</u>. Executive shall keep the Bank informed of his or her current address and the current
address of his Beneficiaries. If the location of Executive is not made known to the Bank, the Bank shall delay payment of Executive's benefit payment(s) until the location of Executive is made known to the Bank; however, the Bank shall only be
obligated to hold the benefit payment(s) for 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 Executive's Beneficiary. If the location
of Executive's Beneficiary is not known to the Bank, Executive and his Beneficiary(ies) shall thereupon forfeit any rights to the balance, if any, of any benefits provided for such 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 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
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 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. Accordingly, payments may be accelerated, in accordance with requirements and conditions of the Treasury
Regulations (or subsequent guidance) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the Federal Government; (iii) in compliance with ethics laws or
conflicts of interest laws; (iv) in limited cash-outs (but not in excess of the limit under Code Section 402(g)(1)(B)); (v) in the case of certain distributions to avoid a non-allocation year under
Code Section 409(p); (vi) to apply certain offsets in satisfaction of a debt of Executive to the Bank; (vii) in satisfaction of certain *bona fide* disputes between Executive and the Bank; or (viii) for any other purpose set
forth in the Treasury Regulations and subsequent guidance.

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.</u> <u>§</u> <u>1828(k</u>). Any payments made to 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</u> <u>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 Executive retains legal counsel to enforce any of the terms of the Plan, the
Bank will pay the reasonable legal fees and related expenses reasonably incurred by him, but only if 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
Executive and the Bank. Notwithstanding anything to the contrary herein, the Plan may be amended without Executive's consent to the extent necessary to comply with existing tax laws or changes to existing tax laws or to amend or terminate the
Plan in accordance with Section 7.2 below.

7.2 <u>Termination of Plan</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Partial Termination</u>. The Board of Directors, at its discretion, may partially terminate the Plan by
freezing future accruals if, in its sole judgment, the tax, accounting, or other effects of the continuance of the Plan, or potential payments thereunder, would not be in the best interests of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Complete Termination</u>. Subject to the requirements of Code Section 409A, in the event of complete
termination of the Plan, the Plan shall cease to operate and the Bank shall pay out to Executive his benefits as if Executive had terminated employment as of the effective date of the complete termination. A complete termination of the Plan shall
occur only under the following circumstances and conditions:

&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 Executive's (or his Beneficiary's) gross income (and paid to 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;(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 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;(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
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., 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 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 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.

------

IN WITNESS WHEREOF, the Bank has caused this Plan to be executed, effective as of the day and date first above written.

---

| | | |
|:---|:---|:---|
| ATTEST: | **BAYVANGUARD BANK** | **BAYVANGUARD BANK** |
| /s/ Timothy L. Prindle | By: | /s David M. Flair |
| **TIMOTHY L. PRINDLE** | Title: | Chief Executive Officer |
| <br> August 29, 2018 | <br> Date: | August 29, 2018 |
| Date |  |  |

---

## Exhibit 10.6

**Exhibit 10.6** 

**BAY-VANGUARD FEDERAL SAVINGS BANK** 

**EXECUTIVE SPLIT DOLLAR AGREEMENT** 

This **EXECUTIVE SPLIT DOLLAR AGREEMENT** is entered into as of this 12<sup>th</sup> day of April, 2017, by and between Bay-Vanguard Federal Savings Bank, a federally chartered savings institution with its main office in Baltimore, MD ("the Bank") and David M. Flair ("the Executive"). This Executive Split Dollar Agreement shall append the Split Dollar Endorsement entered into on even date herewith, or as subsequently amended, by and between the Executive and the Bank.

To encourage the Executive to remain an employee of the Bank, the Bank is willing to divide the death proceeds of a life insurance policy on the Executive's life. The Bank will pay life insurance premiums from its general assets.

The Bank and the Executive agree as set forth herein.

**ARTICLE 1** 

**GENERAL DEFINITIONS** 

The following terms shall have the meanings specified:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <u>Executive's Interest</u> means the benefit set forth in Section 2.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <u>Insured</u> means the Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 <u>Insurer</u> means each life insurance carrier in which there is a Split Dollar Policy Endorsement attached to this Executive Split Dollar Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4 <u>Net Death Proceeds</u> means the total death proceeds of the Policy minus the cash surrender value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5 <u>Plan Administrator</u> or <u>Administrator</u> means the plan administrator described in Article 7.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6 <u>Policy</u> means the specific life insurance policy or policies issued by the Insurer(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7 <u>Split Dollar Policy Endorsement</u> means the form required by the Administrator or the Insurer to indicate the Executive's interest, if any, in a Policy on the Executive's life.

**ARTICLE 2** 

**POLICY OWNERSHIP/INTERESTS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>Bank Ownership</u>. The Bank is the sole owner of the Policy and shall have the right to exercise all incidents of ownership. The Bank shall be the beneficiary of any death proceeds remaining after the Executive's Interest has been paid under Section 2.2 of this Executive Split Dollar Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <u>Executive's Interest</u>. In the case of the Executive's death, the Executive shall have the right to designate the beneficiary(ies) of death proceeds in the amount of the lesser of (i) the present value of the benefit the Executive would have received under Section 2.1 of the Bay- Vanguard Federal Savings Bank Salary Continuation Agreement for David M. Flair (the "SCA") (as if he had attained the Normal Retirement Age immediately prior to his death, in the event Executive dies prior to attaining his normal retirement age under the SCA – as illustrated on Schedule A to this Split Dollar Agreement) or, if the Executive is in pay status under the SCA at the time of his death, the present value of the remaining payments that would be due under the SCA, or (ii) the Net Death Proceeds.

Subject to the terms of this Executive Split Dollar Agreement, including but not limited to the Bank's right to terminate this Executive Split Dollar Agreement under Section 8.8, the Bank hereby endorses the Executive's Interest to the Executive and agrees to execute any other or further documents that may be required to effectuate this Executive Split Dollar Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <u>Internal Revenue Code Section</u> <u>1035 Exchanges</u>. The Executive recognizes and agrees that the Bank may after this Executive Split Dollar Agreement is adopted wish to exchange the Policy of life insurance on the Executive's life for another contract of life insurance insuring the Executive's life. Provided that the Policy is replaced (or intended to be replaced) with a comparable policy of life insurance, the Executive agrees to provide medical information and cooperate with medical insurance-related testing required by a prospective insurer for implementing the Policy or, if necessary, for modifying or updating to a comparable insurer.

**ARTICLE 3** 

**PREMIUMS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <u>Premium Payment</u>. The Bank shall pay any premiums due on the Policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <u>Imputed Income</u>. The Bank shall impute income annually to the Executive in an amount to reflect the value of the coverage provided under the Split Dollar Agreement in an amount determined in accordance with federal tax requirements.

**ARTICLE 4** 

**ASSIGNMENT** 

The Executive may assign without consideration all interests in the Policy and in this Executive Split Dollar Agreement to any person, entity or trust. If the Executive transfers all of the Executive's interest in the Policy, then all of the Executive's interest in the Policy and in this Executive Split Dollar 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 the Policy or in this Executive Split Dollar Agreement.

**ARTICLE 5** 

**INSURER** 

The Insurer shall be bound only by the terms of the Policy. Any payments the Insurer makes or actions it takes in accordance with the Policy shall fully discharge it from all claims, suits and demands of all entities or persons. The Insurer shall not be bound by or be deemed to have notice of the provisions of this Executive Split Dollar Agreement.

------

**ARTICLE 6** 

**CLAIMS PROCEDURE** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <u>Claims Procedure</u>. Any person or entity who has not received benefits under this Executive Split Dollar Agreement that he or she believes should be paid (the claimant) shall make a claim for such benefits as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.1 *Initiation of Written Claim.* The claimant initiates a claim by submitting to the Administrator a written claim for the benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.2 *Timing of Administrator Response.* The Administrator shall respond to such claimant within 90 days after receiving the claim. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 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 Administrator expects to render its decision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.3 *Notice of Decision.* If the Administrator denies part of or the entire claim, the Administrator shall notify the claimant in writing of such denial. The Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall be set forth with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The specific reasons for the denial,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A reference to the specific provisions of this Agreement on which the denial is based,

&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;(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;(e) A statement of the claimant's right, if any, to bring a civil action under the Employee Retirement Income
Security Act of 1974 (ERISA) section 502(a) following an adverse benefit determination on review.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <u>Review Procedure</u>. If the Administrator denies part of or the entire claim, the claimant shall have the opportunity for a full and fair review by the Administrator of the denial, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.1 *Initiation of Written Request.* To initiate the review, the claimant, within 60 days after receiving the Administrator's notice of denial, must file with the Administrator a written request for review.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.2 *Additional Submissions of Information Access.* The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Administrator 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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.3 *Considerations on Review.* In considering the review, the Administrator 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.4 *Timing of Administrator Response*. The Administrator shall respond in writing to such claimant within 60 days after receiving the request for review. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by 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 Administrator expects to render its decision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.5 *Notice of Decision.* The Administrator shall notify the claimant in writing of its decision on review. The Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall be set forth with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The specific reasons for the denial,

&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;(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;(d) A statement of the claimant's right to bring a civil action under ERISA section 502(a).

**ARTICLE 7** 

**ADMINISTRATION OF AGREEMENT** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <u>Administrator Duties</u>. This Executive Split Dollar Agreement shall be administered by an Administrator, which shall consist of the Bank's board of directors or such committee as the board shall appoint. The Executive may be a member of the Administrator. The Administrator shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Executive Split Dollar Agreement and (b) decide or resolve any and all questions, including interpretations of this Executive Split Dollar Agreement, as may arise in connection with the Executive Split Dollar Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 <u>Agents</u>. In the administration of this Executive Split Dollar Agreement, the Administrator 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 be counsel to the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 <u>Binding Effect of Decisions</u>. The decision or action of the Administrator with respect to any question arising out of or in connection with the administration, interpretation, and application of this Executive Split Dollar Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Executive Split Dollar Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 <u>Indemnity of Administrator</u>. The Bank shall indemnify and hold harmless the members of the Administrator against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Executive Split Dollar Agreement, except in the case of willful misconduct by the Administrator or any of its members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5 <u>Information</u>. To enable the Administrator to perform its functions, the Bank shall supply full and timely information to the Administrator on all matters relating to the date and circumstances of the retirement, death, or Termination of Employment of the Executive and such other pertinent information as the Administrator may reasonably require.

**ARTICLE 8** 

**MISCELLANEOUS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 <u>Binding Effect</u>. This Executive Split Dollar Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators and transferees, and any Policy beneficiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 <u>No Guarantee of Employment</u>. This Executive Split Dollar Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Bank, nor does it interfere with the Bank's right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 <u>Applicable Law</u>. The Executive Split Dollar Agreement and all rights hereunder shall be governed by and construed according to the laws of the State of Maryland, except to the extent preempted by the laws of the United States of America.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 <u>Entire Agreement</u>. This Executive Split Dollar Agreement constitutes the entire agreement between the Bank and the Executive concerning the subject matter hereof. No rights are granted to the Executive under this Executive Split Dollar Agreement other than those specifically set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5 <u>Severability</u>. If for any reason any provision of this Executive Split Dollar Agreement is held invalid, such invalidity shall not affect any other provision of this Executive Split Dollar Agreement, and each such other provision shall continue in full force and effect to the full extent consistent with law. If any provision of this Executive Split Dollar Agreement is held invalid in part, such invalidity shall not affect the remainder of such provision, and the remainder of such provision, together with all other provisions of this Executive Split Dollar Agreement shall continue in full force and effect to the full extent consistent with law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6 <u>Headings</u>. Section headings are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Executive Split Dollar Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.7 <u>Notices</u>. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid, to the following addresses or to such other address as either party may designate by like notice: (a) if to the Bank, to the Board of Directors, Bay-Vanguard Federal Savings Bank, 7114 North Point Road, Baltimore, MD, 21219 and (b) if to the Executive, to the address of the Executive on the Bank's records, and to such other or additional person or persons as either party shall have designated to the other party in writing by like notice.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.8 <u>Amendment and Termination</u>. This Executive Split Dollar Agreement shall terminate upon the occurrence of any one of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Surrender, lapse, or other termination of the Policy by the Bank, which the Bank reserves the absolute right to
do, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) cessation of the Bank's business, which is not continued by the Bank's successor, if any, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) written notice of termination of the agreement by either of the Bank or the Executive, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) bankruptcy, receivership, or dissolution of the Bank, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) distribution of the death benefit proceeds in accordance with Section 2.2 above.

If this Executive Split Dollar Agreement is terminated, the Bank may in its sole discretion retain or terminate the Policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.9 <u>Successors</u>. By an assumption agreement in form and substance satisfactory to the Executive, the Bank shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Bank to expressly assume and agree to perform this Executive Split Dollar Agreement in the same manner and to the same extent that the Bank would be required to perform this Executive Split Dollar Agreement if no succession had occurred.

------

**IN WITNESS WHEREOF**, the Bank and the Executive have executed this Executive Split Dollar Agreement as of the date first written above.

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| | | | |
|:---|:---|:---|:---|
| **THE EXECUTIVE:** | **THE EXECUTIVE:** | **THE BANK:** | **THE BANK:** |
| **DAVID M. FLAIR** | **DAVID M. FLAIR** | **BAY-VANGUARD FEDERAL SAVINGS BANK** | **BAY-VANGUARD FEDERAL SAVINGS BANK** |
| By: | /s/ David M. Flair | By: | /s/ Michael J. Dee |
| Title: | President/CEO | Title: | SVP/CFO |

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**AGREEMENT TO COOPERATE WITH INSURANCE UNDERWRITING INCIDENT TO INTERNAL REVENUE CODE SECTION 1035 EXCHANGE** 

I acknowledge that I have read the Executive Split Dollar Agreement and agree to be bound by its terms, particularly the covenant on my part set forth in section 2.3 of the Executive Split Dollar Agreement to provide medical information and cooperate with medical insurance-related testing required by an insurer to issue a comparable insurance policy to cover the benefit provided under this Executive Split Dollar Agreement.

---

| | |
|:---|:---|
| /s/ Illegible | /s/ David M. Flair |
| Witness | Executive |

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## Exhibit 10.7

**Exhibit 10.7** 

**BV FINANCIAL, INC.** 

**2017 STOCK OPTION PLAN** 

**<u>ARTICLE 1 – GENERAL</u>**

**Section 1.1 <u>Purpose, Effective Date and Term</u>**. The purpose of the BV Financial, Inc. 2017 Stock Option Plan (the "<u>Plan</u>") is to promote the long-term financial success of BV Financial, Inc. (the "<u>Company</u>") and its Subsidiaries, including Bay-Vanguard Federal Savings Bank (the "<u>Bank</u>"), by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company's stockholders through the ownership of additional common stock of the Company. The "<u>Effective Date</u>" of the Plan shall be the date the Plan satisfies the applicable stockholder approval requirements, provided, however, that no Stock Option shall be granted under this Plan until the Company has received written approval or non-objection from the Federal Reserve Board to fund the Plan with shares of the Company. The Plan shall remain in effect as long as any Stock Option is outstanding; *provided, however,* that no Stock Option may be granted under the Plan after the day immediately prior to the ten-year anniversary of the Effective Date.

**Section 1.2 <u>Administration</u>**. The Plan shall be administered by the Board of Directors or by the Compensation Committee of the Board of Directors (the "<u>Committee</u>"), in accordance with Section 5.1.

**Section 1.3 <u>Participation</u>**. Each Employee or Director of the Company or any Subsidiary who is granted a Stock Option in accordance with the terms of the Plan shall be a Participant in the Plan. The grant of Stock Options shall be limited to Employees and Directors of the Company or any Subsidiary.

**Section 1.4 <u>Definitions</u>**. Capitalized terms used in this Plan are defined in Article 8 and elsewhere in this Plan.

**<u>ARTICLE 2 – STOCK OPTIONS</u>**

**Section 2.1 <u>General</u>**. Each Stock Option granted under the Plan shall be subject to the terms and conditions of the Plan and any additional terms, conditions, limitations and restrictions as the Committee shall provide with respect to the Stock Option and as evidenced in the Stock Option Agreement. Subject to the provisions of Section 2.3, a Stock Option may be granted as an alternative to or replacement of an existing Stock Option under the Plan or any other plan of the Company or any Subsidiary or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or any Subsidiary, including without limitation the plan of any entity acquired by the Company or any Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Stock Options*. A Stock Option means a grant under the Section 2.1 that represents the right to purchase shares of Stock at an Exercise Price established by the Committee. Any Stock Option may be either an Incentive Stock Option (an "<u>ISO</u>") that is intended to satisfy the requirements applicable to an "Incentive Stock Option" described in Code Section 422(b), or a Non-Qualified Stock Option (a "<u>Non-Qualified Option</u>") that is not intended to be an ISO; provided, however, that no ISOs may be granted: (i) after the day immediately prior to the ten-year anniversary of the Effective Date or the date the Plan is approved by the Board of Directors, whichever is earlier; or (ii) to a non-Employee. Unless otherwise specifically provided by its terms, any Stock Option granted to an Employee under this Plan shall be an ISO to the maximum extent permitted. Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether at the time of grant or as the result of a subsequent event) shall be deemed to be a Non-Qualified Option. In addition, any ISO granted under this Plan may be unilaterally modified by the Committee to disqualify such Stock Option from ISO treatment such that it shall become a Non-Qualified Option; provided, however, that any such modification shall be ineffective if it causes the Stock Option to be subject to Code Section 409A (unless, as modified, the Stock Option complies with Code Section 409A).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Grant of Stock Options*. Each Stock Option shall be evidenced by a Stock Option Agreement that shall: (i) specify the number of Stock Options covered by the grant; (ii) specify the date of grant of the Stock Option; (iii) specify the vesting period or conditions to vesting; and (iv) contain any other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant's employment or Service, as the Committee may, in its discretion, prescribe.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Terms and Conditions*. A Stock Option shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the date of its grant (or five (5) years with respect to ISOs granted to an Employee who is a 10% Stockholder). The Exercise Price of each Stock Option shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock); *provided, however,* that the Exercise Price of an ISO shall not be less than 110% of Fair Market Value of a share of Stock on the date of grant if granted to a 10% Stockholder; *provided further,* that the Exercise Price may be higher or lower in the case of Stock Options granted or exchanged in replacement of existing Stock Options held by an Employee or Director of, or service provider to, an acquired entity. The payment of the Exercise Price of a Stock Option shall be by cash or, subject to limitations imposed by applicable law, by such other means as the Committee may from time to time permit, including: (i) by tendering, either actually or constructively by attestation, shares of Stock valued at Fair Market Value as of the day of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee, to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise; (iii) by a net settlement of the Stock Option, using a portion of the shares obtained on exercise in payment of the Exercise Price of the Stock Option (and if applicable, any minimum required tax withholding); (iv) by personal, certified or cashier's check; (v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof. The total number of shares that may be acquired upon the exercise of a Stock Option shall be rounded down to the nearest whole share, with cash-in-lieu paid by the Company, at its discretion, for the value of any fractional share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *Prohibition of Cash Buy-Outs of Underwater Stock Options*. Under no circumstances will any underwater Stock Options that were granted under the Plan be bought back by the Company without stockholder approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Vesting.* The Committee shall specify the vesting schedule or conditions of each Stock Option. Unless the Committee specifies a different vesting schedule at the time of grant, Stock Options shall be granted with a vesting rate not exceeding twenty percent (20%) per year, with the first installment vesting no earlier than the one year anniversary of the date of grant. If the right to become vested in a Stock Option under the Plan (including the right to exercise a Stock Option) is conditioned on the completion of a specified period of Service with the Company or its Subsidiaries, without achievement of performance measures or other performance objectives being required as a condition of vesting, and without it being granted in lieu of, or in exchange for, other compensation, then the required period of Service for full vesting shall be determined by the Committee and evidenced in the Stock Option Agreement (subject to acceleration of vesting, to the extent permitted by the Committee or set forth in the Stock Option Agreement, in the event of the Participant's death, Disability or a Change in Control). Notwithstanding anything to the contrary herein, all Stock Options granted under the Plan shall be subject to a vesting requirement of at least one year of Service, unless accelerated due to death, Disability or upon a Change in Control.

**Section 2.2 <u>Deferred Compensation</u>**. If any Stock Option would be considered "deferred compensation" as defined under Code Section 409A ("<u>Deferred Compensation</u>"), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Stock Option Agreement, without the consent of the Participant, to maintain exemption from, or to comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Stock Option Agreement pursuant to this Section 2.2 shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A. A Participant's acceptance of any Stock Option under the Plan constitutes acknowledgement and consent to such rights of the Committee, without further consideration or action. Any discretionary authority retained by the Committee pursuant to the terms of this Plan or pursuant to a Stock Option Agreement shall not be applicable to a Stock Option grant that is determined to constitute Deferred Compensation, if such discretionary authority would contravene Code Section 409A.

**Section 2.3 <u>Prohibition Against Option Repricing</u>**. Except for adjustments pursuant to Section 3.4, and reductions of the Exercise Price approved by the Company's stockholders, neither the Committee nor the Board of Directors shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Stock Option's in-the-money value or in exchange for Options) or replacement grants, or other means.

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**Section 2.4 <u>Effect of Termination of Service</u>**. The Committee shall establish the effect of a Termination of Service on the continuation of rights and benefits available under a Stock Option and, in so doing, may make distinctions based upon, among other things, the cause of Termination of Service. Unless otherwise specified by the Committee and set forth in the Stock Option Agreement or in an employment or severance agreement entered into by and between the Company and/or the Bank and an Employee, the following provisions shall apply to each Stock Option granted under this Plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Upon a Participant's Termination of Service for any reason other than due to Disability, death, Retirement or termination for Cause, Stock Options shall be exercisable only as to those shares that were immediately exercisable by such Participant at the date of termination, and Stock Options may be exercised only for a period of three (3) months following termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event of a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised shall expire and be forfeited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Upon Termination of Service for reason of Disability or death, all Stock Options shall be exercisable as to all shares subject to the Stock Option, whether or not then exercisable at the date of Termination of Service. Unless the Committee determines otherwise, Stock Options may be exercised for a period of one year following Termination of Service due to death or Disability or the remaining unexpired term of the Stock Option, if less; *provided, however*, that no Stock Option shall be eligible for treatment as an ISO in the event the Stock Option is exercised more than one year following Termination of Service due to Disability and *provided, further*, in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the optionee's death must have occurred while employed or within three months of Termination of Service. In the event of Termination of Service due to Retirement, a Participant's vested Stock Options shall be exercisable for one year following Termination of Service, provided that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three months following Termination of Service due to Retirement, and any Stock Option that has not vested as of the date of Termination of Service shall expire and be forfeited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term of the Stock Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding the provisions of this Section 2.4, the effect of a Change in Control on the vesting/exercisability of Stock Options is as set forth in Article 4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Notwithstanding the foregoing, in the event that the Bank is designed as being in troubled condition by its primary Federal banking regulator, no Stock Option granted under this Plan that would be subject to 12 C.F.R. Part 359 shall be granted without the prior approval of the Company's primary Federal banking regulator with the concurrence of the Federal Deposit Insurance Corporation.

**<u>ARTICLE 3 - SHARES SUBJECT TO PLAN</u>**

**Section 3.1 <u>Available Shares</u>**. The shares of Stock with respect to which Stock Options may be granted under the Plan shall be shares currently authorized but unissued or, to the extent permitted or required by applicable law or regulation, subsequently acquired by the Company, including shares purchased in the open market or in private transactions.

**Section 3.2 <u>Share Limitations</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Share Reserve*. Subject to the following provisions of this Section 3.2, the maximum number of shares of Stock that may be delivered to Participants and their beneficiaries under the Plan shall be 150,000 shares of Stock. The aggregate number of shares available for grant under this Plan shall be subject to adjustment as provided in Section 3.4.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Computation of Shares Available.* For purposes of this Section 3.2, the number of shares of Stock available for the grant of additional Stock Options shall be reduced by the number of shares of Stock previously granted, subject to the following: to the extent any shares of Stock covered by a Stock Option granted under the Plan are not delivered to a Participant or beneficiary for any reason, including because the Stock Option is forfeited or canceled or because a Stock Option is not exercised, then such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan. To the extent: (i) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the Exercise Price; or (ii) shares of Stock are withheld to satisfy withholding taxes upon exercise of a Stock Option; or (iii) shares are withheld to satisfy the exercise price of Stock Options in a net settlement of Stock Options, then the number of shares of Stock available shall be reduced by the gross number of Stock Options exercised rather than by the net number of shares of Stock issued.

**Section 3.3 <u>Limitations on Grants to Individuals</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Stock Options—Employees.* The maximum number of shares of Stock, in the aggregate, that may be covered by a Stock Option granted to any one Employee under the Plan shall be 50,000 shares, all of which may be granted during any calendar year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Stock Options—Directors.* The maximum number of shares of Stock, in the aggregate, that may be subject to Stock Options granted to any one individual non-employee Director under the Plan shall be 10,000 shares, all of which may be granted during any calendar year and, in addition, all non-employee Directors, in the aggregate, may not receive more than 50,000 shares, all of which may be granted during any calendar year.

**Section 3.4 <u>Corporate Transactions</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *General.* In the event any recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, or exchange of shares of Stock or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event, affects the shares of Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan and/or under any Stock Option granted under the Plan, then the Committee shall, in an equitable manner, adjust any or all of: (i) the number and kind of securities deemed to be available thereafter for grants of Stock Options in the aggregate to all Participants and individually to any one Participant; (ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Stock Options; and (iii) the Exercise Price. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Stock Options (including, without limitation, cancellation of Stock Options in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution or exchange of Stock Options using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any parent or Subsidiary or the financial statements of the Company or any parent or Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Merger in which Company is Not Surviving Entity.* In the event of any merger,consolidation, or other business reorganization (including, but not limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise determined by the Committee at any time at or after grant and prior to the consummation of such merger, consolidation or other business reorganization, any Stock Options granted under the Plan that remain outstanding shall be converted into Stock Options to purchase voting common equity securities of the business entity that survives such merger, consolidation or other business reorganization having substantially the same terms and conditions as the outstanding Stock Options under this Plan and reflecting the same economic benefit (as measured by the difference between the aggregate Exercise Price and the value exchanged for outstanding shares of Stock in such merger, consolidation or other business reorganization), all as determined by the Committee prior to the consummation of such merger; provided, however, that the Committee may, at any time prior to the consummation of such merger, consolidation or other business reorganization, direct that all, but not less than all, outstanding Stock Options be canceled as of the effective date of such merger, consolidation or other business reorganization in exchange for a cash payment per share of Stock equal to the excess (if any) of the value exchanged for an outstanding share of Stock in such merger, consolidation or other business reorganization over the Exercise Price of the Stock Option being canceled.

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**Section 3.5 <u>Delivery of Shares</u>**. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Compliance with Applicable Laws.* Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the Plan unless such delivery or distribution complies with all applicable laws (including, the requirements of the Securities Act), and the applicable requirements of any Exchange or similar entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Certificates.* To the extent that the Plan provides for the issuance of shares of Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any Exchange.

**<u>ARTICLE 4 - CHANGE IN CONTROL</u>**

**Section 4.1 <u>Consequence of a Change in Control</u>**. Subject to the provisions of Section 2.1(e) (relating to vesting and acceleration) and Section 3.4 (relating to the adjustment of shares), and except as otherwise provided in the Plan, as determined by the Committee and set forth in the terms of any Stock Option Agreement or as set forth in an employment, change in control, or severance agreement entered into by and between the Company and/or the Bank and an Employee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) At the time of a Change in Control, all Stock Options then held by the Participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the Stock Option). All Stock Options may be exercised for a period of one year following the Participant's Termination of Service, provided, however, that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three (3) months following such termination.

**Section 4.2 <u>Definition of Change in Control</u>**. For purposes of this Agreement, the term "<u>Change in Control</u>" shall mean the consummation by the Company or the Bank, in a single transaction or series of related transactions, of any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Merger</u>: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Company or the Bank, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Acquisition of Significant Share Ownership</u>: A person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company's or the Bank's Voting Securities; provided, however, this clause (b) shall not apply to beneficial ownership of the Company's or the Bank's voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding Voting Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Change in Board Composition</u>: During any period of two consecutive years, individuals who constitute the Company's or the Bank's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company's or the Bank's board of directors; provided, however, that for purposes of this clause (c), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period or who is appointed as a director as a result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation shall be deemed to have also been a director at the beginning of such period; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Sale of Assets</u>: The Company or the Bank sells to a third party all or substantially all of its assets.

Notwithstanding the foregoing, in the event that a Stock Option constitutes Deferred Compensation, and the settlement of, or distribution of benefits under, such Stock Option is to be triggered solely by a Change in Control, then with respect to such Stock Option, a Change in Control shall be defined as required under Code Section 409A, as in effect at the time of such transaction.

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In addition, in no event shall a reorganization of Bay-Vanguard, MHC (i.e., the mutual holding company), the Company and the Bank solely within its corporate structure or a second-step conversion constitute a Change in Control for purposes of the Plan.

**<u>ARTICLE 5 - COMMITTEE</u>**

**Section 5.1 <u>Administration</u>**. The Plan shall be administered by the members of the Compensation Committee of the Company who are Disinterested Board Members. If the Committee consists of fewer than three Disinterested Board Members, then the Board of Directors shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least three Disinterested Board Members. Any members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion or decision to make or administer Stock Options that are made to Participants who at the time of consideration for such Stock Option: (i) are persons subject to the short-swing profit rules of Section 16 of the Exchange Act. The Board of Directors (or if necessary to maintain compliance with any applicable listing standards, those members of the Board of Directors who are "independent directors" under the corporate governance statutes or rules of any national Exchange on which the Company lists, has listed or seeks to list its securities) may, in its discretion, take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee.

**Section 5.2 <u>Powers of Committee</u>**. The administration of the Plan by the Committee shall be subject to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Committee will have the authority and discretion to select from among the Company's and its Subsidiaries' Employees and Directors those persons who shall receive Stock Options, to determine the time or times of receipt, to determine the types of Stock Options and the number of shares covered by the grants, to establish the terms, conditions, features (including automatic exercise in accordance with Section 7.18 hereof), restrictions (including without limitation, provisions relating to non-competition, non-solicitation and confidentiality), and other provisions of such Stock Options, to cancel or suspend Stock Options and to reduce, eliminate or accelerate any restrictions or vesting requirements applicable to a Stock Option at any time after the grant of the Stock Option or to extend the time period to exercise a Stock Option, provided that such extension is consistent with Code Section 409A and the terms of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Committee will have the authority to define terms not otherwise defined herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the articles of incorporation and bylaws of the Company and applicable corporate law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Committee will have the authority to: (i) suspend a Participant's right to exercise a Stock Option during a blackout period (or similar restricted period) or to exercise in a particular manner (i.e., such as a "cashless exercise" or "broker-assisted exercise") to the extent that the Committee deems it necessary or in the best interests of the Company in order to comply with any applicable securities laws and regulations issued by the SEC (the "<u>Blackout Period</u>"); and (ii) to extend the period to exercise a Stock Option by a period of time equal to the Blackout Period, provided that such extension does not violate Section 409A of the Code, the ISO requirements or applicable laws and regulations.

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**Section 5.3 <u>Delegation by Committee</u>**. Except to the extent prohibited by applicable law, the applicable rules of an Exchange upon which the Company lists its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated under the Exchange Act, if applicable, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including: (a) delegating to a committee of one or more members of the Board of Directors who are not "non-employee directors," within the meaning of Rule 16b-3, the authority to grant Stock Options under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members of the Board of Directors who would be eligible to serve on the Compensation Committee of the Company pursuant to the listing requirements imposed by any national securities exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant Stock Options under the Plan. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any Stock Options so granted. Any such allocation or delegation may be revoked by the Committee at any time.

**Section 5.4 <u>Information to be Furnished to Committee</u>**. As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee with such data and information as the Committee determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee with such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.

**Section 5.5 <u>Committee Action</u>**. The Committee shall hold such meetings, and may make such administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. Subject to Section 5.1, all actions of the Committee shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf.

**<u>ARTICLE 6 – AMENDMENT AND TERMINATION</u>**

**Section 6.1 <u>General</u>**. The Board of Directors may, as permitted by law, at any time, amend or terminate the Plan, and may amend any Stock Option Agreement, provided that no amendment or termination may cause the Stock Option to violate Code Section 409A, may cause the repricing of a Stock Option, or, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights of any Participant or beneficiary under any Stock Option granted under the Plan prior to the date such amendment is adopted by the Board of Directors; *provided, however*, that, no amendment may (a) materially increase the benefits accruing to Participants under the Plan, (b) materially increase the aggregate number of securities that may be issued under the Plan, other than pursuant to Section 3.4, or (c) materially modify the requirements for participation in the Plan, unless the amendment is approved by the Company's stockholders.

**Section 6.2 <u>Amendment to Conform to Law and Accounting Changes</u>**. Notwithstanding any provision in this Plan or any Stock Option Agreement to the contrary, the Committee may amend the Plan or any Stock Option Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of: (i) conforming the Plan or the Stock Option Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A); or (ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation thereof issued by the SEC or Financial Accounting Standards Board subsequent to the adoption of the Plan or the making of the Stock Option affected thereby, which, in the sole discretion of the Committee, may materially and adversely affect the financial condition or results of operations of the Company. By accepting a Stock Option grant under this Plan, each Participant agrees and consents to any amendment made pursuant to this Section 6.2 or Section 2.7 to any Stock Option granted under the Plan without further consideration or action.

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**<u>ARTICLE 7 - GENERAL TERMS</u>**

**Section 7.1 <u>No Implied Rights</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *No Rights to Specific Assets.* Neither a Participant nor any other person shall by reason of participation in the Plan acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds, assets, or other property that the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the shares of Stock or amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *No Contractual Right to Employment or Future Grants.* The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. No individual shall have the right to be selected to receive a Stock Option under the Plan, or, having been so selected, to receive a future Stock Option under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *No Rights as a Stockholder*. Except as otherwise provided in the Plan or in the Stock Option Agreement, no Stock Option under the Plan shall confer upon the holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.

**Section 7.2 <u>Transferability</u>**. Except as otherwise so provided by the Committee, ISOs under the Plan are not transferable except: (i) as designated by the Participant by will or by the laws of descent and distribution; (ii) to a trust established by the Participant, if under Code Section 671 and applicable state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust; or (iii) between spouses incident to a divorce or pursuant to a domestic relations order, provided, however, in the case of a transfer within the meaning of this Section 7.2(iii), the Stock Option shall not qualify as an ISO as of the day of such transfer. The Committee shall have the discretion to permit the transfer of vested Stock Options (other than ISOs) under the Plan; *provided, however,* that such transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of such family members or to charitable organizations, and; *provided, further,* that such transfers are not made for consideration to the Participant.

**Section 7.3 <u>Designation of Beneficiaries</u>**. A Participant hereunder may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time to time revoke or amend any such designation ("<u>Beneficiary Designation</u>"). Any designation of beneficiary under this Plan shall be controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a domestic relations order); *provided, however,* that if the Committee is in doubt as to the entitlement of any such beneficiary to any Stock Option, the Committee may determine to recognize only the legal representative of the Participant, in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone.

**Section 7.4 <u>Non-Exclusivity</u>**. Neither the adoption of this Plan by the Board of Directors nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board of Directors or the Committee to adopt such other incentive arrangements as either may deem desirable, including, without limitation, the granting of Stock Options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

**Section 7.5 <u>Stock Option Agreement</u>**. Each Stock Option granted under the Plan shall be evidenced by a Stock Option Agreement signed by the Participant. A copy of the Stock Option Agreement, in any medium chosen by the Committee, shall be provided (or made available electronically) to the Participant.

**Section 7.6 <u>Eligibility For Form and Time of Elections/Notification Under Code Section</u> <u>83(b)</u>**. Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require. Notwithstanding anything herein to the contrary, the Committee may, on the date of grant or at a later date, as applicable, prohibit an individual from making an election under Code

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Section 83(b). If the Committee has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the election within ten (10) days of filing notice of the election with the Internal Revenue Service or as otherwise required by the Committee. This requirement is in addition to any filing and notification required under the regulations issued under the authority of Code Section 83(b).

**Section 7.7 <u>Evidence</u>**. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties.

**Section 7.8 <u>Tax Withholding</u>**. Where a Participant is entitled to receive shares of Stock upon the exercise of a Stock Option, the Company shall have the right to require such Participant to pay to the Company the amount of any tax that the Company is required to withhold with respect to such exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the amount withheld. To the extent determined by the Committee and specified in a Stock Option Agreement, a Participant shall have the right to direct the Company to satisfy up to the maximum amount required for federal, state and local tax withholding by reducing the number of shares of Stock subject to the Stock Option (without issuance of such shares of Stock to the Stock Option holder) by a number equal to the quotient of (i) the total minimum amount of required tax withholding divided by (ii) the excess of the Fair Market Value of a share of Stock on the exercise date over the Exercise Price per share of Stock;. Provided there are no adverse accounting consequences to the Company (a requirement to have liability classification of an award under FASB ASC Topic 718 is an adverse consequence), a Participant who is not required to have taxes withheld may require the Company to withhold in accordance with the preceding sentence as if the Stock Option was subject to minimum tax withholding requirements.

**Section 7.9 <u>Action by Company or Subsidiary</u>**. Any action required or permitted to be taken by the Company or any Subsidiary shall be by resolution of its board of directors, or by action of one or more members of the Board of Directors (including a committee of the Board of Directors) who are duly authorized to act for the Board of Directors, or (except to the extent prohibited by applicable law or applicable rules of the Exchange on which the Company lists its securities) by a duly authorized officer of the Company or such Subsidiary.

**Section 7.10 <u>Successors</u>**. All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.

**Section 7.11 <u>Indemnification</u>**. To the fullest extent permitted by law and the Company's governing documents, each person who is or shall have been a member of the Committee, or of the Board of Directors, or an officer of the Company to whom authority was delegated in accordance with Section 5.3, or an Employee of the Company, shall be indemnified and held harmless by the Company against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys' fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute or regulation. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's articles of incorporation or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. The foregoing right to indemnification shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, provided, however, that, if required by applicable law, an advancement of expenses shall be made only upon delivery to the Company of an undertaking, by or on behalf of such persons to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified for such expenses.

**Section 7.12 <u>No Fractional Shares</u>**. Unless otherwise permitted by the Committee, no fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Stock Option. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated by rounding down.

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**Section 7.13 <u>Governing Law</u>**. The Plan, all Stock Options granted hereunder, and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of Maryland without reference to principles of conflict of laws, except as superseded by applicable federal law. The federal and state courts located in the State of Maryland, shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any grant under this Plan, each Participant and any other person claiming any rights under the Plan agrees to submit himself or herself and any legal action that the Participant brings under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.

**Section 7.14 <u>Benefits Under Other Plans</u>**. Except as otherwise provided by the Committee or as set forth in a Qualified Retirement Plan, Stock Options granted to a Participant (including the grant and the receipt of benefits) under the Plan shall be disregarded for purposes of determining the Participant's benefits under, or contributions to, any Qualified Retirement Plan, non-qualified plan and any other benefit plans maintained by the Participant's employer. The term "<u>Qualified Retirement Plan</u>" means any plan of the Company or a Subsidiary that is intended to be qualified under Code Section 401(a).

**Section 7.15 <u>Validity</u>**. If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision has never been included herein.

**Section 7.16 <u>Notice</u>**. Unless otherwise provided in an Stock Option Agreement, all written notices and all other written communications to the Company provided for in the Plan or in any Stock Option Agreement, shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its principal executive office. Such notices, demands, claims and other communications shall be deemed given:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in the case of facsimile or email, the date upon which the transmitting party received confirmation of receipt; *provided, however,* that in no event shall any such communications be deemed to be given later than the date they are actually received, provided they are actually received.

In the event a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery service. Communications that are to be delivered by U.S. mail or by overnight service to the Company shall be directed to the attention of the Company's Corporate Secretary, unless otherwise provided in the Participant's Stock Option Agreement.

**Section 7.17 <u>Forfeiture Events</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Committee may specify in an Stock Option Agreement that the Participant's rights, payments, and benefits with respect to a Stock Option shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting conditions of a Stock Option. Such events include, but are not limited to, termination of employment for cause, termination of the Participant's provision of Services, violation of material Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct of the Participant that is detrimental to the business or reputation of the Company or any Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws, any Participant who is subject to automatic forfeiture under Section 304 of the Sarbanes-

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Oxley Act of 2002 or who is subject to clawback under Section 954 of the Dodd-Frank Act shall reimburse the Company the amount of any payment in settlement of a Stock Option earned or accrued during the twelve month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document embodying such financial reporting requirement.

In addition, Stock Options granted hereunder are subject to any clawback policy adopted by the Board of Directors from time to time.

**Section 7.18 <u>Automatic Exercise</u>**. In the sole discretion of the Committee exercised in accordance with Section 5.2(a) above, any Stock Options that are exercisable but unexercised as of the day immediately before the tenth anniversary of the date of grant may be automatically exercised, in accordance with procedures established for this purpose by the Committee, but only if the exercise price is less than the Fair Market Value of a share of Stock on such date and the automatic exercise will result in the issuance of at least one (1) whole share of Stock to the Participant after payment of the exercise price and any applicable minimum tax withholding requirements. Payment of the exercise price and any applicable tax withholding requirements shall be made by a net settlement of the Stock Option whereby the number of shares of Stock to be issued upon exercise are reduced by a number of shares having a Fair Market Value on the date of exercise equal to the exercise price and any applicable minimum tax withholding.

**Section 7.19 <u>Regulatory Requirements</u>**. The grant and settlement of Stock Options under this Plan shall be conditioned upon and subject to compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.

**<u>ARTICLE 8 - DEFINED TERMS; CONSTRUCTION</u>**

**Section 8.1** In addition to the other definitions contained herein, unless otherwise specifically provided in a Stock Option Agreement, the following definitions shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "10% Stockholder" means an individual who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "Board of Directors" means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of termination for "Cause," then, for purposes of this Plan, the term "Cause" shall have meaning set forth in such agreement. In the absence of such a definition, "Cause" means termination because of a Participant's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Company's or the Bank's Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the Chief Executive Officer of the Bank or the Board of Directors will likely cause substantial financial harm or substantial injury to the reputation of the Bank or the Company, willfully engaging in actions that in the reasonable opinion of the Board of Directors will likely cause substantial financial harm or substantial injury to the business reputation of the Bank or the Company, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "Change in Control" has the meaning ascribed to it in Section 4.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "Code" means the Internal Revenue Code of 1986, as amended, and any rules, regulations and guidance promulgated thereunder, as modified from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "Committee" means the Committee acting under Article 5.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "Director" means a member of the Board of Directors or the board of directors of a Subsidiary.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of "Disability" or "Disabled," then, for purposes of this Plan, the terms "Disability" or "Disabled" shall have meaning set forth in such agreement. In the absence of such a definition, "Disability" shall be defined in accordance with the Bank's long-term disability plan. To the extent that a Stock Option granted hereunder is subject to Code Section 409A, "Disability" or "Disabled" shall mean that a Participant: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months; or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering Employees. Except to the extent prohibited under Code Section 409A, if applicable, the Committee shall have discretion to determine if a termination due to Disability has occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "Disinterested Board Member" means a member of the Board of Directors who: (i) is not a current Employee of the Company or a Subsidiary; (ii) is not a former employee of the Company or a Subsidiary who receives compensation for prior Services (other than benefits under a tax-qualified retirement plan) during the taxable year; (iii) has not been an officer of the Company or a Subsidiary; (iv) does not receive compensation from the Company or a Subsidiary, either directly or indirectly, for services as a consultant or in any capacity other than as a Director except in an amount for which disclosure would not be required pursuant to Item 404 of SEC Regulation S-K in accordance with the proxy solicitation rules of the SEC, as amended or any successor provision thereto; and (v) does not possess an interest in any other transaction, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(a) of SEC Regulation S-K under the proxy solicitation rules of the SEC, as amended or any successor provision thereto. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of Code Section 162(m), Rule 16b-3 promulgated under the Exchange Act and the corporate governance standards imposed on compensation committees under the listing requirements imposed by any Exchange on which the Company lists or seeks to list its securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "Employee" means any person employed by the Company or a Subsidiary. Directors who are also employed by the Company or a Subsidiary shall be considered Employees under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "Exchange" means any national securities exchange on which the Stock may from time to time be listed or traded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "Exercise Price" means the price established with respect to a Stock Option pursuant to Section 2.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) "Fair Market Value" means the value of one share of the Stock on any relevant date, determined under the following rules:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if the Stock is traded on an exchange, the reported "closing price" on the relevant date, if it is a trading day, otherwise on the next preceding trading day;

(ii)if the Stock is not traded on an exchange but is traded over-the-counter on a quotation system, the reported "closing price," if reported, or if there is no reported "closing price," the mean between the highest bid and the lowest asked prices on that quotation system on the relevant date if it is a trading day, otherwise on the next preceding trading day; or

(iii)if neither subparts (i) or (ii) of this definition apply, (a) with respect to any Stock Option that is subject to Code Section 409A or any Non-Qualified Option, fair market value shall be determined by the reasonable application of a reasonable valuation method within the meaning of Treasury Regulation Section 1.409A-1(b)(5)(iv)(B); and (b) with respect to any other Stock Option, fair market value shall be determined by the Committee in good faith and, with respect to Incentive Stock Options, consistent with rules prescribed under the Code.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) A termination of employment by an Employee Participant shall be deemed a termination of employment for "Good Reason" as a result of the Participant's resignation from the employ of the Company or any Subsidiary upon the occurrence of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a material diminution in Participant's base compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a material diminution in Participant's authority, duties or responsibilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) a change in the geographic location at which Participant must perform his duties that is more than thirty-five (35) miles from the location of Participant's principal workplace on the date of this Agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) in the event a Participant is a party to an employment, change in control, severance or similar agreement that provides a definition for "Good Reason" or a substantially similar term, then the occurrence of any event set forth in such definition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) "Involuntary Termination" means the Termination of Service of a Participant by the Company or Subsidiary (other than termination for Cause) or termination of employment by an Employee Participant for Good Reason.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) "ISO" has the meaning ascribed to it in Section 2.1(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) "Non-Qualified Option" means the right to purchase shares of Stock that is either: (i) granted to a Participant who is not an Employee; or (ii) granted to an Employee and either is not designated by the Committee to be an ISO or does not satisfy the requirements of Section 422 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) "Participant" means any individual who has received, and currently holds, an outstanding Stock Option granted under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) "Retirement" means, unless otherwise specified in an Stock Option Agreement, retirement from employment or service on or after the attainment of age 65. An Employee who is also a Director shall not be deemed to have terminated due to Retirement for purposes of vesting of Stock Options and exercise of Stock Options until both Service as an Employee and Service as a Director has ceased. A non-employee Director will be deemed to have terminated due to Retirement under the provisions of this Plan only if the non-employee Director has terminated Service on the board(s) of directors of the Company and any Subsidiary or affiliate in accordance with applicable Company policy, following the provision of written notice to such board(s) of directors of the non-employee Director's intention to retire. A non-employee Director who continues in Service as a director emeritus or advisory director shall be deemed to be in Service of the Company or a Subsidiary for purposes of vesting and exercise of Stock Options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) "SEC" means the United States Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) "Securities Act" means the Securities Act of 1933, as amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) "Service" means service as an Employee or non-employee Director of the Company or a Subsidiary, as the case may be, and shall include service as a director emeritus or advisory director. Service shall not be deemed interrupted in the case of sick leave, military leave or any other absence approved by the Company or a Subsidiary, in the case of transferees between payroll locations or between the Company, a Subsidiary or a successor.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) "Stock" means the common stock of the Company, $0.01 par value per share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) "Stock Option Agreement" means the document (in whatever medium prescribed by the Committee) that evidences the terms and conditions of a Stock Option under the Plan. Any document is referred to as an agreement, regardless of whether a Participant's signature is required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) "Stock Option" has the meaning ascribed to it in Section 2.1(a) and 2.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) "Subsidiary" means any corporation, affiliate, bank or other entity that would be a subsidiary corporation with respect to the Company as defined in Code Section 424(f) and, other than with respect to an ISO, shall also mean any partnership or joint venture in which the Company and/or other Subsidiary owns more than fifty percent (50%) of the capital or profits interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) "Termination of Service" means the first day occurring on or after a grant date on which the Participant ceases to be an Employee or Director (including a director emeritus or advisory director) of the Company or any Subsidiary, regardless of the reason for such cessation, subject to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Participant's cessation as an Employee shall not be deemed to occur by reason of the transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Participant's cessation as an Employee shall not be deemed to occur by reason of the Participant's being on a bona fide leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant's Services, provided such leave of absence does not exceed six months, or if longer, so long as the Employee retains a right to reemployment with the Company or Subsidiary under an applicable statute or by contract. For these purposes, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Employee will return to perform Services for the Company or Subsidiary. If the period of leave exceeds six months and the Employee does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six month period. For purposes of this sub-section, to the extent applicable, an Employee's leave of absence shall be interpreted by the Committee in a manner consistent with Treasury Regulation Section 1.409A-1(h)(1).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If, as a result of a sale or other transaction, the Subsidiary for whom the Participant is employed (or to whom the Participant is providing Services) ceases to be a Subsidiary, and the Participant is not, following the transaction, an Employee of the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the Participant's Termination of Service caused by the Participant being discharged by the entity for whom the Participant is employed or to whom the Participant is providing Services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Except to the extent Code Section 409A may be applicable to a Stock Option, and subject to the foregoing paragraphs of this sub-section, the Committee shall have discretion to determine if a Termination of Service has occurred and the date on which it occurred. In the event that any Stock Option granted under the Plan constitutes Deferred Compensation (as defined in Section 2.7 hereof), the term Termination of Service shall be interpreted by the Committee in a manner consistent with the definition of "Separation from Service" as defined under Code Section 409A and under Treasury Regulation Section 1.409A-1(h)(ii). For purposes of this Plan, a "<u>Separation from Service</u>" shall have occurred if the employer and the Participant reasonably anticipate that no further Services will be performed by the Participant after the date of the Termination of Service (whether as an employee or as an independent contractor) or the level of further Services performed will be less than fifty percent (50%) of the average level of bona fide Services in the 36 months immediately preceding the Termination of Service. If a Participant is a "Specified Employee," as defined in Code Section 409A and any payment to be made hereunder shall be determined to be subject to Code Section 409A, then if required by Code Section 409A, the payment or a portion of the payment (to the minimum extent possible) shall be delayed and shall be paid on the first day of the seventh month following Participant's Separation from Service.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) With respect to a Participant who is a Director, cessation as a Director will not be deemed to have occurred if the Participant continues as a director emeritus or advisory director. With respect to a Participant who is both an Employee and a Director, termination of employment as an Employee shall not constitute a Termination of Service for purposes of the Plan so long as the Participant continues to provide Service as a Director or director emeritus or advisory director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) "Voting Securities" means any securities which ordinarily possess the power to vote in the election of directors without the happening of any pre-condition or contingency.

**Section 8.2** In this Plan, unless otherwise stated or the context otherwise requires, the following uses apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) actions permitted under this Plan may be taken at any time and from time to time in the actor's reasonable discretion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor, as in effect at the relevant time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in computing periods from a specified date to a later specified date, the words "from" and "commencing on" (and the like) mean "from and including," and the words "to," "until" and "ending on" (and the like) mean "to, but excluding";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) indications of time of day mean Eastern Time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "including" means "including, but not limited to";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) all references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise specified;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) all words used in this Plan will be construed to be of such gender or number as the circumstances and context require;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Plan have been inserted solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its provisions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) all accounting terms not specifically defined herein shall be construed in accordance with GAAP.

## Exhibit 10.8

**Exhibit 10.8** 

**BV FINANCIAL, INC.** 

**2021 EQUITY INCENTIVE PLAN** 

**<u>ARTICLE 1 — GENERAL</u>**

**Section 1.1** **<u>Purpose, Effective Date and Term</u>**. The purpose of the BV Financial, Inc. 2021 Equity Incentive Plan (the "<u>Plan</u>") is to promote the long-term financial success of BV Financial, Inc. (the "<u>Company</u>"), and its Subsidiaries, including BayVanguard Bank (the "<u>Bank</u>"), by providing a means to attract, retain and reward individuals who contribute to that success and to further align their interests with those of the Company's stockholders through the ownership of additional shares of common stock of the Company and/or through compensation tied to the value of the Company's common stock. The "<u>Effective Date</u>" of the Plan shall be the date on which the Plan satisfies the applicable stockholder approval requirements; subject to any regulatory approvals, including the approval of the Board of Governors of the Federal Reserve System. The Plan shall remain in effect as long as any Awards are outstanding; *provided, however,* that no Awards may be granted under the Plan after the day immediately prior to the ten-year anniversary date of the Effective Date. Upon stockholder and any required regulatory approvals of this Plan, no further awards shall be granted under the BV Financial, Inc. 2017 Stock Option Plan (the "2017 Stock Option Plan"), which shall remain in existence solely for the purpose of administering outstanding grants.

**Section 1.2** **<u>Administration</u>**. The Plan shall be administered by the Compensation Committee of the Board of Directors (the "<u>Committee</u>") in accordance with Section 5.1.

**Section 1.3 <u>Participation</u>**. Each individual who is granted and holds an Award in accordance with the terms of the Plan shall be a Participant in the Plan (a "<u>Participant</u>"). The grant of Awards shall be limited to Employees, Directors and service providers of the Company or any Subsidiary.

**Section 1.4** **<u>Definitions</u>**. Capitalized terms used in this Plan are defined in Article 8 and elsewhere in this Plan.

**<u>ARTICLE 2 — AWARDS</u>**

**Section 2.1** **<u>General</u>**. Any Award under the Plan may be granted singularly or in combination with another Award or other Awards. Each Award under the Plan shall be subject to the terms and conditions of the Plan and any additional terms, conditions, limitations and restrictions as the Committee shall provide with respect to the Award as evidenced in an Award Agreement. In the event of a conflict between the terms of an Award Agreement and the Plan, the terms of the Plan will control. Subject to the provisions of Section 2.2(d), an Award may be granted as an alternative to or replacement of an existing Award under the Plan or any other plan of the Company or any Subsidiary or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or any Subsidiary, including without limitation, the plan of any entity acquired by the Company or any Subsidiary. The types of Awards that may be granted under the Plan include Stock Options, Restricted Stock and Restricted Stock Units and any Award may be granted as a Performance Award.

**Section 2.2** **<u>Stock Options</u>**. A Stock Option is a grant that represents the right to purchase shares of Stock at an established Exercise Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Grant of Stock Options.* Each Stock Option shall be evidenced by an Award Agreement that specifies: (i) the number of shares of Stock covered by the Stock Option; (ii) the date of grant of the Stock Option and the Exercise Price; (iii) the vesting period or conditions to vesting or exercisability (whether time- and/or performance-based); and (iv) any other terms and conditions not inconsistent with

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the Plan, including the effect of termination of a Participant's employment or Service, as the Committee may, in its discretion, prescribe. Any Stock Option may be either an Incentive Stock Option that is intended to satisfy the requirements applicable to an "Incentive Stock Option" described in Code Section 422(b), or a Non-Qualified Option that is not intended to be an ISO; provided, however, that no ISOs may be granted: (i) after the day immediately prior to the ten-year anniversary of the Effective Date or the date on which the Plan is approved by the Board of Directors, whichever is earlier; or (ii) to a non-Employee. Unless otherwise specifically provided by its terms, any Stock Option granted to an Employee under this Plan shall be an ISO to the maximum extent permitted. Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether at the time of grant or as the result of a subsequent event) shall be deemed to be a Non-Qualified Option. In addition, any ISO granted under this Plan may be unilaterally modified by the Committee to disqualify it from ISO treatment, so that it becomes a Non-Qualified Option; provided, however, that any such modification shall be ineffective if it causes the Option to be subject to Code Section 409A (unless, as modified, the Option complies with Code Section 409A).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Other Terms and Conditions.* A Stock Option shall be exercisable in accordance with its terms and conditions and during the periods established by the Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the date of its grant (or five (5) years with respect to ISOs granted to a 10% Stockholder). The Exercise Price of each Stock Option shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock); *provided, however,* that the Exercise Price of an ISO shall not be less than 110% of Fair Market Value of a share of Stock on the date of grant if an ISO is granted to a 10% Stockholder; *provided further,* that the Exercise Price may be higher or lower in the case of Stock Options granted or exchanged in replacement of existing Awards held by an employee or director of an acquired entity. The payment of the Exercise Price shall be by cash or, subject to limitations imposed by applicable law, by any other means as the Committee may from time to time permit, including: (i) by tendering, either actually or constructively by attestation, shares of Stock valued at Fair Market Value as of the day of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee, to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from the exercise; (iii) by a net settlement of the Stock Option, using a portion of the shares of Stock obtained on exercise in payment of the Exercise Price (and if applicable, any tax withholding); (iv) by personal, certified or cashier's check; (v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof. The total number of shares of Stock that may be acquired upon the exercise of a Stock Option shall be rounded down to the nearest whole share, with cash-in-lieu paid by the Company, at its discretion, for the value of any fractional share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Prohibition of Cash Buy-Outs of Underwater Stock Options.* Under no circumstances will any underwater Stock Option (i.e., a Stock Option with an Exercise Price as of an applicable date that is greater than the Fair Market Value of Stock as of the same date) that was granted under the Plan be bought back by the Company without stockholder approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *Prohibition Against Repricing.* Except for adjustments pursuant to Section 3.4, and reductions of the Exercise Price approved by the Company's stockholders, neither the Committee nor the Board of Directors shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Award's in-the-money value or in exchange for Options or other Awards) or replacement grants, or other means.

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**Section 2.3** **<u>Restricted Stock</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Grant of Restricted Stock.* A Restricted Stock Award is a grant of a share of Stock for no consideration or such minimum consideration as may be required by applicable law, subject to a vesting schedule or the satisfaction of market conditions or performance conditions. Each Restricted Stock Award shall be evidenced by an Award Agreement that specifies (i) the number of shares of Stock covered by the Restricted Stock Award; (ii) the date of grant of the Restricted Stock Award; (iii) the vesting period (whether time- and/or performance-based); and (iv) any other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant's employment or Service. All Restricted Stock Awards shall be in the form of issued and outstanding shares of Stock that, at the discretion of the Committee, shall either be (x) registered in the name of the Participant and held by or on behalf of the Company, together with a stock power executed by the Participant in favor of the Company, pending the vesting or forfeiture of the Restricted Stock; or (y) registered in the name of, and delivered to, the Participant. In any event, the certificates evidencing the Restricted Stock Award shall at all times prior to the applicable vesting date bear the following legend:

The Stock evidenced hereby is subject to the terms of an Award Agreement with BV Financial, Inc., dated [date], made pursuant to the terms of the BV Financial, Inc. 2021 Equity Incentive Plan, copies of which are on file at the executive offices of BV Financial, Inc., and may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with the terms of the Plan and Award Agreement,

or other restrictive legend as the Committee, in its discretion, may specify. Notwithstanding the foregoing, the Company may in its sole discretion issue Restricted Stock in any other approved format (*e.g.,* electronically or through book-entry format) in order to facilitate the paperless transfer of the Award. In the event Restricted Stock is not issued in certificate form, the Company and its transfer agent shall maintain appropriate bookkeeping entries that evidence Participants' ownership of the Awards. Restricted Stock that is not issued in certificate form shall be subject to the same terms and conditions of the Plan as certificated shares, including the restrictions on transferability and the provision of a stock power executed by the Participant in favor of the Company, until the satisfaction of the conditions to which the Restricted Stock Award is subject.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Terms and Conditions.* Each Restricted Stock Award shall be subject to the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *Dividends.* Unless the Committee determines otherwise, cash dividends or distributions, if any, declared and paid with respect to shares of Stock subject to a Restricted Stock Award shall be immediately distributed to the Participant No cash dividends shall be paid with respect to a Restricted Stock Awards subject to performance-based vesting conditions unless and until the Participant vests in the Restricted Stock Award. Upon the vesting of Restricted Stock granted as a Performance Award, any cash dividends declared but not paid to the Participant during the vesting period shall be paid, without interest, within thirty (30) days following the vesting date. Any stock dividends declared on shares of Stock subject to a Restricted Stock Award, whether or not performance-based, shall be subject to the same restrictions and shall vest at the same time as the shares of Restricted Stock from which the dividends were derived. If the distribution of dividends are delayed, the Committee shall cause the dividend (and any earnings thereon) to be distributed to the Participant no later than two and one-half months following the date on which the Restricted Stock vests.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *Voting Rights.* Unless the Committee determines otherwise, a Participant shall have voting rights related to unvested, non-forfeited Restricted Stock and the voting rights may be exercised by the Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) *Tender Offers and Merger Elections.* Each Participant to whom a Restricted Stock Award is granted shall have the right to respond, or to direct the response, with respect to the related shares of Restricted Stock, to any tender offer, exchange offer, cash/stock merger consideration election or other offer made to, or elections made by, the holders of shares of Stock. The direction for any of the shares of Restricted Stock shall be given by proxy or ballot (if the Participant is the beneficial owner of the shares of Restricted Stock for voting purposes) or by completing and filing, with the inspector of elections, the trustee or the other person who shall be independent of the Company, as the Committee shall designate (if the Participant is not the a beneficial owner), a written direction in the form and manner prescribed by the Committee. If no direction is given, then the shares of Restricted Stock shall not be tendered.

**Section 2.4 <u>Restricted Stock Units</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Grant of Restricted Stock Unit Awards.* A Restricted Stock Unit is an Award denominated in shares of Stock that is similar to a Restricted Stock Award except no shares of Stock are actually awarded on the date of grant. A Restricted Stock Unit is subject to a vesting schedule or the satisfaction of market conditions or performance conditions and shall be settled in shares of Stock, *provided, however,* that in the sole discretion of the Committee, determined at the time of settlement, a Restricted Stock Unit may be settled in cash based on the Fair Market Value of a share of the Stock multiplied by the number of Restricted Stock Units being settled, or a combination of shares of Stock and cash. Each Restricted Stock Unit shall be evidenced by an Award Agreement that specifies (i) the number of Restricted Stock Units covered by the Award; (ii) the date of grant of the Restricted Stock Units; (iii) the Restriction Period and the vesting period (whether time- and/or performance-based); (iv) any other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant's employment or Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Other Terms and Conditions.* Each Restricted Stock Unit Award shall be subject to the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Committee may impose any other conditions and/or restrictions on any Restricted Stock Unit Award as it may deem advisable, including, without limitation, a requirement that Participants pay a stipulated purchase price for each Restricted Stock Unit, time-based restrictions and/or vesting following the attainment of performance measures, restrictions under applicable laws or under the requirements of any Exchange or market upon which shares of Stock may be listed, and/or holding requirements or sale restrictions placed by the Company upon vesting of Restricted Stock Units.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The conditions for grant or vesting and the other provisions of Restricted Stock Units (including without limitation any applicable performance measures) need not be the same with respect to each recipient. An Award of Restricted Stock Units shall be settled as and when the Restricted Stock Units vest or, in the case of Restricted Stock Units subject to performance measures, after the Committee has determined that the performance goals have been satisfied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of grant of the Restricted Stock Unit for which the Participant's continued Service is required (the "<u>Restriction Period</u>"), and until the later of (A) the expiration of the Restriction Period or (B) the date the applicable performance measures (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) A Participant shall have no voting rights with respect to any Restricted Stock Units. No dividends shall be paid on Restricted Stock Units. In the sole discretion of the Committee, exercised at the time of grant, Dividend Equivalent Rights may be assigned to Restricted Stock Units. A Dividend Equivalent Right, if any, shall be paid at the same time as the shares of Stock or cash subject to the Restricted Stock Unit are distributed to the Participant and is otherwise subject to the same rights and restrictions as the underlying Restricted Stock Unit.

**Section 2.5** **<u>Vesting of Awards</u>**. Unless the Committee specifies a different vesting schedule at the time of grant, Awards under the Plan (other than Performance Awards) shall be granted with a vesting rate of twenty percent (20%) per year, with the initial installment vesting no earlier than the one-year anniversary of the date of grant, unless accelerated due to death, Disability, or an Involuntary Termination at or following a Change in Control. If the right to become vested in an Award (including the right to exercise a Stock Option) is conditioned on the completion of a specified period of Service, without achievement of performance measures or other performance objectives being required as a condition of vesting, and without it being granted in lieu of, or in exchange for, other compensation, then the required period of Service for full vesting shall be evidenced in an Award Agreement (subject to acceleration of vesting, to the extent permitted by the Plan, by the Committee (subject to the limitations set forth in this Section 2.5) or as set forth in the Award Agreement, in the event of the Participant's death, Disability or an Involuntary Termination at or following a Change in Control).

**Section 2.6** **<u>Deferred Compensation</u>**. If any Award would be considered "deferred compensation" as defined under Code Section 409A ("<u>Deferred Compensation</u>"), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the Participant, to maintain the exemption from, or to comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section 2.6 shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A. A Participant's acceptance of any Award under the Plan constitutes acknowledgement and consent to the rights of the Committee, without further consideration or action. Any discretionary authority retained by the Committee pursuant to the terms of this Plan or pursuant to an Award Agreement shall not apply to an Award that is determined to constitute Deferred Compensation, if the discretionary authority would contravene Code Section 409A.

**Section 2.7** **<u>Effect of Termination of Service on Awards</u>**. The Committee shall establish the effect of a Termination of Service on the continuation of rights and benefits available under an Award and, in so doing, may make distinctions based upon, among other things, the reason(s) for the Termination of Service and type of Award. Unless otherwise specified by the Committee and set forth in an Award Agreement between the Company and/or a Subsidiary and the Participant or as set forth in an employment or severance agreement entered into by and between the Company and/or a Subsidiary and the Participant, the following provisions shall apply to each Award granted under this Plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Upon a Participant's Termination of Service for any reason other than due to Disability, death, Retirement or for Cause, Stock Options shall be exercisable only as to those shares of Stock that were immediately exercisable by the Participant at the date of termination, and the Stock Options may be exercised only for a period of three (3) months following termination and any Restricted Stock Award or Restricted Stock Unit that had not vested as of the date of Termination of Service shall expire and be forfeited.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event of a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised (whether or not vested) and all Restricted Stock Awards and Restricted Stock Units granted to a Participant that have not vested shall expire and be forfeited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Upon Termination of Service for reason of Disability or death, any Service-based Stock Options shall be exercisable as to all shares of Stock subject to an outstanding Award, whether or not then exercisable, and all Service-based Restricted Stock Awards and Restricted Stock Units shall vest as to all shares subject to an outstanding Award, whether or not otherwise immediately vested, at the date of Termination of Service. Upon Termination of Service for reason of Disability or death, any Awards that vest based on the achievement of performance targets shall vest, pro-rata, by multiplying (i) the number of Awards that would be obtained based on achievement at target (or if actual achievement of the performance measures is greater than the target level, at the actual achievement level) as of the date of Disability or death, by (ii) a fraction, the numerator of which is the number of whole months the Participant was in Service during the performance period and the denominator of which is the number of months in the performance period. Stock Options may be exercised for a period of one (1) year following a Termination of Service due to death or Disability; *provided, however*, that no Stock Option shall be eligible for treatment as an ISO in the event the Stock Option is exercised more than one (1) year following Termination of Service due to Disability and *provided, further*, in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the optionee's death must have occurred while employed or within three (3) months of Termination of Service. In the event of Termination of Service due to Retirement, a Participant's vested Stock Options shall be exercisable for one (1) year following Termination of Service. No Stock Option shall be eligible for treatment as an ISO in the event the Stock Option is exercised more than three (3) months following Termination of Service due to Retirement and any Stock Option, Restricted Stock Award or Restricted Stock Unit that has not vested as of the date of Termination of Service shall expire and be forfeited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term of the Stock Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding the provisions of this Section 2.7, the effect of a Change in Control on the vesting/exercisability of Stock Options, Restricted Stock Awards and Restricted Stock Units is as set forth in Article 4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) For purposes of the Plan, the term "Retirement" means, unless otherwise specified in an Award Agreement, retirement from employment or Service on or after the attainment of age 65. An Employee who also serves as a Director shall not be deemed to have terminated due to Retirement for purposes of vesting of Awards and exercise of Stock Options until both Service as an Employee and Service as a Director has ceased. A non-employee Director will be deemed to have terminated due to Retirement under the provisions of this Plan only if the non-employee Director has terminated Service on the board(s) of directors of the Company and any Subsidiary or affiliate in accordance with an applicable Company policy, following the provision of written notice to the board(s) of directors of the non-employee Director's intention to retire. A non-employee Director who continues in Service as a director emeritus or advisory director shall be deemed to be in Service of the Company or a Subsidiary for purposes of vesting of Awards and exercise of Stock Options.

**Section 2.8.** **<u>Holding Period for Vested Awards</u>**. As a condition of receipt of an Award, the Award Agreement may require a Participant to agree to hold a vested Award or shares of Stock received upon exercise of a Stock Option for a period of time specified in the Award Agreement. The foregoing limitation shall not apply to the extent that an Award vests due to death, Disability or an Involuntary Termination at or following a Change in Control, or to the extent that (i) a Participant directs the Company to withhold or the Company elects to withhold shares of Stock with respect to the vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the amount required to be withheld or (ii) a Participant exercises a Stock Option by a net settlement, and in the case of (i) and (ii) herein, only to the extent of the shares are withheld for tax purposes or for purposes of the net settlement.

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**<u>ARTICLE 3 — SHARES SUBJECT TO PLAN</u>**

**Section 3.1** **<u>Available Shares</u>**. The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including shares purchased in the open market or in private transactions.

**Section 3.2** **<u>Share Limitations</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Share Reserve.* Subject to the following provisions of this Section 3.2, the maximum number of shares of Stock that may be delivered to Participants and their beneficiaries under the Plan shall be equal to 245,000 shares of Stock. The maximum number of shares of Stock that may be delivered pursuant to the exercise of Stock Options (all of which may be granted as ISOs) is 100,000 shares of Stock. The maximum number of shares of Stock that may be issued as Restricted Stock Awards is 145,000 shares of Stock. The aggregate number of shares of Stock available for grant under this Plan and the number of shares of Stock subject to outstanding Awards shall be subject to adjustment as provided in Section 3.4. As of the Effective Date, no further grants will be made under the 2017 Stock Option Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Computation of Shares Available.* For purposes of this Section 3.2 and in connection with the granting of a Stock Option, Restricted Stock or a Restricted Stock Unit, the number of shares of Stock available for the grant of additional Stock Options, Restricted Stock or Restricted Stock Units shall be reduced by the number of shares of Stock previously granted, subject to the following. To the extent any shares of Stock covered by an Award (including Restricted Stock Awards and Restricted Stock Units) under the Plan are not delivered to a Participant or beneficiary for any reason, including because the Award is forfeited or canceled or because a Stock Option is not exercised, then the shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan. To the extent: (i) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the Exercise Price; (ii) shares of Stock are withheld to satisfy withholding taxes upon exercise or vesting of an Award granted hereunder; or (iii) shares are withheld to satisfy the Exercise Price of Stock Options in a net settlement of Stock Options, then the number of shares of Stock available shall be reduced by the gross number of Stock Options exercised or Awards vested rather than by the net number of shares of Stock issued.

**Section 3.3** **<u>Limitations on Grants to Individuals</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Employee Awards*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *Stock Options—Employees.* The maximum number of shares of Stock, in the aggregate, that may be covered by a Stock Option granted to any one Employee under the Plan shall be 25,000 shares, all of which may be granted during any calendar year. This maximum amount represents twenty-five percent (25%) of the maximum number of shares of Stock that may be delivered pursuant to Stock Options under Section 3.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *Restricted Stock/Restricted Stock Unit Awards—Employees*. The maximum number of shares of Stock, in the aggregate, that may be subject to Restricted Stock Awards and Restricted Stock Units granted to any one Employee under the Plan shall be 36,250 shares, all of which may be granted during any calendar year. This maximum amount represents twenty-five percent (25%) of the maximum number of shares of Stock that may be issued as Restricted Stock Awards and Restricted Stock Units.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Director Awards.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *Stock Options – Individual and Aggregate Limits*. Individual non-employee Directors may be granted Stock Options of up to 5,000 shares, in the aggregate, all of which may be granted during any calendar year and, in addition, all non-employee Directors, in the aggregate, may be granted up to 30,000 shares all of which may be granted during any calendar year. These maximum amounts represent five percent (5%) and thirty percent (30%), respectively, of the maximum number of shares of Stock that may be delivered pursuant to Stock Options under Section 3.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *Restricted Stock/Restricted Stock Unit Awards – Individual and Aggregate Limits.* Individual non-employee Directors may be granted Restricted Stock Awards and Restricted Stock Units of up to 7,250 shares, in the aggregate, all of which may be granted during any calendar year and, in addition, all non-employee Directors, in the aggregate, may be granted up to 43,500 shares all of which may be granted during any calendar year. These maximum amounts represent five percent (5%) and thirty percent (30%), respectively, of the maximum number of shares of Stock that may be delivered pursuant to Restricted Stock Awards and Restricted Stock Units under Section 3.2.

**Section 3.4** **<u>Corporate Transactions</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *General.* In the event any recapitalization, reclassification, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, or exchange of shares of Stock or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or increase or decrease in the number of shares of Stock without consideration, or similar corporate transaction or event, affects the shares of Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan and/or under any Award granted under the Plan, then the Committee shall, in an equitable manner, adjust any or all of: (i) the number and kind of securities deemed to be available thereafter for grants of Stock Options, Restricted Stock Awards and Restricted Stock Units in the aggregate to all Participants and individually to any one Participant; (ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Stock Options, Restricted Stock Awards and Restricted Stock Units; and (iii) the Exercise Price. In addition, the Committee is authorized to adjust the terms and conditions of, and the criteria included in, Stock Options, Restricted Stock Awards and Restricted Stock Units (including, without limitation, cancellation of Stock Options, Restricted Stock Awards and Restricted Stock Units in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution or exchange of Stock Options, Restricted Stock Awards and Restricted Stock Units using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the first sentence in this paragraph) affecting the Company or any parent or Subsidiary or the financial statements of the Company or any parent or Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Merger in Which Company is Not Surviving Entity.* In the event of any merger, consolidation, or other business reorganization (including, but not limited to, a Change in Control) in which the Company is not the surviving entity, any Stock Options granted under the Plan which remain outstanding shall be converted into Stock Options to purchase voting common equity securities of the business entity which survives the merger, consolidation or other business reorganization having substantially the same terms and conditions as the outstanding Stock Options under this Plan and reflecting the same economic benefit (as measured by the difference between the aggregate Exercise Price and the value exchanged for outstanding shares of Stock in the merger, consolidation or other business

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reorganization), all as determined by the Committee or the Board prior to the consummation of the merger, consolidation or other business reorganization. Similarly, any Restricted Stock or Restricted Stock Units which remain outstanding shall be assumed by and become Restricted Stock and/or Restricted Stock Units of the business entity which survives the merger, consolidation or other business reorganization. In the event the acquiring entity fails or refuses to assume the Company's outstanding Awards: (1) any Service-based Awards shall vest immediately at or immediately prior to the effective time of the merger, consolidation or other business reorganization; (2) any Awards subject to performance-based vesting conditions shall vest in the same manner as required under Section 4.1(c) hereof at the time of the merger, consolidation or other business reorganization, as if the holder thereof incurred an Involuntary Termination of Service on that date; and (3) unless another treatment is specified in the documents governing the merger, consolidation or other business organization, in the case of vested Restricted Stock or Restricted Stock Units, holders thereof shall receive on the effective date of the transaction, the same value as received by a holder of a share of Stock, multiplied by the number of Restricted Stock or Restricted Stock Units held, and in the case of a holder of Stock Options, the holder shall receive the difference, in cash, between the aggregate Exercise Price of the holder's outstanding Stock Options and the value exchanged for outstanding shares of Stock in the merger, consolidation or other business reorganization.

**Section 3.5** **<u>Delivery of Shares</u>**. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Compliance with Applicable Laws.* Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the Plan unless the delivery or distribution complies with all applicable laws (including, the requirements of the Securities Act), and the applicable requirements of any Exchange or similar entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Certificates.* To the extent that the Plan provides for the issuance of shares of Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any Exchange.

**<u>ARTICLE 4 — CHANGE IN CONTROL</u>**

**Section 4.1** **<u>Consequence of a Change in Control</u>**. Subject to the provisions of Section 2.5 (relating to vesting and acceleration) and Section 3.4 (relating to the adjustment of shares), and except as otherwise provided in the Plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) At the time of an Involuntary Termination at or following a Change in Control, all service-based Stock Options then held by the Participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the Stock Option). All Stock Options may be exercised for a period of one (1) year following the Participant's Involuntary Termination, provided, however, that no Stock Option shall be eligible for treatment as an ISO in the event the Stock Option is exercised more than three (3) months following the termination of employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At the time of an Involuntary Termination at or following a Change in Control, all Service-based Awards of Restricted Stock and Restricted Stock Units shall become fully earned and vested immediately.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event of an Involuntary Termination at or following a Change in Control, a prorated portion of any Performance Awards will vest based on actual performance measured as of the most recent completed fiscal quarter. If actual performance cannot be determined, a prorated portion of the Performance Awards will vest at the target performance level. The pro-rata portion will be calculated based on a number of months worked during the performance period as a percentage of the total performance period.

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**Section 4.2** **<u>Definition of Change in Control</u>**. For purposes of this Plan, the term "<u>Change in Control</u>" shall mean the consummation by the Company or the Bank, in a single transaction or series of related transactions, of any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Merger.* The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Company or the Bank, and, as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Acquisition of Significant Share Ownership.* There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than a Schedule 13G) required under Section 13(d) or 14(d) of the Exchange Act, that discloses that the filing person has or persons acting in concert have become the beneficial owner of 25% or more of a class of the Company's or Bank's voting securities; *provided, however,* this sub-section (b) shall not apply to beneficial ownership of the Company's or the Bank's voting shares held in a fiduciary capacity by an entity in which the Company directly or indirectly beneficially owns 50% or more of its outstanding Voting Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Change in Board Composition.* During any period of two consecutive years, individuals who constitute the Company's or the Bank's board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company's or the Bank's board of directors; *provided, however,* that for purposes of this sub-section (c), each director who is first elected by the board of directors (or first nominated by the board of directors for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of the period or who is appointed as a director as a result of a directive, supervisory agreement or order issued by the primary regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation shall be deemed to have also been a director at the beginning of the period; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *Sale of Assets.* The Company or the Bank sells to a third party all or substantially all of its assets.

In addition, in no event shall a reorganization of Bay-Vanguard, M.H.C. (i.e., the mutual holding company), the Company and the Bank solely within its corporate structure or a second-step conversion constitute a Change in Control for purposes of the Plan.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "<u>Subject Person")</u> acquired beneficial ownership of more than the permitted amount of the then outstanding Stock or Voting Securities as a result of a change in the number of shares of Stock or Voting Securities then outstanding, which thereby increases the proportional number of shares beneficially owned by the Subject Person; *provided, however,* that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Stock or Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the beneficial owner of any additional Stock or Voting Securities which increases the percentage of the then outstanding Stock or Voting Securities beneficially owned by the Subject Person, then a Change in Control shall occur.

In addition, if an Award constitutes Deferred Compensation, and the settlement of, or distribution of benefits under, the Award is to be triggered solely by a Change in Control, then with respect to the Award, a Change in Control shall be defined as required under Code Section 409A, as in effect at the time of the transaction.

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**<u>ARTICLE 5 — COMMITTEE</u>**

**Section 5.1** **<u>Administration</u>**. The Plan shall be administered by the Committee. If the Committee consists of fewer than three (3) Disinterested Board Members, then the Board of Directors shall appoint to the Committee additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least three (3) Disinterested Board Members. Any members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion or decision to make or administer Awards that are made to Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of Section 16 of the Exchange Act. The Board of Directors (or if necessary to maintain compliance with the applicable listing standards, those members of the Board of Directors who are "independent directors" under the corporate governance statutes or rules of any Exchange on which the Company lists, has listed or seeks to list its securities) may, in their discretion, take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee.

**Section 5.2** **<u>Powers of Committee</u>**. The administration of the Plan by the Committee shall be subject to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Committee shall have the authority and discretion to select those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares of Stock covered by the Awards, to establish the terms, conditions, features (including automatic exercise in accordance with Section 7.18), performance criteria, restrictions (including without limitation, provisions relating to non-competition, non-solicitation and confidentiality), and other provisions of such Awards (subject to the restrictions imposed by Article 6), to cancel or suspend Awards and to reduce, eliminate or accelerate any restrictions or vesting requirements applicable to an Award at any time after the grant of the Award; *provided, however,* that the Committee shall not exercise its discretion to accelerate an Award within the first year following the date of grant, or to extend the time period to exercise a Stock Option unless the extension is consistent with Code Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Committee shall have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Committee shall have the authority to define terms not otherwise defined herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the articles of incorporation and bylaws of the Company and applicable corporate law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Committee shall have the authority to: (i) suspend a Participant's right to exercise a Stock Option during a blackout period (or similar restricted period) or to exercise in a particular manner (i.e., such as a "cashless exercise" or "broker-assisted exercise") to the extent that the Committee deems it necessary or in the best interests of the Company in order to comply with the securities laws and regulations issued by the SEC (the "<u>Blackout Period</u>"); and (ii) to extend the period to exercise a Stock Option by a period of time equal to the Blackout Period, provided that the extension does not violate Section 409A of the Code, the Incentive Stock Option requirements or applicable laws and regulations.

**Section 5.3** **<u>Delegation by Committee</u>**. Except to the extent prohibited by applicable law, the applicable rules of an Exchange upon which the Company lists its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated under the Exchange Act, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and

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may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including: (a) delegating to a committee of one or more members of the Board of Directors who are not "non-employee directors," within the meaning of Rule 16b-3, the authority to grant Awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members of the Board of Directors who would be eligible to serve on the Compensation Committee of the Company pursuant to the listing requirements imposed by any Exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant Awards under the Plan. The acts of the delegates shall be treated hereunder as acts of the Committee and the delegates shall report regularly to the Committee regarding the exercise of delegated duties and responsibilities and any Awards so granted. Any such allocation or delegation may be revoked by the Committee at any time.

**Section 5.4** **<u>Information to be Furnished to Committee</u>**. As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee with data and information it determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee any evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.

**Section 5.5** **<u>Committee Action</u>**. The Committee shall hold meetings, and may make administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. Subject to Section 5.1, all actions of the Committee, including interpretations of provisions of the Plan, shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf.

**<u>ARTICLE 6 — AMENDMENT AND TERMINATION</u>**

**Section 6.1** **<u>General</u>**. The Board of Directors may, as permitted by law, at any time, amend or terminate the Plan, and may amend any Award Agreement, provided that no amendment or termination (except as provided in Sections 2.6, 3.4 and 6.2) may cause the Award to violate Code Section 409A, may cause the repricing of a Stock Option, or, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights of any Participant or beneficiary under any Award prior to the date the amendment is adopted by the Board of Directors; *provided, however*, that, no amendment may (a) materially increase the benefits accruing to Participants under the Plan, (b) materially increase the aggregate number of securities which may be issued under the Plan, other than pursuant to Section 3.4, or (c) materially modify the requirements for participation in the Plan, unless the amendment is approved by the Company's stockholders.

**Section 6.2** **<u>Amendment to Conform to Law and Accounting Changes</u>**. Notwithstanding any provision in this Plan or any Award Agreement to the contrary, the Committee may amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of: (i) conforming the Plan or the Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A); or (ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation thereof issued by the SEC or the Financial Accounting Standards Board (the "<u>FASB</u>") subsequent to the adoption of the Plan or the making

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of the Award affected thereby, which, in the sole discretion of the Committee, may materially and adversely affect the financial condition or results of operations of the Company. By accepting an Award under this Plan, each Participant agrees and consents to any amendment made pursuant to this Section 6.2 to any Award granted under the Plan without further consideration or action.

**<u>ARTICLE 7 — GENERAL TERMS</u>**

**Section 7.1** **<u>No Implied Rights</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *No Rights to Specific Assets.* Neither a Participant nor any other person shall by reason of participation in the Plan acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right, evidenced by an Award Agreement, to the shares of Stock or amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *No Contractual Right to Employment or Future Awards.* The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit under the Plan, unless the right or claim has specifically accrued under the terms of the Plan. No individual shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to receive a future Award under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *No Rights as a Stockholder.* Except as otherwise provided in the Plan or in an Award Agreement, no Award shall confer upon the holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.

**Section 7.2** **<u>Transferability</u>**. Except as otherwise so provided by the Committee, Stock Options under the Plan are not transferable except: (i) as designated by the Participant by will or by the laws of descent and distribution; (ii) to a trust established by the Participant, if under Code Section 671 and applicable state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust; or (iii) between spouses incident to a divorce or pursuant to a domestic relations order, *provided, however,* in the case of a transfer within the meaning of Section 7.2(iii), the Stock Option shall not qualify as an ISO as of the day of the transfer. The Committee shall have the discretion to permit the transfer of vested Stock Options (other than ISOs) under the Plan; *provided, however,* that such transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of the family members or to charitable organizations, and *provided, further,* that the transfers are not made for consideration to the Participant.

Awards of Restricted Stock shall not be transferable prior to the time that the Awards vest in the Participant. A Restricted Stock Unit Award is not transferable, except in the event of death, prior to the time that the Restricted Stock Unit Award vests and is earned and the property in which the Restricted Stock Unit is denominated is distributed to the Participant or the Participant's Beneficiary.

**Section 7.3** **<u>Designation of Beneficiaries</u>**. A Participant may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time to time revoke or amend any such designation. Any designation of beneficiary under this Plan shall be controlling over any other disposition, testamentary or otherwise (unless the disposition is pursuant to a domestic relations order); *provided, however,* that if the Committee is in doubt as to the entitlement of any beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant, in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone.

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**Section 7.4 <u>Non-Exclusivity</u>**. Neither the adoption of this Plan by the Board of Directors nor the submission of the Plan to the stockholders of the Company for approval (and any subsequent approval by the stockholders of the Company) shall be construed as creating any limitations on the power of the Board of Directors or the Committee to adopt other incentive arrangements as may deemed desirable, including, without limitation, the granting of Restricted Stock Awards, Restricted Stock Units or Stock Options and such arrangements may be either generally applicable or applicable only in specific cases.

**Section 7.5** **<u>Eligibility for Form and Time of Elections/Notification Under Code Section</u> <u>83(b)</u>**. Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require. Notwithstanding anything herein to the contrary, the Committee may, on the date of grant or at a later date, as applicable, prohibit an individual from making an election under Code Section 83(b). If the Committee has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the election within ten (10) days of filing notice of the election with the Internal Revenue Service or as otherwise required by the Committee. This requirement is in addition to any filing and notification required under the regulations issued under the authority of Code Section 83(b).

**Section 7.6** **<u>Evidence</u>**. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other written information upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties.

**Section 7.7** **<u>Tax Withholding</u>**. Where a Participant is entitled to receive shares of Stock upon the vesting or exercise of an Award, the Company shall have the right to require the Participant to pay to the Company the amount of any tax that the Company is required to withhold with respect to the vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the amount required to be withheld. To the extent determined by the Committee and specified in an Award Agreement, a Participant shall have the right to direct the Company to satisfy the amount required for federal, state and local tax withholding by: (i) with respect to a Stock Option, reducing the number of shares of Stock subject to the Stock Option (without issuance of the shares of Stock to the Stock Option holder) by a number equal to the quotient of (a) the amount of required tax withholding divided by (b) the excess of the Fair Market Value of a share of Stock on the exercise date over the Exercise Price per share of Stock; and (ii) with respect to Restricted Stock Awards and Restricted Stock Units, withholding a number of shares (based on the Fair Market Value on the vesting date) otherwise vesting that would satisfy the amount of required tax withholding. Provided there are no adverse accounting consequences to the Company (a requirement to have liability classification of an award under FASB ASC Topic 718 is an adverse consequence), a Participant who is not required to have taxes withheld may require the Company to withhold in accordance with the preceding sentence as if the Award were subject to tax withholding requirements.

**Section 7.8** **<u>Action by Company or Subsidiary</u>**. Any action required or permitted to be taken by the Company or any Subsidiary shall be by resolution or unanimous written consent of its board of directors, or by action of one or more members of the board of directors (including a committee of the board of directors) who are duly authorized to act for the board of directors, or (except to the extent prohibited by applicable law or applicable rules of the Exchange on which the Company lists its securities) by a duly authorized officer of the Company or Subsidiary.

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**Section 7.9** **<u>Successors</u>**. All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of the successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.

**Section 7.10** **<u>Indemnification</u>**. To the fullest extent permitted by law and the Company's governing documents, each person who is or shall have been a member of the Committee, or of the Board of Directors, or an officer of the Company to whom authority was delegated in accordance with Section 5.3, or an Employee of the Company, shall be indemnified and held harmless by the Company against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys' fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute or regulation. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's articles of incorporation or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. The foregoing right to indemnification shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, provided, however, that, if required by applicable law, an advancement of expenses shall be made only upon delivery to the Company of an undertaking, by or on behalf of such persons to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified for such expenses.

**Section 7.11** **<u>No Fractional Shares</u>**. Unless otherwise permitted by the Committee, no fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award Agreement. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether the fractional shares or any rights thereto shall be forfeited or otherwise eliminated by rounding down.

**Section 7.12** **<u>Governing Law</u>**. The Plan, all Awards granted hereunder, and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of Maryland without reference to principles of conflict of laws, except as superseded by applicable federal law. The federal and state courts located in the State of Maryland, shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Award, each Participant and any other person claiming any rights under the Plan agrees to submit himself or herself and any legal action that brought with respect to the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.

**Section 7.13** **<u>Benefits Under Other Plans</u>**. Except as otherwise provided by the Committee or as set forth in a Qualified Retirement Plan, non-qualified plan or other benefit plan, Awards to a Participant (including the grant and the receipt of benefits) under the Plan shall be disregarded for purposes of determining the Participant's benefits under, or contributions to, any Qualified Retirement Plan, non-qualified plan and any other benefit plans maintained by the Participant's employer. The term "<u>Qualified Retirement Plan</u>" means any plan of the Company or a Subsidiary that is intended to be qualified under Code Section 401(a).

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**Section 7.14** **<u>Validity</u>**. If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of the Plan, but this Plan shall be construed and enforced as if the illegal or invalid provision has never been included herein.

**Section 7.15** **<u>Notice</u>**. Unless otherwise provided in an Award Agreement, all written notices and all other written communications to the Company provided for in the Plan or in any Award Agreement, shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its principal executive office. Notices, demands, claims and other communications shall be deemed given:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S. mail; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in the case of facsimile or email, the date upon which the transmitting party received confirmation of receipt; *provided, however,* that in no event shall any such communications be deemed to be given later than the date they are actually received, provided they are actually received.

If a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery service. Communications that are to be delivered by U.S. mail or by overnight service to the Company shall be directed to the attention of the Company's Corporate Secretary, unless otherwise provided in the Award Agreement.

**Section 7.16** **<u>Forfeiture Events</u>**. The Committee may specify in an Award Agreement that the Participant's rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. These events include, but are not limited to, termination of employment for Cause, termination of the Participant's provision of Services to the Company or any Subsidiary, violation of material Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct of the Participant that is detrimental to the business or reputation of the Company or any Subsidiary.

**Section 7.17** **<u>Awards Subject to Clawback</u>**. (a) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws, and the automatic forfeiture provisions under Section 304 of the Sarbanes-Oxley Act of 2002 apply as a result, any Participant who was an executive officer of the Company at the time of grant or at the time of restatement shall be subject to "clawback" as if the person was subject to Section 304 of the Sarbanes-Oxley Act of 2002.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Awards granted hereunder are subject to any Clawback Policy that may be adopted by the Company from time to time, whether pursuant to the provisions of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, implementing regulations thereunder, or otherwise

**Section 7.18** **<u>Automatic Exercise</u>**. In the sole discretion of the Committee exercised in accordance with Section 5.2(a), any Stock Options that are exercisable but unexercised as of the day immediately before the tenth anniversary of the date of grant (or other expiration date) may be automatically exercised, in accordance with procedures established for this purpose by the Committee, but only if the Exercise Price is less than the Fair Market Value of a share of Stock on that date and the automatic exercise will result in the

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issuance of at least one (1) whole share of Stock to the Participant after payment of the Exercise Price and any applicable tax withholding requirements. Payment of the Exercise Price and any applicable tax withholding requirements shall be made by a net settlement of the Stock Option whereby the number of shares of Stock to be issued upon exercise are reduced by a number of shares having a Fair Market Value on the date of exercise equal to the Exercise Price and any applicable tax withholding.

**Section 7.19** **<u>Regulatory Requirements</u>**. The grant and settlement of Awards shall be conditioned upon and subject to compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.

**<u>ARTICLE 8 — DEFINED TERMS; CONSTRUCTION</u>**

**Section 8.1** In addition to the other definitions contained herein, unless otherwise specifically provided in an Award Agreement, the following definitions shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "10% Stockholder" means an individual who, at the time of grant, owns Stock possessing more than 10% of the total combined voting power of all classes of Stock of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "Award" means any Stock Option, Restricted Stock Award or Restricted Stock Unit or any other right or interest relating to Stock or cash, granted to a Participant under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "Award Agreement" means the document (in whatever medium prescribed by the Committee and whether or not a signature is required or provided by a Participant) that evidences the terms and conditions of an Award. A copy of the Award Agreement shall be provided (or made available electronically) to each Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "Board of Directors" means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If the Participant is a party to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of termination for "Cause," then, for purposes of this Plan, the term "Cause" shall have meaning set forth in the agreement. In the absence of such a definition, "Cause" means termination because of a Participant's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Company's or the Bank's (or other Subsidiary's) Code of Ethics, material violation of the Sarbanes-Oxley Act of 2002 requirements for officers of public companies that in the reasonable opinion of either co-Chief Executive Officer (or Chief Executive Officer if there are no longer co-Chief Executive Officers) of the Company or the Bank or the Board of Directors will likely cause substantial financial harm or substantial injury to the reputation of the Bank or the Company, willfully engaging in actions that in the reasonable opinion of the Board of Directors will likely cause substantial financial harm or substantial injury to the business reputation of the Bank or the Company, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "Change in Control" has the meaning ascribed to it in Section 4.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "Code" means the Internal Revenue Code of 1986, as amended, and any rules, regulations and guidance promulgated thereunder, as modified from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "Director" means a member of the Board of Directors or of a board of directors of a Subsidiary.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If the Participant is a party to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of "Disability" or "Disabled," then, for purposes of this Plan, the terms "Disability" or "Disabled" shall have meaning set forth in that agreement. In the absence of such a definition, "Disability" shall be defined in accordance with the Bank's long-term disability plan. In the absence of a long-term disability plan or to the extent that an Award is subject to Code Section 409A, "Disability" or "Disabled" shall mean that a Participant has been determined to be disabled by the Social Security Administration. Except to the extent prohibited under Code Section 409A, if applicable, the Committee shall have discretion to determine if a Disability has occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "Disinterested Board Member" means a member of the Board of Directors who: (i) is not a current Employee of the Company or a Subsidiary; (ii) is not a former employee of the Company or a Subsidiary who received compensation for prior Services (other than benefits under a tax-qualified retirement plan) during the taxable year; (iii) has not been an officer of the Company or a Subsidiary for the past three (3) years; (iv) does not receive compensation from the Company or a Subsidiary, either directly or indirectly, for services as a consultant or in any capacity other than as a Director except in an amount for which disclosure would not be required pursuant to Item 404 of SEC Regulation S-K or any successor provision thereto; and (v) does not possess an interest in any other transaction, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(a) of SEC Regulation S-K or any successor provision thereto. The term Disinterested Board Member shall be interpreted in a manner as shall be necessary to conform to the requirements of Rule 16b-3 promulgated under the Exchange Act and the corporate governance standards imposed on compensation committees under the listing requirements imposed by any Exchange on which the Company lists or seeks to list its securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "Dividend Equivalent Right" means the right, associated with a Restricted Stock Unit, to receive a payment, in cash or shares of Stock, as applicable, equal to the amount of dividends paid on a share Stock, as specified in the Award Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "Employee" means any person employed by the Company or a Subsidiary, including Directors who are also employed by the Company or a Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "Exchange" means any national securities exchange on which the Stock may from time to time be listed or traded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended and the rules, regulations and guidance promulgated thereunder, as modified from time to to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) "Exercise Price" means the price established with respect to a Stock Option pursuant to Section 2.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) "Fair Market Value" on any date, means: (i) if the Stock is listed on an Exchange, national market system or automated quotation system, the closing sales price on that Exchange or over such system on that date or, in the absence of reported sales on that date, the closing sales price on the immediately preceding date on which sales were reported; or (ii) if the Stock is not listed on an Exchange, "Fair Market Value" shall mean a price determined by the Committee in good faith on the basis of objective criteria consistent with the requirements of Code Section 422 and applicable provisions of Code Section 409A.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) A termination of employment by an Employee Participant shall be deemed a termination of employment for "Good Reason" as a result of the Participant's resignation from the employ of the Company or any Subsidiary upon the occurrence of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a material diminution in Participant's base compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a material diminution in Participant's authority, duties or responsibilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) a change in the geographic location at which Participant must perform his duties that is more than twenty-five (25) miles from the location of Participant's principal workplace; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) notwithstanding the foregoing, in the event a Participant is a party to an employment, change in control, severance or similar agreement that provides a definition for "Good Reason" or a substantially similar term, then the occurrence of any event set forth in such definition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) "Involuntary Termination" means the Termination of Service of a Participant by the Company or Subsidiary (other than termination for Cause) or termination of employment by an Employee Participant for Good Reason.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) "Incentive Stock Option" or "ISO" has the meaning ascribed to it in Section 2.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) "Non-Qualified Option" means the right to purchase shares of Stock that is either: (i) designated as a Non-Qualified Option, (ii) granted to a Participant who is not an Employee; or (iii) granted to an Employee, but does not satisfy the requirements of Code Section 422.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) "Performance Award" means an Award that vests in whole or in part upon the achievement of one or more specified performance measures, as determined by the Committee. The conditions for grant or vesting and the other provisions of a Performance Award (including without limitation any applicable performance measures) need not be the same with respect to each recipient. A Performance Award shall vest, or as to Restricted Stock Units be settled, after the Committee has determined that the performance goals have been satisfied. Notwithstanding anything herein to the contrary, no Performance Award shall be granted under terms that will permit its accelerated vesting upon termination of Service (other than death or Disability or upon an Involuntary Termination following a Change in Control).

Performance measures can include, but are not limited to: book value or tangible book value per share; basic earnings per share (*e.g.,* earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization; or earnings per share); basic cash earnings per share; diluted earnings per share; return on assets; cash return on assets; return on equity; cash return on equity; return on tangible equity; cash return on tangible equity; net income or net income before taxes; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; cash efficiency ratio; operating efficiency ratio; financial return ratios; core earnings, capital; increase in revenue; total stockholder return; total shareholder return including special dividends; net operating income, operating income; net interest margin or net interest rate spread;

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cash flow; cash earnings; stock price; assets, growth in assets, loans or deposits, asset quality metrics, charge-offs, loan reserves, non-performing assets and loans, growth of loans, loan production volume; non-performing asset ratio; regulatory compliance or safety and soundness; achievement of balance sheet or income statement objectives and strategic business objectives, or any combination of these or other measures.

Performance measures may be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the Company or a Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. The terms of an Award may provide that partial achievement of performance measures may result in partial payment or vesting of the award or that the achievement of the performance measures may be measured over more than one period or fiscal year. In establishing any performance measures, the Committee may provide for the exclusion of the effects of the following items, to the extent the exclusion is set forth in the Award Agreement and identified in the audited financial statements of the Company, including footnotes, or in the Management's Discussion and Analysis section of the Company's annual report or in an earnings release or in the Compensation Discussion and Analysis Section, if any, of the Company's annual proxy statement: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) dividends declared on the Company's stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses incurred in connection with a merger, branch acquisition or similar transaction. Subject to the preceding sentence, if the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company or its Subsidiaries conducts its business or other events or circumstances render current performance measures to be unsuitable, the Committee may modify the performance measures, in whole or in part, as the Committee deems appropriate. Notwithstanding anything to the contrary herein, performance measures relating to any Award hereunder will be modified, to the extent applicable, to reflect a change in the outstanding shares of Stock of the Company by reason of any stock dividend or stock split, or a corporate transaction, such as a merger of the Company into another corporation, any separation of a corporation or any partial or complete liquidation by the Company or a Subsidiary. If a Participant is promoted, demoted or transferred to a different business unit during a performance period, the Committee may determine that the selected performance measures or applicable performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or eliminate the performance measures or change the applicable performance period; or (ii) cause to be made a cash payment to the Participant in an amount determined by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) "Restricted Stock" or "Restricted Stock Award" has the meaning ascribed to it in Section 2.3(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) "Restricted Stock Unit" has the meaning ascribed to it in Section 2.4(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) "Restriction Period" has the meaning set forth in Section 2.4(b)(iii).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) "SEC" means the United States Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) "Securities Act" means the Securities Act of 1933, as amended and the rules, regulations and guidance promulgated thereunder and modified from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) "Service" means service as an Employee or Director of the Company or a Subsidiary, as the case may be, and shall include service as a director emeritus or advisory director. Service shall not be deemed interrupted in the case of sick leave, military leave or any other absence approved by the Company or a Subsidiary, in the case of transferees between payroll locations or between the Company, a Subsidiary or a successor.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) "Stock" means the common stock of the Company, $0.01 par value per share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) "Stock Option" has the meaning ascribed to it in Section 2.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) "Subsidiary" means any corporation, affiliate, bank or other entity which would be a subsidiary corporation with respect to the Company as defined in Code Section 424(f) and, other than with respect to an ISO, shall also mean any partnership or joint venture in which the Company and/or other Subsidiary owns more than 50% of the capital or profits interests.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) "Termination of Service" means the first day occurring on or after a grant date on which the Participant ceases to be an Employee or Director (including a director emeritus or advisory director) of the Company or any Subsidiary, regardless of the reason for such cessation, subject to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Participant's cessation as an Employee shall not be deemed to occur by reason of the Participant's being on a bona fide leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant's Services, provided the leave of absence does not exceed six (6) months, or if longer, so long as the Employee retains a right to reemployment with the Company or Subsidiary under an applicable statute or by contract. For these purposes, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Employee will return to perform Services for the Company or Subsidiary. If the period of leave exceeds six (6) months and the Employee does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the six-month period. For purposes of this sub-section, to the extent applicable, an Employee's leave of absence shall be interpreted by the Committee in a manner consistent with Treasury Regulation Section 1.409A-1(h)(1).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If, as a result of a sale or other transaction, the Subsidiary for whom Participant is employed (or to whom the Participant is providing Services) ceases to be a Subsidiary, and the Participant is not, following the transaction, an Employee of the Company or an entity that is then a Subsidiary, then the occurrence of the transaction shall be treated as the Participant's Termination of Service caused by the Participant being discharged by the entity by which the Participant is employed or to which the Participant is providing Services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Except to the extent Code Section 409A may be applicable to an Award, and subject to the foregoing paragraphs of this sub-section, the Committee shall have discretion to determine if a Termination of Service has occurred and the date on which it occurred. In the event that any Award under the Plan constitutes Deferred Compensation (as defined in Section 2.6), the term Termination of Service shall be interpreted by the Committee in a manner consistent with the definition of "Separation from Service" as defined under Code Section 409A and under Treasury Regulation Section 1.409A-1(h)(ii). For purposes of this Plan, a "Separation from Service" shall have occurred if the employer and Participant reasonably anticipate that no further Services will be performed by the Participant after the date of the Termination of Service (whether as an Employee or as an independent contractor) or the level of further Services performed will be less than 50% of the average level of bona fide Services in the thirty-six (36) months immediately preceding the Termination of Service. If a Participant is a "Specified Employee," as defined in Code Section 409A and any payment to be made hereunder shall be determined to be subject to Code Section 409A, then if required by Code Section 409A, the payment or a portion of the payment (to the minimum extent possible) shall be delayed and shall be paid on the first day of the seventh month following Participant's Separation from Service.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) With respect to a Participant who is a Director, cessation as a Director will not be deemed to have occurred if the Participant continues as a director emeritus or advisory director. With respect to a Participant who is both an Employee and a Director, termination of employment as an Employee shall not constitute a Termination of Service for purposes of the Plan so long as the Participant continues to provide Service as a Director or director emeritus or advisory director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) "Voting Securities" means any securities which ordinarily possess the power to vote in the election of directors without the happening of any pre-condition or contingency.

**Section 8.2** In this Plan, unless otherwise stated or the context otherwise requires, the following uses apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) actions permitted under this Plan may be taken at any time and from time to time in the actor's reasonable discretion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor, as in effect at the relevant time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in computing periods from a specified date to a later specified date, the words "from" and "commencing on" (and the like) mean "from and including," and the words "to," "until" and "ending on" (and the like) mean "to, but excluding";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) indications of time of day mean Eastern Time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "including" means "including, but not limited to";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) all references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise specified;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) all words used in this Plan will be construed to be of the gender or number as the circumstances and context require;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Plan have been inserted solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its provisions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) all accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles in the United States of America.

## Exhibit 10.9

**Exhibit 10.9** 

**BAY-VANGUARD FEDERAL SAVINGS BANK** 

**AMENDED AND RESTATED** 

**SUPPLEMENTAL DIRECTOR RETIREMENT AGREEMENT** 

Effective the 1<sup>st</sup> day of January, 2008, this AMENDED AND RESTATED SUPPLEMENTAL DIRECTOR RETIREMENT AGREEMENT ("Agreement"), between Bay-Vanguard Federal Savings Bank ("Bank"), a bank located in Baltimore, Maryland, and Brian K. McHale ("Director"), amends and restates the Director Supplemental Retirement Plan Director Agreement, originally executed between the parties on November 11, 2002.

**Article 1 - Benefits Tables** 

The following tables describe the benefits available to the Director, or the Director's Beneficiary, upon the occurrence of certain events. Capitalized terms have the meanings given them in Article 3. Except for death, each benefit described is in lieu of any other benefit herein.

**Table A: Retirement Benefit** 

**Normal Retirement Age ("NRA") = 70** 

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| | | | |
|:---|:---|:---|:---|
| **Distribution Event** | **Amount of Benefit** | **Form of Benefit** | **Timing of Benefit Distribution** |
| Separation from Service following Normal Retirement Age | $6,100 per year | Monthly installments | Payments begin: Within 30 days following Separation from Service; Duration of payments: 10 years |

---

**Table B: Benefit Available Prior to Retirement** 

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| | | | |
|:---|:---|:---|:---|
| **Distribution Event** | **Amount of Benefit** | **Form of Benefit** | **Timing of Benefit Distribution** |
| Voluntary Separation from Service | Accrued Liability Balance, as of Separation from Service | Unreduced lump sum | Payments begin: Within 30 days following Separation from Service |
| Involuntary Separation from Service | Accrued Liability Balance, as of Separation from Service | Unreduced lump sum | Payments begin: Within 30 days following Separation from Service |
| Change in Control | $6,100 per year | Monthly installments | Payments begin: Within 30 days following a Change in Control<br> Duration: 10 years |

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**Table C: Death Benefit** 

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| | | | |
|:---|:---|:---|:---|
| **Distribution Event** | **Amount of Benefit** | **Form of Benefit** | **Timing of Benefit Distribution** |
| Death (while actively serving) | 100% of the Accrued Liability Balance | Unreduced Lump sum | Payment(s) begin (to Beneficiary): 30 days following Executive's death |
| Death (during installment payout of benefit under Tables A or B) | Remaining installment payments, if any, under Table A or B | Monthly installments | Payments to Beneficiary continue on same schedule as if Director had lived. |

---

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**Article 2 - Purpose** 

The purpose of this Agreement is to further the growth and development of the Bank by providing Director with supplemental retirement income, and thereby encourage Director's productive efforts on behalf of the Bank and the Bank's shareholders, and to align the interests of the Director and those shareholders. The Bank promises to make certain payments to the Participant, or the Participant's Beneficiary, at retirement, death, or upon some other qualifying event pursuant to the terms of this Agreement.

**Article 3 - Definitions and Construction** 

It is intended that this Agreement comply and be construed in accordance with Section 409A of the Internal Revenue Code (the "Code"). It is also intended that the Agreement be "unfunded" and maintained for a select group of management or highly compensated employees of the Bank, for purposes of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and not be construed to provide income to the Director or Beneficiary under Code prior to actual receipt of benefits.

Where the following words and phrases appear in the Agreement, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary:

3.1 "Accrued Liability Balance" shall mean the amount accrued by the Bank to fund the future benefit
expense associated with this Agreement. The Bank shall account for this benefit using Generally Accepted Accounting Principles, regulatory accounting guidance of the Bank's primary federal regulator, and other applicable accounting guidance,
including APB 12 and FAS 106. Accordingly, the Bank shall establish a liability retirement account for the Director into which appropriate accruals shall be made using a reasonable discount rate, which is at least equal to the Applicable Federal
Rate (AFR), and which may be adjusted from time to time.

3.2 "Board" shall mean the Board of Directors of the Bank.

3.3 "Beneficiary" shall mean the person(s) designated by the Director, including the estate of the
Director, entitled to a benefit under this Agreement.

3.4 "Change in Control" shall mean a change in ownership or control of the Bank as defined in Treasury
Regulation § **  l.409A-3(i)(5) or any subsequently applicable published authority or guidance.

3.5 "Effective Date" shall mean January 1, 2008.

3.6 "Involuntary Separation from Service" shall mean that the Bank terminates Director's service at
any time before Director's Normal Retirement Age and such termination is not considered a Termination for Cause.

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3.7 "Present Value" shall mean: All lump sum distributions under this Plan shall be discounted to present
value using a discount rate under IRC Section 1274, Table 1 Applicable Federal Rates (AFR) for the month in which a required calculation is made by using 130% of the Long Term Annual rate set forth.

3.8 "Separation from Service" shall mean that the Director has retired or otherwise has a termination of
service with the Bank. For purposes of this Agreement, whether a termination of service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Director reasonably anticipated that no further services would
be performed after a certain date, or that the level of bona fide services the Director would perform after such date would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed over the
immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Director has been providing services to the Bank less than 36 months). Facts and circumstances to be
considered in making this determination include, but are not limited to, whether the Director continues to be treated as an Director for other purposes (such as continuation of salary and participation in Director benefit programs), whether
similarly situated service providers have been treated consistently, and whether the Director is permitted, and realistically available, to perform services for other service recipients in the same line of business. A Director will be presumed not
to have separated from service where the level of bona fide services performed continues at a level that is fifty percent (50%) or more of the average level of service performed by the Director during the immediately preceding thirty-six (36) month period. A Separation from Service will not be deemed to have occurred while the Director is on military leave, sick leave, or other bona fide leave of absence, provided Director has the
right to continue service under an applicable statute or by contract.

3.9 "Termination for Cause" shall mean:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Gross negligence or gross neglect of duties to the Bank; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the
Director's service with the Bank; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in
connection with the Director's service and resulting in a material adverse effect on the Bank.

3.10 "Voluntary Separation from Service" shall mean the Director terminates service with the Bank prior to
Normal Retirement Age for reasons other than death, disability, Termination for Cause, or Separation from Service following a Change in Control.

**Article 4 - Beneficiary** 

4.1 <u>Beneficiary</u>. Director shall have the right to name a Beneficiary of the death benefit, if any, described
in Article 1 herein. Director shall have the right to name such Beneficiary at any time prior to Director's death and submit it to the Plan Administrator (or Plan Administrator's representative) on the form provided. Once received and
acknowledged by the Plan Administrator, the form shall be effective. The Director may change a Beneficiary designation at any time by submitting a new form to the Plan Administrator. Any such change shall follow the same rules as for the original
Beneficiary designation and shall automatically supersede the existing Beneficiary form on file with the Plan Administrator.

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4.2 <u>Failure to Designate a Beneficiary</u>. If Director dies without a valid Beneficiary designation on file
with the Plan Administrator, the Director's surviving spouse, if any, shall become the designated Beneficiary. If Director has no surviving spouse, death benefits shall be paid to the personal representative of Director's estate.

4.3 <u>Facility of Distribution</u>. If the Plan Administrator 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 Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person
having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of
a benefit shall be a distribution for the account of the Director and the Beneficiary, as the case may be. and shall be a complete discharge of any liability under the Agreement for such distribution amount.

**Article 5 - General Limitations** 

5.1 <u>Termination for Cause</u>. Notwithstanding any provision of this Agreement to the contrary, the Bank shall
not distribute any benefit under this Agreement if the Director suffers a "Termination for Cause" (as defined in Section 3.9 above).

5.2 <u>Removal</u>. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute
any benefit under this Agreement if the Director is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

**Article 6 - Administration of Agreement** 

6.1 <u>Plan Administrator</u>. The Bank shall be the Plan Administrator, unless the Bank appoints a committee to be
the Plan Administrator. The Bank may appoint a Committee ("Committee") of one or more individuals in the service of Bank for the purpose of discharging the administrative responsibilities of the Bank under the Plan. The Bank may remove a
Committee member for any reason by giving such member ten (10) days' written notice and may thereafter fill any vacancy thus created. The Committee shall represent the Bank in all matters concerning the administration of this Plan;
provided however, the final authority for all administrative and operational decisions relating to the Plan remains with the Bank.

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6.2 <u>Authority of Plan Administrator</u>. The Plan Administrator shall have full power and authority to adopt
rules and regulations for the administration of the Plan, provided they are not inconsistent with the provisions of this Plan, and Section 409A of the Code, to interpret, alter, amend or revoke any rules and regulations so adopted, to enter
into contracts on behalf of the Bank with respect to this Agreement, to make discretionary decisions under this Plan, to demand satisfactory proof of the occurrence of any event that is a condition precedent to the commencement of any payment or
discharge of any obligation under the Plan, and to perform any and all administrative duties under this Plan.

6.3 <u>Recusal.</u> An individual serving as Plan Administrator may be eligible to participate in the Plan, but
such person shall not be entitled to participate in discretionary decisions under Article 7 relating to such person's own interests in the Plan.

6.4 <u>Agents.</u> In the administration to the Agreement, the Plan Administrator 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 be counsel to the Bank.

6.5 <u>Binding Effect of Decisions</u>. The decision or action of the Plan Administrator with respect to any
question arising out of or in connection with the administration, interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in
the Agreement.

6.6 <u>Indemnity of Plan Administrator</u>. The Bank shall indemnify and hold harmless the Plan Administrator and
its agents 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 Plan Administrator.

6.7 <u>Bank Information</u>. To enable the Plan Administrator to perform its functions, the Bank shall supply full
and timely information to the Plan Administrator on all matters relating to the date and circumstances of any event triggering a benefit hereunder.

6.8 <u>Annual Statement</u>. The Plan Administrator shall provide to the Bank, on the schedule set forth in the
Administrative Services Contract, a statement setting forth the benefits to be distributed under this Agreement.

**Article** 7

**Claims And Review Procedures** 

7.1 <u>Claims Procedure</u>. A Director or Beneficiary ("claimant") who has not received benefits under
the Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.1 <u>Initiation – Written Claim</u>. The claimant initiates a claim by submitting to the Plan Administrator
a written claim for the benefits.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.2 <u>Timing of Plan Administrator Response</u>. The Plan Administrator shall respond to such claimant within 90
days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional 90 days by notifying the
claimant in writing, prior to the end of the initial 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 Plan
Administrator expects to render its decision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.3 <u>Notice of Decision</u>. If the Plan Administrator denies part or all of the claim, the Plan Administrator
shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a 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;(a) The specific reasons for the denial;

&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;(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;(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;(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.

7.2 Review Procedure. If the Plan Administrator denies part or all of the claim, the claimant shall have the
opportunity for a full and fair review by the Plan Administrator of the denial, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.1 <u>Initiation - Written Request</u>. To initiate the review, the claimant, within 60 days after receiving the
Plan Administrator's notice of denial, must file with the Plan Administrator a written request for review.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.2 <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 Plan Administrator 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;&nbsp;&nbsp;7.2.3 <u>Consideration on Review</u>. In considering the review, the Plan Administrator 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;&nbsp;&nbsp;7.2.4 <u>Timing of Plan Administrator Response</u>. The Plan Administrator shall respond in writing to such claimant
within 60 days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by 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 Plan Administrator expects to render its decision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.5 <u>Notice of Decision</u>. The Plan Administrator shall notify the claimant in writing of its decision on
review. The Plan Administrator shall write the notification in a 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;(a) The specific reasons for the denial;

&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;(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;(d) A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

**Article 8 - Amendments and Termination** 

8.1 This Agreement may be amended or terminated unilaterally by the Bank, except where an amendment or termination
would materially reduce the Director's vested benefit, in which case the Director's consent shall be required.

8.2 <u>Subsequent Changes to Time and Form of Payment</u>: The Bank may permit a subsequent change to the time and
form of benefit distributions. Any such change shall be considered made only when it becomes irrevocable under the terms of the Agreement. Any change will be considered irrevocable not later than thirty (30) days following acceptance of the
change by the Plan Administrator, subject to the following rules:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the subsequent deferral election may not take effect until at least twelve (12) months after the date on
which the election is made;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the payment (except in the case of death, disability, or unforeseeable emergency) upon which the subsequent
deferral election is made is deferred for a period of not less than five (5) years from the date such payment would otherwise have been paid; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) in the case of a payment made at a specified time, the election must be made not less than twelve
(12) months before the date the payment is scheduled to be paid.

------

**Article 9 - Miscellaneous** 

9.1 <u>Binding Effect</u>. This Agreement shall bind the Director and the Bank, and their beneficiaries, survivors,
executors, administrators and transferees.

9.2 <u>No Guarantee of Service</u>. This Agreement is not a contract for service. It does not give the Director the
right to remain as a director of the Bank, nor does it interfere with the Bank's right to discharge the Director. It also does not require the Director to remain a director nor interfere with the Director's right to terminate service at
any time.

9.3 <u>Non-Transferability</u>. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.

9.4 <u>Tax Withholding</u>. The Bank shall withhold any taxes that are required to be withheld from the benefits
provided under this Agreement. The Director acknowledges that the Bank's sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies).

9.5 <u>Applicable Law.</u> The Agreement and all rights hereunder shall be governed by the laws of the state of
Maryland, except to the extent preempted by the laws of the United States of America.

9.6 <u>Unfunded Arrangement</u>. The Director is a general unsecured creditor of the Bank for the distribution of
benefits under this Agreement. The benefits represent the mere promise by the Bank to distribute such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life or other informal funding asset is a general asset of the Bank to which the Director has no preferred or secured claim.

9.7 <u>Reorganization</u>. The Bank shall not merge or consolidate into or with another bank, or reorganize, or
sell substantially all of its assets to another bank, firm, or person unless such succeeding or continuing bank, 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 bank.

9.8 <u>Entire Agreement</u>. This Agreement constitutes the entire agreement between the Bank and the Director as
to the subject matter hereof. No rights are granted to the Director by virtue of this Agreement other than those specifically set forth herein.

9.9 <u>Interpretation</u>. Wherever the fulfillment of the intent and purpose of this Agreement requires, and the
context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

------

9.10 <u>Alternative Action</u>. In the event it shall become impossible for the Bank or the Plan Administrator to
perform any act required by this Agreement, the Bank or Plan Administrator may in its discretion perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Bank.

9.11 <u>Headings</u>. Article and section headings are for convenient reference only and shall not control or affect
the meaning or construction of any of its provisions.

9.12 <u>Validity</u>. In case any provision of this Agreement shall be illegal or invalid for any reason, said
illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal and invalid provision has never been inserted herein.

9.13 <u>Notice</u>. Any notice or filing required or permitted to be given to the Bank or Plan Administrator under
this Agreement shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

<u>7114 North Point Road</u> 

<u>Baltimore, Maryland 21219</u> 

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 on the receipt for registration or certification.

Any notice or filing required or permitted to be given to the Director under this Agreement shall be sufficient if in writing and hand-delivered, or sent by mail, to the last know address of the Director.

9.14 <u>Opportunity to Consult with Independent Advisors.</u> The Director acknowledges that he has been afforded
the opportunity to consult with independent advisors of his choosing including, without limitation, accountants or tax advisors and counsel regarding both the benefits granted to him under the terms of this Agreement and the (i) terms and
conditions which may affect the Director's right to these benefits, and (ii) personal tax effects of such benefits including, without limitation, the effects of any federal or state taxes, Section 2800 of the Code, Section 409A
of the Code, and any other taxes, costs, expenses or liabilities whatsoever related to such benefits, which in any of the foregoing instances the Director acknowledges and agrees shall be the sole responsibility of the Director notwithstanding any
other term or provision of this Agreement. The Director further acknowledges and agrees that the Bank shall have no liability whatsoever related to any such personal tax effects or other personal costs, expenses, or liabilities applicable to the
Director and further specifically waives any right for himself or herself, and his or her heirs, beneficiaries, legal representatives, agents, successor and assign to claim or assert liability on the part of the Bank related to the matters described
above in this Section 9.14. The Director further acknowledges that he has read, understands and consents to all of the terms and conditions of this Agreement, and that he enters into this Agreement with a full understanding of its terms and
conditions.

------

9.15 Restriction on Timing of Distribution. Solely to the extent necessary to avoid penalties under
Section 409A, distributions under this Agreement may not commence earlier than six (6) months after a Separation from Service (as described under the "Separation from Service" provision herein) if, pursuant to Internal Revenue
Code Section 409A, the participant hereto is considered a "specified employee" of a publicly-traded company, as defined under 409A. In the event a distribution is delayed pursuant to this Section, the originally scheduled distribution
shall be delayed for six (6) months, and shall commence instead on the first day of the seventh month following Separation from Service. If payments are scheduled to be made in installments, the first six (6) months of installment payments
shall be delayed, aggregated, and paid instead on the first day of the seventh month, after which all installment payments shall be made on their regular schedule. If payment is scheduled to be made in a lump sum, the lump sum payment shall be
delayed for six (6) months and instead be made on the first day of the seventh month.

9.16 <u>Certain Accelerated Payments</u>: The Bank may make any accelerated distribution permissible under Treasury
Regulation 1.409A-3(j)(4), provided that such distribution(s) meets the requirements of Section l.409A-3(j)(4).

**(signatures on following page)** 

------

IN WITNESS WHEREOF, the Director and a duly authorized representative of the Bank have signed this Agreement.

---

| | | |
|:---|:---|:---|
| **DIRECTOR:** | **BANK:** | **BANK:** |
|  | **BAY-VANGUARD FEDERAL SAVINGS BANK** | **BAY-VANGUARD FEDERAL SAVINGS BANK** |
| /s/ Brian K. McHale | By | /s/ Edmund T. Leonard |
| Brian K. McHale | Title Chairman | Title Chairman |

---

## Ex-21

**Exhibit 21** 

**Subsidiaries of BV Financial Inc.** 

---

| | | |
|:---|:---|:---|
| Name | Percent Ownership | State of Incorporation |
|  BayVanguard Bank | 100% | Maryland |
|  Easton Capital Trust I | 100% | Delaware |

---

**Subsidiaries of BayVanguard Bank** 

---

| | | |
|:---|:---|:---|
| Name | Percent Ownership | State of Incorporation |
|  BV Real Estate, LLC | 100% | Maryland |
|  1920 Rock Spring Road, LLC | 100% | Maryland |
|  Idlewild Properties, LLC | 100% | Maryland |

---

## Exhibit 23.2

**Exhibit 23.2**![LOGO](g447808dsp101.jpg)

March 13, 2023

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

7114 North Point Road

Baltimore, Maryland 21219

Members of the Boards of Directors:

We hereby consent to the use of our firm's name in the Application for Conversion, and any amendments thereto, to be filed with the Federal Reserve Board, and in the Registration Statement on Form S-1, and any amendments thereto, to be filed with the Securities and Exchange Commission. We also hereby consent to the inclusion of, summary of and references to our Valuation Appraisal Report and any Valuation Appraisal Report Updates and our statement concerning subscription rights and liquidation rights in such filings including the prospectus and proxy statement/prospectus of BV Financial, Inc. We also consent to the reference to our firm under the heading "Experts" in the prospectus and proxy statement/prospectus.

---

| |
|:---|
| Sincerely, |
| RP<sup>®</sup> FINANCIAL, LC. |
| ![LOGO](g447808rpsig.jpg) |

---

------

---

| | |
|:---|:---|
| 1311-A Dolley Madison Boulevard, Suite 2A | Telephone: (703) 528-1700 |
| McLean, VA 22101 | Fax No.: (703) 528-1788 |
| www.rpfinancial.com | Toll-Free No.: (866) 723-0594 |
|  | E-Mail: mail@rpfinancial.com |

---

## Exhibit 23.3

**Exhibit 23.3** 

**Consent of Independent Registered Public Accounting Firm** 

We consent to the incorporation by reference in this Registration Statement on Form S-1 of BV Financial, Inc. for the registration of common stock, of our report dated March 13, 2023, with respect to the consolidated financial statements of BV Financial, Inc. as of December 31, 2022 and 2021, and for each of the years in the two-year period ended December 31, 2022, which appears in this registration statement. We also consent to the reference to our firm under the caption "Experts" in this registration statement.

/s/ FORVIS, LLP (Formerly, Dixon Hughes Goodman LLP)

**Richmond, Virginia** 

**March 13, 2023**

## Exhibit 99.1

**Exhibit 99.1**![LOGO](g447808dsp101.jpg)

December 2, 2022

Mr. David M. Flair, Co-President and Co-CEO

Mr. Michael J. Dee, EVP and CFO

BV Financial, Inc. / BayVanguard Bank

7114 North Point Road

Sparrows Point, Maryland 21219

Dear Messrs. Flair and Dee:

This letter sets forth the agreement between BayVanguard Bank, Sparrows Point, Maryland (the "Bank"), wholly-owned by BV Financial, Inc. (the "Company"), which in turn is the mid-tier holding company majority owned by Bay-Vanguard, MHC (the "MHC"), collectively, "Bay-Vanguard" or the "Company," and RP<sup>®</sup> Financial, LC. ("RP Financial"), whereby RP Financial will provide the independent conversion appraisal services in conjunction with Bay-Vanguard's second step conversion offering.

The scope, timing and fee structure for these appraisal services are described below. These appraisal services will be directed by the undersigned, with the assistance of other RP Financial staff members.

***<u>Description of Appraisal Services</u>***

Pursuant to this appraisal engagement, RP Financial will conduct financial due diligence of Bay-Vanguard, for the purpose of estimating the pro forma market value of the Company in accordance with the applicable regulatory appraisal guidelines. Such due diligence will include senior management interviews and reviews of historical and pro forma financial information to be included in the prospectus and other documents and records, to gain insight into the operations, financial condition, profitability, market area, risks and various internal and external factors. RP Financial will prepare a detailed written valuation report of the Company consistent with applicable regulatory appraisal guidelines and standard pro forma valuation practices. The appraisal report will include an analysis of the Company's financial condition and operating results, as well as an assessment of the interest rate, credit, and liquidity risks. The appraisal report will incorporate an evaluation of the Company's business strategies, recent transactions, market area, future prospects, and intended use of proceeds. RP Financial will select a peer group of relatively comparable public banking companies for the purpose of determining appropriate valuation adjustments for the Company relative to the peer group's pricing ratios based on key fundamental differences.

We will review pertinent sections of the Company's prospectus and conduct discussions with representatives of the Company and its other conversion advisors to obtain necessary data and information for the appraisal report, including key deal elements such as dividend policy, use of proceeds, reinvestment rate, tax rate, offering expenses, and characteristics of stock plans.

------

---

| | |
|:---|:---|
| 1311-A Dolley Madison Blvd. | Direct: (703) 647-6549 |
| Suite 2A | Main: (703) 528-1700 |
| McLean, VA 22101 | Fax: (703) 528-1788 |
| joren@rpfinancial.com | www.rpfinancial.com |

---

------

*Mr. David M. Flair* 

*Mr. Michael J. Dee* 

*December 2, 2022* 

 *Page 2* 

The original appraisal report will establish a midpoint pro forma market value in accordance with applicable regulatory requirements. The appraisal report may be periodically updated throughout the conversion process, and there will be at least one updated appraisal that would be prepared at the time of the closing of the stock offering to determine the number of shares to be issued in accordance with the conversion regulations. In the event of a syndicated community offering, it will be necessary to file an update in conjunction with the close of the subscription offering and prior to the pricing phase in the syndicated community offering.

RP Financial agrees to deliver the original appraisal report and subsequent updates, in writing, to the Company at the above address in conjunction with the filing of the regulatory conversion applications and amendments thereto. Subsequent updates, upon authorization by the Company, will be filed promptly as certain events occur which would warrant the preparation and filing of such appraisal updates pursuant to regulatory guidelines. Further, RP Financial agrees to perform such other services as are necessary or required in connection with the regulatory review of the appraisal and respond to the regulatory comments regarding the original appraisal and subsequent updates.

In the event of a syndicated community offering phase, RP Financial will participate in the various all hands calls regarding the offering results, pricing discussions and timing.

RP Financial will present the appraisal report, including the appraisal methodology, peer group selection and assumptions, to the Board of Directors for review. If appropriate, RP Financial will present subsequent updates to the Board. It is understood that such presentations may be made telephonically.

***<u>Fee Structure and Payment Schedule</u>***

The Company agrees to pay RP Financial fees for preparation and delivery of the original appraisal report and subsequent appraisal updates as shown below, plus reimbursable expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• $15,000 upon execution of this letter of agreement engaging RP Financial's appraisal services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• $105,000 upon delivery of the completed original appraisal report; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• $15,000 upon delivery of each subsequent appraisal update report required in conjunction with the regulatory
application and stock offering.

The Company will reimburse RP Financial for reasonable out-of-pocket expenses incurred in preparation of the original appraisal and subsequent updates. Such out-of-pocket expenses will likely include travel, printing, communications, shipping, computer and data services, and will not exceed $10,000 in the aggregate, without the Company's authorization to exceed this level. In the event travel is not practical or unsafe due to the COVID-19 pandemic or other reasons, RP Financial and the Company agree to make other arrangements, such as telephonic or videoconference meetings.

------

*Mr. David M. Flair* 

*Mr. Michael J. Dee* 

*December 2, 2022* 

 *Page 3* 

In the event the Company shall, for any reason, discontinue the proposed transaction prior to delivery of the completed original appraisal report or subsequent updates and payment of the corresponding fees, the Company agrees to compensate RP Financial according to RP Financial's standard billing rates for consulting services based on accumulated and verifiable time expenses, not to exceed the respective fee caps noted above, after applying full credit to the initial retainer fee towards such payment, together with reasonable out-of-pocket expenses, subject to the cap on such expenses as set forth above. RP Financial's standard billing rates range from $125 per hour for research associates to $550 per hour for managing directors.

If during the course of the proposed transaction, unforeseen events occur so as to materially change the nature or the work content of the services described in this contract, the terms of said contract shall be subject to renegotiation by the Company and RP Financial. Such unforeseen events shall include, but not be limited to, material changes to the structure of the transaction such as inclusion of a simultaneous business combination transaction, material changes in the conversion regulations, appraisal guidelines or processing procedures as they relate to conversion appraisals, material changes in management or procedures, operating policies or philosophies, and excessive delays or suspension of processing of conversion applications by the regulators such that completion of the conversion transaction requires the preparation by RP Financial of a new appraisal.

***<u>Covenants, Representations and Warranties</u>***

The Company and RP Financial agree to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Company agrees to make available or to supply to RP Financial such information with respect to its business and financial condition as RP Financial may reasonably request in order to provide the aforesaid valuation. Such information heretofore or hereafter supplied or made available to RP Financial shall include: annual financial statements, periodic regulatory filings and material agreements, debt instruments, off balance sheet assets or liabilities, commitments and contingencies, unrealized gains or losses and corporate books and records. All information provided by the Company to RP Financial shall remain strictly confidential (unless such information is otherwise made available to the public), and if the conversion is not consummated or the services of RP Financial are terminated hereunder, RP Financial shall promptly return to the Company the original and any copies of such information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Company represents and warrants to RP Financial that any information provided to RP Financial does not and will not, to the best of the Company's knowledge, at the times it is provided to RP Financial, contain any untrue statement of a material fact or in response to informational requests by RP Financial fail to state a material fact necessary to make the statements therein not false or misleading in light of the circumstances under which they were made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. (a) The Company agrees that it will indemnify and hold harmless RP Financial, any affiliates of RP Financial, the respective members, officers, agents and employees of RP Financial or their successors and assigns who act for or on behalf of RP Financial in connection with the services called for under this agreement (hereinafter referred to as "RP Financial"), from and against any and all losses, claims, damages and liabilities (including, but not limited to, reasonable attorneys' fees, and all losses and expenses in connection with claims under the federal securities laws) attributable to (i) any untrue statement or alleged untrue statement of a material fact contained in the financial statements or other information furnished or otherwise provided by the

------

*Mr. David M. Flair* 

*Mr. Michael J. Dee* 

*December 2, 2022* 

 *Page 4* 

Company to RP Financial, either orally or in writing; (ii) the omission or alleged omission of a material fact from the financial statements or other information furnished or otherwise made available by the Company to RP Financial; or (iii) any action or omission to act by the Company, or the Company's respective officers, directors, employees or agents, which action or omission is undertaken in bad faith or is negligent. The Company will be under no obligation to indemnify RP Financial hereunder if a court determines that RP Financial was negligent or acted in bad faith with respect to any actions or omissions of RP Financial related to a matter for which indemnification is sought hereunder. Reasonable time devoted by RP Financial to situations for which RP Financial is deemed entitled to indemnification hereunder, shall be an indemnifiable cost payable by the Company at the normal hourly professional rate chargeable by such employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) RP Financial shall give written notice to the Company of such claim or facts within thirty days of the assertion of any claim or discovery of material facts upon which RP Financial intends to base a claim for indemnification hereunder, including the name of counsel that RP Financial intends to engage in connection with any indemnification related matter. In the event the Company elects, within seven days of the receipt of the original notice thereof, to contest such claim by written notice to RP Financial, the Company shall not be obligated to make payments under Section 3(c), but RP Financial will be entitled to be paid any amounts payable by the Company hereunder within five days after the final non-appealable determination of such contest either by written acknowledgement of the Company or a decision of a court of competent jurisdiction or alternative adjudication forum, unless it is determined in accordance with Section 3(c) hereof that RP Financial is not entitled to indemnity hereunder. If the Company does not so elect to contest a claim for indemnification by RP Financial hereunder, RP Financial shall (subject to the Company's receipt of the written statement and undertaking under Section 3(c) hereof) be paid promptly and in any event within thirty days after receipt by the Company of detailed billing statements or invoices for which RP Financial is entitled to reimbursement under Section 3(c) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subject to the Company's right to contest under Section 3(b) hereof, the Company shall pay for or reimburse the reasonable expenses, including reasonable attorneys' fees, incurred by RP Financial in advance of the final disposition of any proceeding within thirty days of the receipt of such request if RP Financial furnishes the Company: (1) a written statement of RP Financial's good faith belief that it is entitled to indemnification hereunder; (2) a written undertaking to repay the advance if it ultimately is determined in a final, non-appealable adjudication of such proceeding that RP Financial is not entitled to such indemnification; and (3) a detailed invoice of the expenses for which reimbursement is sought.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In the event the Company does not pay any indemnified loss or make advance reimbursements of expenses in accordance with the terms of this agreement, RP Financial shall have all remedies available at law or in equity to enforce such obligation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Any indemnification payments to be made by the Company hereunder are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (12 USC 1828(k)) and the Regulations promulgated thereunder by the Federal Deposit Insurance Corporation (12 CFR Part 359).

This agreement constitutes the entire understanding of the Company and RP Financial concerning the subject matter addressed herein, and such contract shall be governed and construed in accordance with the Commonwealth of Virginia. This agreement may not be modified, supplemented or amended except by written agreement executed by both parties.

------

*Mr. David M. Flair* 

*Mr. Michael J. Dee* 

*December 2, 2022* 

 *Page 5* 

The Company and RP Financial are not affiliated, and neither the Company nor RP Financial 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. RP 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 of the federal banking agencies or otherwise prohibit or restrict in anyway RP Financial from serving in the role of independent appraiser for the Company.

\* \* \* \* \* \* \* \* \* \* \*

Please acknowledge your agreement to the foregoing by signing as indicated below and returning to RP Financial a signed copy of this letter, together with the initial retainer fee of $15,000.

---

| | | |
|:---|:---|:---|
|  |  | Sincerely, |
|  |  | ![LOGO](g447808g0304045823373.jpg) |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;James J. Oren |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Director |
| Agreed to and Accepted by: |  | David M. Flair, Co-President and Co-CEO; or, |
|  |  | Michael J. Dee, EVP/Chief Financial Officer |
|  | Name: | /s/ Michael J. Dee |
|  | Title: | EVP/Chief Financial Officer |

---

For: BayVanguard Bank, subsidiary of BV Financial, Inc.,

Sparrows Point, Maryland

Date Executed: December 2, 2022

## Exhibit 99.2

**Exhibit 99.2**![LOGO](g447808dsp101.jpg)

March 9, 2023

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

7114 North Point Road

Baltimore, Maryland 21219

Re: Plan of Conversion

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

Members of the Boards of Directors:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion (the "Plan") adopted by the Boards of Directors of Bay-Vanguard, M.H.C., Inc. (the "MHC") and BV Financial, Inc. ("BV Financial"). As a result of the conversion, the MHC will be merged into BV Financial and as a result the MHC will cease to exist. As part of the conversion, the 86.28% ownership interest of the MHC in BV Financial will be offered for sale in the offering. When the conversion is completed, BV Financial will continue to own all of the outstanding common stock of BayVanguard Bank and public stockholders will own all of the outstanding common stock of BV Financial.

We understand that in accordance with the Plan, subscription rights to purchase shares of common stock in the Company are to be issued to: (1) Eligible Account Holders; (2) Tax-Qualified Plans including BayVanguard Bank's employee stock ownership plan (the "ESOP"); (3) Supplemental Eligible Account Holders; and, (4) Other Members. Based solely upon our observation that the subscription rights will be available to such parties without cost, will be legally non-transferable and of short duration, and will afford such parties the right only to purchase shares of common stock at the same price as will be paid by members of the general public in the community, syndicated or firm commitment underwritten offerings but without undertaking any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue, we are of the belief that, as a factual matter:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the subscription rights will have no ascertainable market value; and,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) the price at which the subscription rights are exercisable will not be more or less than the pro forma market
value of the shares upon issuance.

Changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or BV Financial's value 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.

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| |
|:---|
| Sincerely, |
| ![LOGO](g447808rpsig.jpg) |
| RP Financial, LC. |

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| | |
|:---|:---|
| 1311-A Dolley Madison Boulevard, Suite 2A | Telephone: (703) 528-1700 |
| McLean, VA 22101 | Fax No.: (703) 528-1788 |
| www.rpfinancial.com | Toll-Free No.: (866) 723-0594 |
|  | E-Mail: mail@rpfinancial.com |

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## Exhibit 99.3

**Exhibit 99.3**![LOGO](g447808dsp5aa.jpg)

**Dated as of February 24, 2023**![LOGO](g447808g0309080148570.jpg)

1311-A Dolley Madison Boulevard

Suite 2A

McLean, Virginia 22101

703.528.1700 rpfinancial.com

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![LOGO](g447808g0309080319192.jpg)

February 24, 2023

Boards of Directors

Bay-Vanguard, M.H.C.

BV Financial, Inc.

BayVanguard Bank

7114 North Point Road

Baltimore, Maryland 21219

Members of the Boards of Directors:

At your request, we have completed and hereby provide an independent appraisal ("Appraisal") of the estimated pro forma market value of the common stock which is to be issued in connection with the mutual-to-stock conversion transaction described below.

This Appraisal is furnished pursuant to the requirements stipulated in the Code of Federal Regulations and has been prepared in accordance with the "Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization" (the "Valuation Guidelines") of the Office of Thrift Supervision ("OTS") and accepted by the Federal Reserve Board ("FRB"), the Federal Deposit Insurance Corporation ("FDIC") and the Office of the Comptroller of the Currency ("OCC"), and applicable regulatory interpretations thereof.

<u>Description of Plan of Conversion</u> 

The Boards of Directors of Bay-Vanguard, M.H.C. (the "MHC") and BV Financial, Inc. ("BV Financial" or the "Company") have approved the plan of conversion whereby the MHC will convert to stock form. As a result of the conversion, BV Financial, which currently owns all of the issued and outstanding common stock of BayVanguard Bank (the "Bank"), will remain in existence and the MHC will be merged into BV Financial and the MHC will no longer exist. As of December 31, 2022, the MHC had a majority ownership interest in, and its principal asset consisted of, approximately 86.28% of the common stock (the "MHC Shares") of the Company. The remaining 13.72% of BV Financial's common stock is owned by public stockholders.

It is our understanding that BV Financial will offer its stock, representing the majority ownership interest held by the MHC, in a subscription offering to Eligible Account Holders, Tax-Qualified Employee Benefit Plans consisting of the Bank's employee stock ownership plan (the "ESOP"), Supplemental Eligible Account Holders and Other Members. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale to the public at large in a community offering and a syndicated offering. Upon completing the mutual-to-stock conversion and stock offering (the "second-step conversion"), BV Financial will be 100% owned by public shareholders, the publicly-held shares of the Company will be exchanged for shares in BV Financial at a ratio that retains their ownership interest at the time the conversion is completed and the MHC assets will be consolidated with BVFL.

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| | |
|:---|:---|
| **Washington Headquarters** |  |
| 1311-A Dolley Madison Boulevard | Telephone: (703) 528-1700 |
| Suite 2A | Fax No.: (703) 528-1788 |
| McLean, VA 22101 | Toll-Free No.: (866) 723-0594 |
| www.rpfinancial.com | E-Mail: mail@rpfinancial.com |

---

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*Boards of Directors* 

*February 24, 2023* 

*Page 2* 

<u>RP<sup>®</sup> Financial, LC.</u> 

RP<sup>®</sup> Financial, LC. ("RP Financial") is a financial consulting firm serving the financial services industry nationwide that, among other things, specializes in financial valuations and analyses of business enterprises and securities, including the pro forma valuation for savings institutions converting from mutual-to-stock form. The background and experience of RP Financial is detailed in Exhibit V-1. We believe that, except for the fee we will receive for the Appraisal, we are independent of the Company, the Bank, the MHC and the other parties engaged by the Bank or the Company to assist in the second-step conversion process.

<u>Valuation Methodology</u> 

In preparing our Appraisal, we have reviewed the regulatory applications of BV Financial, the Bank and the MHC, including the prospectus as filed with the FRB and the Securities and Exchange Commission ("SEC"). We have conducted a financial analysis of BV Financial, the Bank and the MHC that has included a review of audited financial information for the years ended December 31, 2018 through December 31, 2022, a review of various unaudited information and internal financial reports through December 31, 2022, and due diligence related discussions with the Company's management; FORVIS, BV Financial's independent auditor; Luse Gorman PC, BV Financial's conversion counsel and Performance Trust Capital Partners, BV Financial's marketing advisor in connection with the stock offering. All assumptions and conclusions set forth in the Appraisal were reached independently from such discussions. In addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.

We have investigated the competitive environment within which BV Financial operates and have assessed BV Financial's relative strengths and weaknesses. We have kept abreast of the changing regulatory and legislative environment for financial institutions and analyzed the potential impact on BV Financial and the industry as a whole. We have analyzed the potential effects of the stock conversion on BV Financial's operating characteristics and financial performance as they relate to the pro forma market value of BV Financial. We have analyzed the assets held by the MHC, which will be consolidated with BV Financial's assets and equity pursuant to the completion of the second-step conversion. We have reviewed the economic and demographic characteristics of the Company's primary market area. We have compared BV Financial's financial performance and condition with selected publicly-traded thrifts in accordance with the Valuation Guidelines, as well as all publicly-traded thrifts and thrift holding companies. We have reviewed the current conditions in the securities markets in general and the market for thrift stocks in particular, including the market for existing thrift issues, initial public offerings by thrifts and thrift holding companies and second-step conversion offerings. We have excluded from such analyses thrifts subject to announced or rumored acquisition, and/or institutions that exhibit other unusual characteristics.

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*Boards of Directors* 

*February 24, 2023* 

*Page 3* 

The Appraisal is based on BV Financial's representation that the information contained in the regulatory applications and additional information furnished to us by BV Financial and its independent auditor, legal counsel and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by BV Financial, or its independent auditor, legal counsel and other authorized agents nor did we independently value the assets or liabilities of BV Financial. The valuation considers BV Financial only as a going concern and should not be considered as an indication of BV Financial's liquidation value.

Our appraised value is predicated on a continuation of the current operating environment for BV Financial and for all thrifts and their holding companies. Changes in the local, state and national economy, the legislative and regulatory environment for financial institutions and mutual holding companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the value of BV Financial's stock alone. It is our understanding that there are no current plans for selling control of BV Financial following completion of the second-step conversion. To the extent that such factors can be foreseen, they have been factored into our analysis.

The estimated pro forma market value is defined as the price at which BV Financial's common stock, immediately upon completion of the second-step stock offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

In preparing the pro forma pricing analysis we have noted that the pro forma impact of the MHC's net assets (i.e., unconsolidated equity) that will be consolidated with the Company and thus will increase equity, is de-minimis in terms of affecting the minority ownership percentage. The assets of the MHC were equal to $8,000 of cash on deposit at the Bank as of December 31, 2022 and there were no waived dividends.

<u>Valuation Conclusion</u> 

It is our opinion that, as of February 24, 2023, the estimated aggregate pro forma valuation of the shares of the Company to be issued and outstanding at the end of the conversion offering – including (1) newly-issued shares representing the MHC's current ownership interest in the Company; and, (2) exchange shares issued to existing public shareholders of the Company was $144,875,620 at the midpoint, equal to 14,487,562 shares at $10.00 per share. The resulting range of value and pro forma shares, all based on $10.00 per share, are as follows: $123,144,270 or 12,314,427 shares at the minimum, $166,606,960 or 16,660,696 shares at the maximum and $191,598,000 or 19,159,800 shares at the super maximum.

Based on this valuation and taking into account the ownership interest represented by the shares owned by the MHC, the midpoint of the offering range is $125,000,000 equal to 12,500,000 shares at $10.00 per share. The resulting offering range and offering shares, all based on $10.00 per share, are as follows: $106,250,000 or 10,625,000 shares at the minimum, $143,750,000 or 14,375,000 shares at the maximum and $165,312,500 or 16,531,250 shares at the super maximum.

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*Boards of Directors* 

*February 24, 2023* 

*Page 4* 

<u>Establishment of the Exchange Ratio</u> 

The conversion regulations provide that in a conversion of a mutual holding company, the minority stockholders are entitled to exchange the public shares for newly issued shares in the fully converted company. The Boards of Directors of the MHC and BV Financial have independently determined the exchange ratio, which has been designed to preserve the current aggregate percentage ownership in the Company (adjusted for the dilution resulting from the consolidation of the MHC's unconsolidated equity into the Company). The exchange ratio to be received by the existing minority shareholders of the Company will be determined at the end of the offering, based on the total number of shares sold in the offering and the final appraisal. Based on the valuation conclusion herein, the resulting offering value and the $10.00 per share offering price, the indicated exchange ratio at the midpoint is 1.9529 shares of the Company's stock for every one share held by public shareholders. Furthermore, based on the offering range of value, the indicated exchange ratio is 1.6599 at the minimum, 2.2458 at the maximum and 2.5827 at the super maximum. RP Financial expresses no opinion on the proposed exchange of newly issued Company shares for the shares held by the public stockholders or on the proposed exchange ratio.

<u>Limiting Factors and Considerations</u> 

The valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such valuation is determined in accordance with applicable regulatory guidelines and 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 common stock in the conversion offering, or prior to that time, will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the estimated pro forma market value thereof. The appraisal reflects only a valuation range as of this date for the pro forma market value of BV Financial immediately upon issuance of the stock and does not take into account any trading activity with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the second-step conversion.

RP Financial's valuation was based on the financial condition, operations and shares outstanding of BV Financial as of December 31, 2022, the date of the financial data included in the prospectus. The proposed exchange ratio to be received by the current public stockholders of BV Financial and the exchange of the public shares for newly issued shares of BV Financial's common stock as a full public company was determined independently by the Boards of Directors of the MHC and the Company. RP Financial expresses no opinion on the proposed exchange ratio to public stockholders or the exchange of public shares for newly issued shares.

RP Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by RP Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. RP Financial maintains a policy which prohibits RP Financial, its principals or employees from purchasing stock of its client institutions.

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*Boards of Directors* 

*February 24, 2023* 

*Page 5* 

This valuation may be updated as provided for in the conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the financial performance and condition of BV Financial, management policies, and current conditions in the equity markets for thrift shares, both existing issues and new issues. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the legislative and regulatory environment for financial institutions, the stock market and the market for thrift stocks, and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the update. The valuation will also be updated at the completion of BV Financial's stock offering.

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| |
|:---|
| Respectfully submitted, |
| RP<sup>®</sup> FINANCIAL, LC. |
| ![LOGO](g447808g0309080319322.jpg) |
| William E. Pommerening |
| CEO and Managing Director |
| ![LOGO](g447808g0309080319436.jpg) |
| James J. Oren |
| Director |

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|:---|
| ***RP<sup>®</sup> Financial, LC.*** |
| ***i*** |

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*****TABLE OF CONTENTS*****

***BV Financial, Inc.***

***Baltimore, Maryland***

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| | |
|:---|:---|
| DESCRIPTION | PAGE<br>NUMBER |
|  <u>CHAPTER ONE</u> OVERVIEW AND FINANCIAL ANALYSIS |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Introduction | I.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Plan of Conversion | I.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Strategic Overview | I.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Balance Sheet Trends | I.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income and Expense Trends | I.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Risk Management | I.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lending Activities and Strategy | I.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset Quality | I.15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Funding Composition and Strategy | I.15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subsidiaries | I.16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal Proceedings | I.16 |
|  <u>CHAPTER TWO</u> MARKET AREA |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Introduction | II.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; National Economic Factors | II.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Environment | II.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Market Area Demographics | II.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Primary Market Area Employment Sectors | II.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Baltimore MSA Economy | II.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Market Area Largest Employers | II.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unemployment Data | II.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Market Area Deposit Characteristics/Competition | II.13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Competition | II.14 |
|  <u>CHAPTER THREE</u> PEER GROUP ANALYSIS |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Peer Group Selection | III.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Condition | III.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income and Expense Components | III.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan Composition | III.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Credit Risk | III.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Risk | III.12 |

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| |
|:---|
| ***RP<sup>®</sup> Financial, LC.*** |
| ***ii*** |

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*****TABLE OF CONTENTS*****

***BV Financial, Inc.***

***Baltimore, Maryland***

***(continued)***

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| | |
|:---|:---|
| DESCRIPTION | PAGE<br>NUMBER |
|  <u>CHAPTER FOUR</u> VALUATION ANALYSIS |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Introduction | IV.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appraisal Guidelines | IV.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RP Financial Approach to the Valuation | IV.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Analysis | IV.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Financial Condition | IV.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Profitability, Growth and Viability of Earnings | IV.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Asset Growth | IV.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Primary Market Area | IV.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Dividends | IV.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Liquidity of the Shares | IV.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Marketing of the Issue | IV.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The Public Market | IV.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The New Issue Market | IV.14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. The Acquisition Market | IV.16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Trading in BVFL's Stock | IV.16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Management | IV.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Effect of Government Regulation and Regulatory Reform | IV.17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Summary of Adjustments | IV.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Approaches | IV.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Price-to-Earnings ("P/E") | IV.20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Price-to-Book ("P/B") | IV.21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Price-to-Assets ("P/A") | IV.21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comparison to Recent Offerings | IV.23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation Conclusion | IV.23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Establishment of the Exchange Ratio | IV.23 |

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|:---|
| ***RP<sup>®</sup> Financial, LC.*** |
| ***iii*** |

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***LIST OF TABLES***

***BV Financial, Inc.***

***Baltimore, Maryland***

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| | | |
|:---|:---|:---|
| TABLE<br>NUMBER | DESCRIPTION | PAGE |
| 1.1 | Historical Balance Sheets | I.4 |
| 1.2 | Historical Income Statements | I.8 |
| 2.1 | Summary Demographic Data | II.7 |
| 2.2 | Primary Market Area Employment Sectors | II.9 |
| 2.3 | Market Area Largest Employers | II.12 |
| 2.4 | Unemployment Trends | II.11 |
| 2.5 | Deposit Summary | II.13 |
| 2.6 | Market Area Deposit Competitors – As of June 30, 2022 | II.15 |
| 3.1 | Peer Group of Publicly-Traded Thrifts | III.3 |
| 3.2 | Balance Sheet Composition and Growth Rates | III.6 |
| 3.3 | Income as a Pct. of Avg. Assets and Yields, Costs, Spreads | III.8 |
| 3.4 | Loan Portfolio Composition and Related Information | III.11 |
| 3.5 | Credit Risk Measures and Related Information | III.13 |
| 3.6 | Interest Rate Risk Measures and Net Interest Income Volatility | III.14 |
| 4.1 | Market Area Unemployment Rates | IV.7 |
| 4.2 | Conversions Completed in Last 12 Months | IV.15 |
| 4.3 | Public Market Pricing Versus Peer Group | IV.22 |

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.1*** |

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**I. OVERVIEW AND FINANCIAL ANALYSIS** 

<u>Introduction</u> 

BayVanguard Bank was originally chartered in 1873. BV Financial (the "Company") is a Maryland-chartered subsidiary holding company organized in 2005 as the holding company for BayVanguard Bank, a Maryland-chartered stock savings bank headquartered in the Sparrows Point area of Baltimore, Maryland. In August 2018, the Bank converted its charter from a federally-chartered savings bank to a Maryland-chartered savings bank. The Bank serves the Baltimore, Maryland metropolitan area (the "Baltimore Metro") and the central Maryland "Eastern Shore" region through a network of 15 offices. A total of 9 offices are located in the Baltimore Metro and six offices are located in Dorchester and Talbot Counties on the Eastern Shore. The current branch office structure is the result of a number of acquisition transactions that have expanded the Bank's branch office footprint beyond the original location in Sparrows Point, Maryland, southeast of Baltimore City. A map showing the Bank's offices is in Exhibit I-1.

In January 2005, the Bank was reorganized into a federally-chartered stock savings association within a mutual holding company ("MHC") structure with a mid-tier holding company and a concurrent minority stock offering. As part of the reorganization, the Company publicly sold a minority portion of the common shares in a subscription and community offering and issued majority ownership of the shares the MHC. Since that time, the Bank has acquired five banking companies: (1) Vigilant Federal Savings Bank ("Vigilant FSB") in 2013; (2) Kopernik Bank ("Kopernik Bank") in February 2019; (3) MB Bancorp, Inc. and its subsidiary Madison Bank of Maryland ("MB Bancorp") in February 2020; (4) Delmarva Bancshares, Inc. and its subsidiary 1880 Bank ("Delmarva Bancshares") in October 2020; and, (5) North Arundel Savings Bank in January 2022. No BV Financial common shares were issued to target shareholders for these acquisitions, as Vigilant FSB, Kopernik Bank and North Arundel Savings Bank were in mutual form, and the shareholder-owned MB Bancorp, Inc. and Delmarva Bancshares were cash acquisitions.

The Company's principal activity is the ownership of the outstanding shares of the Bank, and it has issued debt that was downstreamed to the Bank for capital support. At December 31, 2022, the Company had 7,418,575 shares of common stock outstanding, whereby the MHC owned 6,400,814 shares, or 86.28%, and public shareholders owned the remaining 1,017,761 shares, or 13.72%. The public shares are traded on OTC Pink Marketplace ("OTCPK") under the trading symbol "BVFL".

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.2*** |

---

BV Financial is regulated by the Federal Reserve and the Bank is a member of the Federal Home Loan Bank ("FHLB") system. The Bank's deposits are insured up to the regulatory maximums by the FDIC. The Bank is community-oriented and offers traditional financial services. The Bank is engaged primarily in the business of attracting local deposits and originates commercial real estate, one-to-four family real estate, marine, farm loans, construction, multi-family, commercial and consumer loans. The Bank also invests in securities such as U.S. Government and agency securities and mortgage backed securities ("MBS").

At December 31, 2022, the Company reported $845.0 million of assets, $659.1 million in loans, $684.6 million of deposits and stockholders' equity of $97.8 million, or 11.57% of total assets. The Company has acquisition related intangible assets, including $14.2 million of goodwill and $1.2 million of amortizing core deposit intangible ("CDI"). As a result, tangible equity is currently $82.1 million, or 9.72% of assets. For the 12 months ended December 31, 2022, the Company reported net income equal to $10.524 million, or 1.25% of average assets. The Company's audited financial statements are incorporated by reference as Exhibit I-2.

<u>Plan of Conversion</u> 

The Boards of Directors of Bay-Vanguard, M.H.C. (the "MHC") and BV Financial, Inc. ("BV Financial" or the "Company") have approved the plan of conversion whereby the MHC will convert to stock form. As a result of the conversion, BV Financial, which currently owns all of the issued and outstanding common stock of BayVanguard Bank (the "Bank"), will remain in existence and the MHC will be merged into BV Financial and the MHC will no longer exist. As of December 31, 2022, the MHC had a majority ownership interest in, and its principal asset consisted of, approximately 86.28% of the common stock (the "MHC Shares") of the Company. The remaining 13.72% of BV Financial's common stock is owned by public stockholders. It is our understanding that BV Financial will offer its stock, representing the majority ownership interest held by the MHC, in a subscription offering to Eligible Account Holders, Tax-Qualified Employee Benefit Plans consisting of the Bank's employee stock ownership plan (the "ESOP"), Supplemental Eligible Account Holders and Other Members. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale to the public at large in a community offering and a syndicated offering. Upon completing the mutual-to-stock conversion and stock offering (the "second-step conversion"), BV

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.3*** |

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Financial will be 100% owned by public shareholders, the publicly-held shares of the Company will be exchanged for shares in BV Financial at a ratio that retains their ownership interest at the time the conversion is completed and the MHC assets will be consolidated with BV Financial.

<u>Strategic Overview</u> 

The Company has historically pursued a traditional thrift business model, emphasizing the origination of 1-4 family first mortgage loans for investment (both owner-occupied and non-owner occupied), funded principally by retail deposits generated through the branch network. The Company has sought to emphasize high quality and flexible service, capitalizing on its local orientation, competitive rates, and safety and soundness.

In more recent periods, the Bank has diversified its lending to be more competitive with regional banking companies and to improve its interest rate risk management and enhance yields. As it has diversified its lending, the Bank has embraced technology, policies and procedures and credit management changes. Retail deposits have consistently served as the primary interest-bearing funding source. As the Company has expanded organically and through acquisition, the Company has borrowed funds from the FHLB and issued debt at the mid-tier holding company level to support the Bank's capital. A total of four whole bank acquisitions have been completed since 2019, which have increased the Company's asset size from approximately $165 million in 2018 to the current $845 million and the branch office network from four branches to 15 branches. These acquisitions have not only enabled the Company's ability to be more competitive through broader market reach and expanded products and services, but they have increased economies of scale and operating efficiency.

<u>Balance Sheet Trends</u> 

Table 1.1 presents the Company's historical balance sheet data for the most recent four fiscal years through December 31, 2022 and a prior period as of June 30, 2018. The Company changed the fiscal year reporting period from June to December as of December 31, 2019. From June 30, 2018 to December 31, 2022, BV Financial's total assets have increased at a 43.34% annual rate, with loans receivable, representing the majority of the asset base, increasing at a similar rate of 44.80%. Most of this asset growth occurred in fiscal 2019 and 2020, related to the three acquisitions completed in those years. A summary of BV Financial's key operating ratios over the two fiscal years is presented in Exhibit I-3.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.4*** |

---

Table 1.1

BV Financial, Inc.

Historical Balance Sheets

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | As of June 30, | As of June 30, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | As of December 31, | |
|  | 2018 | 2018 | 2019 | 2019 | 2020 | 2020 | 2021 | 2021 | 2022 | 2022 | 2018-2022<br>Annualized<br>Growth |
|  | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Pct |
|  | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | (%) |
|  <u>Total Amount of:</u> |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Assets | $167206 | 100.00% | $294184 | 100.00% | $815565 | 100.00% | $815130 | 100.00% | $844963 | 100.00% | 43.34% |
| &nbsp;&nbsp;&nbsp;&nbsp; Loans Receivable (net) | 124608 | 74.52% | 235194 | 79.95% | 607395 | 74.48% | 584438 | 71.70% | 659131 | 78.01% | 44.80% |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and Equivalents | 10216 | 6.11% | 24230 | 8.24% | 91990 | 11.28% | 111190 | 13.64% | 68652 | 8.12% | 52.71% |
| &nbsp;&nbsp;&nbsp;&nbsp; Investment Securities, FHLB Stock | 19635 | 11.74% | 12805 | 4.35% | 41209 | 5.05% | 42256 | 5.18% | 44693 | 5.29% | 20.05% |
| &nbsp;&nbsp;&nbsp;&nbsp; Fixed Assets | 4115 | 2.46% | 5835 | 1.98% | 15482 | 1.90% | 15050 | 1.85% | 15176 | 1.80% | 33.65% |
| &nbsp;&nbsp;&nbsp;&nbsp; OREO | 715 | 0.43% | 450 | 0.15% | 2790 | 0.34% | 1987 | 0.24% | 1987 | 0.24% | 25.50% |
| &nbsp;&nbsp;&nbsp;&nbsp; Bank Owned Life Insurance | 5177 | 3.10% | 7450 | 2.53% | 26195 | 3.21% | 25966 | 3.19% | 19983 | 2.36% | 35.01% |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred Tax Asset | 1664 | 1.00% | 3045 | 1.04% | 8156 | 1.00% | 8322 | 1.02% | 9113 | 1.08% | 45.92% |
| &nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 120 | 0.07% | 1116 | 0.38% | 12830 | 1.57% | 14420 | 1.77% | 14420 | 1.71% | 189.85% |
| &nbsp;&nbsp;&nbsp;&nbsp; Intangible Assets | 23 | 0.01% | 1213 | 0.41% | 1469 | 0.18% | 1293 | 0.16% | 1195 | 0.14% | 140.58% |
| &nbsp;&nbsp;&nbsp;&nbsp; Other Assets | 933 | 0.56% | 2846 | 0.97% | 8049 | 0.99% | 10208 | 1.25% | 10613 | 1.26% | 71.66% |
| &nbsp;&nbsp;&nbsp;&nbsp; Deposits | $138685 | 82.94% | $217822 | 74.04% | $675096 | 82.78% | $680025 | 83.43% | $684618 | 81.02% | 42.59% |
| &nbsp;&nbsp;&nbsp;&nbsp; Borrowings | 3000 | 1.79% | 3000 | 1.02% | 54655 | 6.70% | 36828 | 4.52% | 49039 | 5.80% | 86.06% |
| &nbsp;&nbsp;&nbsp;&nbsp; Other Liabilities | 3871 | 2.32% | 7359 | 2.50% | 11793 | 1.45% | 14831 | 1.82% | 13555 | 1.60% | 32.11% |
| &nbsp;&nbsp;&nbsp;&nbsp; Stockholders' Equity | 21650 | 12.95% | 66003 | 22.44% | 74021 | 9.08% | 83446 | 10.24% | 97751 | 11.57% | 39.79% |
| &nbsp;&nbsp;&nbsp;&nbsp; Tangible Stockholders' Equity | 21507 | 12.86% | 63674 | 21.64% | 59722 | 7.32% | 67733 | 8.31% | 82136 | 9.72% | 34.69% |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Unrealized Gain/(Loss) on |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Investment/MBS Available for Sale | 208) | -0.12% | $14 | 0.00% | $361 | 0.04% | 96) | -0.01% | $204 | 0.02% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Public Shares Outstanding | 949136 | 31.65% | 955612 | 13.45% | 949062 | 13.37% | 988411 | 13.85% | 1017761 | 13.72% |  |
| &nbsp;&nbsp;&nbsp;&nbsp; MHC Shares Outstanding | 2049988 | 68.35% | 6149810 | 86.55% | 6149810 | 86.63% | 6149810 | 86.15% | 6400814 | 86.28% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Shares Outstanding | 2999124 | 100.00% | 7105422 | 100.00% | 7098872 | 100.00% | 7138221 | 100.00% | 7418575 | 100.00% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tangible Book Value/Share | $7.17 |  | $8.96 |  | $8.41 |  | $9.49 |  | $11.07 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loans/Deposits | 89.85% |  | 107.98% |  | 89.97% |  | 85.94% |  | 96.28% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Offices Open | 4 |  | 7 |  | 16 |  | 16 |  | 15 |  |  |

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(1) Ratios are as a percent of ending assets.

Source: BV Financial's audited financial statements.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.5*** |

---

The funding base includes deposits, borrowings and equity, with a notable increase in borrowings in 2020 as the Company issued $35 million of subordinated debt in order to finance the Delmarva Bancshares acquisition. Total cash and investments have been maintained at sufficient levels for liquidity purposes. Equity reached $97.8 million at December 31, 2022, or 11.57% of assets, while tangible equity was $82.1 million or 9.72% of assets, reflecting the intangibles (goodwill and core deposit intangible), created from the various acquisitions.

The Bank's loans receivable totaled $659.1 million, or 78.0% of assets as of December 31, 2022. As noted, the Bank's loan portfolio today is relatively diversified reflecting expansion of the types of loans originated as well as the acquired portfolios. Today the loan portfolio includes 1-4 family and multifamily mortgages, commercial real estate, construction/land, farmland and marine (boat) loans. The Delmarva Bancshares acquisition substantially increased the non-residential real estate and non-real estate secured loan portfolio, particularly in the form of agriculture real estate loans. The 1-4 family residential loan portfolio equaled $262.8 million, or 39.6% of total loans as of December 31, 2022, a decline from 55% of loans as of June 30, 2018. The residential portfolio includes approximately $125 million of non-owner occupied 1-4 family investor property loans, with such loans increasing in balance due to certain of the acquisitions. Since fiscal 2018, the commercial real estate/multifamily loan portfolio has increased from $36.5 million, or 29% of loans, to $318.7 million, or 48% loans at December 31, 2022, with a notable portion of these loans secured by out-of-state property. As noted above, the Bank engages in agriculture lending, primary through the Bank 1880 operations on the Eastern Shore, and also in marine lending (boat loans). Both of these lending activities provide certain benefits in terms of loan and customer diversification and limiting interest rate risk.

Part of the lending activities include the origination of loans that are secured by out-of-state property. Certain of these loans are originated to existing, Maryland based borrowers who have other business or personal interests in other states. As of December 31, loans secured by out-of-state property approximated $183.0 million, or 28% of the outstanding loan portfolio. This activity has been pursued in order to achieve certain lending and portfolio goals, and most of the loans are secured by commercial real estate property, as of the total out-of-state loans, approximately $145.2 million were commercial real estate loans. The five states with the largest balance of such loans were California, New Jersey, Virginia, Florida and Kentucky, and in those five states the commercial loans equaled $102.8 million, or 56% of the total out-of-state loans. Delinquency levels of these loans have been minimal, and the Bank has engaged in this out-of-state lending since 2020. Credit risk is managed through the Bank's strict underwriting policies and procedures.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.6*** |

---

The intent of the Company's investment policy is to provide adequate liquidity and to generate a favorable return within the context of supporting overall credit and interest rate risk objectives. It is anticipated that proceeds retained at the holding company level will initially be invested into low-risk investment securities pending deployment into loans. The Company manages cash and investments to provide adequate liquidity while generating a favorable return consistent with its approved interest rate, credit and liquidity risk objectives. Historically, cash and equivalents ranged 5% to 7% of assets, but has trended higher recently given certain recent events, including elevated loan refinancings, participating in certain government pandemic related programs and customer deposits of stimulus checks. Cash and equivalents totaled $68.7 million, or 8.1% of assets at December 31, 2022.

Since yearend 2019, the Company's level of investment securities (inclusive of FHLB stock) ranged from a low of 4.35% of assets at yearend 2019 to a high of 5.29% of assets at yearend 2022. As of December 31, 2022, the Company held investment securities totaling $44.7 million or 5.29% of assets, consisting of mortgage-backed securities ($34.4 million), investment grade corporate bonds ($5.1 million), and securities issued by the U.S. Government and its agencies or government sponsored enterprises ($4.0 million). As of December 31, 2022, $33.0 million of the investment securities portfolio was maintained as available-for-sale and $10.5 million was maintained as held-to-maturity. As of December 31, 2022, the available for sale investment portfolio had a net pre-tax unrealized loss of $3.2 million, reflecting the impact of the substantial rise in interest rates during 2022. Additional information regarding the Company's investment portfolio is included in the Company's consolidated audited financial statements.

Total investment in fixed assets (including land, buildings, and furniture, fixtures and equipment), totaled $15.2 million, or 1.8% of assets as of December 31, 2022. BV Financial owns most of its office locations, and the elevated investment reflects acquired main office buildings from the completed acquisitions. Other real estate owned ("OREO") increased in 2020 and totaled $2.0 million as of December 31, 2022.

BV Financial has an investment in bank-owned life insurance ("BOLI") policies, as a source of funding for employee benefit expenses and to provide tax-advantaged income. As of December 31, 2022, the cash surrender value of BayVanguard Bank's BOLI equaled $20.0 million, or 2.4% of assets.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.7*** |

---

Funding needs have been provided mostly by retail deposits (core deposits and certificates of deposit, or "CDs") and equity, recording annual deposit growth of 41.8% (inclusive of acquisitions) and annual tangible equity growth of 30.0% (reflecting retained earnings, acquisitions and related intangible assets, and market adjustments for investment securities designated available for sale, or "AFS"). An increased amount of borrowings has been utilized in recent periods, primarily in the form of $35 million of subordinated debt that in October 2020 to fund the cash acquisition of Delmarva Bancshares. Borrowings totaled $49.0 million as of December 31, 2022 and included another subordinated debt security originally issued by Delmarva Bancshares. There were a total of $12.0 million of FHLB advances outstanding as of December 31, 2022 as a supplemental funding source.

The intangible assets (goodwill and core deposit intangible) created from the acquisitions has impacted the level of tangible equity. The equity/assets ratio has been leveraged from 21.64% to 9.72% in recent years as asset growth exceeded equity growth. Tangible equity equaled $82.1 million at December 31, 2022, or 9.72% of assets. The Bank maintained surpluses relative to all of its regulatory capital requirements at that date. The addition of stock proceeds will serve to strengthen the Company's capital position, as well as support growth opportunities. At the same time, the significant increase in BV Financial's pro forma capital position will initially depress its ROE.

<u>Income and Expense Trends</u> 

Table 1.2 shows the Company's historical income statements for the years ended December 31, 2019 through December 31, 2022 and for the 18 months ended December 31, 2019 (the Company changed its fiscal year from June to December in 2019). Since fiscal 2019, the Company's reported earnings ranged from a low of $2.5 million, or 0.91% of average assets during 2019 to a high of $10.5 million or 1.25% of average assets during the 12 months ended December 31, 2022. Net interest income and operating expenses represent the primary components of the Company's earnings, while non-interest operating income has been a modest, but upward trending contributor to the Company's earnings. Loan loss provisions and non-operating income and losses have had a varied impact on the Company's earnings during the period covered in Table 1.2, with a number of non-operating items related to recent acquisitions. In the fair value accounting for the mergers, credit adjustments have been established.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.8*** |

---

Table 1.2

BV Financial, Inc.

Historical Income Statements

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | For the 18 Mths Ended, | For the 18 Mths Ended, | For the Year Ended, | For the Year Ended, | For the Year Ended, | For the Year Ended, | For the Year Ended, | For the Year Ended, | For the Year Ended, | For the Year Ended, |
|  | December 31, 2019 | December 31, 2019 | December 31, 2019 | December 31, 2019 | December 31, 2020 | December 31, 2020 | December 31, 2021 | December 31, 2021 | December 31, 2022 | December 31, 2022 |
|  | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) |
|  | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) |
|  Interest Income | $15578 | 4.32% | $12147 | 4.49% | $18226 | 3.89% | $29378 | 3.62% | $33350 | 3.95% |
|  Interest Expense | (2163) | -0.60% | (1740) | -0.64% | (2904) | -0.62% | (3733) | -0.46% | (3430) | -0.41% |
|  Net Interest Income | $13415 | 3.72% | $10407 | 3.85% | $15322 | 3.27% | $25645 | 3.16% | $29920 | 3.54% |
|  Provision for Loan Losses | (160) | -0.04% | (110) | -0.04% | (695) | -0.15% | (575) | -0.07% | (1038) | -0.12% |
|  Net Interest Income after Provisions | $13255 | 3.68% | $10297 | 3.81% | $14627 | 3.12% | $25070 | 3.09% | $28882 | 3.42% |
|  Other Income | $755 | 0.21% | $546 | 0.20% | $1650 | 0.35% | $2302 | 0.28% | $4078 | 0.48% |
|  Gain(Loss) on Sale of Loans | 0 | 0.00% | 0 | 0.00% | 21 | 0.00% | 57 | 0.01% | 1 | 0.00% |
|  Operating Expense | (9908) | -2.75% | (7403) | -2.74% | (10461) | -2.23% | (14390) | -1.77% | (19029) | -2.25% |
|  Net Operating Income | $4102 | 1.14% | $3440 | 1.27% | $5837 | 1.24% | $13039 | 1.61% | $13932 | 1.65% |
|  OREO Hldg Costs, Writedowns, Gn(Loss) on Sale | 259) | -0.07% | 102) | -0.04% | 128) | -0.03% | 215) | -0.03% | 965) | -0.11% |
|  Gain on Sale of Other Assets | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 246 | 0.03% |
|  Bargain Purchase Gain | 0 | 0.00% | 0 | 0.00% | 3285 | 0.70% | 0 | 0.00% | 1340 | 0.16% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Non-Operating Income (Exp.) | 259) | -0.07% | 102) | -0.04% | $3157 | 0.67% | 215) | -0.03% | $621 | 0.07% |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Income Before Tax | $3843 | 1.07% | $3338 | 1.23% | $8994 | 1.92% | $12824 | 1.58% | $14553 | 1.72% |
| &nbsp;&nbsp;&nbsp;&nbsp; Income Taxes | (967) | -0.27% | (865) | -0.32% | (1349) | -0.29% | (3383) | -0.42% | (4029) | -0.48% |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Income (Loss) | $2876 | 0.80% | $2473 | 0.91% | $7645 | 1.63% | $9441 | 1.16% | $10524 | 1.25% |
|  <u>Adjusted Earnings:</u> |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net Income | $2876 | 0.80% | $2473 | 0.91% | $7645 | 1.63% | $9441 | 1.16% | $10524 | 1.25% |
|  Add(Deduct): Non-Operating (Inc)/Exp | 0 | 0.00% | 0 | 0.00% | (3285) | -0.70% | 0 | 0.00% | (1586) | -0.19% |
|  Tax Effect | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Adjusted Earnings: | $2876 | 0.80% | $2473 | 0.91% | $4360 | 0.93% | $9441 | 1.16% | $8938 | 1.06% |
|  Diluted EPS ($) | $0.54 |  | $0.38 |  | $1.07 |  | $1.32 |  | $1.42 |  |
|  <u>Memo:</u> |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expense Coverage Ratio (%) | 135.40% |  | 140.58% |  | 146.47% |  | 178.21% |  | 157.23% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Efficiency Ratio (%) | 69.92% |  | 67.59% |  | 61.56% |  | 51.39% |  | 55.97% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Return on Equity (%) | 2.75% |  | 4.39% |  | 10.93% |  | 11.99% |  | 11.53% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Return on Tangible Equity (%) | 6.39% |  | 4.55% |  | 11.72% |  | 14.96% |  | 13.92% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effective Tax Rate (%) | 25.16% |  | 25.91% |  | 15.00% |  | 26.38% |  | 27.69% |  |

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(1) Ratios are as a percent of average assets, annualized when appropriate.

Source: BV Financial's audited financial statements for 2019-2022.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.9*** |

---

For the period covered in Table 1.2, the Company's net interest income to average assets ratio ranged from a low of 3.16% during 2021 to a high of 3.85% during 2019. The Company's net interest income to average assets ratio increased to 3.54% during the 12 months ended December 31, 2022. The decrease in the Company's net interest income ratio from 2019 to 2021 occurred mostly during 2019 and 2020, as the result of interest rate spread compression. Interest rate spread compression during 2019 was due to a more significant increase in the cost of interest-bearing liabilities compared to the increase in the yield on interest earning asset, while interest rate spread compression during 2020 was due to a more significant decrease in the yield on interest-earning assets relative to the decrease in the cost of interest-bearing liabilities. The increase in the net interest income ratio during fiscal 2022 was facilitated by a higher interest rate spread, which was the result of an increase in the yield on earning assets in the rising rate environment of 2022, while funding costs were held generally with limited change. Overall, during the past two years, the Company's interest rate spread increased from 3.37% during 2021 to 3.75% during 2022. The Company's net interest rate spreads and yields and costs for the past two years are set forth in Exhibit I-4.

Non-interest operating income has generally been a modest contributor to profitability but has trended upward as a result of the acquisitions with greater commercial deposits and loans and higher BOLI income, along with higher balances of core deposits and transaction accounts that typically generate more fee income.

Operating expenses represent the other major component of the Company's earnings statement, ranging from a low of $7.4 million or 2.74% of average assets during 2019 to a high of $19.0 million or 2.25% of average assets during 2022. Operating expenses have increased with the completion of acquisitions and organic growth and inflation. The operating expense ratio has declined over time as the Bank has been able to efficiently leverage the expense base through acquisitions and the related cost savings.

As a result of the foregoing, the expense coverage ratio (net interest income divided by operating expenses) has trended upward from 140% in 2019 to 157% for the most recent year. Similarly, the efficiency ratio (operating expenses, net of amortization of intangibles, as a percent of the sum of net interest income and other operating income) has decreased from 68% in 2019 to 56% for the 12 months ended December 31, 2022.

Loss provisioning in recent years has been limited given that the loan growth has been dominated by acquisition and that credit adjustments were incorporated into the fair value

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.10*** |

---

accounting. Thus, loan loss provisions have been modest since 2019 and reflected internal loan growth and the potential for loan losses related to COVID-19. Provisions for loan losses were 0.07% of average assets for 2021 and 0.12% of average assets for fiscal 2022. As of December 31, 2022, the Company maintained an allowance for loan and lease losses ("ALLL") of $3.813 million, equal to 111.3% of non-performing loans and 0.45% of total loans receivable, recognizing that credit adjustments were incorporated into the fair value accounting for the acquisitions. If the fair value adjustments were added to the ALLL, the ratio at December 31, 2022 would have been 1.15% of total loans. Exhibit I-5 sets forth the Company's loan loss allowance activity during the past two years.

The Company's effective tax rate was 26.4% in fiscal 2021 and a lower 26.0% in fiscal 2022. The statutory combined tax rate is 27.5% for the Company, and the BOLI tax-favorable income assists in lowering the effective tax rate.

<u>Interest Rate Risk Management</u> 

The Bank's Asset/Liability Management Committee, which consists of members of senior management, is responsible for evaluating the interest rate risk inherent in the Bank's assets and liabilities, for determining the level of risk that is appropriate, based on the overall business strategies, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by the board of directors. The Bank utilizes a third party to analyze sensitivity to interest rates through use of certain simulation models, including the impact on net interest income of a shift in market interest rates. Based on the latest available analysis as of December 31, 2022, over the next 12 months, the Company's net interest income is projected to increase by 1.2% upon an instantaneous increase of 200 basis points in a parallel yield curve rate shock and such net interest income would decrease by 10.4% upon an instantaneous decrease of 200 basis points. This indicates the Company's net interest income may not be subject to significant changes in a rising rate environment. Further, BV Financial measures changes to the financial condition of the Company through an economic value of equity model. This model measures the changes in the fair value of assets and liabilities under various interest rate change scenarios. The analysis as of December 31, 2022 indicates that the Company's economic value of equity ("EVE") would increase by 4.64% pursuant to a 200 basis point increase in interest rates, and decrease by 19.2% pursuant to a 200 basis point decrease in interest rates (see Exhibit I-6). The projected impact to the Company's EVE suggests that the Company's exposure to rising interest rates is relatively minimal.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.11*** |

---

The Bank pursues certain strategies to manage interest rate risk, particularly with respect to seeking to limit the repricing mismatch between interest rate sensitive assets and liabilities. The Bank manages interest rate risk from the asset side of the balance sheet in part by diversifying into other types of lending beyond 1-4 family permanent mortgage loans such as originating commercial and construction/land loans, all of which have shorter terms to repricing or maturity and carry higher interest rates. As of December 31, 2022, of the Company's total loans due after December 31, 2023, adjustable rate loans comprised 32.37%% of total loans receivable (see Exhibit I-7). The Bank also seeks to purchase short-term and adjustable rate investment securities and maintaining levels of cash and cash equivalents. The commercial real estate and 1-4 family non-owner occupied loan originations typically carry terms with a 5 year adjustment period with 25 year amortization periods. On the liability side of the balance sheet, management of interest rate risk has been pursued through maintaining the volume of deposits in lower cost and less interest rate sensitive checking and savings accounts, and reducing dependence on higher cost certificates of deposits.

There are numerous limitations inherent in interest rate risk analyses such as the credit risk of Bank's loans pursuant to changing interest rates. Additionally, such analyses do not measure the impact of changing spread relationships, as interest rates among various asset and liability accounts rarely move in tandem, as the shape of the yield curve for various types of assets and liabilities is constantly changing in response to investor perceptions and economic events and circumstances.

<u>Lending Activities and Strategy</u> 

BV Financial's primary lending activities are the origination of commercial real estate loans and one- to four-family real estate loans and, to a lesser extent, commercial loans, construction and land loans, marine loans and farm loans. The lending department focuses on three groups of constituents – consumer, community, and investment real estate, with the consumer group consisting of loans made to the Bank's customer base. The community group focuses on lending to the business needs of the community (non-owner occupied residential, commercial real estate and commercial and industrial lending, while the investment real estate group focuses on larger real estate projects. In recent years the lending activities have also increased focus on commercial real estate and C&I lending in an effort to diversify the loan portfolio, shorten the term-to-maturity or repricing, and increase the overall yield earned on loans. Recent acquisitions have

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.12*** |

---

increased the Company's concentration of commercial real estate and C&I loans (see Exhibit I-8 for the current loan portfolio composition and Exhibit I-9 for contractual maturities by loan type).

<u>Commercial Real Estate/Multi-Family Lending</u> 

At December 31, 2022, BV Financial had $318.7 million in commercial real estate loans, representing 48.0% of the total loan portfolio. As shown in Table 1.8. $91.9 million of such loans were owner occupied commercial real estate loans and there was $226.9 million in non-owner occupied commercial real estate loans. The commercial real estate loans are secured by a variety of properties, including multifamily, commercial retail, office buildings, shopping centers and hotels. These types of loans are attractive credits given the higher yields, larger balances, shorter duration and prospective relationship potential.

CRE/5+ loans are generally underwritten as 5-10 year balloon loans with 20-25 year amortization periods. Terms of these loans include interest rates usually tied to the five-year treasury rate plus a margin, an 80% maximum LTV and a minimum debt service coverage ratio of 1.25x. The average loan balance of the commercial real estate loan portfolio was 781,000 at December 31, 2022. Further, at December 31, 2022, $156.0 million, or 46.5% of the commercial real estate portfolio was secured by collateral located outside of the state of Maryland. These out-of-state loans are generally sourced from existing relationships and referrals through various professional contacts, such as accountants, attorneys, financial advisors and real estate brokerage firms

These loans are generally priced at a higher rate of interest, have larger balances and involve a greater risk profile than 1-4 residential mortgage loans. Often the payments on commercial real estate loans are dependent on successful operations and management of the property. When originating commercial real estate loans, the Bank evaluates the qualifications and financial condition of the borrower, as well as the value and condition of the property securing the loan. The Bank will also generally require and obtain personal guarantees from the principals.

<u>First Position Residential Real Estate Lending</u> 

The Bank's historical lending focus was the origination of first position fixed- and adjustable rate 1-4 family residential real estate loans secured by local properties for portfolio. These loans totaled $262.8 million at December 31, 2022, or 39.6% of total loans, with 82% of these loans having fixed rates of interest. The portfolio is comprised of traditional owner-occupied loans secured by local properties, including conforming and nonconforming loans, of which 87%

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.13*** |

---

are secured by properties located in the state of Maryland. These loans generally have terms of up to 30 years and maximum loan-to-value ("LTV") ratios of 80%. Approximately $125.1 million of this portfolio is secured by non-owner occupied investor properties. Non-owner occupied loans are attractive given their higher yield, more favorable interest rate risk and LTV ratios (generally 80% at origination). BV Financial originates a small amount of loans secured by non-owner occupied properties with "interest only" features. The Bank does not originate other types of subprime loans, including loans with "negative amortization" features, which have higher risk underwriting characteristics.

<u>Commercial Lending</u> 

BV Financial originates for portfolio non-real estate secured commercial loans, including USDA/SBA loans and other miscellaneous C&I loans. C&I loans totaled $28.1 million, or 4.2% of total loans as of December 31, 2022.

The Bank originates commercial loans, including equipment loans and business acquisitions loans, and lines of credit to small- and medium-sized companies in the primary market area. Such loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. Secured commercial loans can have a loan-to-value ratio of up to 90% of the collateral securing the loan, and be secured by accounts receivable, inventory and equipment. The commercial loans originated are variable- and fixed-rate loans, generally for a one- to ten-year term. Variable interest rates are indexed to the Prime Rate as published in the Wall Street Journal, plus a margin.

Commercial loans typically have shorter terms to maturity and higher interest rates than commercial real estate loans and thus provide interest rate risk benefits to the Bank. Further, the Bank usually requires such borrowers to maintain their primary deposit accounts with the Bank, which is attractive from a fee income and low-interest cost perspective.

<u>Construction/Land Development Loans</u> 

The Bank has developed its construction/land lending activities largely through recent acquisitions. Such loans totaled $17.9 million, or 2.7% of loans, at December 31, 2022, and included residential and commercial construction projects and land loans, with most construction projects located in the primary market area. Construction loans originated by the Bank usually have a maximum 24 month term, and are limited to 80% of the appraised value on residential construction loans, 75% LTV on non-residential construction loans and 90% of appraised value

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.14*** |

---

on residential owner-occupied properties. Construction loans generally involve greater credit risk than improved owner-occupied real estate lending. Land loans typically are limited to 755 of lower of cost or as completed appraised value with a maximum term of 24 months. BV Financial reviews and inspects each property before disbursement of loan funds, and also requires detailed cost estimates to complete the construction project and an appraisal of the property. Restricting originations to properties within the primary market area served also lowers the overall risk of this lending activity.

<u>Marine Loans</u> 

The Bank also maintains a portfolio of marine (boat) loans as part of the more diversified lending operations. The Company has engaged in marine (boat) lending, primarily through purchases, and the current portfolio approximates $15 million. Such loans are purchased primarily from two loan brokers in the regional area. All such loans are underwritten internally, and boat surveys (appraisals) and inspections are obtained on all security. Typical marine loans are fixed rate with 20-year amortization terms and 90% LTV ratios.

<u>Farm Lending</u> 

At December 31, 2022, BV Financial maintained a balance of agriculture related loans of $13.8 million, or 2.1% of total loans. The farm loan portfolio consists of loans to farmers and agricultural businesses, most of which are located on the Eastern Shore of Maryland. These loans are generally secured by farmland and equipment and are generally made to multi-generational clients acquired through the acquisition of 1880 Bank or originated since that acquisition. These loans typically have a five-year term and are made at a fixed rate, indexed to the Five -Year U.S. Treasury Constant Maturity rate, plus a margin. Farm loans are generally limited to 80% of the purchase price or appraised value of land and 90% of the purchase price or market value of equipment, whichever is less. This lending activity represents an important service capability to the Eastern Shore communities.

<u>Consumer Lending</u> 

BV Financial originates a small amount of miscellaneous consumer based loans, and the balance of these loans totaled $2.4 million, or 0.4% of total loans at December 31, 2022. The consumer loans that we originate generally consist of loans secured by automobile loans, deposits and miscellaneous other types of installment loans and are generally only provided to existing lending clients upon request.

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.15*** |

---

<u>Asset Quality</u> 

Exhibit I-10 present historical amounts and ratios regarding the Company's asset quality position. Over the past two years, BV Financial's balance of non-performing assets ranged from a low of $4.8 million or 0.61% of assets at December 31, 2021 to a high of $7.9 million or 0.94% of assets at December 31, 2022. As shown in Exhibit I-10, non-performing assets at December 31, 2022 consisted non-accruing loans, other real estate owned, and a small balance of performing troubled debt restructured loans. Loans secured by commercial property comprised the largest concentration of the non-accruing loan balance, with the second largest concentration consisting of loans secured by 1-4 family residential properties.

As of December 31, 2022, the Company maintained an allowance for loan and lease losses ("ALLL") of $3.813 million, equal to 111.3% of non-performing loans and 0.45% of total loans receivable, recognizing that credit adjustments were incorporated into the fair value accounting for the acquisitions. If the fair value credit discount adjustments remaining from the Company's prior acquisitions were added to the ALLL, the ratio at December 31, 2022 would have been 1.15% of total loans. The Company's management reviews and classifies loans on a monthly basis and establishes loan loss provisions based on the overall quality, size, and composition of the loan portfolio, as well as other factors such as historical loss experience, industry trends, and local real estate market and economic conditions.

<u>Funding Composition and Strategy</u> 

Deposits have consistently served as the Company's primary funding source and at December 31, 2022 deposits accounted for 93.32% of BV Financial's combined balance of deposits and borrowings. Exhibit I-11 sets forth the Company's deposit composition for the past two fiscal years. Transaction and savings account deposits constituted 78.60% of total deposits as of December 31, 2022, as compared to 79.13% of total deposits as of December 31, 2021. The increase in the concentration of certificates of deposit comprising total deposits at December 31, 2022 compared to 2021 was due to a reduction in non-interest bearing demand deposits.

The balance of the Company's deposits consists of CDs, which equaled 21.40% of total deposits at December 31, 2022 compared to 20.87% of total deposits at year end 2021. The Company did not hold any brokered CDs at December 31, 2022.

As of December 31, 2022 and 2021, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000) was $165.5 million and $160.4 million,

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***OVERVIEW AND FINANCIAL ANALYSIS*** |
|  | ***I.16*** |

---

respectively, or 24.2% and 23.6% of total deposits, respectively. A portion of these uninsured deposits were municipal deposits. As of December 31, 2022, the aggregate amount of all uninsured certificates of deposit was $28.1 million (See Exhibit I-12).

Borrowings serve as an alternative funding source for the Company to address funding needs for growth, and to support management of deposit costs and interest rate risk. As of December 31, 2022, the Company's borrowings totaled $49.0 million and consisted of FHLB advances ($12.0 million), $35.0 million of unsecured subordinated debt (the "Notes"), which bear an interest rate of 4.875% and mature in 2030. The Notes are fixed rate until 2025, and then carry and variable rate equal to the 3 month Secured Overnight Financing Rate plus 472 basis point. The Notes can be redeemed beginning in December 2025. In conjunction with acquisition of 1880 Bank and its holding company, Delmarva Bancshares, Inc., BV Financial acquired the Easton Capital Trust Junior Subordinated Notes, with $3.0 million in principal balance and which mature in 2034. This debt accrues interest at a floating rate of the three month LIBOR plus 2.85%.

<u>Subsidiaries</u> 

The Company has two subsidiaries, BayVanguard Bank and Easton Capital Trust I. The Bank maintains three subsidiaries, BV Real Estate, LLC, 1920 Rock Spring Road, LLC and Idlewild Properties, LLC. BV Real Estate, LLC and Idlewild Properties, LLC hold real estate and other assets acquired through foreclosure or repossession by BayVanguard Bank. 1920 Rock Spring Road, LLC is the holding company for a property owned by BayVanguard Bank.

<u>Legal Proceedings</u> 

From time to time, the Company is involved in routine legal proceedings in the ordinary course of business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the Company's financial condition, results of operations and cash flows.

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.1*** |

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**II. MARKET AREA** 

<u>Introduction</u> 

BayVanguard Bank serves the Baltimore, Maryland metropolitan area (the "Baltimore Metro") and the central Maryland "Eastern Shore" region through a network of 15 offices. A total of 9 offices are located in the Baltimore Metro and six offices are located in Dorchester and Talbot Counties on the Eastern Shore. The current branch office structure is mostly the result of a number of acquisition transactions that have expanded BayVanguard Bank's branch office footprint beyond the original location in Sparrows Point, Maryland, southeast of Baltimore City. A map showing BayVanguard Bank's office coverage is set forth in Exhibit I-1.

BayVanguard Bank defines its primary market areas as the Baltimore Metro and the central Eastern Shore of Maryland. The Baltimore Metro regional economy has evolved over time as employment in the manufacturing/industrialization sector has declined and the market area economy has become broadly similar to the national economy in terms of its employment in key sectors, including services employment. There is a notable federal government employment base given the region's proximity to Washington, DC. Employment sectors that are strongly represented include business and professional services, healthcare, wholesale/retail trade, government, and finance/insurance/real estate. Examples of some of the major employers in BayVanguard Bank's Baltimore Metro market area include John's Hopkins University and Hospital and Health System, and the University of Maryland Education and Health Care Systems, along with government facilities such as Fort George G. Meade, the Aberdeen Proving Ground and the US Naval Academy. The Eastern Shore market branches serve a much smaller population and economic base that is more focused on agriculture and entities such as food processing, fisheries, aquaculture and manufacturing.

Current and future levels of business and growth opportunities will be partially influenced by economic and demographic characteristics of the regional market, particularly the future growth and stability of the regional economies, and the nature and intensity of the competitive environment for financial institutions. These factors outlined herein have been considered in the valuation of BV Financial's common stock.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.2*** |

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<u>National Economic Factors</u> 

After expanding for over 10 years, the longest on record, the national economic expansion came to an end in the second quarter of 2020 as a result of the COVID-19 pandemic and related shutdown of businesses and economic activity on both a personal and business basis. Through December 2022, the worldwide impact of COVID-19 has caused a substantial change in current and go-forward expectations in many economic performance factors, including the United States GDP growth. Following annual GDP growth in the range of 1.0% to 3.0% during the most recent economic expansion, the United States GDP increased by 0.3% for calendar year 2020, with a sharp decline in the second quarter (31.2%) and strong growth in the third quarter (33.8%) as a result of the implementation of federal assistance payments. More recent GDP growth was 5.6% for calendar year 2021, indicating a return to growth, but still supported by notable government programs, and an increase of 0.3% for the nine months ended September 30, 2022, as the economy remains impacted by fallout of the pandemic and related issues such as inflation, rising interest rates employee resources and supply-chain interruptions, among other impacts. Based on the most recent Wall Street Journal ("WSJ") economists' forecast, GDP is projected to increase by 0.4% for the fourth quarter of 2022.

The economy has recorded job growth in recent years, with an average of 2.4 million jobs added annually over the 2015-2019 time period, indicating a steady and notable growth period. As was the case with GDP performance noted above, United States job growth turned negative in March 2020, with the labor force contracting by 1.7 million in March and 20.7 million in April 2020, reflecting an unprecedented deterioration in the employment sector of the economy. During the May-December 2020 time period, a total of 12.3 million jobs were added to the workforce, reflecting a recovery of a portion of the prior losses. A further 6.23 million jobs were added in 2021 and 4.50 million jobs in 2022. Near-term expectations for employment gains are for continued modest improvement, with quarterly average job growth of 90,000 jobs as estimated by the WSJ economists forecast.

Economists have been focused in recent periods on the national unemployment rate, which prior to 2020 had been at levels considered to be "full employment" for the last year and a half. The unemployment rate equaled 3.5% as of December 2019, the lowest rate in 2019. The economic disruption caused by the COVID-19 crisis caused the rate to reach 14.8% for April 2020, a level not seen since the Great Depression. The national unemployment rate trended downward to reach 6.7% as of December 2020 and a further 3.9% at December 2021 and

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.3*** |

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reflecting the job increases and a return to pre-COVID economic activity noted earlier. Such unemployment rate has further declined to 3.5% as of December 2022. There remains excess demand for employees in many industries, with such demand resulting in some companies unable to return to their pre-COVID level of operations and the need to offer higher compensation to attract employees becoming part of the inflationary trend. There remain other longer-term impacts on job growth such as the aging of the employment base, further loss of the working age population base as baby boomers retire, increased use of technology to reduce or replace workers in the workplace, and the overall slower rate of population growth compared to prior generations.

For 2020, the annualized national inflation rate was 1.20%, indicating inflation had been kept under control, which is a long term focus of the Federal Reserve policy. More recent inflation data indicated an annualized inflation rate of 4.7% for 2021 and 8.2% for the 11 months ended November 2022. The 2020 inflation rate was impacted substantially by the COVID-19 crisis, reflecting the reduced demand for products and services nationwide and therefore lower inflation. Since the start of the second quarter of 2021, the inflation rate has dramatically increased to a decades old high, reflecting increased consumer demand, a lack of available individuals to full open positions causing wage increases, limitations on production and substantial global supply chain issues. This has become a substantial issue for future economic performance in the United States. The Federal Reserve has addressed the inflation rate by raising interest rates to reduce demand, however this action will continue through at least into the first half of 2023 and current expectations are that a recession is more likely than not in 2023 as a result of the reduced economic activity related to higher interest rates. The most recent WSJ economists forecast indicated an expected 2023 inflation rate of 3.3%, declining to 2.4% for calendar year 2024 and further to 2.3% in 2025.

After recording a strong performance in calendar year 2019, the major stock market indices reached all-time highs in early 2020, and then fell quickly and dramatically through March 2020 as a result of worldwide fears of economic slowdowns or recession, based on the emergence of the COVID-19 pandemic. Subsequent to March 2020, these indices have recovered substantially all of the losses incurred or reached new highs due to government spending actions and as the national economy has mostly returned to pre-pandemic levels. From an all-time high of 29,551.42 on February 12, 2020, the DJIA fell by 37.1% to 18,591.93 as of March 23, 2020. Since that date, the DJIA has recorded a recovery to 33,147.25 as of December 31, 2022, however this level reflects a sharp drop from early 2022 levels approaching 37,000 as

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.4*** |

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various concerns such as inflation, rising interest rates, labor shortages, supply chain restrictions, the Ukraine War, and recession fears have caused investor pessimism. Similarly, these trends have also occurred in the other major market indexes such as the S&P 500, which settled at 3,839.50 on December 31, 2022, well above the February 2020 all-time high of 3,386.15, but a decline from a recent 2022 high of 4,796.56, while the NASDAQ has exceeded the February 2020 high of 9,817.18 to reach 10,466.48 as of December 31, 2022, which also represents a recent decline from a January 2022 high of 15,832.80.

Similar to the major market indices noted above, the major banking market indexes also increased substantially in calendar year 2019 and then fell quickly and dramatically as a result of worldwide fears of economic slowdowns or recession in early 2020. From an all-time high of 165.73 on January 2, 2020, the S&P BMI Bank Index fell by 49.4% through March 23, 2020 to 83.73 based primarily in expected lower income and eventual loan losses due to the economic decline. Since that low, the SNL BMI index has recovered to 148.35, representing an increase of 77.2%. However, similar to the broader market indexes, the BMI Index has fallen from an early 2022 high of 202.27, as the impact of various factors listed above have impacted the outlook for banking industry performance. There has been a general positive market conclusion of the eventual impact of COVID-19 and the potential economic fallout to financial institutions.

Regarding factors that most directly impact the banking and financial services industries, through early 2020, the residential real estate industry was relatively healthy, as new and previously owned home sales increased, and residential housing prices have continued to trend upward in most metropolitan areas of the country. Homebuilders were expecting a more stable trend in new home construction with residential housing starts projected to increase somewhat from 2020 to 2021. As a result of the pandemic and the corresponding lower interest rates, residential loan volumes dramatically increased for 2020 and 2021, with many mortgage banking operations recording substantial increases in volumes and profits. Further, the recent implementation of rate increases by the Federal Reserve initially caused additional demand for housing as individuals have decided to make housing purchases now versus later when prices are expected to be higher. However, the Federal Reserve interest rate hikes which began in March 2022, and have totaled 4.25% through December 31, 2022, have caused a sharp reduction in home sales and the related mortgage banking activity as the fixed rate residential loan secondary market rates have approached or exceeded 6%. As a result of the above, national home price indices have recorded notable increases in 2020, 2021 and year-to-date 2022, however there are expectations that housing prices will begin to record declines due to the higher rate environment. After reaching a high of $413,800 in June 2022, such figure declined to $370,700 in November 2022. These figures compare favorably to the generational low of $169,000 recorded in March 2009 during the national recession.

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.5*** |

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Based on the consensus outlook of economists surveyed by The Wall Street Journal in October 2022, the economists forecasted a rising federal funds rate from 4.27% in December 2022 to 4.55% in June 2023 and a subsequent decline to 2.83% in December 2025. On average, the economists forecasted that the 10-year Treasury yield would equal 3.84% in December 2022 and decline to 3.45% in December 2023 and 3.20% in December 2025.

The December 2022 mortgage finance forecast from the Mortgage Bankers Association (the "MBA") reflected notable trends in units and dollars of residential housing. The forecast indicated that 2025 existing home sales are expected to reach 5.585 million, up from a low of 4.513 million in 2023 and new home sales were forecasted to equal 806,000 in 2025 compared to 2023 sales of 616,000. The 2025 median sale price for existing homes was forecasted to increase to $387,200, up from $371,400 in 2023, while the new homes price was forecasted to reach $449,800 in 2025 versus $440,100 in 2023. Total mortgage production was forecasted to decrease through 2023 to $1.899 trillion, compared to $2.245 trillion in 2022. The forecasted level in 2025 originations was based on a 51% increase in refinancing volume and a 22% increase in purchase volume. Purchase mortgage originations were forecasted to total $4.140 trillion in 2025, versus refinancing volume totaling $1.846 billion. Housing starts for 2025 were projected to total 1.657 million, versus 1.412 million in 2023.

<u>Interest Rate Environment</u> 

The pandemic outbreak and implied impact to the national economy, which became more and more evident throughout early 2020, led the Federal Reserve to reduce interest rates to essentially zero, with a prime rate of 3.25%, and a targeted fed funds rate of 0.00% to 0.25%, indicating that the Federal Reserve's direct interest rate levers had been implemented to support the national economy. After reaching a low of 0.52% on August 4, 2020, the 10-year Treasury Bond traded in the range of 1.00% to 1.50% through early 2022, at which time the rate began to increase as inflation trends increased and as the Federal Reserve began increasing interest rates. Through December 31, 2022, the Federal Reserve has increased the base federal funds target rate a total of 4.25% from 0.25% to 4.50%. The 10-year Treasury rate was 3.88% as of December 31, 2022. Similarly, after reaching a low of 1.19% on August 4; 2020, the 30-year Treasury Bond rate has trended upward to 3.97% as of December 31, 2022. The latest Wall Street Journal survey of leading economists indicates a modestly declining rate scenario starting in mid-2023 through 2025 with short-term rates declining more than long term rates. A history of interest rates is presented in Exhibit II-1.

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.6*** |

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The current rising interest rate environment has benefited financial institutions as adjustable-rate loans have repriced upward, either immediately for prime based loans, or over a period of time, while the level of industry liquidity will likely limit the need to increase deposit rate offerings at the same pace. Residential loan demand, particularly for refinance transactions, has been substantially impacted by rising interest rates, and the remaining lending sectors may be impacted by a potential recession, thus indicating some limitations on bank lending and activity in the near-term future.

<u>Market Area Demographics</u> 

Demographic and economic growth trends, measured by changes in population, number of households, and median household income, provide key insights into the characteristics of BayVanguard Bank's primary market area in the Baltimore Metro and the Eastern Shore. Trends in these key measures are summarized by the data presented in Table 2.1 from 2018 to 2023 and projected through 2028. Data for the nation, the State of Maryland and the Baltimore metropolitan statistical area ("MSA") is included for comparative purposes. Additional detail regarding the market area's demographic and economic condition is included in Exhibit II-2.

The market area primarily consists of a mix of urban and suburban communities within the Baltimore MSA, along with the two Eastern Shore counties. As of 2022, the population of the Baltimore MSA approximated 2.9 million, with four-county primary market area totaled 2.3 million, indicating BayVanguard Bank has access to a substantial population base for its banking services. The Eastern Shore counties contain a much smaller population base, reflecting the rural market area. Trends since 2018 show that the population growth across the market area varies, with Baltimore County recording growth in line with statewide averages, Baltimore City recording population declines and Anne Arundel County recording growth above comparative averages. The smaller Eastern Shore counties recorded modest population increases. Population growth for the next five years indicate a similar trend through 2028, with the statewide average equal to the national growth rate, and the primary market area counties recording similar growth or shrinkage rates. While the size of the primary market area is a positive aspect of the market area for community based financial institutions such as BayVanguard Bank, the data

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.7*** |

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Table 2.1

BayVanguard Bank

Summary Demographic Data

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Year | Year | Year | Growth Rate | Growth Rate |
|  | 2018 | 2023 | 2028 | 2018-2023 | 2023-2028 |
|  | | | | (%) | (%) |
|  **<u>Population (000)</u>** |  |  |  |  |  |
|  USA | 326533 | 334500 | 341663 | 0.5% | 0.4% |
|  Maryland | 6061 | 6209 | 6329 | 0.5% | 0.4% |
|  Baltimore-Columbia-Towson, MD | 2814 | 2851 | 2893 | 0.3% | 0.3% |
|  Baltimore, MD | 835 | 854 | 866 | 0.4% | 0.3% |
|  Baltimore, MD (City) | 610 | 570 | 555 | -1.4% | -0.5% |
|  Harford, MD | 252 | 265 | 272 | 1.0% | 0.5% |
|  Anne Arundel, MD | 575 | 597 | 614 | 0.7% | 0.6% |
|  Dorchester, MD | 32 | 32 | 32 | 0.2% | 0.0% |
|  Talbot, MD | 37 | 38 | 38 | 0.3% | 0.1% |
|  **<u>Households (000)</u>** |  |  |  |  |  |
|  USA | 123943 | 128298 | 131438 | 0.7% | 0.5% |
|  Maryland | 2261 | 2335 | 2383 | 0.6% | 0.4% |
|  Baltimore-Columbia-Towson, MD | 1080 | 1104 | 1122 | 0.4% | 0.3% |
|  Baltimore, MD | 327 | 329 | 332 | 0.1% | 0.2% |
|  Baltimore, MD (City) | 247 | 247 | 244 | 0.0% | -0.3% |
|  Harford, MD | 94 | 100 | 103 | 1.3% | 0.6% |
|  Anne Arundel, MD | 214 | 223 | 230 | 0.8% | 0.6% |
|  Dorchester, MD | 13 | 14 | 14 | 0.7% | 0.1% |
|  Talbot, MD | 16 | 16 | 16 | 0.6% | 0.2% |
|  **<u>Median Household Income ($)</u>** |  |  |  |  |  |
|  USA | 61045 | 73503 | 83333 | 3.8% | 2.5% |
|  Maryland | 81294 | 96089 | 107483 | 3.4% | 2.3% |
|  Baltimore-Columbia-Towson, MD | 77704 | 93386 | 105686 | 3.7% | 2.5% |
|  Baltimore, MD | 73009 | 88428 | 100727 | 3.9% | 2.6% |
|  Baltimore, MD (City) | 49011 | 56247 | 62106 | 2.8% | 2.0% |
|  Harford, MD | 83297 | 104364 | 119693 | 4.6% | 2.8% |
|  Anne Arundel, MD | 95583 | 113988 | 128010 | 3.6% | 2.3% |
|  Dorchester, MD | 52690 | 60863 | 66311 | 2.9% | 1.7% |
|  Talbot, MD | 62771 | 80632 | 86325 | 5.1% | 1.4% |
|  **<u>Per Capita Income ($)</u>** |  |  |  |  |  |
|  USA | 33583 | 41287 | 46830 | 4.2% | 2.6% |
|  Maryland | 42020 | 50691 | 56704 | 3.8% | 2.3% |
|  Baltimore-Columbia-Towson, MD | 41146 | 50810 | 57622 | 4.3% | 2.5% |
|  Baltimore, MD | 39501 | 47123 | 54009 | 3.6% | 2.8% |
|  Baltimore, MD (City) | 30788 | 38449 | 42937 | 4.5% | 2.2% |
|  Harford, MD | 39238 | 51109 | 59323 | 5.4% | 3.0% |
|  Anne Arundel, MD | 46778 | 57373 | 64745 | 4.2% | 2.4% |
|  Dorchester, MD | 29410 | 34267 | 38006 | 3.1% | 2.1% |
|  Talbot, MD | 40184 | 51227 | 54982 | 5.0% | 1.4% |
| <u>**2023 Age Distribution (%)**</u> | 0-14 Yrs. | 15-34 Yrs. | 35-54 Yrs. | 55-69 Yrs. | 70+ Yrs. |
|  USA | 18 | 26.5 | 25 | 18.5 | 12.1 |
|  Maryland | 18 | 25.4 | 25.7 | 19.2 | 11.7 |
|  Baltimore-Columbia-Towson, MD | 17.9 | 25.8 | 25.5 | 19.1 | 11.7 |
|  Baltimore, MD | 17.7 | 25.3 | 24.7 | 19.4 | 12.9 |
|  Baltimore, MD (City) | 17.3 | 29.6 | 24.7 | 17.8 | 10.5 |
|  Harford, MD | 17.7 | 24.2 | 25.5 | 20.6 | 12 |
|  Anne Arundel, MD | 18.5 | 25.1 | 26.4 | 18.8 | 11.1 |
|  Dorchester, MD | 17.1 | 22.3 | 21.8 | 22.7 | 16 |
|  Talbot, MD | 14.4 | 19.1 | 20 | 23.3 | 23.1 |
|  | Less Than | $25,000 to | $50,000 to |  |  |
| <u>**2023 HH Income Dist. (%)**</u> | 25000 | 50000 | 100000 | $100,000+ |  |
|  USA | 16 | 18.8 | 28.7 | 36.4 |  |
|  Maryland | 11.6 | 14.1 | 26.3 | 48.1 |  |
|  Baltimore-Columbia-Towson, MD | 12.7 | 14.4 | 26.1 | 46.8 |  |
|  Baltimore, MD | 11.8 | 15.2 | 29.1 | 43.8 |  |
|  Baltimore, MD (City) | 24.7 | 21.5 | 25.8 | 28.1 |  |
|  Harford, MD | 9.5 | 12.2 | 26.2 | 52 |  |
|  Anne Arundel, MD | 6.9 | 10.4 | 26.1 | 56.6 |  |
|  Dorchester, MD | 21 | 21.5 | 30.2 | 27.3 |  |
|  Talbot, MD | 14.1 | 16.9 | 29.6 | 39.5 |  |
|  Source: S&P Global Market Intelligence. | Source: S&P Global Market Intelligence. |  |  |  |  |

---

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.8*** |

---

indicates that certain sections of the market area counties will retain slow or negative growth characteristics. Population age distribution data is also presented in Table 2.1, which indicates that Baltimore City maintains a somewhat younger population base, while Baltimore and Anne Arundel Counties residents are more closely aligned with the metropolitan area and state in general and Talbot County having the oldest population base.

Growth in households generally mirrored the population growth rates from 2018 to 2023, and such growth rates are projected to continue at similar rates over the next five years. Specifically, the number of households in the Baltimore MSA and Baltimore County are projected to increase at a 0.3% and 0.2% annual rate, respectively, while Baltimore City will record net losses in households. Similar to population trends, Anne Arundel and Harford Counties are expected to record the strongest growth.

Income characteristics for BayVanguard Bank's markets are also reflected in the data set forth in Table 2.1. Bay-Vanguard Bank's market in Maryland is located in a metropolitan region of the state along the eastern seaboard of the United States which is reflected in the comparatively higher income levels for Baltimore County comparted to national averages as measured by median household income and per capita income. Specifically, median household and per capita income levels in Baltimore County were $88,428 and $47,123 compared to national averages of $73,503 and 41,287, respectively. Alternatively, Baltimore City reported notably lower income figures with that are 23% and 7% lower, respectively, than national averages, an indication of the lower wealth and income characteristics of the city. Anne Arundel County recorded the highest income levels overall, above all comparative areas. Overall, however, the Baltimore MSA has an above average median household income level compared to similar-sized metropolitan areas in the country. Dorchester County reported lower income levels than the regional averages, while Talbot County reported much higher income levels. Over the next five years, median household and per capita income growth levels in the market area are projected to be in the range of state and national averages.

Household income distribution rates for 2023 also reveal the comparable income figures of BayVanguard Bank's specific market area, as Baltimore City reported less favorable income levels in comparison to state and national averages, while Baltimore County's income distribution was more favorable than the national as a whole, another sign of the higher level of wealth present in BayVanguard Bank's market area. Anne Arundel County's statistics were most favorable and the Eastern Shore counties data was similar to the actual income levels mentioned above.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.9*** |

---

<u>Primary Market Area Employment Sectors</u> 

Table 2.2 provides an overview of employment by economic sector for the State of Maryland and the six primary market area counties. As shown, Maryland and the primary market area all reported the largest proportions of employment in services, education, healthcare and social services, wholesale and retail trade and manufacturing, indicative of a relatively diversified employment base. Manufacturing employment is higher in all market area counties except Baltimore City and Talbot County than the state average, reflecting the historical industrial base of the region. Wholesale and retail trade employment is supported by the operations of the Port of Baltimore, and the location of the metropolitan area along the eastern seaboard of the United States, which allows for easy access via railroad and highways to a majority of the nation's population. Overall, the distribution of employment exhibited in the primary market area is indicative of a diverse economic environment, and the employment base is thus not deemed to be overly dependent on a single economic sector.

<u>Baltimore MSA Economy</u> 

The Baltimore MSA is one of the oldest metropolitan areas in the country and was originally founded based on the water access to the Atlantic Ocean via the Chesapeake Bay and Baltimore Harbor. This made the Baltimore area a leading port for immigrants and the shipping via water transportation made the Baltimore area a leading trading port for agricultural and manufactured goods from the Mid-Atlantic region. The port of entry for immigrants also resulted

Table 2.2

BayVanguard Bank

Primary Market Area Employment Sectors

(Percent of Labor Force)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | Baltimore | Baltimore | Harford | Anne Arundel | Dorchester | Talbot |
| Employment Sector | Maryland | County | City | County | County | County | County |
|  | (%) | (%) | (%) | (%) | (%) | (%) | (%) |
|  Services | 29.8% | 26.7% | 25.6% | 26.4% | 30.4% | 22.3% | 31.6% |
|  Education, Healthcare, Soc. Serv. | 23.8% | 27.4% | 32.2% | 22.3% | 20.6% | 25.2% | 23.2% |
|  Wholesale/Retail Trade | 10.8% | 8.0% | 7.5% | 11.5% | 13.1% | 6.4% | 7.1% |
|  Manufacturing | 10.8% | 12.1% | 10.6% | 13.1% | 11.6% | 14.7% | 10.5% |
|  Construction | 5.9% | 7.8% | 6.8% | 6.7% | 5.5% | 3.7% | 5.6% |
|  Finance/Insurance/Real Estate | 4.5% | 5.3% | 4.5% | 7.0% | 5.0% | 10.5% | 6.8% |
|  Transportation/Utility | 7.2% | 5.5% | 4.6% | 6.9% | 7.4% | 6.3% | 7.9% |
|  Government | 1.7% | 1.5% | 1.6% | 1.2% | 1.5% | 2.1% | 2.0% |
|  Information | 4.8% | 5.4% | 6.5% | 4.7% | 4.4% | 5.0% | 3.3% |
|  Agriculture | 0.5% | 0.4% | 0.1% | 0.1% | 0.5% | 3.9% | 2.2% |
|  | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |

---

Source: S&P Global Market Intelligence.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.10*** |

---

in a large base of individuals of diversified backgrounds seeking employment and a life in the United States. Further advances in transportation made the Baltimore region a primary center for railroad transportation, and this access to transportation made the area attractive to manufacturing and heavy industry companies for locating plants and offices. For example, the Bethlehem Steel Plan in Sparrows Point, Maryland was at one time the largest steel mill in the world. Other industries that developed a significant presence in the region include foundry/machine shops, canning, printing and publishing and clothing. Thus began a long association with the manufacturing sector for the area in terms of employment and economic activity. Similar to many metropolitan areas in the country, over many decades beginning in the middle of the 20<sup>th</sup> century, the economy and workforce has been forced to change and is now dominated by services, education and healthcare employment, among others. Another factor that impacted the region's economy and workforce is the location close to the nation's capital in Washington, DC. As a result, certain federal government facilities have been established and expanded in the Baltimore region and remain a key part of the demographic and economic base.

Thus, currently, the Baltimore MSA contains a wide array of employment across all primary employment sectors that is typical of a large metropolitan area, with additional employment as a result of its location close to the nation's capital in Washington, D.C. In addition to private sector employment with concentrations in health care, higher education and financial services, BayVanguard Bank's market area includes several large federal government agencies and facilities with operations in the areas of national defense and social security. A notable number of colleges and universities locally and regionally also support the local economy, both in terms of student spending and by providing an educated workforce. Some of the institutions in close proximity include John's Hopkins University, the University of Maryland and Towson University. Health care is also a dominant employer and economic sector and includes the operations of Johns Hopkins Hospital and Health System, University of Maryland Medical System, Medstar Franklin Hospital and CareFirst, Blue Choice. Large government facilities include Fort George G. Meade in Anne Arundel County, the Aberdeen Proving Ground in Harford County, the US Naval Academy in Anne Arundel County and the Social Security Administration Center in Baltimore County. The Port of Baltimore has a long history of one of the east coast's most active shipping centers and is one of the 20 largest import/export trade centers in the county.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.11*** |

---

The Maryland Eastern Shore region reflects a much different market, containing a more rural and agriculture-based economy with additional focus on the Chesapeake Bay and related aquaculture and recreation. Manufacturing employment is also notable given the lower cost of living and lower employment costs. The two-county central Eastern Shore region's population base of approximately 70,000 is substantially lower than the Baltimore Metro figures, but the overall wealth of the region is supported by the related value in the farmland and attractiveness of the region for second/vacation homes and the accompanying tourism industry.

<u>Market Area Largest Employers</u> 

Table 2.3 sets forth details with respect to the largest employers in the six-county market area. As previously mentioned, general services, healthcare, higher education and government agencies are a critical component to the economy of the Baltimore MSA and comprise approximately 60% of the employment base of the market area. Manufacturing and transportation remain notable parts of the economic base. The Eastern Shore counties also contain a variety of large employers in those sectors, plus agriculture.

<u>Unemployment Data</u> 

Comparative unemployment rates for the six market area counties and the Baltimore metropolitan area, as well as for the U.S. and Maryland, are shown in Table 2.4. As of December 2022, the State of Maryland reported an unemployment rate of 3.2%, similar to the national average of 3.3%. Similarly, the Baltimore MSA's unemployment rate was 3.1% as of the same date. Within the six-county primary market area, Baltimore City's unemployment rate of 4.4%

Table 2.4

BayVanguard Bank

Unemployment Trends

---

| | | | |
|:---|:---|:---|:---|
|  | Unemployment Rate(1) | Unemployment Rate(1) | |
|  | Dec. 2021 | Dec. 2022 | Net<br>Change |
|  <u>Region</u> |  |  |  |
|  USA | 3.7% | 3.3% | -0.4% |
|  Maryland | 4.7% | 3.2% | -1.5% |
|  Baltimore-Columbia-Towson, MD | 4.5% | 3.1% | -1.4% |
|  <u>Counties</u> |  |  |  |
|  Baltimore, MD | 4.6% | 3.2% | -1.4% |
|  Baltimore, MD (City) | 6.3% | 4.4% | -1.9% |
|  Harford, MD | 3.9% | 2.8% | -1.1% |
|  Anne Arundel, MD | 3.8% | 2.6% | -1.2% |
|  Dorchester, MD | 4.9% | 3.6% | -1.3% |
|  Talbot, MD | 4.6% | 3.3% | -1.3% |

---

(1) Not seasonally adjusted.

Source: S&P Global Market Intelligence.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.12*** |

---

Table 2.3

BayVanguard Bank

Market Area Largest Employers

---

| | | |
|:---|:---|:---|
| **Employer** | **Industry** | **Size** |
|  **<u>Baltimore County</u>** |  |  |
|  SS Administration and Medicare & Medicaid | Government | 15415 |
|  Community College of Baltimore | Education | 4184 |
|  Medstar Franklin Square Hospital | Health Care | 3900 |
| T. Rowe Price | Financial Services | 3764 |
|  Greater Baltimore Medical Center | Health Care | 3742 |
|  Towson University | University | 3433 |
|  University of Maryland St. Joseph Medical Center | Health Care | 2611 |
|  McCormick and Company, Inc. | Retail Manufacturing | 2455 |
|  CareFirst, BlueChoice, Inc. | Health Care | 2220 |
|  University of Maryland , Baltimore County | University | 2217 |
|  Sheppard Pratt Health Systems | Health Care | 1918 |
|  BD Life Sciences, Diagnostic Systems | Medical, Diagnostic Equip. | 1900 |

---

Source: www. Baltimorecountymd.gov

---

| | | |
|:---|:---|:---|
|  **<u>Baltimore City</u>** |  |  |
|  Johns Hopkins University | Education Services | 18600.0 |
|  Johns Hopkins Hospital & Health System | Health Care | 20485.0 |
|  University of Maryland Medical System | Health Care | 11450.0 |
|  University of Maryland System | Education Services | 8965.0 |
|  MedStar Health | Health Care | 6175.0 |
|  LifeBridge Health | Health Care | 5315.0 |
|  Amazon.com | Fulfillment Center | 4500.0 |
|  Mercy Health Services | Health Care | 4030.0 |
|  St. Agnes HealthCare | Health Care | 3265.0 |
|  Excelon | Utilities | 2950.0 |
|  Kennedy Kreiger Insitute | Health Care | 2600.0 |
|  Maryland Inst. College of Art | Higher Education | 2140.0 |

---

Source: Commerce.maryland.gov, Maryland Dept. of Commerce.

---

| | | |
|:---|:---|:---|
|  **<u>Anne Arundel County</u>** |  |  |
|  Fort George G. Meade | Government | 62860.0 |
|  Anne Arundel County Public Schools | Health Care | 14852.0 |
|  State of Maryland | State Government Services | 12256.0 |
|  BWI Thurgood Marshall Airport | Regional Airport | 9717.0 |
|  Northrop Grumman | Defense, Marine Division | 9500.0 |
|  Anne Arundel County Government | Education | 6348.0 |
|  Anne Arundel Health System | Health Care | 5100.0 |
|  Southwest Airlines | Airline | 4857.0 |
|  Univ of MD Baltimore Washington Medical Center | Health Care | 3328.0 |
|  US Naval Academy | Federal Naval Education | 3000.0 |
|  Live Casino and Hotel | Casino | 3000.0 |
|  Amazon | Warehouse & Distribution | 2210.0 |
|  Booz Allen Hamilton | Consulting | 2100.0 |
|  Anne Arundel Community College | Public College | 1555.0 |
|  Allegis Group | IT & Engineering Services | 1500.0 |

---

Source: Anne Arundel Economic Development Corp.

---

| | | |
|:---|:---|:---|
|  **<u>Dorchester County</u>** |  |  |
|  Amick Farms LLC | Agriculture, Forestry, Fishing & Hunting | 1,000+ |
|  Cambridge Mack Senior Center | Health Care/Social Assistance | 500-749 |
|  Hyatt Regency-Chesapeake Bay | Accommodation & Food Services | 500-740 |
|  Auxillary-The Eastern Shore | Health Care/Social Assistance | 100-249 |
|  Cambridge Engineered Solutions | Manufacturing | 250-499 |
|  Maryland Wire Belts | Manufacturing | 250-499 |
|  Horn Point Laboratory | Professional, Scientific & Technical Services | 100-249 |
|  Interstate Corrpack Inc. | Manufacturing | 100-249 |
|  Mallard Bay Nurse-Rehab Center Hm | Health Care/Social Assistance | 100-249 |
|  Walmart Supercenter | Retail Trade | 100-249 |

---

Source:dllr.state.md.us

---

| | | |
|:---|:---|:---|
|  **<u>Talbot County</u>** |  |  |
|  University-MD Shr Med Ctr | Health Care/Social Assistance | 1,000+ |
|  Delmarva Foundation | Health Care/Social Assistance | 250-499 |
|  Sea Watch Intl | Manufacturing | 250-499 |
|  Chesapeake Building Components | Retail Trade | 100-249 |
|  Hertrich Chevrolet GMC Buick | Retail Trade | 100-249 |
|  Pines | Health Care/Social Assistance | 100-249 |
|  Quality Health Strategies | Health Care/Social Assistance | 100-249 |
|  Star Democrat | Media | 100-249 |
|  Walmart | Retail Trade | 100-249 |
|  YMCA of the Chesapeake | Health Care/Social Assistance | 100-249 |

---

Source:dllr.state.md.us

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.13*** |

---

was the highest, while Baltimore County's rate of 3.2% was lower than comparative averages. This data indicates that BayVanguard Bank's local market area includes areas of both economic strength and a level of weakness in terms of the job market for residents.

<u>Market Area Deposit Characteristics/Competition</u> 

BayVanguard Bank's deposit base is closely tied to the economic fortunes of the six market area counties, in particular, the areas that are nearby to each of Bay-Vanguard Bank's 's retail banking office locations. Table 2.5 displays deposit market trends from June 30, 2018 through June 30, 2022 for BayVanguard Bank, as well as for all commercial banks and savings institution branches located in the market area counties and the state of Maryland.

Table 2.5

BayVanguard Bank

Deposit Summary

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | As of June 30, | As of June 30, | As of June 30, | As of June 30, | As of June 30, | As of June 30, | |
|  | 2018 | 2018 | 2018 | 2022 | 2022 | 2022 | |
|  |<br>Deposits | Market<br>Share | No. of<br>Branches |<br>Deposits | Market<br>Share | No. of<br>Branches |<br>Deposit<br>Growth Rate<br>2018-2022 |
|  | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (Dollars in Thousands) | (%) |
|  **Maryland** | $144990716 | 100.0% | 1491 | $208680087 | 100.0% | 1247 | 9.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | $141636675 | 97.7% | 1432 | $205117979 | 98.3% | 1191 | 9.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | $3354041 | 2.3% | 59 | $3562108 | 1.7% | 56 | 1.5% |
|  **Baltimore County** | $18315678 | 100.0% | 219 | $26766205 | 100.0% | 179 | 9.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | $17259884 | 94.2% | 201 | $25588422 | 95.6% | 160 | 10.3% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | $1055794 | 5.8% | 18 | $1177783 | 4.4% | 19 | 2.8% |
|  BayVanguard Bank | $87194 | 0.5% | 2 | $164269 | 0.6% | 4 | 17.2% |
|  **Baltimore City** | $25348907 | 100.0% | 111 | $38722293 | 100.0% | 108 | 11.2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | $25124800 | 99.1% | 105 | $38534897 | 99.5% | 103 | 11.3% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | $224107 | 0.9% | 6 | $187396 | 0.5% | 5 | -4.4% |
|  BayVanguard Bank | $23378 | 0.1% | 1 | $79772 | 0.2% | 3 | 35.9% |
|  **Harford** | $3940200 | 100.0% | 60 | $5382905 | 100.0% | 48 | 8.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | $3634934 | 92.3% | 53 | $5032141 | 93.5% | 41 | 8.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | $305266 | 7.7% | 7 | $350764 | 6.5% | 7 | 3.5% |
|  BayVanguard Bank (Madison Bk) | $57509 | 1.5% | 2 | $42954 | 0.8% | 2 | -7.0% |
|  **Anne Arundel** | $12519433 | 100.0% | 149 | $17047758 | 100.0% | 117 | 8.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | $11428870 | 91.3% | 133 | $16550719 | 97.1% | 109 | 9.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | $1090563 | 8.7% | 16 | $497039 | 2.9% | 8 | -17.8% |
|  BayVanguard Bank | $30827 | 0.2% | 1 | $70677 | 0.4% | 1 | 23.1% |
|  **Dorchester County** | $540188 | 100.0% | 12 | $725935 | 100.0% | 12 | 7.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | $540188 | 100.0% | 12 | $495645 | 68.3% | 9 | -2.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | $0 | 0.0% |  | $230290 | 31.7% | 3 | 0.0% |
|  BayVanguard Bank (1880 Bank) | $173620 | 32.1% | 3 | $230290 | 31.7% | 3 | 7.3% |
|  **Talbot County** | $1297643 | 100.0% | 18 | $1877273 | 100.0% | 16 | 9.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial Banks | $1297643 | 100.0% | 18 | $1742394 | 92.8% | 13 | 7.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Savings Institutions | $0 | 0.0% |  | $134879 | 7.2% | 3 | 0.0% |
|  BayVanguard Bank (1880 Bank) | $114443 | 8.8% | 3 | $134879 | 7.2% | 3 | 4.2% |

---

Source: FDIC.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.14*** |

---

Financial institutions in the State of Maryland reported annualized deposit increases of 9.5% over the four-year time period, with commercial banks gaining in deposits at an annual rate of 9.7% and savings institutions gaining deposits at an annual rate of 1.5%. Commercial banks held 98% of total deposits in the State of Maryland as of June 30, 2022.

Consistent with the State of Maryland, commercial banks maintained a much larger market share of deposits than savings institutions in the market area counties, averaging 91.1%. For the four-year period covered in Table 2.5, savings institutions experienced decreases in deposit market share in Baltimore County, Baltimore City, Harford County and Anne Arundel County, indicative of a long-term trend. In the six counties, for the four-year period covered, bank and thrift deposits increased at annual rates ranging from a low of 7.7% in Dorchester County to a high of 11.2% in Baltimore City.

Based on June 30, 2022 deposit data, BayVanguard Bank maintained a market share of 0.6% of bank and thrift deposits in Baltimore County, versus a lower market share of 0.2% in Baltimore City. In the other market area counties, deposit market shares ranged from a low of 0.4% in Anne Arundel County to a high of 31.7% in Dorchester County. These market shares are a reflection of the relative sizes of the banking market in the region and that potential additional deposits could be obtained from the market in general. BayVanguard Bank recorded annual deposit gains in all market area counties except Harford County since June 30, 2018, with some of the gains reflecting completion of acquisitions. BayVanguard Bank's deposits increased at an annual rate of 35.9% in Baltimore City and by 17.2% in Baltimore County over the past four years.

<u>Competition</u> 

Bay-Vanguard faces notable competition in both deposit gathering and lending activities, including direct competition with financial institutions that primarily have a local, regional or national presence. Securities firms and mutual funds also represent major sources of competition in raising deposits. In many cases, these competitors are also seeking to provide some or all of the community-oriented services as BayVanguard Bank. With regard to lending competition, BayVanguard Bank encounters the most significant competition from the same institutions providing deposit services. In addition, BayVanguard Bank competes with mortgage companies, independent mortgage brokers, and credit unions. Table 2.6 lists BayVanguard Bank's largest competitors in the primary market area based on deposit market share as noted parenthetically. Bank of America and Manufacturers and Traders Trust Company command a large portion of the regional deposit base, along with Truist Bank and PNC Bank. The largest community-based institutions in the Baltimore Metro include First National Bank of PA, Harford Bank and Sandy Spring Bank, while on the Eastern Shore there are several other smaller community institutions. BayVanguard Bank was ranked 17th out of 25 financial institutions in Baltimore County and 13th out of 21 institutions in Baltimore City as of June 30, 2022. On the Eastern Shore, BayVanguard Bank's competitive position was much higher given the small number of competitors.

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***MARKET AREA*** |
|  | ***II.15*** |

---

Table 2.6

BayVanguard Bank

Market Area Deposit Competitors - As of June 30, 2022

---

| | | | |
|:---|:---|:---|:---|
| **Location** | **Name** | **Market<br>Share** | **Rank** |
|  |  | **(%)** |  |
|  Baltimore County, MD | Bank of America, NA (NC) | 23.83% |  |
|  | Manufacturers and Traders Trust Co (NY) | 18.48% |  |
|  | Wells Fargo Bank, NA (SD) | 10.99% |  |
|  | CFG Community Bank (MD) | 10.12% |  |
|  | PNC Bank, NA (DE) | 9.36% |  |
|  | Truist Bank (NC) | 7.36% |  |
|  | First National Bank of Pennsylvania (PA) | 4.73% |  |
|  | **BayVanguard Bank (MD)** | **0.61%** | **17 out of 25** |
|  Baltimore City, MD | Bank of America, NA (NC) | 43.00% |  |
|  | Manufacturers and Traders Trust Co (NY) | 26.47% |  |
|  | PNC Bank, NA (DE) | 9.97% |  |
|  | Truist Bank (NC) | 8.20% |  |
|  | Wells Fargo Bank, NA (SD) | 7.70% |  |
|  | First National Bank of Pennsyvania (PA) | 1.23% |  |
|  | The Harbor Bank of MD (MD) | 0.79% |  |
|  | **BayVanguard Bank (MD)** | **0.21%** | **13 out of 21** |
|  Harford County, MD | Manufacturers and Traders Trust Co (NY) | 19.65% |  |
|  | Bank of America, NA (NC) | 17.88% |  |
|  | Truist Bank (NC) | 14.27% |  |
|  | PNC Bank, NA (DE) | 13.47% |  |
|  | Harford Bank (MD) | 9.47% |  |
|  | Wells Fargo Bank, NA (SD) | 9.09% |  |
|  | First National Bank of Pennsylvania (PA) | 6.49% |  |
|  | **BayVanguard Bank (MD)** | **0.80%** | **12 out of 14** |
|  Anne Arundel County, MD | Truist Bank (NC) | 21.40% |  |
|  | Bank of America, NA (NC) | 18.53% |  |
|  | Manufacturers and Traders Trust Co (NY) | 16.93% |  |
|  | Wells Fargo Bank, NA (SD) | 7.97% |  |
|  | PNC Bank, NA (DE) | 7.52% |  |
|  | Sandy Spring Bank (MD) | 5.14% |  |
|  | Shore United Bank, NA (MD) | 5.03% |  |
|  | **BayVanguard Bank (MD)** | **0.41%** | **18 out of 21** |
|  Dorchester County, MD | **BayVanguard Bank (MD)** | **31.72%** | **1 out of 7** |
|  | Hebron Savings Bank (MD) | 26.53% |  |
|  | Provident State Bank, Inc. (MD) | 13.84% |  |
|  | Manufacturers and Traders Trust Co (NY) | 7.51% |  |
|  | Bank of America, NA (NC) | 7.47% |  |
|  Talbot County, MD | Shore United Bank, NA (MD) | 46.69% |  |
|  | Bank of America, NA (NC) | 16.03% |  |
|  | PNC Bank, NA (DE) | 11.15% |  |
|  | **BanVanguard Bank (MD)** | **7.18%** | **4 out of 9** |
|  | Truist Bank (NC) | 5.87% |  |

---

Source: FDIC.gov

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.1*** |

---

**III. PEER GROUP ANALYSIS** 

This chapter presents an analysis of BV Financial's operations versus a group of comparable savings institutions (the "Peer Group") selected from the universe of all publicly-traded savings institutions in a manner consistent with the regulatory valuation guidelines. The basis of the pro forma market valuation of BV Financial is derived from the pricing ratios of the Peer Group institutions, incorporating valuation adjustments for key differences in relation to the Peer Group. Since no Peer Group can be exactly comparable to BV Financial, key areas examined for differences are: financial condition; profitability, growth and viability of earnings; asset growth; primary market area; dividends; liquidity of the shares; marketing of the issue; management; and effect of government regulations and regulatory reform.

<u>Peer Group Selection</u> 

The Peer Group selection process is governed by the general parameters set forth in the regulatory valuation guidelines. Accordingly, the Peer Group is comprised of only those publicly-traded savings institutions whose common stock is either listed on the NYSE or NASDAQ, since their stock trading activity is regularly reported and generally more frequent than non-publicly traded and closely-held institutions. Institutions that are not listed on the NYSE or NASDAQ are inappropriate, since the trading activity for thinly-traded or closely-held stocks are typically highly irregular in terms of frequency and price and thus may not be a reliable indicator of market value. We have also excluded from the Peer Group those companies under acquisition or subject to rumored acquisition, mutual holding companies and recent conversions, since their pricing ratios are subject to unusual distortion and/or have limited trading history. A recent listing of the universe of all publicly-traded savings institutions is included as Exhibit III-1.

Ideally, the Peer Group, which must have at least 10 members to comply with the regulatory valuation guidelines, should be comprised of locally- or regionally-based institutions with comparable resources, strategies and financial characteristics. There are approximately 45<u> </u>fully-converted, publicly-traded institutions nationally and, thus, it is typically the case that the Peer Group will be comprised of institutions with relatively comparable characteristics. To the extent that differences exist between the converting institution and the Peer Group, valuation adjustments will be applied to account for the differences. Since BV Financial will be a full public company upon completion of the offering, we considered only full public companies to be viable candidates for inclusion in the Peer Group. From the universe of publicly-traded thrifts, we selected ten institutions with characteristics similar to those of BV Financial. In the selection

------

---

| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.2*** |

---

process, we applied one "screen" to the universe of all public companies that were eligible for consideration:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Screen #1 Fully converted institutions with assets between $525</u> <u>million and $1.6</u> <u>billion.</u> Thirteen companies met the criteria for Screen #1 and 10 were included in the Peer Group: 1895 Bancorp of Wisconsin, Inc. of WI, Affinity Bancshares, Inc. of GA, HMN Financial, Inc. of MN, Home Federal Bancorp,
Inc. of LA, IF Bancorp, Inc. of IL, Magyar Bancorp, Inc. of NJ, Northeast Community Bancorp, Inc. of NY, Provident Financial Holdings, Inc of CA, Riverview Bancorp, Inc. of WA and William Penn Bancorporation of PA. Carver Bancorp, Inc. of NY and
Broadway Financial Corporation of CA were excluded from the Peer Group, as the result of unusual stock pricing and ratios, while ECB Bancorp, Inc. of MA was excluded due to being a recent conversion. Exhibit III-2 provides financial and public market pricing characteristics of all publicly-traded thrifts with assets less than $2.0 billion.

Table 3.1 shows the general characteristics of each of the ten Peer Group companies and Exhibit III-3 provides summary demographic and deposit market share data for the primary market areas served by each of the Peer Group companies. While there are expectedly some differences between the Peer Group companies and BV Financial, we believe that the Peer Group companies, on average, provide a good basis for valuation subject to valuation adjustments. The following sections present a comparison of BV Financial's financial condition, income and expense trends, loan composition, interest rate risk and credit risk versus the Peer Group as of the most recent publicly available date.

In addition to the selection criteria used to identify the Peer Group companies, a summary description of the key comparable characteristics of each of the Peer Group companies relative to BV Financial's characteristics is detailed below.

• 1895 Bancorp of Wisconsin, Inc. of Wisconsin. Comparable due to similar asset growth rates over the last 12
months, similar non-interest income to average assets ratio, similar risk-weighted assets-to-assets ratio.

• Affinity Bancshares, Inc. of Georgia. Comparable due to concentration of loans and deposits as a percent of
assets, similar level of intangibles, ratio of assets/employee, level of commercial real estate loans as a percent of assets, and non-performing loans-to-loans ratio.

• HMN Financial, Inc. of Minnesota. Comparable due to similar tangible equity ratio, most recent 12 month asset
growth rate, similar cost of interest bearing liabilities, similar risk-weighted assets-to-assets ratio .

• Home Federal Bancorp, Inc. of Louisiana. Comparable due to tangible equity ratio, growth or shrinkage rates of
investments, loans and deposits, level of non-interest income, level of 1-4 family residential loans as a percent of assets

• IF Bancorp, Inc. of Illinois. Comparable due to similar concentration of deposits on the balance sheet, similar
rate of growth in loans over last 12 months, similar tax rate

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.3*** |

---

Table 3.1

Peer Group of Publicly-Traded Commercial Banks

As of December 31, 2022 or the Most Recent Date Available.

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | |  | |  | As of<br>February 24, 2023 | As of<br>February 24, 2023 |
|  |  |  |  |  |  | Total |  | | Fiscal | Stock | Market |
| Ticker | Financial Institution | Exchange | Region | City | State | Assets |  | Offices | Mth End | Price | Value |
|  |  |  |  |  |  | ($Mil) |  |  |  | ($) | ($Mil) |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | NASDAQCM | MW | Greenfield | WI | 529 | (1) | 6 | Dec | 9.88 | 64 |
|  AFBI | Affinity Bancshares, Inc. | NASDAQCM | SE | Covington | GA | 791 |  | 3 | Dec | 15.79 | 105 |
|  HMNF | HMN Financial, Inc. | NASDAQGM | MW | Rochester | MN | 1096 |  | 14 | Dec | 22.00 | 95 |
|  HFBL | Home Federal Bancorp, Inc. of Louis | NASDAQCM | SW | Shreveport | LA | 577 |  | 11 | Jun | 18.40 | 55 |
|  IROQ | IF Bancorp, Inc. | NASDAQCM | MW | Watseka | IL | 824 |  | 8 | Jun | 17.50 | 55 |
|  MGYR | Magyar Bancorp, Inc. | NASDAQGM | MA | New Brunswick | NJ | 822 |  | 7 | Sep | 12.55 | 87 |
|  NECB | Northeast Community Bancorp, Inc. | NASDAQCM | MA | White Plains | NY | 1425 |  | 12 | Dec | 15.66 | 231 |
|  PROV | Provident Financial Holdings, Inc. | NASDAQGS | WE | Riverside | CA | 1271 |  | 14 | Jun | 14.06 | 101 |
|  RVSB | Riverview Bancorp, Inc. | NASDAQGS | WE | Vancouver | WA | 1599 |  | 18 | Mar | 7.10 | 153 |
|  WMPN | William Penn Bancorporation | NASDAQCM | MA | Bristol | PA | 871 |  | 13 | Jun | 11.88 | 160 |

---

(1) As of September 30, 2022 or the most recent date available.

Source: S&P Global Market Intelligence

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.4*** |

---

• Magyar Bancorp, Inc. of New Jersey. Comparable due to similar concentration of loans, deposits and borrowings as
a percent of assets, similar asset growth rate, similar last 12 month growth in loans and borrowings, similar ratio of net interest income as a percent of average assets, similar operating expense ratio, similar loan portfolio composition as a
percent of assets.

• Northeast Community Bancorp, Inc. of New York. Comparable due to similar concentration of loans, deposits and
borrowings as a percent of assets, similar operating expense ratio, similar level of net charges over last 12 months, similar level of risk-weighted assets-to-assets ratio.

• Provident Financial Holdings, Inc. of California. Comparable due to similar level of loans as a percent of
assets, similar interest expense ratio, similar operating expense ratio, similar ratio of assets per employee.

• Riverview Bancorp, Inc. of Washington. Comparable due to similar level of deposits as a percent of assets,
similar level of intangibles as a percent of assets, similar rate of decline in cash and investments over last 12 months, similar operating expense ratio, similar level of multifamily and commercial real estate loans as a percent of assets, similar
level of NPAs and 90+ loans as a percent of assets.

• William Penn Bancorporation of Pennsylvania. Comparable due to similar LTM asset growth rate, similar level of
interest expense as a percent of average assets, similar ratio of assets/employee, similar ratio of 1-4 family loans and construction loans as a percent of assets, similar ratios of NPLs/loans and
Reserves/Loans.

In aggregate, the Peer Group companies maintained a slightly lower level of tangible equity compared to the industry average (12.17% of assets versus 13.03% for all public companies), generated higher earnings as a percent of average assets (0.91% core ROAA versus 0.79% for all public companies) and earned a higher ROE (7.30% core ROE versus 6.56% for all public companies). Overall, the Peer Group's average P/TB ratio and average core P/E multiple were below the respective averages for all publicly-traded thrifts.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | All<br>Publicly-Traded |  |<br>Peer Group |  |
|  <u>Financial Characteristics (Averages)</u> |  |  |  |  |
|  Assets ($Mil) | $5123 |  | $980 |  |
|  Market capitalization ($Mil) | $539 |  | $110 |  |
|  Tangible equity/assets (%) | 13.03 | % | 12.17 | % |
|  Core return on average assets (%) | 0.79 |  | 0.91 |  |
|  Core return on average equity (%) | 6.56 |  | 7.30 |  |
|  <u>Pricing Ratios (Averages)(1)</u> |  |  |  |  |
|  Core price/earnings (x) | 12.87 | x | 10.45 | x |
|  Price/tangible book (%) | 107.99 | % | 96.66 | % |
|  Price/assets (%) | 12.30 |  | 11.20 |  |

---

(1) As of February 24, 2023.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.5*** |

---

Ideally, the Peer Group companies would be comparable to BV Financial in terms of all of the selection criteria, but the universe of publicly-traded thrifts does not provide for an appropriate number of such companies. However, in general, the companies selected for the Peer Group were fairly comparable to BV Financial, as will be highlighted in the following comparative analysis.

<u>Financial Condition</u> 

Table 3.2 shows comparative balance sheet measures for BV Financial and the Peer Group, reflecting the expected similarities and some differences given the selection procedures outlined above. The Company's and the Peer Group's ratios reflect balances as of December 31, 2022 or the latest date available. BV Financial's equity-to-assets ratio of 11.57% was below the Peer Group's average equity ratio of 12.59%. The Company's pro forma equity position will increase with the addition of stock proceeds, which will provide the Company with an equity-to-assets ratio that exceeds the Peer Group's ratio. Tangible equity-to-assets ratios for the Company and the Peer Group equaled 9.72% and 12.11%, respectively. The increase in BV Financial's pro forma capital position will be favorable from a risk perspective and in terms of future earnings potential that could be realized through leverage and lower funding costs. At the same time, the Company's higher pro forma capitalization will initially depress return on equity. Both BV Financial's and the Peer Group's capital ratios reflected capital surpluses with respect to the regulatory capital requirements.

The interest-earning asset compositions for the Company and the Peer Group were somewhat similar, with loans constituting the largest concentration of interest-earning assets for both BV Financial and the Peer Group. The Company's loans-to-assets ratio of 78.01% was higher than the comparable Peer Group ratio of 72.70%. Comparatively, the Company's cash and investments-to-assets ratio of 13.41% was lower than the comparable Peer Group ratio of 21.44%. Overall, BV Financial's interest-earning assets amounted to 91.42% of assets, which approximated the comparable Peer Group ratio of 94.14%. The Peer Group's non-interest earning assets included bank-owned life insurance ("BOLI") equal to 2.01% of assets and goodwill/intangibles equal to 0.48% of assets, while the Company maintained corresponding balances of 2.36% and 1.85% of assets for BOLI and goodwill/intangibles.

BV Financial's funding liabilities reflected a funding composition that was somewhat similar to that of the Peer Group's funding composition. The Company's deposits equaled 81.02%

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.6*** |

---

Table 3.2

Balance Sheet Composition and Growth Rates

Comparable Institution Analysis

As of December 31, 2022 or the Most Recent Date Available.

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| | | | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | | | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet as a Percent of Assets | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Balance Sheet Annual Growth Rates | Regulatory Capital | Regulatory Capital | Regulatory Capital |
|  |  | | | Cash &<br>Equivalents | MBS &<br>Invest |<br>BOLI | Net<br>Loans (1) |<br>Deposits | Borrowed<br>Funds | Sub.<br>Debt | Total<br>Equity | Goodwill<br>& Intang | Tangible<br>Equity |<br>Assets | MBS, Cash &<br>Investments |<br>Loans |<br>Deposits | Borrows.<br>&Sub debt | Total<br>Equity | Tangible<br>Equity | Tier 1<br>Leverage | Tier 1<br>Risk-Based | Risk-Based<br>Capital |
|  <u>BV Financial, Inc.</u> | <u>BV Financial, Inc.</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  December 31, 2022 | December 31, 2022 |  |  | 8.12% | 5.29% | 2.36% | 78.01% | 81.02% | 1.31% | 4.50% | 11.57% | 1.85% | 9.72% | 3.66% | -26.13% | 12.78% | 0.68% | 33.16% | 17.14% | 21.26% | 13.39% | 16.76% | 17.34% |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp; Averages |  |  | 2.77% | 18.67% | 2.01% | 72.70% | 80.67% | 5.32% | 0.17% | 12.59% | 0.48% | 12.11% | 3.67% | -24.02% | 14.02% | 4.17% | 31.44% | -7.53% | -7.72% | 11.75% | 14.39% | 15.41% |
| &nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp; Medians |  |  | 2.62% | 18.62% | 1.98% | 72.05% | 81.65% | 3.33% | 0.00% | 11.16% | 0.01% | 11.16% | 3.46% | -26.15% | 13.79% | 3.60% | 48.51% | -7.82% | -8.48% | 10.54% | 14.33% | 15.54% |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | (2) | WI | 2.97% | 23.49% | 2.68% | 67.09% | 71.66% | 10.76% | 0.00% | 14.34% | 0.00% | 14.34% | -2.19% | -22.33% | 6.88% | 1.33% | 1.82% | -17.68% | -17.68% | 11.86% | 16.64% | 17.46% |
|  AFBI | Affinity Bancshares, Inc. |  | GA | 3.33% | 9.33% | 1.99% | 80.49% | 83.05% | 1.27% | 0.00% | 14.80% | 2.35% | 12.45% | 0.41% | -38.50% | 10.61% | 7.24% | -79.54% | -3.20% | -3.59% | 10.97% | 11.86% | 13.11% |
|  HMNF | HMN Financial, Inc. |  | MN | 3.31% | NA | 0.00% | 71.01% | 89.58% | 0.00% | 0.00% | 8.88% | 0.07% | 8.81% | 2.49% | NA | 18.28% | 3.29% | -100.00% | -11.54% | -11.61% | 9.14% | 11.48% | 12.65% |
|  HFBL | Home Federal Bancorp, Inc. of Louisian |  | LA | 3.55% | 18.62% | 1.15% | 73.10% | 89.88% | 1.43% | 0.00% | 8.44% | 0.00% | 8.44% | 0.92% | -26.15% | 13.45% | 1.18% | 94.91% | -8.84% | -8.84% | 9.99% | 14.08% | 15.25% |
|  IROQ | IF Bancorp, Inc. |  | IL | 1.18% | 25.73% | 1.77% | 68.14% | 81.01% | 9.22% | 0.00% | 8.63% | 0.00% | 8.63% | 6.62% | -12.43% | 14.13% | 3.91% | 117.37% | -17.81% | -17.81% | 9.88% | NA | NA |
|  MGYR | Magyar Bancorp, Inc. |  | NJ | 0.96% | 12.41% | 2.16% | 81.07% | 82.29% | 4.04% | 0.00% | 12.16% | 0.00% | 12.16% | 5.25% | -32.45% | 15.99% | 4.39% | 30.30% | 1.50% | 1.50% | 11.23% | 14.58% | 15.83% |
|  NECB | Northeast Community Bancorp, Inc. |  | NY | 6.70% | 3.21% | 1.82% | 85.07% | 78.73% | 1.68% | 0.00% | 18.39% | 0.01% | 18.38% | 16.32% | -26.43% | 25.22% | 21.01% | -23.16% | 4.25% | 4.44% | 16.50% | 13.17% | 13.50% |
|  PROV | Provident Financial Holdings, Inc. |  | CA | 1.95% | 14.07% | NA | 81.85% | 74.37% | 14.30% | 0.00% | 10.17% | 0.00% | 10.17% | 7.50% | -32.56% | 22.10% | -1.16% | 121.59% | 1.02% | 1.02% | 9.55% | 17.87% | 18.74% |
|  RVSB | Riverview Bancorp, Inc. |  | WA | 1.54% | 28.96% | 1.98% | 62.67% | 85.44% | 2.62% | 1.68% | 9.51% | 1.72% | 7.79% | -5.01% | -23.54% | 5.80% | -7.29% | 84.35% | -6.81% | -8.11% | 10.10% | 15.46% | 16.71% |
|  WMPN | William Penn Bancorporation |  | PA | 2.27% | 32.22% | 4.56% | 56.51% | 70.66% | 7.86% | 0.00% | 20.58% | 0.63% | 19.95% | 4.43% | -1.80% | 7.75% | 7.82% | 66.72% | -16.20% | -16.54% | 18.26% | NA | NA |

---

(1) Includes loans held for sale.

(2) As of September 30, 2022 or the latest date available.

Source: S&P Global Market Intelligence, LC. and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.7*** |

---

of assets, which was slightly above the Peer Group's ratio of 80.67%. The Company also maintained a slightly higher level of borrowings than the Peer Group, as indicated by borrowings-to-assets ratios of 5.81% and 5.49% for BV Financial and the Peer Group, respectively. Total interest-bearing liabilities maintained by the Company and the Peer Group, as a percent of assets, equaled 86.83% and 86.16%, respectively.

A key measure of balance sheet strength for a thrift institution is its interest-earning assets/interest-bearing liabilities ("IEA/IBL") ratio. Presently, the Company's IEA/IBL ratio is lower than the Peer Group's ratio, based on IEA/IBL ratios of 105.29% and 109.26%, respectively. The additional capital realized from stock proceeds should serve to provide BV Financial with an IEA/IBL ratio that exceeds the Peer Group's ratio, as the increase in capital provided by the infusion of stock proceeds will serve to lower the level of interest-bearing liabilities funding assets and will be primarily deployed into interest-earning assets.

The growth rate section of Table 3.2 shows annual growth rates for key balance sheet items. BV Financial's and the Peer Group's growth rates are based on annual growth for the twelve months ended December 31, 2022. BV Financial recorded a 3.66% increase in assets, versus asset growth of 3.67% recorded by the Peer Group. Asset growth for BV Financial included an 12.78% increase in loans, which was in part funded by an 26.13% decline in cash and investments. Asset growth for the Peer Group included a 14.02% increase in loans and a 24.02% decrease in cash and investments.

A 0.68% increase in deposits funded part of the Company's asset growth, while borrowings increased by a higher 33.16%. Similarly, asset growth for the Peer Group was funded through deposit growth of 4.17% and borrowings growth of 31.44%. The Company's tangible equity increased by 21.26%, which was more than the Peer Group's tangible capital decline of 7.72%. The Company's post-conversion equity growth rate will initially be constrained by maintenance of a higher pro forma equity position. Additionally, implementation of any stock repurchases and initiation of any dividend payments, pursuant to regulatory limitations and guidelines, could also slow the Company's equity growth rate in the longer term following the stock offering.

<u>Income and Expense Components</u> 

Table 3.3 displays statements of operations for the Company and the Peer Group. The Company's and the Peer Group's ratios are based on earnings for the 12 months ended

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.8*** |

---

Table 3.3

Income as Percent of Average Assets and Yields, Costs, Spreads

Comparable Institution Analysis

For the 12 Months Ended December 31, 2022 or the Most Recent 12 Months Available

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| | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | | Net Interest Income | Net Interest Income | Net Interest Income | Net Interest Income | | Non-Interest Income | Non-Interest Income | | Non-Op. Items | Non-Op. Items | | Yields, Costs, and Spreads | Yields, Costs, and Spreads | Yields, Costs, and Spreads | | |
|  |  |  |<br>Net<br>Income (2) |<br>Income |<br>Expense |<br>NII | Loss<br>Provis.<br>on IEA |<br>NII<br>After<br>Provis. | Gain<br>on Sale of<br>Loans | Other<br>Non-Int<br>Income |<br>Total<br>Non-Int<br>Expense |<br>Net Gains/<br>Losses (1) |<br>Extrao.<br>Items |<br>Provision<br>for<br>Taxes |<br>Yield<br>On IEA |<br>Cost<br>Of IBL |<br>Yld-Cost<br>Spread |<br>MEMO:<br>Assets/<br>FTE Emp. |<br>MEMO:<br>Effective<br>Tax Rate (2) |
|  |  |  | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | ($000) | (%) |
|  <u>BV Financial, Inc.</u> | <u>BV Financial, Inc.</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  December 31, 2022 | December 31, 2022 |  | 1.25% | 3.95% | 0.41% | 3.54% | 0.12% | 3.42% | 0.00% | 0.48% | 2.25% | 0.07% | 0.00% | 0.48% | 4.35% | 0.25% | 4.10% | $7897 | 27.69% |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp; Averages |  | 0.85% | 3.66% | 0.36% | 3.30% | 0.05% | 3.25% | 0.08% | 0.44% | 2.53% | -0.05% | 0.00% | 0.28% | 3.87% | 0.58% | 3.29% | $7786 | 23.93% |
| &nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp; Medians |  | 0.84% | 3.33% | 0.35% | 3.04% | 0.05% | 3.01% | 0.08% | 0.40% | 2.48% | -0.02% | 0.00% | 0.29% | 3.55% | 0.57% | 3.12% | $7742 | 26.22% |
|  <u>Comparable Group(2)</u> | <u>Comparable Group(2)</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | WI | -0.08% | 2.90% | 0.27% | 2.63% | 0.04% | 2.59% | 0.08% | 0.40% | 3.07% | -0.12% | 0.00% | -0.05% | 3.06% | 0.62% | 2.44% | $5466 | NM |
|  AFBI | Affinity Bancshares, Inc. | GA | 0.93% | 4.17% | 0.31% | 3.86% | 0.09% | 3.77% | NA | NA | 2.79% | -0.08% | 0.00% | 0.28% | 4.47% | 0.56% | 3.91% | $8608 | 23.51% |
|  HMNF | HMN Financial, Inc. | MN | 0.75% | 3.21% | 0.19% | 3.02% | 0.10% | 2.92% | 0.22% | 0.60% | 2.69% | NA | 0.00% | 0.30% | 3.30% | 0.31% | 2.99% | $6643 | 28.62% |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana | LA | 0.99% | 3.74% | 0.36% | 3.38% | 0.15% | 3.24% | 0.15% | 0.29% | 2.53% | 0.00% | 0.00% | 0.16% | 4.03% | 0.50% | 3.53% | $7589 | 13.93% |
|  IROQ | IF Bancorp, Inc. | IL | 0.69% | 3.40% | 0.51% | 2.89% | 0.10% | 2.80% | 0.03% | 0.60% | 2.44% | -0.06% | 0.00% | 0.25% | 3.50% | 0.62% | 2.88% | $7421 | 26.22% |
|  MGYR | Magyar Bancorp, Inc. | NJ | 1.01% | 3.88% | 0.44% | 3.44% | 0.07% | 3.37% | 0.10% | 0.22% | 2.27% | 0.00% | 0.00% | 0.42% | 4.09% | 0.71% | 3.38% | $9029 | 29.46% |
|  NECB | Northeast Community Bancorp, Inc. | NY | 1.95% | 5.65% | 0.64% | 5.01% | 0.03% | 4.98% | 0.00% | 0.26% | 2.41% | -0.12% | 0.00% | 0.75% | 6.00% | 1.31% | 4.69% | $10311 | 27.84% |
|  PROV | Provident Financial Holdings, Inc. | CA | 0.71% | 3.18% | 0.34% | 2.83% | -0.07% | 2.90% | NA | NA | 2.23% | 0.00% | 0.00% | 0.31% | 3.25% | 0.44% | 2.81% | $7895 | 30.12% |
|  RVSB | Riverview Bancorp, Inc. | WA | 1.13% | 3.19% | 0.14% | 3.05% | -0.04% | 3.09% | 0.00% | 0.72% | 2.33% | 0.00% | 0.00% | 0.34% | 3.37% | 0.14% | 3.23% | $6856 | 23.16% |
|  WMPN | William Penn Bancorporation | PA | 0.46% | 3.25% | 0.41% | 2.84% | 0.00% | 2.84% | NA | NA | 2.54% | -0.02% | 0.00% | 0.07% | 3.59% | 0.57% | 3.02% | $8043 | 12.46% |

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(1) Net gains/losses includes gain/loss on sale of securities and nonrecurring income and expense.

(2) For the 12 months ended December 31, 2022, or the most recent 12 month period.

Source: S&P Global Market Intelligence and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.9*** |

---

December 31, 2022. BV Financial and the Peer Group reported net income to average assets ratios of 1.25% and 0.85%, respectively. Higher ratios of net interest income and lower operating expenses represented earnings advantages for the Company, while a lower ratio of provisions for loan losses represented an earnings advantages for the Peer Group.

The Company's higher net interest income to average assets ratio was realized through a higher interest income ratio, which was facilitated by a higher yield earned on interest-earning assets (4.35% versus 3.87% for the Peer Group). The Peer Group's slightly lower interest expense ratio was facilitated despite a higher cost of funds. Overall, BV Financial and the Peer Group reported net interest income to average assets ratios of 3.54% and 3.30%, respectively.

In another key area of core earnings strength, the Company maintained a lower level of operating expenses than the Peer Group. For the period covered in Table 3.3, the Company and the Peer Group reported operating expense to average assets ratios of 2.25% and 2.53%, respectively. The Company and Peer Group maintained a similar number of employees relative to asset size. Assets per full time equivalent employee equaled $7.897 million for the Company, versus $7.786 million for the Peer Group.

When viewed together, net interest income and operating expenses provide considerable insight into a thrift's earnings strength, since those sources of income and expenses are typically the most prominent components of earnings and are generally more predictable than losses and gains realized from the sale of assets or other non-recurring activities. In this regard, as measured by their expense coverage ratios (net interest income divided by operating expenses), the Company's earnings were more favorable than the Peer Group's earnings. Expense coverage ratios for BV Financial and the Peer Group equaled 157.2% and 122.3%, respectively.

Sources of non-interest operating income (including gains on sale of loans) provided a similar contribution to the Peer Group's earnings, with such income amounting to 0.48% and 0.52% of BV Financial's and the Peer Group's average assets, respectively. Taking non-interest operating income into account in comparing the Company's and the Peer Group's earnings, BV Financial's efficiency ratio (operating expenses, as a percent of the sum of non-interest operating income and net interest income) of 55.97% was more favorable than the Peer Group's efficiency ratio of 70.75%.

Loan loss provisions had a higher impact on the Company's earnings than the Peer Group's earnings, as loan loss provisions established by the Company and the Peer Group equaled 0.12% and 0.05% of average assets, respectively

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.10*** |

---

The Company and the Peer Group recorded net non-operating gains equal to 0.07% and a net loss of 0.05% of average assets, respectively. Typically, gains and losses generated from the sale of assets and other non-operating activities are viewed as earnings with a relatively high degree of volatility, and, thus, are not considered to be part of an institution's core earnings. Extraordinary items were not a factor in either the Company's or the Peer Group's earnings.

The Company recorded an effective tax rate of 27.69%, which approximated the Peer Group's effective tax rate of 23.93%. As indicated in the prospectus, the Company's effective marginal tax rate is equal to 27.0%.

<u>Loan Composition</u> 

Table 3.4 presents data related to the Company's and the Peer Group's loan portfolio compositions (including the investment in mortgage-backed securities). In comparison to the Peer Group, the Company's loan portfolio composition reflected a slightly lower combined concentration of 1-4 family permanent mortgage loans and mortgage-backed securities (31.77% of assets versus 33.61% for the Peer Group), as the Peer Group's higher concentration of mortgage-backed securities was partially offset by the Company's higher concentration of 1-4 family loans. Loan servicing intangibles constituted a more significant balance sheet item for the Peer Group, equal to an average of $657,000 for the Peer Group compared to a zero balance for the Company.

Diversification into higher risk and higher yielding types of lending was more significant for the Company. The Company's loan portfolio composition reflected higher concentrations of commercial real estate loans (39.62% of assets versus 23.90% of assets for the Peer Group) and consumer loans (2.20% of assets versus 1.73% of assets for the Peer Group). Comparatively, the Peer Group reported higher percentages of construction/land loans, multi-family loans and commercial and industrial loans. In total, construction/land, commercial real estate, multi-family, commercial business and consumer loans comprised 49.96% and 52.93% of the Company's and the Peer Group's assets, respectively. Overall, the Company's asset composition provided for a similar risk weighted assets-to-assets ratio of 78.38% compared to 78.74% for the Peer Group.

<u>Credit Risk</u> 

Overall, based on a comparison of credit risk measures, the Company's implied credit risk exposure was viewed to be greater than the Peer Group's implied credit risk exposure. As shown

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.11*** |

---

Table 3.4

Loan Portfolio Composition and Related Information

Comparable Institution Analysis

As of December 31, 2022 or the Most Recent Date Available.

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | Portfolio Composition as a Percent of Assets | | |
|  |  |<br>MBS | 1-4<br>Family | Constr.<br>& Land | Multi-<br>Family |<br>Comm RE | Commerc.<br>Business |<br>Consumer |<br>RWA/<br>Assets |<br>Servicing<br>Assets |
|  |  | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | ($000) |
|  **<u>BV Financial, Inc.</u>** |  |  |  |  |  |  |  |  |  |  |
|  December 31, 2022 |  | 2.56% | 29.21% | 2.20% | 2.67% | 39.62% | 3.28% | 2.20% | 78.38% | $0 |
|  <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Averages |  | 13.43% | 20.18% | 10.43% | 9.35% | 23.90% | 7.53% | 1.73% | 78.74% | $657 |
| &nbsp;&nbsp;&nbsp;&nbsp; Medians |  | 14.87% | 20.81% | 5.10% | 5.01% | 23.00% | 8.00% | 0.18% | 74.35% | $53 |
|  <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |
|  PyraMax Bank, F.S.B. | WI | 11.17% | 20.16% | 5.50% | 13.95% | 19.27% | 8.15% | 0.03% | 72.74% | $1860 |
|  Affinity Bank | GA | 2.31% | 6.48% | 4.69% | 0.56% | 37.15% | 18.68% | 14.03% | 93.08% | $0 |
|  Home Federal Savings Bank | MN | 17.58% | 21.47% | 6.31% | 4.91% | 30.94% | 6.02% | 1.13% | 79.70% | $2986 |
|  Home Federal Bank | LA | 18.10% | 27.26% | 7.83% | 4.72% | 25.18% | 8.16% | 0.11% | 70.65% | $0 |
|  Iroquois Federal Savings and Loan Association | IL | 21.86% | 19.17% | 5.54% | 12.15% | 20.82% | 8.71% | 1.15% | NA | $1515 |
|  Magyar Bank | NJ | 7.66% | 28.39% | 2.20% | 5.11% | 42.14% | 3.85% | 0.40% | 75.95% | $0 |
|  NorthEast Community Bank | NY | 0.49% | 0.39% | 65.41% | 9.96% | 2.21% | 7.85% | 0.04% | 117.67% | $0 |
|  Provident Savings Bank, F.S.B. | CA | 13.42% | 38.19% | 0.20% | 36.84% | 6.97% | 0.11% | 0.01% | 53.15% | $101 |
|  Riverview Bank | WA | 16.32% | 8.69% | 4.02% | 3.45% | 35.24% | 11.92% | 0.10% | 66.94% | $13 |
|  William Penn Bank | PA | 25.40% | 31.56% | 2.59% | 1.80% | 19.13% | 1.79% | 0.25% | NA | $92 |

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Note: Bank level data.

Source: S&P Global Market Intelligence and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has beenobtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.12*** |

---

in Table 3.5, the Company's ratios for non-performing/assets and non-performing loans/loans equaled 1.08% and 1.06%, respectively, versus comparable measures of 0.52% and 0.51% for the Peer Group. These ratios include accruing loans that are classified as troubled debt restructurings, which accounted for 16% of the Company's non-performing loan balance. The Company's and Peer Group's loss reserves as a percent of non-performing loans equaled 54.14% and 201.51%, respectively. Loss reserves maintained as percent of loans receivable equaled 0.58% for the Company, versus 1.04% for the Peer Group. Net loan charge-offs were a slightly larger factor for the Peer Group, as net loan charge-offs for the Peer Group equaled 0.01% of loans compared to a nominal net recovery for the Company.

<u>Interest Rate Risk</u> 

Table 3.6 reflects various key ratios highlighting the relative interest rate risk exposure of the Company versus the Peer Group. In terms of balance sheet composition, BV Financial's interest rate risk characteristics implied a slightly higher degree of interest rate risk exposure relative to the comparable measures for the Peer Group. In particular, the Company's tangible equity-to-assets ratio was lower than the respective Peer Group ratio, while the IEA/IBL ratio was similar. At the same time, the Company's higher ratio of non-interest earning assets as a percent of assets implied a slightly higher degree of balance sheet interest rate risk exposure for the Company. On a pro forma basis, the infusion of stock proceeds should serve to strengthen the Company's balance sheet interest rate risk characteristics, given the increases that will be realized in Company's tangible equity-to-assets and IEA/IBL ratios.

To analyze interest rate risk associated with the net interest margin, we reviewed quarterly changes in net interest income as a percent of average assets for BV Financial and the Peer Group. In general, the comparative fluctuations in the Company's and the Peer Group's net interest income ratios implied that a greater degree of interest rate risk was associated with the Company's net interest margin, based on the interest rate environment that prevailed during the period covered in Table 3.6. The stability of the Company's net interest margin should be enhanced by the infusion of stock proceeds, as interest rate sensitive liabilities will be funding a lower portion of BV Financial's assets and the proceeds will be substantially deployed into interest-earning assets.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.13*** |

---

Table 3.5

Credit Risk Measures and Related Information

Comparable Institution Analysis

As of December 31, 2022 or the Most Recent Date Available.

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |<br>REO/<br>Assets | NPAs &<br>90+Del/<br>Assets (1) | Adj NPAs &<br>90+Del/<br>Assets (2) |<br>NPLs/<br>Loans (3) |<br>Rsrves/<br>Loans HFI |<br>Rsrves/<br>NPLs (3) | Rsrves/<br>NPAs &<br>90+Del (1) |<br>Net Loan<br>Chargeoffs (4) |<br>NLCs/<br>Loans |
|  |  | (%) | (%) | (%) | (%) | (%) | (%) | (%) | ($000) | (%) |
|  **<u>BV Financial, Inc.</u>** |  |  |  |  |  |  |  |  |  |  |
|  December 31, 2022 |  | 0.24% | 1.08% | 0.94% | 1.06% | 0.58% | 54.14% | 42.23% | 109 | -0.02% |
|  <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Averages |  | 0.06% | 0.52% | 0.31% | 0.51% | 1.04% | 201.51% | 201.43% | $67 | 0.01% |
| &nbsp;&nbsp;&nbsp;&nbsp; Medians |  | 0.00% | 0.48% | 0.16% | 0.38% | 1.19% | 134.97% | 117.28% | $26 | 0.01% |
|  <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |
|  PyraMax Bank, F.S.B. | WI | 0.00% | 0.21% | 0.14% | 0.31% | 0.88% | 284.96% | 284.96% | 138 | -0.04% |
|  Affinity Bank | GA | 0.37% | 1.27% | 1.21% | 1.07% | 1.45% | 134.97% | 92.75% | $0 | 0.00% |
|  Home Federal Savings Bank | MN | 0.00% | 0.20% | 0.17% | 0.27% | 1.31% | 480.01% | 480.01% | $71 | 0.01% |
|  Home Federal Bank | LA | 0.05% | 0.39% | 0.37% | 0.45% | 1.13% | 251.47% | 215.38% | $235 | 0.06% |
|  Iroquois Federal Savings and Loan Association | IL | 0.00% | 0.05% | 0.02% | 0.05% | 1.26% | NA | NA | $52 | 0.01% |
|  Magyar Bank | NJ | 0.04% | 0.91% | 0.51% | 1.06% | 1.30% | 122.04% | 117.28% | $0 | 0.00% |
|  NorthEast Community Bank | NY | 0.10% | 0.10% | 0.10% | 0.00% | 0.45% | NA | 374.04% | $210 | 0.02% |
|  Provident Savings Bank, F.S.B. | CA | 0.00% | 0.67% | 0.08% | 0.82% | 0.56% | 68.13% | 68.13% | $0 | 0.00% |
|  Riverview Bank | WA | 0.00% | 0.82% | 0.02% | 0.07% | 1.43% | NA | 111.29% | $0 | 0.00% |
|  William Penn Bank | PA | 0.00% | 0.56% | 0.49% | 0.97% | 0.67% | 69.01% | 69.01% | $236 | 0.05% |

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(1) NPAs are defined as nonaccrual loans, performing TDRs, and OREO.

(2) Adjusted NPAs are defined as nonaccrual loans and OREO (performing TDRs are excluded).

(3) NPLs are defined as nonaccrual loans and performing TDRs.

(4) Net loan chargeoffs are shown on a last twelve month basis.

Source: S&P Global Market Intelligence and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obrained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.14*** |

---

Table 3.6

Interest Rate Risk Measures and Net Interest Income Volatility

Comparable Institution Analysis

As of December 31, 2022 or the Most Recent Date Available.

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| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | |  | | Balance Sheet Measures | Balance Sheet Measures | Balance Sheet Measures | | | | | | |
|  | |  | | | | | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income | Quarterly Change in Net Interest Income |
| | |  | | Tangible<br>Equity/<br>Assets | Avg<br>IEA/<br>Avg IBL | Non-Earn.<br>Assets/<br>Assets |<br>12/31/2022 |<br>9/30/2022 |<br>6/30/2022 |<br>3/31/2022 |<br>12/31/2021 |<br>9/30/2021 |
|  | |  | | (%) | (%) | (%) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) | (change in net interest income is annualized in basis points) |
|  **<u>BV Financial, Inc.</u>** | **<u>BV Financial, Inc.</u>** |  |  |  |  |  |  |  |  |  |  |  |
|  December 31, 2022 | December 31, 2022 |  |  | 9.7% | 143.0% | 8.9% | 40 | 32 | 25 | -31 | 23 | 16 |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Average | &nbsp;&nbsp;&nbsp;&nbsp; Average |  |  | 12.2% | 145.6% | 6.0% | 5 | 31 | 12 | 6 | -4 | -1 |
| &nbsp;&nbsp;&nbsp;&nbsp; Median |  |  |  | 11.2% | 148.3% | 6.0% | 0 | 18 | 17 | 0 | -3 | 4 |
|  <u>Comparable Group</u> | <u>Comparable Group</u> |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | (1) | WI | 14.3% | 145.2% | 5.6% | 0 | 49 | -19 | 12 | 30 | -15 |
|  AFBI | Affinity Bancshares, Inc. |  | GA | 12.8% | 157.4% | 4.4% | -25 | 10 | -37 | 80 | -12 | -30 |
|  HMNF | HMN Financial, Inc. |  | MN | 8.8% | 157.4% | 2.9% | 22 | 7 | 17 | 7 | -51 | 10 |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana |  | LA | 8.4% | 143.7% | 6.4% | 7 | 41 | 23 | 3 | -2 | 12 |
|  IROQ | IF Bancorp, Inc. |  | IL | 8.6% | 112.0% | 6.3% | -14 | 37 | -4 | -17 | 4 | 19 |
|  MGYR | Magyar Bancorp, Inc. |  | NJ | 12.2% | 151.4% | 7.4% | -24 | 16 | 29 | -8 | -3 | 0 |
|  NECB | Northeast Community Bancorp, Inc. |  | NY | 18.4% | 178.4% | 11.5% | 73 | 120 | 47 | -21 | 6 | -19 |
|  PROV | Provident Financial Holdings, Inc. |  | CA | 10.2% | 123.4% | 2.8% | 1 | 11 | 31 | -2 | -8 | 17 |
|  RVSB | Riverview Bancorp, Inc. |  | WA | 7.9% | 158.6% | 2.2% | 18 | 21 | 16 | -3 | -13 | 9 |
|  WMPN | William Penn Bancorporation |  | PA | 20.1% | 128.8% | 10.6% | -9 | -1 | 11 | 9 | 13 | -10 |

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NA=Change is greater than 100 basis points during the quarter.

(1) As of September 30, 2022 or the latest date available.

Source: S&P Global Market Intelligence and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2023 by RP<sup>®</sup> Financial, LC.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***PEER GROUP ANALYSIS*** |
|  | ***III.15*** |

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<u>Summary</u> 

Based on the above analysis, RP Financial concluded that the Peer Group forms a reasonable basis for determining the pro forma market value of the Company. Such general characteristics as asset size, capital position, interest-earning asset composition, funding composition, core earnings measures, loan composition, credit quality and exposure to interest rate risk all tend to support the reasonability of the Peer Group from a financial standpoint. Those areas where differences exist will be addressed in the form of valuation adjustments to the extent necessary.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.1*** |

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**IV. VALUATION ANALYSIS** 

<u>Introduction</u> 

This chapter presents the valuation analysis and methodology, prepared pursuant to the regulatory valuation guidelines, and valuation adjustments and assumptions used to determine the estimated pro forma market value of the common stock to be issued in conjunction with the Company's conversion transaction.

<u>Appraisal Guidelines</u> 

The federal regulatory appraisal guidelines required by the FRB, the OCC, the FDIC and state banking agencies specify the pro forma market value methodology for estimating the pro forma market value of a converting thrift. Pursuant to this methodology: (1) a peer group of comparable publicly-traded institutions is selected; (2) a financial and operational comparison of the subject company to the peer group is conducted to discern key differences; and (3) a valuation analysis in which the pro forma market value of the subject company is determined based on the market pricing of the peer group as of the date of valuation, incorporating valuation adjustments for key differences. In addition, the pricing characteristics of recent conversions, both at conversion and in the aftermarket, must be considered.

<u>RP Financial Approach to the Valuation</u> 

The valuation analysis herein complies with such regulatory approval guidelines. Accordingly, the valuation incorporates a detailed analysis based on the Peer Group, discussed in Chapter III, which constitutes "fundamental analysis" techniques. Additionally, the valuation incorporates a "technical analysis" of recently completed stock conversions, particularly second-step conversions, including closing pricing and aftermarket trading of such offerings. It should be noted that these valuation analyses cannot possibly fully account for all the market forces which impact trading activity and pricing characteristics of a particular stock on a given day.

The pro forma market value determined herein is a preliminary value for the Company's to-be-issued stock. Throughout the conversion process, RP Financial will: (1) review changes in BV Financial's operations and financial condition; (2) monitor BV Financial's operations and financial condition relative to the Peer Group to identify any fundamental changes; (3) monitor the external factors affecting value including, but not limited to, local and national economic

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.2*** |

---

conditions, interest rates, and the stock market environment, including the market for thrift stocks and BV Financial's stock specifically; and (4) monitor pending conversion offerings, particularly second-step conversions, (including those in the offering phase), both regionally and nationally. If during the second-conversion process material changes occur, RP Financial will determine if updated valuation reports should be prepared to reflect such changes and their related impact on value, if any. RP Financial will also prepare a final valuation update at the closing of the offering to determine if the prepared valuation analysis and resulting range of value continues to be appropriate.

The appraised value determined herein is based on the current market and operating environment for the Company and for all thrifts. Subsequent changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or major world events), which may occur from time to time (often with great unpredictability) may materially impact the market value of all thrift stocks, including BV Financial's value or BV Financial's value alone. To the extent a change in factors impacting the Company's value can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into the analysis.

<u>Valuation Analysis</u> 

A fundamental analysis discussing similarities and differences relative to the Peer Group was presented in Chapter III. The following sections summarize the key differences between the Company and the Peer Group and how those differences affect the pro forma valuation. Emphasis is placed on the specific strengths and weaknesses of the Company relative to the Peer Group in such key areas as financial condition, profitability, growth and viability of earnings, asset growth, primary market area, dividends, liquidity of the shares, marketing of the issue, management and the effect of government regulations and/or regulatory reform. We have also considered the market for thrift stocks, in particular new issues, to assess the impact on value of the Company coming to market at this time.

1. <u>Financial Condition</u> 

The financial condition of an institution is an important determinant in pro forma market value because investors typically look to such factors as liquidity, capital, asset composition and quality and funding sources in assessing investment attractiveness. The similarities and differences in the Company's and the Peer Group's financial strengths are noted as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Overall A/L Composition</u>. In comparison to the Peer Group, the Company's interest-earning asset
composition showed a higher concentration of loans and a lower concentration of cash and investments. Diversification into higher risk and higher yielding types of

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.3*** |

---

loans was slightly higher for the Peer Group, while the Company maintained a higher concentration of 1-4 family loans. Overall, in comparison to the Peer Group, the Company's interest-earning asset composition provided for higher yield earned on interest-earning assets with a similar risk weighted assets-to-assets ratio. BV Financial's funding composition reflected similar levels of deposits and borrowings relative to the comparable Peer Group measures, which translated into a lower cost of funds for the Company. Overall, as a percent of assets, the Company maintained a lower level of interest-earning assets and a similar level of interest-bearing liabilities compared to the Peer Group's ratios, which resulted in a lower IEA/IBL ratio for the Company. After factoring in the impact of the net stock proceeds, the Company's IEA/IBL ratio should exceed the Peer Group's IEA/IBL ratio. On balance, RP Financial concluded that asset/liability composition was a slightly positive factor in our adjustment for financial condition. <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Credit Quality.</u> The Company's ratios for non-performing assets as a percent of assets and non-performing loans as a percent of loans were higher than the comparable ratios for the Peer Group. In comparison to the Peer Group, the Company maintained lower loss
reserves as a percent of non-performing loans and slightly higher loss reserves as a percent of loans, however a notable portion of the Company's loan portfolio consists of acquired loans, which carry a
fair value credit reserve from the acquisition accounting. Net loan charge-offs as a percent of loans were minimal, and similar for the Company and the Peer Group. The Company's risk weighted assets-to-assets ratio was similar to the Peer Group's ratio. Overall, RP Financial concluded that credit quality was a slightly negative factor in our adjustment for financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Balance Sheet Liquidity</u>. The Company operated with a lower level of cash and investment securities
relative to the Peer Group (13.41% of assets versus 21.44% for the Peer Group). Following the infusion of stock proceeds, the Company's cash and investments ratio is expected to increase as the net proceeds realized from the second-step
offering will be initially deployed into cash and investments. The Company was viewed as having similar future borrowing capacity relative to the Peer Group, based on the fairly similar levels of borrowings currently funding the Company's and
the Peer Group's assets. Overall, RP Financial concluded that balance sheet liquidity was a neutral factor in our adjustment for financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Funding Liabilities</u>. The Company's interest-bearing funding composition reflected similar
concentrations of deposits and borrowings relative to the comparable Peer Group ratios, while the Company's cost of funds was lower than the Peer Group's ratio. Total interest-bearing liabilities as a percent of assets were similar for
both. Following the stock offering, the increase in the Company's equity position will reduce the level of interest-bearing liabilities funding the Company's assets. Overall, RP Financial concluded that funding liabilities was a neutral
factor in our adjustment for financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Equity</u>. The Company currently operates with a lower tangible equity-to-assets ratio than the Peer Group. Following the stock offering, BV Financial's pro forma tangible capital position will exceed the Peer Group's tangible equity-to-assets ratio. The increase in the Company's pro forma equity position will result in greater leverage potential and reduce the level of interest-bearing liabilities utilized to fund assets. At

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.4*** |

---

the same time, the Company's more significant capital surplus will likely result in a lower ROE. On balance, RP Financial concluded that equity strength was a positive factor in our adjustment for financial condition.

On balance, BV Financial's balance sheet strength was considered to be more favorable relative to the Peer Group's balance sheet strength and, thus, a slight upward adjustment was applied for the Company's financial condition.

2. <u>Profitability, Growth and Viability of Earnings</u> 

Earnings are a key factor in determining pro forma market value, as the level and risk characteristics of an institution's earnings stream and the prospects and ability to generate future earnings heavily influence the multiple that the investment community will pay for earnings. The major factors considered in the valuation are described below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Reported Earnings</u>. The Company's reported earnings were higher than the Peer Group's on a ROAA
basis (1.25% of average assets versus 0.85% for the Peer Group). The Company maintained earnings advantages with respect to higher net interest income, a lower operating expense ratio and higher non-operating income ratios, while the Peer Group maintained earnings advantages with respect to a lower level of provisions for loan losses and higher non-interest operating income. Reinvestment of stock proceeds into
interest-earning assets will serve to increase the Company's earnings, with the benefit of reinvesting proceeds expected to be somewhat offset by implementation of additional stock benefit plans in connection with the second-step offering.
Overall, the Company's pro forma reported earnings were considered to be more favorable than the Peer Group's reported earnings and, thus, RP Financial concluded that this was a positive factor in our adjustment for profitability, growth
and viability of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Core Earnings</u>. Net interest income, operating expenses, non-interest operating income and loan loss provisions were reviewed in assessing the relative strengths and weaknesses of the Company's and the Peer Group's core earnings. The Company maintained a
higher net interest income ratio, a lower operating expense ratio and a similar level of non-interest operating income. The Company's higher net interest income and operating expense ratios translated
into an expense coverage ratio that was higher than the Peer Group's expense coverage ratio of 1.22x. Comparatively, the Company's efficiency ratio of 55.97% was more favorable than the Peer Group's efficiency ratio of 70.75%. Loan
loss provisions had a greater impact on the Company's earnings. After adjusting for non-operating losses and gains, the Company's ROAA ratio remained above the comparable Peer Group ratio. Overall,
these measures, as well as the expected earnings benefits the Company should realize from the redeployment of stock proceeds into interest-earning assets and leveraging of post-conversion capital, which will be somewhat negated by expenses
associated with the stock benefit plans, indicate that the Company's pro forma core earnings will remain more favorable than the Peer Group's core earnings. Therefore, RP Financial concluded that this was a positive factor in our
adjustment for profitability, growth and viability of earnings.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.5*** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Interest Rate Risk</u>. Quarterly changes in the Company's and the Peer Group's net interest income
to average assets ratios indicated a greater degree of volatility was associated with the Company's net interest margin. Other measures of interest rate risk, such as equity, IEA/IBL and non-interest earning asset ratios were slightly more favorable for the Peer Group. On a pro forma basis, the infusion of stock proceeds can be expected to provide the Company with higher equity-to-assets and IEA/ILB ratios and perhaps provide greater stability in the quarterly net interest margin. On balance, RP Financial concluded that interest rate
risk was a neutral factor in our adjustment for profitability, growth and viability of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Credit Risk</u>. Loan loss provisions were a higher factor in the Company's and the Peer Group's
earnings (0.12% of average assets versus 0.05% of average assets for the Peer Group). In terms of future exposure to credit quality related losses, lending diversification into higher risk types of loans was slightly more significant for the Group.
The Company's credit quality measures generally implied a greater degree of credit risk exposure relative to the comparable credit quality measures indicated for the Peer Group. Overall, RP Financial concluded that credit risk was a slightly
negative factor in our adjustment for profitability, growth and viability of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Earnings Growth Potential</u>. Several factors were considered in assessing earnings growth potential. First,
the Company maintained a higher interest rate spread than the Peer Group, which would tend to facilitate continuation of a higher net interest margin for the Company going forward based on the current prevailing interest rate environment. The
reinvestment of the net proceeds will add to net interest income, and the initial reinvestment yields are expected to support the overall spread. Second, the infusion of stock proceeds will provide the Company with greater growth potential through
leverage than currently maintained by the Peer Group. Third, the Company's similar ratio of non-interest operating income and lower operating expense ratio were on balance viewed as an advantage to
sustain earnings growth during periods when net interest margins come under pressure as the result of adverse changes in interest rates. Overall, earnings growth potential was considered to be a positive factor in our adjustment for profitability,
growth and viability of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Return on Equity</u>. Currently, the Company's core ROE is higher than the Peer Group's core ROE. As
the result of the increase in equity that will be realized from the infusion of net stock proceeds into the Company's equity, the Company's pro forma return equity on a core earnings basis will decline, and likely be slightly lower than
the Peer Group's current core ROE. However, the Bank has shown the ability to leverage the existing equity base to enhance ROE. Accordingly, this was a neutral factor in the adjustment for profitability, growth and viability of earnings.

On balance, BV Financial's pro forma earnings strength was considered to be more favorable than the Peer Group's earnings strength and, thus, a moderate upward adjustment was applied for profitability, growth and viability of earnings.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.6*** |

---

3. <u>Asset Growth</u> 

Comparative asset growth rates for the Company and the Peer Group showed respective increases of 3.66% and 3.67% for the most recent 12 month period. The Company's asset growth was realized through a 12.78% increase in loans, which was partially funded by a 26.13% decrease in cash and investments. Comparatively, asset growth for the Peer Group consisted of a 24.02% decrease in cash and investments and a 14.02% increase in loans. On a pro forma basis, the Company's tangible equity-to-assets ratio will exceed the Peer Group's tangible equity-to-assets ratio, indicating greater leverage capacity for the Company. Historically, the Company has shown an ability to expand the asset base through acquisitions and internal growth. On balance, a slight upward adjustment was applied for asset growth.

4. <u>Primary Market Area</u> 

The general condition of an institution's market area has an impact on value, as future success is in part dependent upon opportunities for profitable activities in the local market served. BV Financial serves the Baltimore, MD metropolitan area and central MD Eastern Shore through the headquarters office and 14 full service branches. Operating in a densely populated market area provides the Company with growth opportunities, but such growth must be achieved in a highly competitive market environment. The Company competes against similar sized and also significantly larger institutions that provide a larger array of services and have significantly larger branch networks than maintained by BV Financial.

The Peer Group companies generally operate in markets with similar population sizes, on average, compared to Baltimore County. Population growth for the primary market area counties served by the Peer Group companies reflected a range of growth rates, but, overall, population growth rates in the markets served by the Peer Group companies were similar to Baltimore County's recent historical and projected population growth rates. Baltimore County has a higher per capita income compared to the Peer Group's average per capita income and, on average, the Peer Group's primary market area counties were similarly affluent markets within their respective states compared to Baltimore County's per capita income as a percent of Maryland's per capita income (93.1% for the Peer Group versus 93.0% for Baltimore County). The average and median deposit market shares maintained by the Peer Group companies were greater than the Company's market share of deposits in Baltimore County, but still modest in terms of market share. Overall, the degree of competition faced by the Peer Group companies was viewed as somewhat lower than the Company's competitive environment in Baltimore County (given the

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.7*** |

---

numerous other counties in the Baltimore region that have large population basis and the related competitive environment), while the growth potential in the markets served by the Company was for the most part viewed to be similar to that provided by the Peer Group's primary market areas. Summary demographic and deposit market share data for the Company and the Peer Group companies is provided in Exhibit III-3. As shown in Table 4.1, the average unemployment rate for the primary market area counties served by the Peer Group companies was equal to the unemployment rate reflected for Baltimore County. On balance, we concluded that a slight downward adjustment was appropriate for the Company's market area.

Table 4.1

Market Area Unemployment Rates

BV Financial, Inc. and the Peer Group Companies(1)

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| | | |
|:---|:---|:---|
|  | <br>County | Dec. 2022<br>Unemployment |
|  BV Financial, Inc. - MD | Baltimore | 3.2% |
|  <u>Peer Group Average</u> |  | 3.2% |
|  1895 Bancorp of Wisconsin, Inc. – WI | Milwaukee | 2.8 |
|  Affinity Bancshares, Inc. - GA | Newton | 2.9 |
|  HMN Financial, Inc. – MN | Olmstead | 2.2 |
|  Home Federal Bancorp, Inc. of LA – LA | Caddo | 3.8 |
|  IF Bancorp, Inc. - IL | Iroquois | 4.0 |
|  Magyar Bancorp, Inc. – NJ | Middlesex | 2.7 |
|  Northeast Community Bancorp, Inc. - NY | Westchester | 2.5 |
|  Provident Financial Holdings, Inc. - CA | Riverside | 3.7 |
|  Riverview Bancorp, Inc. - WA | Clark | 4.6 |
|  William Penn Bancorporation – PA | Bucks | 2.9 |

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(1) Unemployment rates are not seasonally adjusted.

Source: S&P Global Market Intelligence.

5. <u>Dividends</u> 

The Company currently does not pay a dividend, and has made no commitment for payment of dividends following completion of the second-step conversion. Future declarations of dividends, if any, by the Board of Directors will depend upon a number of factors, including investment opportunities, growth objectives, financial condition, profitability, tax considerations, minimum capital requirements, regulatory limitations, stock market characteristics and general economic conditions.

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.8*** |

---

Eight out of the ten Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 0.96% to 3.98%. The average dividend yield on the stocks of the Peer Group institutions was 2.11% as of February 24. 2023. Comparatively, as of February 24, 2023, the average dividend yield on the stocks of all fully-converted publicly-traded thrifts equaled 2.39%.

Overall, following the second-step conversion, the Company will have the capacity to pay a dividend comparable to the Peer Group's average dividend yield based on pro forma earnings and capitalization. On balance, we concluded that no adjustment was warranted for this factor.

6. <u>Liquidity of the Shares</u> 

The Peer Group is by definition composed of companies that are traded in the public markets. All of the Peer Group companies trade on NASDAQ. Typically, the number of shares outstanding and market capitalization provides an indication of how much liquidity there will be in a particular stock. The market capitalization of the Peer Group companies ranged from $55.1 million to $231.1 million as of February 24, 2023, with average and median market values of $109.75 million and $97.45 million, respectively. The shares issued and outstanding of the Peer Group companies ranged from 3.1 million to 21.5 million, with average and median shares outstanding equal to 8.9 million and 6.7 million, respectively. The Company's second-step stock offering is expected to provide for a pro forma market value that will be at the high end of the Peer Group's market capitalizations and at the high end of the Peer Group's range of shares outstanding. Following the second-step conversion, the Company's stock will be traded on the NASDAQ Capital Market. Overall, we anticipate that the Company's stock will have a fairly comparable trading market as the Peer Group companies on average and, therefore, concluded no adjustment was necessary for this factor.

7. <u>Marketing of the Issue</u> 

We believe that four separate markets exist for thrift stocks, including those coming to market such as BV Financial: (A) the after-market for public companies, in which trading activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future prospects; (B) the new issue market in which converting thrifts are evaluated on the basis of the same factors, but on a pro forma basis without the benefit of prior operations as a fully-converted company; (C) the acquisition market for thrift and bank franchises based in Maryland; and (D) the market for the public stock of BVFL. All of these markets were considered in the valuation of the Company's to-be-issued stock.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.9*** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>The Public Market</u>

The value of publicly-traded thrift stocks is easily measurable, and is tracked by most investment houses and related organizations. Exhibit IV-1 provides pricing and financial data on all publicly-traded thrifts. In general, thrift stock values react to market stimuli such as interest rates, inflation, perceived industry health, projected rates of economic growth, regulatory issues and stock market conditions in general. Exhibit IV-2 displays historical stock market trends for various indices and includes historical stock price index values for publicly-traded thrifts and commercial banks. Exhibit IV-3 displays various stock price indices as of February 24, 2023.

In terms of assessing general stock market conditions, the performance of the overall stock market has been mixed in recent quarters. After a favorable employment report for March supported stock market gains at the beginning of April 2022, stocks turned lower going into mid-April as rate fears mounted in light of data showing that inflation hit another 40-year high in March and the Federal Reserve signaling a more hawkish tone for future interest rate hikes in order to tame inflation. Stock indexes traded unevenly with the onset of first quarter earnings season in mid-April, amid uncertainty the impact that higher inflation and higher interest rates would have on corporate earnings. April concluded with a deepening rout in technology shares, which translated into the worst monthly performance for NASDAQ since 2008. The NASDAQ was down 13.3% for the month of April, versus an 8.8% decline in the S&P 500 and a 4.9% decline in the Dow Jones Industrial Average ("DJIA"). Stocks initially rallied after the Federal Reserve concluded its early-May meeting by raising its target rate by 0.5%, which was followed by the DJIA posting its largest one-day decline in 2022 and the NASDAQ closing down 5.0%. Major U.S. stock indexes fell to new lows for 2022 heading into mid-May, as a higher-than-expected increase in the April CPI heighted concerns that the Federal Reserve would move to raise rates more aggressively and, in turn, slow economic growth. Following a mid-May rebound, stocks fell sharply heading into the second half of May as disappointing earnings from some larger retailers raised fears of a recession. Comparatively, some favorable earnings reports and economic data supported a broad-based rally during the last full week of trading in May, with all three major U.S. stock indexes recording their best week since November 2020. Stocks reversed course and traded sharply lower during the first half of June, in which the S&P 500 entered bear territory and the DJIA closed below 30000. High inflation, rising interest rates and growing

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.10*** |

---

concerns about the outlook for corporate profits and economic growth were noted factors that curtailed investors' appetite for investing in stocks. Stocks rallied in the second half of June on signs that economic activity was cooling off, which tempered expectations that the Federal Reserve would implement a series of steep rate hikes. The second quarter ended with stocks closing lower and, overall, posting their worst first half of a year in decades.

Stocks opened the third quarter of 2022 trading unevenly ahead of the release of the June employment report. Fears about a recession on the horizon and the June CPI showing inflation recached a four-decade high weighed on stocks going into mid-July, which was followed by a one-day rally to closeout the second full week of trading in July. The one-day rally was fueled by a larger than expected in June retail sales. Second quarter earnings reports drove day-to-day fluctuations in the broader stock market going into the second half of July, which was followed by stocks rallying at the end of July after the Federal Reserve increased its target rate by 0.75% and signaled more tightening was likely this year. Geopolitical tensions in China weighed on stocks at the start of August, which was followed a broader stock market rally through mid-August. Factors contributing to the upswing in stocks included some strong earnings reports and a slowdown in inflation as indicated by the CPI. Stocks snapped a four week winning to close out the third week of August, as fears of additional sharp interest rate increases by the Federal Reserve prompted a multi-day selloff heading into last two weeks of August. After rallying in advance of the Federal Reserve Chairman's late-August speech on the economy, stocks plummeted to close out August as investors reacted to the Federal Reserve Chairman's pledge to keep raising interest rates until it was confident that inflation was under control. Expectations that the Federal Reserve remained on track to raise interest rates following the release of the August jobs report provided for an up-and-down market for stocks during the first few days of trading in September. Stocks suffered their worst day in more than two years on September 13<sup>th</sup>, as a stronger than expected increase in the August CPI raised expectations that the Federal Reserve would move aggressively to combat inflation and, in turn, increase the possibility of a recession. In advance of the Federal Reserve meeting, stocks edged higher, which was followed by a board-based selloff after the Federal Reserve raised its target rate by 0.75% and signaled the need for further rate increases. The DJIA slid into bear market territory to close out the third quarter, as investors confronted new signs of slowing global economic growth, Russia's attempt to escalate the war in Ukraine and growing certainty that the Federal Reserve will continue to raise rates to fight inflation.

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.11*** |

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The broader stock market rebounded at the start of the fourth quarter of 2022, with the DJIA posting its best two-day gain since April 2020. A relative strong jobs report for September 2022 translated into stocks trading lower following the early-October rally, as hopes faded that the Federal Reserve would pursue a less aggressive monetary policy. After NASDAQ moved into bear territory for the second time of 2022, some favorable third quarter earnings reports fueled a broader stock market rally in the second half of October. Overall, the DJIA was up 14% for the month of October, which was its best month since 1976. Stocks traded lower at the start of November in conjunction with the Federal Reserve raising its target rate by another 0.75% and plans to keep raising rates, but potentially in smaller increments. A favorable employment report for October boosted stocks ahead of the mid-term elections, which was followed by a one-day selloff after election day amid uncertainty around the mid-term election results and turmoil in cryptocurrency markets. With the release of the October CPI showing a smaller-than-expected increase, stocks posted their biggest gains in more than two years on November 10<sup>th</sup>. Trading in the broader stock market was mixed through mid-November, as investor enthusiasm over a potential slowdown in interest rate increases faded. The up and down market continued through the second half of November, with stocks trading lower on worries about a rise in Covid-19 cases in China and then rallying after the Federal Reserve Chairman signaled a potential slowdown in interest rate increases. Economically sensitive shares led the market lower in early-December, as strong economic data increased expectations that the Federal Reserve would continue to raise interest rates throughout 2023. Slowing inflation indicated by November's CPI fueled a stock market rally heading into mid-December, which was followed by a selloff in mid-December as weak data for retail sales and manufacturing output heightened recession fears. A jump in consumer confidence data for December sparked a one-day rally heading into the last week of 2022, which was followed by an up and down stock market during the final week of the year. Overall, the DJIA closed at 33147.25 on the last day of trading in 2022, a decrease of 8.8% for 2022, while the S&P 500 and the NASDAQ Composite ended 2022 with respective declines of 19.4% and 33.1%.

Signs that inflation was moderating and the December jobs report showing a slowdown in hiring translated into stocks trending higher during the first two weeks of 2023. A sharp drop in December retail sales prompted a selloff in the broader stock market heading into the second half of January. Some favorable fourth quarter earnings reports and indications that inflation was moderating contributed to stocks trading higher during the second half of January. All three of the major U.S. stock indexes recorded strong monthly gains, as investors became

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.12*** |

---

more confident that Federal Reserve interest rate increases were nearing an end. After a stronger-than-expected jobs report for January stoked fears that interest rate increases could continue longer than anticipated, stocks pulled back in early-February. A general downward trend continued in the broader stock market going into the second half of February, as stronger than expected inflation data further heightened concerns that Federal Reserve tightening would last longer than investors had anticipated. On February 24, 2023, the DJIA closed at 32816.92, a decrease of 1.3% from one year ago and a decrease of 1.0 year-to-date, and the NASDAQ closed at 11394.94, a decrease of 15.4% from one year ago and an increase of 8.9% year-to-date. The S&P 500 Index closed at 3970.04 on February 24, 2023, a decrease of 7.4% from one year ago and an increase of 3.4% year-to-date.

The market for thrift stocks has also experienced varied trends in recent quarters. Signs that soaring inflation and a slowing economy were starting to impact businesses pressured bank stocks lower at the start of the second quarter of 2022. Lackluster first quarter earnings reports posted by the nation's largest banks and warnings of future headwinds that could negatively impact bank earnings extended the downturn in bank stocks through the end of April. The selloff in bank stocks continued through the first half of May, which was driven by investor fears that the economy could slide into a recession as the Federal Reserve pursued a more aggressive path of rate increases to combat inflation. Bank stocks participated in a broadly-based stock market rally in the second half of May, with positive earnings reports posted by some large retailers and favorable economic data lifting sentiment across the market. After bank shares stabilized through early-June, inflation fears triggered a selloff in bank stocks going into mid-June as the May CPI increased to its highest level in more than four decades. For the balance of the second quarter, bank shares settled into a narrow trading range.

At the start of the third quarter of 2022, bank stocks showed little movement ahead of the June employment report. Bank stocks traded lower at the start of the second quarter earnings season, as J.P. Morgan's second quarter earnings report spotlighted concerns about the outlook for the U.S. economy. The one-day rally in the broader stock market in mid-July lifted bank stocks as well, which was in part supported by favorable second quarter earnings reports posted by some large banks. A favorable earnings outlook reported by some banks in their second quarter earnings reports and the rally in the broader stock market following the Federal Reserve's rate hike helped to sustain a positive trend for financial shares through the second half of July. After edging lower at the start of August, a stronger-than-expected jobs report for July and a slightly slower pace of inflation indicated by the July CPI contributed to financial shares

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|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.13*** |

---

trending higher through mid-August. Bank stocks reversed course and followed the broader stock market lower during the second half of August, as investors assessed the likelihood that the Federal Reserve would continue to move aggressively to tame inflation and the potential that higher interest rates could push the U.S. economy into a protracted economic downturn. After edging lower at the start of September, financial shares traded higher along with the broader stock market heading into mid-September. Financial shares participated in the broader market selloff with the release of the August CPI in mid-September, which indicated that inflation remained elevated and raised expectations that the Federal Reserve would continue to raise rates aggressively in an effort to combat inflation. The downturn in bank stocks accelerated in the second half of September, as fears of an economic slowdown mounted following the Federal Reserve's 0.75% rate hike and expectations that the Federal Reserve would continue to raise rates for the balance of 2022.

Financial shares paralleled trends in the broader stock market at the beginning of the fourth quarter of 2022, initially trading up and then retreating with the strong jobs report for September diminishing expectations of an easing in the Federal Reserve's monetary policy. Bank shares led a mid-October stock market rally, as some large banks posted better-than-expected third quarter earnings. Generally favorable third quarter earnings reports coming out of the banking sector and indications by some Federal Reserve officials that they were considering whether to slow the pace of monetary tightening helped to sustain the positive trend for bank stocks through the end of October. After trading in a narrow range at the beginning of November and through the mid-term elections, bank stocks traded up on the lower-than-expected increase in the October CPI. Financial shares eased lower heading into the second half of November, as stronger-than-expected retail sales for October increased expectations that the Federal Reserve would keep raising interest rates to reduce persistently high inflation. Signs of inflation cooling and the possibility of smaller interest rate increases by the Federal Reserve contributed to bank stocks edging higher during the second half of November, which was followed by bank stocks and other economically shares leading the market lower during the first half of December. Recession worries elevated by indications from the Federal Reserve that it may have to hold interest rates higher for longer than expected was a driving factor that fueled the downturn in bank stocks. In the closing weeks of 2022, bank stocks traded in a narrow range and then edged higher at the end of December. For 2022 overall, the S&P U.S. BMI Banks Index was down 19.4%.

Bank stocks followed the broader stock market's positive trend during the first half of January 2023 and then retreated heading into the second half of January, as recession worries

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.14*** |

---

came into focus on the report that retail sales for December posted their biggest decline in 2022. Prospects that the Federal Reserve would begin to dial back its interest rate increases and fourth quarter GDP data that showed economic growth slowed less than expected provided for a mildly positive trend for bank stocks in the second half of January, which continued into early-February as the quarter-point rate hike by the Federal Reserve was in line with expectations. Fourth quarter earnings season translated into a narrow trading range for bank stocks through mid-February, which was followed by bank stocks trading lower along with the selloff in the broader stock market as inflation data raised expectations that the Federal Reserve would keep interest rates higher for longer had been anticipated. On February 24, 2023, the S&P U.S. BMI Banks Index closed at 157.1, a decrease of 12.9% from one year ago and an increase of 5.9% year-to-date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>The New Issue Market</u>

In addition to thrift stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining the Company's pro forma market value. The new issue market is separate and distinct from the market for seasoned thrift stocks in that the pricing ratios for converting issues are computed on a pro forma basis, specifically: (1) the numerator and denominator are both impacted by the conversion offering amount, unlike existing stock issues in which price change affects only the numerator; and (2) the pro forma pricing ratio incorporates assumptions regarding source and use of proceeds, effective tax rates, stock plan purchases, etc. which impact pro forma financials, whereas pricing for existing issues are based on reported financials. The distinction between pricing of converting and existing issues is perhaps no clearer than in the case of the price/book ("P/B") ratio in that the P/B ratio of a converting thrift will typically result in a discount to book value whereas in the current market for existing thrifts the P/B ratio may reflect a premium to book value. Therefore, it is appropriate to also consider the market for new issues, both at the time of the conversion and in the aftermarket.

As shown in Table 4.2, three standard conversion offerings, one second -step offerings and one first-step MHC offering were completed during 2022 and one second-step offering has been completed during 2023 through February 24, 2023. The second-step offerings were completed by First Seacoast Bancorp, Inc. of New Hampshire ("First Seacoast"), which was completed in January 2023 and Ponce Financial Group, Inc. of New York ("Ponce Financial") which was completed in January 2022. The First Seacoast offering was smaller than the

------

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.15*** |

---

**Table 4.2** 

**Pricing Characteristics and After-Market Trends** 

**Conversions Completed in Since January 1, 2022** 

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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Institutional Information | Institutional Information | Institutional Information | Pre-Conversion Data | Pre-Conversion Data | Pre-Conversion Data | Pre-Conversion Data |  |  |  |  | Contribution to | Contribution to | Insider Purchases | Insider Purchases | Insider Purchases | Insider Purchases |  | Pro Forma Data | Pro Forma Data | Pro Forma Data | Pro Forma Data | Pro Forma Data | Pro Forma Data |  | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends | Post-IPO Pricing Trends |
|  |  |  | Financial Info. | Financial Info. | Asset Quality | Asset Quality | Offering Information | Offering Information | Offering Information | Offering Information | Char. Found. | Char. Found. | % Off Incl. Fdn.+Merger Shares | % Off Incl. Fdn.+Merger Shares | % Off Incl. Fdn.+Merger Shares | % Off Incl. Fdn.+Merger Shares |  | Pricing Ratios(2)(5) | Pricing Ratios(2)(5) | Pricing Ratios(2)(5) | Financial Charac. | Financial Charac. | Financial Charac. |  | Closing Price: | Closing Price: | Closing Price: | Closing Price: | Closing Price: | Closing Price: | Closing Price: | Closing Price: |
|  |  |  |  |  |  |  | Excluding Foundation | Excluding Foundation | Excluding Foundation | Excluding Foundation |  | % of | Benefit Plans | Benefit Plans | Benefit Plans |  | Initial |  |  |  |  |  |  |  | First |  | After |  | After |  |  |  |
|  | Conversion |  |  | Equity/ | NPAs/ | Res. | Gross | % | % of | Exp./ |  | Public Off. |  | Recog. | Stk | Mgmt.& | Div. |  | Core |  | Core |  | Core | IPO | Trading | % | First | % | First | % | Thru | % |
| Institution | Date | Ticker | Assets | Assets | Assets | Cov. | Proc. | Offer | Mid. | Proc. | Form | Inc. Fdn. | ESOP | Plans | Option | Dirs. | Yield | P/TB | P/E | P/A | ROA | TE/A | ROE | Price | Day | Chg | Week(3) | Chg | Month(4) | Chg | 2/24/23 | Chg |
|  |  |  | ($Mil) | (%) | (%) | (%) | ($Mil.) | (%) | (%) | (%) |  | (%) | (%) | (%) | (%) | (%)(1) | (%) | (%) | (x) | (%) | (%) | (%) | (%) | ($) | ($) | (%) | ($) | (%) | ($) | (%) | ($) | (%) |
|  **<u>Standard Conversions</u>** | **<u>Standard Conversions</u>** | **<u>Standard Conversions</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  **ECB Bancorp, Inc., MA** | 7/28/22 | ECBK-NASDAQ | $689 | 11.42% | 0.11% | 589% | $89.2 | 100% | 96% | 2.7% | **C/S** | **$600/2.83%** | 8.0% | 4.0% | 10.0% | 3.8% | 0.00% | 59.3% | 19.1x | 12.0% | 0.6% | 20.2% | 3.1% | $10.00 | $14.09 | 40.9% | $14.13 | 41.3% | $14.06 | 40.6% | $**15.51** | 55.1% |
|  **VWF Bancorp, Inc., OH** | 7/14/22 | VWFB-OTCQB | $137 | 17.62% | 0.17% | 96% | $19.2 | 100% | 87% | 7.8% | **N.A.** | **N.A.** | 8.0% | 4.0% | 10.0% | 25.1% | 0.00% | 51.8% | NM | 12.8% | 0.1% | 24.8% | 0.3% | $10.00 | $12.90 | 29.0% | $14.50 | 45.0% | $14.90 | 49.0% | $**15.72** | 57.2% |
|  **NSTS Bancorp, Inc., IL** | 1/19/22 | NSTS-NASDAQ | $260 | 17.68% | 0.70% | 529% | $52.9 | 100% | 132% | 3.7% | **C/S** | **$150/2.00%** | 8.0% | 4.0% | 10.0% | 5.0% | 0.00% | 59.5% | NM | 17.7% | -0.2% | 29.8% | -0.6% | $10.00 | $12.59 | 25.9% | $12.30 | 23.0% | $12.50 | 25.0% | $**10.54** | 5.4% |
|  **Averages - Standard Conversions:** | **Averages - Standard Conversions:** | **Averages - Standard Conversions:** | $**362** | **15.57%** | **0.33%** | **405%** | $**53.8** | **100%** | **105%** | **4.7%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **11.3%** | **0.00%** | **56.9%** | **19.1x** | **14.2%** | **0.2%** | **24.9%** | **0.9%** | $**10.00** | $**13.19** | **31.9%** | $**13.64** | **36.4%** | $**13.82** | **38.2%** | $**13.92** | **39.2%** |
|  **Medians - Standard Conversions:** | **Medians - Standard Conversions:** | **Medians - Standard Conversions:** | $**260** | **17.62%** | **0.17%** | **529%** | $**52.9** | **100%** | **96%** | **3.7%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **5.0%** | **0.00%** | **59.3%** | **19.1x** | **12.8%** | **0.1%** | **24.8%** | **0.3%** | $**10.00** | $**12.90** | **29.0%** | $**14.13** | **41.3%** | $**14.06** | **40.6%** | $**15.51** | **55.1%** |
|  **<u>Second Step Conversions</u>** | **<u>Second Step Conversions</u>** | **<u>Second Step Conversions</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  **First Seacoast Bancorp, Inc., NH** | 1/20/23 | FSEA-NASDAQ | $524 | 9.11% | 0.00% | 717% | $28.1 | 55% | 85% | 5.7% | **N.A.** | **N.A.** | 8.0% | 4.0% | 10.0% | 1.5% | 0.00% | 74.1% | 30.6x | 9.3% | 0.3% | 12.6% | 2.4% | $10.00 | $10.35 | 3.5% | $10.39 | 3.9% | $10.28 | 2.8% | $**10.21** | 2.1% |
|  Ponce Financial Group, Inc., NY\* | 1/28/22 | PDLB-NASDAQ | $1561 | 11.14% | 1.05% | 157% | $133.2 | 54% | 127% | 3.0% | **C/S** | **$1.0M/2.91%** | 8.0% | 4.0% | 10.0% | 0.9% | 0.00% | 85.9% | 34.6x | 14.8% | 0.4% | 17.2% | 2.5% | $10.00 | $10.79 | 7.9% | $10.65 | 6.5% | $10.65 | 6.5% | $**9.29** | -7.1% |
|  **Averages - Second Step Conversions:** | **Averages - Second Step Conversions:** | **Averages - Second Step Conversions:** | $**1042** | **10.13%** | **0.53%** | **437%** | $**80.6** | **55%** | **106%** | **4.3%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **1.2%** | **0.00%** | **80.0%** | **32.6x** | **12.0%** | **0.4%** | **14.9%** | **2.4%** | $**10.00** | $**10.57** | **5.7%** | $**10.52** | **5.2%** | $**10.47** | **4.7%** | $**9.75** | **-2.5%** |
|  **Medians - Second Step Conversions:** | **Medians - Second Step Conversions:** | **Medians - Second Step Conversions:** | $**1042** | **10.13%** | **0.53%** | **437%** | $**80.6** | **55%** | **106%** | **4.3%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **1.2%** | **0.00%** | **80.0%** | **32.6x** | **12.0%** | **0.4%** | **14.9%** | **2.4%** | $**10.00** | $**10.57** | **5.7%** | $**10.52** | **5.2%** | $**10.47** | **4.7%** | $**9.75** | **-2.5%** |
|  **<u>Mutual Holding Companies</u>** | **<u>Mutual Holding Companies</u>** | **<u>Mutual Holding Companies</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  CFSB Bancorp, Inc., MA\* | 1/13/22 | CFSB-NASDAQ | $337 | 14.56% | 0.00% | NM | $28 | 43% | 130% | 5.4% | **C/S** | **$250/4.44%** | 8.7% | 4.4% | 10.9% | 5.2% | 0.00% | 63.2% | 75.4x | 16.7% | 0.3% | 20.0% | 1.6% | $10.00 | $10.18 | 1.80% | $10.65 | 6.5% | $10.63 | 6.3% | $**9.04** | -9.6% |
|  **Averages - MHC Conversions:** | **Averages - MHC Conversions:** | **Averages - MHC Conversions:** | $**337** | **14.56%** | **0.00%** | **NM** | $**28.0** | **43%** | **130%** | **5.4%** | **N.A.** | **N.A.** | **8.7%** | **4.4%** | **10.9%** | **5.2%** | **0.00%** | **63.2%** | **75.4x** | **16.7%** | **0.3%** | **20.0%** | **1.6%** | $**10.00** | $**10.18** | **1.8%** | $**10.65** | **6.5%** | $**10.63** | **6.3%** | $**9.04** | **-9.6%** |
|  **Medians - MHC Conversions:** | **Medians - MHC Conversions:** | **Medians - MHC Conversions:** | $**337** | **14.56%** | **0.00%** | **NM** | $**28.0** | **43%** | **130%** | **5.4%** | **N.A.** | **N.A.** | **8.7%** | **4.4%** | **10.9%** | **5.2%** | **0.00%** | **63.2%** | **75.4x** | **16.7%** | **0.3%** | **20.0%** | **1.6%** | $**10.00** | $**10.18** | **1.8%** | $**10.65** | **6.5%** | $**10.63** | **6.3%** | $**9.04** | **-9.6%** |
|  **Averages - All Conversions:** | **Averages - All Conversions:** | **Averages - All Conversions:** | $**597** | **14.48%** | **0.41%** | **343%** | $**64.5** | **79%** | **115%** | **4.5%** | **N.A.** | **N.A.** | **8.1%** | **4.1%** | **10.2%** | **8.0%** | **0.00%** | **63.9%** | **43.1x** | **14.8%** | **0.3%** | **22.4%** | **1.4%** | $**10.00** | $**12.11** | **21.1%** | $**12.45** | **24.5%** | $**12.55** | **25.5%** | $**12.02** | **20.2%** |
|  **Medians - All Conversions:** | **Medians - All Conversions:** | **Medians - All Conversions:** | $**337** | **14.56%** | **0.17%** | **343%** | $**52.9** | **100%** | **127%** | **3.7%** | **N.A.** | **N.A.** | **8.0%** | **4.0%** | **10.0%** | **5.0%** | **0.00%** | **59.5%** | **34.6x** | **14.8%** | **0.3%** | **20.2%** | **1.6%** | $**10.00** | $**12.59** | **25.9%** | $**12.30** | **23.0%** | $**12.50** | **25.0%** | $**10.54** | **5.4%** |

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| | | |
|:---|:---|:---|
| Note: \* - Appraisal performed by RP Financial; BOLD = RP Financial assisted in the business plan preparation, "NT" - Not Traded; "NA" - Not Applicable, Not Available; C/S-Cash/Stock. | Note: \* - Appraisal performed by RP Financial; BOLD = RP Financial assisted in the business plan preparation, "NT" - Not Traded; "NA" - Not Applicable, Not Available; C/S-Cash/Stock. | Note: \* - Appraisal performed by RP Financial; BOLD = RP Financial assisted in the business plan preparation, "NT" - Not Traded; "NA" - Not Applicable, Not Available; C/S-Cash/Stock. |
| (1) As a percent of MHC offering for MHC transactions. | (5) Mutual holding company pro forma data on full conversion basis. |  |
| (2) Does not take into account the adoption of SOP 93-6. | (6) Simultaneously completed acquisition of another financial institution. |  |
| (3) Latest price if offering is less than one week old. | (7) Simultaneously converted to a commercial bank charter. |  |
| (4) Latest price if offering is more than one week but less than one month old. | (8) Former credit union. | February 24, 2023 |

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.16*** |

---

proposed BV Financial offering, while the Ponce Financial offering was in the range of the proposed BV Financial Offering. First Seacoast's offering closed at the minimum of its offering range at a fully-converted pro forma price/tangible book ratio of 74.1%. First Seacoast's stock price closed up 3.9% after its first week of trading and as of February 24, 2023, First Seacoast's stock was up 2.1% from its IPO price. Ponce Financial's offering closed between the maximum and supermaximum of the offering range at a fully-converted pro forma price/tangible book ratio of 85.9%. Ponce Financial's stock price closed up 6.5% after its first week of trading and as of February 24, 2023, Ponce Financial's stock was down 7.1 from its IPO price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. <u>The Acquisition Market</u> 

Also considered in the valuation was the potential impact on BV Financial's stock price of recently completed and pending acquisitions of other thrift and bank institutions operating in Maryland. As shown in Exhibit IV-4, there were 19 acquisitions of Maryland based bank and savings institutions completed from the beginning of 2018 through February 24, 2023 and there are currently three acquisitions pending for a Maryland based bank or savings institutions. The recent acquisition activity involving Maryland bank and savings institutions may imply a certain degree of acquisition speculation for the Company's stock. To the extent that acquisition speculation may impact the Company's offering, we have largely taken this into account in selecting companies for the Peer Group that could be subject to the same type of acquisition speculation that may influence BV Financial's stock. However, since converting thrifts are subject to a three-year regulatory moratorium from being acquired, acquisition speculation in BV Financial's stock would tend to be less compared to the stocks of the Peer Group companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. <u>Trading in BV Financial's Stock</u> 

Since BV Financial's minority stock currently trades under the symbol "BVFL" on the OTC Pink Sheets, RP Financial also considered the recent trading activity in the valuation analysis. BV Financial had a total of 7,418,575 shares issued and outstanding at February 24, 2023, of which 1,017,761 shares were held by public shareholders and traded as public securities. The Company's stock has had a 52 week trading range of $20.30 to $35.00 per share and its closing price on February 24, 2023 was $34.70 per share. There are significant differences between the Company's minority stock (currently being traded) and the conversion stock that will be issued by the Company. Such differences include different liquidity characteristics, a different return on equity for the conversion stock and the stock is currently traded based on its MHC

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.17*** |

---

ownership structure. Since the pro forma impact has not been publicly disseminated to date, it is appropriate to discount the current trading level. As the pro forma impact is made known publicly, the trading level will become more informative.

\* \* \* \* \* \* \* \* \* \* \*

In determining our valuation adjustment for marketing of the issue, we considered trends in both the overall thrift market, the new issue market including the new issue market for second-step conversions, the acquisition market and recent trading activity in the Company's minority stock. Taking these factors and trends into account, RP Financial concluded that no adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.

8. <u>Management</u> 

The Company's management team appears to have experience and expertise in all of the key areas of the Company's operations. Exhibit IV-5 provides summary resumes of the Company's Board of Directors and senior management. The financial characteristics of the Company suggest that the Board and senior management have been effective in implementing an operating strategy that can be well managed by the Company's present organizational structure. The Company currently does not have any senior management positions that are vacant.

Similarly, the returns, equity positions and other operating measures of the Peer Group companies are indicative of well-managed financial institutions, which have Boards and management teams that have been effective in implementing competitive operating strategies. Therefore, on balance, we concluded no valuation adjustment relative to the Peer Group was appropriate for this factor.

9. <u>Effect of Government Regulation and Regulatory Reform</u> 

As a fully-converted regulated institution, BV Financial will operate in substantially the same regulatory environment as the Peer Group members — all of whom are adequately capitalized institutions and are operating with no apparent restrictions. Exhibit IV-6 reflects the Bank's pro forma regulatory capital ratios. On balance, no adjustment has been applied for the effect of government regulation and regulatory reform.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.18*** |

---

<u>Summary of Adjustments</u> 

Overall, based on the factors discussed above, we concluded that the Company's pro forma market value should reflect the following valuation adjustments relative to the Peer Group:

---

| | |
|:---|:---|
| Key Valuation Parameters: | Valuation Adjustment |
| Financial Condition | Slight Upward |
| Profitability, Growth and Viability of Earnings | Moderate Upward |
| Asset Growth | Slight Upward |
| Primary Market Area | Slight Downward |
| Dividends | No Adjustment |
| Liquidity of the Shares | No Adjustment |
| Marketing of the Issue | No Adjustment |
| Management | No Adjustment |
| Effect of Govt. Regulations and Regulatory Reform | No Adjustment |

---

<u>Valuation Approaches</u> 

In applying the accepted valuation methodology promulgated by the FRB, i.e., the pro forma market value approach, we considered the three key pricing ratios in valuing the Company's to-be-issued stock — price/earnings ("P/E"), price/book ("P/B"), and price/assets ("P/A") approaches — all performed on a pro forma basis including the effects of the stock proceeds. In computing the pro forma impact of the conversion and the related pricing ratios, we have incorporated the valuation parameters disclosed in the Company's prospectus for reinvestment rate, effective tax rate, stock benefit plan assumptions and expenses (summarized in Exhibits IV-7 and IV-8). In our estimate of value, we assessed the relationship of the pro forma pricing ratios relative to the Peer Group and recent conversion offerings.

RP Financial's valuation placed an emphasis on the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>P/E Approach</u>. The P/E approach is generally the best indicator of long-term value for a stock and we have
given it significant weight among the valuation approaches. Given certain similarities between the Company's and the Peer Group's earnings composition and overall financial condition, the P/E approach was carefully considered in this
valuation. At the same time, recognizing that (1) the earnings multiples will be evaluated on a pro forma basis for the Company; and (2) the Peer Group companies have had the opportunity to realize the benefit of reinvesting and leveraging
their offering proceeds, we also gave weight to the other valuation approaches.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>P/B Approach</u>. P/B ratios have generally served as a useful benchmark in the valuation of thrift stocks,
particularly in the context of a public offering, as the earnings approach involves assumptions regarding the use of proceeds. RP Financial considered the P/B approach to be a valuable indicator of pro forma value, taking into account the pricing
ratios under the P/E and P/A approaches. We have also modified

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.19*** |

---

the P/B approach to exclude the impact of intangible assets (i.e., price/tangible book value or "P/TB"), in that the investment community frequently makes this adjustment in its evaluation of this pricing approach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>P/A Approach</u>. P/A ratios are generally a less reliable indicator of market value, as investors typically
assign less weight to assets and attribute greater weight to book value and earnings. Furthermore, this approach as set forth in the regulatory valuation guidelines does not take into account the amount of stock purchases funded by deposit
withdrawals, thus understating the pro forma P/A ratio. At the same time, the P/A ratio is an indicator of franchise value, and, in the case of highly capitalized institutions, high P/A ratios may limit the investment community's willingness to
pay market multiples for earnings or book value when ROE is expected to be low.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Trading of BV Financial stock</u>. Converting institutions generally do not have stock outstanding. BV
Financial, however, has public shares outstanding due to the mutual holding company form of ownership and first-step minority stock offering. Since BV Financial's stock is currently traded on the OTC Pink Sheets, while it is an indicator of the
Company's current market value, the stock is not actively traded and therefore we limited our use of the stock price in our valuation. Based on the February 24, 2023 closing stock price of $34.70 per share and the 7,418,575 shares of BV
Financial common stock outstanding, the Company's implied market value of $257.4 million was considered in the valuation process. However, since the Company's conversion stock will have different characteristics than the minority
shares, and the pro forma information has not been publicly disseminated to date, the current trading price of BV Financial' <u>s</u> stock was discounted herein but will become more important towards the closing of the offering.

The Company has adopted "Employers' Accounting for Employee Stock Ownership Plans" ("ASC 718-40"), which causes earnings per share computations to be based on shares issued and outstanding excluding unreleased ESOP shares. For purposes of preparing the pro forma pricing analyses, we have reflected all shares issued in the offering, including all ESOP shares, to capture the full dilutive impact, particularly since the ESOP shares are economically dilutive, receive dividends and can be voted. However, we did consider the impact of ASC 718-40 in the valuation.

In preparing the pro forma pricing analysis we have reviewed and taken into account the pro forma impact of the MHC's net assets (i.e., unconsolidated equity) that will be consolidated with the Company and, thus, will increase equity. At February 24, 2023, the MHC had net assets of $8,000, which has been added to the Company's December 31, 2022 pro forma equity to reflect the consolidation of the MHC into the Company's operations. However, the diminimus amount of these funds did not impact the public shareholders' ownership interest to two decimal places. Accordingly, for purposes of the Company's pro forma valuation, the public shareholders' ownership interest was unchanged at 13.72% and the MHCs ownership interest was unchanged at 86.28%.

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| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.20*** |

---

Based on the application of the three valuation approaches, taking into consideration the valuation adjustments discussed above, RP Financial concluded that as of February 24, 2023, the aggregate pro forma market value of BV Financial's conversion stock equaled $144,875,620 at the midpoint, equal to 14,487,562 shares at $10.00 per share. The $10.00 per share price was determined by the Boards of Directors of BV Financial and the MHC. The midpoint and resulting valuation range is based on the sale of an 86.28% ownership interest to the public, which provides for a $125,000,000 public offering at the midpoint value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Price-to-Earnings ("P/E")</u>. The application of the P/E valuation method requires calculating the Company's pro forma market value by applying a valuation P/E multiple to the pro forma earnings base. In applying this technique, we considered both reported earnings and a recurring earnings base, that is, earnings adjusted to exclude any one-time non-operating items, plus the estimated after-tax earnings benefit of the reinvestment of the net proceeds. The Company's reported earnings equaled $10.524 million for the 12 months ended December 31, 2022. In deriving BV Financial's core earnings, the Company recorded several non-recurring items as shown in the table below. As shown, on a tax effected basis, assuming an effective marginal tax rate of 27% for the earnings adjustments, the Company's core earnings were determined to equal $10.060 million for the 12 months ended December 31, 2022.

---

| | |
|:---|:---|
|  | Amount |
|  | ($000) |
|  Net income(loss) | $10524 |
|  Less: Gain on Bargain Purchase (1) | (1340) |
|  Less: Excess insurance proceeds | (1100) |
|  Addback: Merger Expenses | 1800 |
|  Addback: Lease buyout cost of closed branch | 500 |
|  Tax Impact of above items at 27% | (324) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Core earnings estimate | $10060 |

---

(1) Not tax effected.

Based on the Company's reported and core earnings and incorporating the impact of the pro forma assumptions discussed previously, the Company's pro forma reported and core P/E multiples at the $144.9 million midpoint value equaled 12.66x and 13.33x, respectively, indicating premiums of 15.5% and 27.6% relative to the Peer Group's average reported and core earnings

------

---

| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.21*** |

---

multiples of 10.96x and 10.45x, respectively (see Table 4.3). In comparison to the Peer Group's median reported and core earnings multiples of 10.49x and 10.46x, respectively, the Company's pro forma reported and core P/E multiples at the midpoint value indicated premiums of 20.7% and 27.4%, respectively. The Company's pro forma P/E ratios based on reported earnings at the minimum and the super maximum equaled 10.99x and 16.39x, respectively, and based on core earnings at the minimum and the super maximum equaled 11.36x and 16.95x respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Price-to-Book ("P/B")</u>. The application of the P/B valuation method requires calculating the Company's pro forma market value by applying a valuation P/B ratio, as derived from the Peer Group's P/B ratio, to the Company's pro forma book value. Based on the $144.9 million midpoint valuation, the Company's pro forma P/B and P/TB ratios equaled 70.62% and 76.45%, respectively. In comparison to the average P/B and P/TB ratios for the Peer Group of 92.38% and 96.66%, respectively, the Company's ratios reflected discounts of 23.55% on a P/B basis and 20.91% on a P/TB basis. In comparison to the Peer Group's median P/B and P/TB ratios of 91.41% and 96.34%, respectively, the Company's pro forma P/B and P/TB ratios at the midpoint value reflected discounts of 22.74% on a P/B basis and 20.65% on a P/TB basis. At the super maximum of the range, the Company's P/B and P/TB ratios equaled 79.74% and 85.25%, respectively. In comparison to the Peer Group's average P/B and P/TB ratios, the Company's P/B and P/TB ratios at the super maximum of the range reflected discounts of 13.68% and 11.80%, respectively. In comparison to the Peer Group's median P/B and P/TB ratios, the Company's P/B and P/TB ratios at the super maximum of the range reflected discounts of 12.77% and 11.51%, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Price-to-Assets ("P/A")</u>. The P/A valuation methodology determines market value by applying a valuation P/A ratio to the Company's pro forma asset base, conservatively assuming no deposit withdrawals are made to fund stock purchases. In all likelihood there will be deposit withdrawals, which results in understating the pro forma P/A ratio which is computed herein. At the $144.9 million midpoint of the valuation range, the Company's value equaled 15.21% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio of 11.20%, which implies a premium of 35.8% has been applied to the Company's pro forma P/A ratio. In comparison to the Peer Group's median P/A ratio of 9.93%, the Company's pro forma P/A ratio at the midpoint value reflects a premium of 53.2%.

------

---

| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.22*** |

---

Table 4.3

Public Market Pricing Versus Peer Group

BV Financial, Inc.

As of February 24, 2023

---

| | | | | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | | | Market | Market | Per Share Data | Per Share Data | | | | | | | | | | | | | | | | | |
|  |  | | | Capitalization | Capitalization | | | | | | | | Dividends(4) | Dividends(4) | Dividends(4) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | | |
|  |  | | | | | | | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | | | | | | | Reported (5) | Reported (5) | Core (5) | Core (5) | | |
| | | | | Price/<br>Share(1) | Market<br>Value | Core<br>12 Month<br>EPS(2) | Book<br>Value/<br>Share | P/E | P/B | P/A | P/TB | P/Core | Amount/<br>Share |<br>Yield | Payout<br>Ratio | Total<br>Assets | Tang. Eq./<br>T. Assets | NPAs/<br>Assets | ROAA | ROAE | ROAA | ROAE |<br>Exchange<br>Ratio |<br>2nd Step<br>Proceeds |
|  |  | | | ($) | ($Mil) | ($) | ($) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) | ($Mil) | (%) | (%) | (%) | (%) | (%) | (%) | (X) | ($Mil) |
|  **<u>BV Financial, Inc.</u>** | **<u>BV Financial, Inc.</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supermaximum | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supermaximum |  |  | $10.00 | $191.60 | $0.59 | $12.54 | 16.39x | 79.74% | 19.40% | 85.25% | 16.95x | $0.00 | 0.00% | 0.00% | $987 | 22.75% | 0.91% | 1.18% | 4.86% | 1.14% | 4.67% | 2.5827x | $165.31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Maximum | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Maximum |  |  | $10.00 | $166.61 | $0.66 | $13.29 | 14.49x | 75.24% | 17.20% | 80.97% | 15.15x | $0.00 | 0.00% | 0.00% | $969 | 21.25% | 0.93% | 1.19% | 5.20% | 1.14% | 4.99% | 2.2458x | $143.75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Midpoint | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Midpoint |  |  | $10.00 | $144.88 | $0.75 | $14.16 | 12.66x | 70.62% | 15.21% | 76.45% | 13.33x | $0.00 | 0.00% | 0.00% | $952 | 19.90% | 0.95% | 1.20% | 5.55% | 1.15% | 5.32% | 1.9529x | $125.00 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Minimum | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Minimum |  |  | $10.00 | $123.14 | $0.88 | $15.33 | 10.99x | 65.23% | 13.16% | 71.12% | 11.36x | $0.00 | 0.00% | 0.00% | $936 | 18.50% | 0.96% | 1.20% | 5.96% | 1.15% | 5.71% | 1.6599x | $106.25 |
|  <u>All Fully-Converted, Publicly-Traded Institutions</u> | <u>All Fully-Converted, Publicly-Traded Institutions</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  |  | $23.26 | $539.63 | $2.08 | $20.61 | 13.85 | 98.25% | 12.30% | 107.99% | 12.87 | $0.49 | 2.39% | 35.11% | $5123 | 13.03% | 0.55% | 0.69% | 5.72% | 0.79% | 6.56% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  |  | $14.06 | $161.06 | $1.15 | $16.03 | 12.48 | 93.75% | 11.64% | 96.64% | 11.11 | $0.31 | 2.17% | 26.70% | $1636 | 11.41% | 0.38% | 0.73% | 6.27% | 0.91% | 6.80% |  |  |
|  **<u>Conversion Appraisal Peer Group</u>** | **<u>Conversion Appraisal Peer Group</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  |  | $14.48 | $109.75 | $1.26 | $15.76 | 10.96 | 92.38% | 11.20% | 96.66% | 10.45 | $0.30 | 2.11% | 27.41% | $980 | 12.17% | 0.16% | 0.85% | 7.03% | 0.91% | 7.30% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  |  | $14.86 | $97.45 | $1.20 | $15.96 | 10.49 | 91.41% | 9.93% | 96.34% | 10.46 | $0.24 | 1.91% | 26.43% | $847 | 11.16% | 0.05% | 0.84% | 7.27% | 0.99% | 8.00% |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | (7) | WI | $9.88 | $63.95 | NA | $12.20 | NA | 80.98% | 12.08% | 80.98% | NA | NA | NA | NA | $529 | 14.34% | NA | -0.08% | -0.52% | 0.02% | 0.10% |  |  |
|  AFBI | Affinity Bancshares, Inc. |  | GA | $15.79 | $104.30 | $1.16 | $17.73 | 14.90x | 89.07% | 13.18% | 105.84% | 13.63x | NA | NA | NA | $791 | 12.75% | NA | 0.93% | 6.05% | 1.01% | 6.61% |  |  |
|  HMNF | HMN Financial, Inc. |  | MN | $22.00 | $95.10 | NA | $21.72 | 12.02x | 101.28% | 8.68% | 102.12% | NA | $0.24 | 1.09% | 13.11% | $1096 | 8.81% | NA | 0.75% | 7.03% | NA | NA |  |  |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana |  | LA | $18.40 | $55.13 | $1.75 | $15.60 | 10.51x | 117.95% | 9.56% | 117.95% | 10.51x | $0.48 | 2.61% | 26.29% | $577 | 8.44% | 0.05% | 0.99% | 11.45% | 0.99% | 11.45% |  |  |
|  IROQ | IF Bancorp, Inc. |  | IL | $17.50 | $55.55 | $1.86 | $21.30 | 10.00x | 82.16% | 6.74% | 82.16% | 9.39x | $0.40 | 2.29% | 22.86% | $824 | 8.63% | 0.04% | 0.69% | 7.51% | 0.74% | 8.00% |  |  |
|  MGYR | Magyar Bancorp, Inc. |  | NJ | $12.55 | $84.62 | $1.20 | $14.82 | 10.46x | 84.69% | 10.30% | 84.69% | 10.46x | $0.12 | 0.96% | 16.67% | $822 | 12.16% | NA | 1.01% | 8.11% | 1.01% | 8.11% |  |  |
|  NECB | Northeast Community Bancorp, Inc. |  | NY | $15.66 | $231.06 | $1.68 | $16.33 | 9.91x | 95.91% | 16.21% | 95.98% | 9.31x | $0.24 | 1.53% | 26.58% | $1425 | 18.38% | NA | 1.95% | 9.60% | 2.07% | 10.22% |  |  |
|  PROV | Provident Financial Holdings, Inc. |  | CA | $14.06 | $99.79 | $1.19 | $18.12 | 11.82x | 77.59% | 7.85% | 77.59% | 11.82x | $0.56 | 3.98% | 47.06% | $1271 | 10.17% | 0.10% | 0.71% | 6.69% | 0.71% | 6.69% |  |  |
|  RVSB | Riverview Bancorp, Inc. |  | WA | $7.10 | $152.62 | $0.88 | $7.07 | 8.07x | 100.39% | 9.55% | 122.55% | 8.03x | $0.24 | 3.38% | 26.70% | $1599 | 7.93% | 0.04% | 1.13% | 12.29% | 1.14% | 12.35% |  |  |
|  WMPN | William Penn Bancorporation |  | PA | $11.88 | $155.42 | $0.32 | $12.67 | NM | 93.75% | 17.84% | 96.70% | NM | $0.12 | 1.01% | 40.00% | $871 | 20.08% | 0.55% | 0.46% | 2.05% | 0.50% | 2.21% |  |  |

---

(1) Closing price at date indicated, market value equal to public (minority shares) times current stock price.

(2) Core earnings reflect net income less non-recurring items

(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and
P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.

(4) Dividend is as of most recent quarterly dividend. Indicated 12 month dividend as a percent of trailing 12 month
earnings.

(5) ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12
month earnings and average equity and assets balances.

(6) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or
unusual operating characteristics.

(7) Current Quarter is December 31, 2022, footnote reflects data as of September 30, 2022, or most recent
date

Source: S&P Global Market Intelligence and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

------

---

| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.23*** |

---

<u>Comparison to Recent Offerings</u> 

As indicated at the beginning of this chapter, RP Financial's analysis of recent conversion offering pricing characteristics at closing and in the aftermarket has been limited to a "technical" analysis and, thus, the pricing characteristics of recent conversion offerings cannot be a primary determinate of value. Particular focus was placed on the P/TB approach in this analysis, since the P/E multiples do not reflect the actual impact of reinvestment and the source of the stock proceeds (i.e., external funds vs. deposit withdrawals). As discussed previously, two second-step offerings were completed since the beginning of 2022. In comparison to the 80.00% average closing pro P/TB ratio of the two second-step offerings, the Company's pro forma P/TB ratio of 76.45% at the midpoint value reflects an implied discount of 4.44%. At the supermaximum of the offering range, the Company's P/TB ratio of 85.25% reflects an implied premium of 6.56% relative to the two second-step offerings average P/TB ratio at closing.

<u>Valuation Conclusion</u> 

Based on the foregoing, it is our opinion that, as of February 24, 2023, the estimated aggregate pro forma valuation of the shares of the Company to be issued and outstanding at the end of the conversion offering – including (1) newly-issued shares representing the MHC's current ownership interest in the Company; and, (2) exchange shares issued to existing public shareholders of the Company - was $144,875,620 at the midpoint, equal to 14,487,562 shares at a per share value of $10.00. The resulting range of value and pro forma shares, all based on $10.00 per share, are shown below.

The pro forma valuation calculations relative to the Peer Group are shown in Table 4.3 and are detailed in Exhibit IV-7 and Exhibit IV-8.

<u>Establishment of the Exchange Ratio</u> 

Conversion regulations provide that in a conversion of a mutual holding company, the minority shareholders are entitled to exchange the public shares for newly issued shares in the fully converted company. The Boards of Directors of the MHC and BV Financial have independently determined the exchange ratio, which has been designed to preserve the current aggregate percentage ownership in the Company. The exchange ratio to be received by the existing minority shareholders of the Company will be determined at the end of the offering, based on the total number of shares sold in the second-step conversion offering and the final appraisal.

------

---

| | |
|:---|:---|
| ***RP<sup>®</sup> Financial, LC.*** | ***VALUATION ANALYSIS*** |
|  | ***IV.24*** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |<br>Total Shares | Exchange Shares<br>Issued to Public<br>Shareholders |<br>Offering<br>Shares |<br>Exchange<br>Ratio |
|  <u>Shares</u> |  |  |  |  |
|  Maximum, as Adjusted | 19159800 | 2628550 | 16531250 | 2.5827 x |
|  Maximum | 16660696 | 2285696 | 14375000 | 2.2458 x |
|  Midpoint | 14487562 | 1987562 | 12500000 | 1.9529 x |
|  Minimum | 12314427 | 1689427 | 10625000 | 1.6599 x |
|  <u>Distribution of Shares</u> |  |  |  |  |
|  Maximum, as Adjusted | 100.00% | 13.72% | 86.28% |  |
|  Maximum | 100.00% | 13.72% | 86.28% |  |
|  Midpoint | 100.00% | 13.72% | 86.28% |  |
|  Minimum | 100.00% | 13.72% | 86.28% |  |
|  <u>Aggregate Market Value at $10.00 per share</u> | <u>Aggregate Market Value at $10.00 per share</u> |  |  |  |
|  Maximum, as Adjusted | $191598000 | $26285500 | $165312500 |  |
|  Maximum | $166606960 | $22856960 | $143750000 |  |
|  Midpoint | $144875620 | $19875620 | $125000000 |  |
|  Minimum | $123144270 | $16894270 | $106250000 |  |

---

Based on the valuation conclusion herein, the resulting offering value and the $10.00 per share offering price, the indicated exchange ratio at the midpoint is 1.9529 shares of the Company for every one public share held by public shareholders. Furthermore, based on the offering range of value, the indicated exchange ratio is 1.6599 at the minimum, 2.2458 at the maximum and 2.5827 at the super maximum. RP Financial expresses no opinion on the proposed exchange of newly issued Company shares for the shares held by the public shareholders or on the proposed exchange ratio.

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**EXHIBITS** 

------

***LIST OF EXHIBITS***

---

| | |
|:---|:---|
| Exhibit<br>Number | Description |
| I-1 | Map of Office Locations |
| I-2 | Audited Financial Statements |
| I-3 | Key Operating Ratios |
| I-4 | Yields and Costs |
| I-5 | Loan Loss Allowance Activity |
| I-6 | Interest Rate Risk Analysis |
| I-7 | Fixed and Adjustable Rate Loans |
| I-8 | Loan Portfolio Composition |
| I-9 | Contractual Maturity by Loan Type |
| I-10 | Non-Performing Assets |
| I-11 | Deposit Composition |
| I-12 | Uninsured Time Deposits |
| II-1 | Historical Interest Rates |
| II-2 | Demographic and Economic Data |
| III-1 | Characteristics of Publicly-Traded Thrifts |
| III-2 | Public Market Pricing of Thrifts with Assets Less Than $2.0 Billion |
| III-3 | Peer Group Market Area Comparative Analysis |

---

------

**LIST OF EXHIBITS (continued)** 

---

| | |
|:---|:---|
| Exhibit<br>Number | Description |
| IV-1 | Stock Prices: As of February 24, 2023 |
| IV-2 | Historical Stock Price Indices |
| IV-3 | Stock Price Indices as of February 24, 2023 |
| IV-4 | Maryland Bank and Thrift Acquisitions 2018 - Present |
| IV-5 | Director and Senior Management Summary Resumes |
| IV-6 | Pro Forma Regulatory Capital Ratios |
| IV-7 | Pro Forma Analysis Sheet |
| IV-8 | Pro Forma Effect of Conversion Proceeds |
| V-1 | Firm Qualifications Statement |

---

------

**EXHIBIT I-1** 

**BV Financial, Inc.** 

**Map of Office Locations** 

------

Exhibit I-1

BV Financial, Inc.

Map of Office Locations

![LOGO](g447808g0309090958161.jpg)

------

**EXHIBIT I-2** 

**BV Financial, Inc.** 

**Audited Financial Statements** 

**[Incorporated by Reference]** 

------

**EXHIBIT I-3** 

**BV Financial, Inc.** 

**Key Operating Ratios** 

------

Exhibit I-3

BV Financial, Inc.

Key Operating Ratios

---

| | | |
|:---|:---|:---|
|  | **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 | 1.35% | 1.16% |
|  Return on average equity | 12.44% | 11.98% |
|  Interest rate spread<sup>(1)</sup> | 3.76% | 3.69% |
|  Net interest margin<sup>(2)</sup> | 3.91% | 3.80% |
|  Non-interest expense to average assets | 2.34% | 1.80% |
|  Efficiency ratio<sup>(3)</sup> | 56.31% | 53.27% |
|  Average interest-earning assets to average interest-bearing liabilities | 134.27% | 142.14% |
|  Average equity to average assets | 10.82% | 9.69% |
|  **Capital Ratios<sup>(4)</sup>:** |  |  |
|  Total capital to risk-weighted assets | 17.34% | 18.07% |
|  Tier 1 capital to risk-weighted assets | 16.76% | 17.57% |
|  Common equity tier 1 capital to risk-weighted assets | 16.76% | 17.57% |
|  Tier 1 capital to average assets | 13.39% | 11.79% |
|  **Asset Quality Ratios:** |  |  |
|  Allowance for loan losses as a percentage of total loans | 0.57% | 0.45% |
|  Allowance for loan losses as a percentage of non-performing loans | 64.80% | 111.28% |
|  Net (charge-offs) recoveries to average outstanding loans during the year | (0.02)% | (0.04)% |
|  Non-performing loans as a percentage of total loans | 0.88% | 0.41% |
|  Non-performing loans as a percentage of total assets | 0.70% | 0.30% |
|  Total non-performing assets as a percentage of total assets | 0.94% | 0.55% |
|  **Other:** |  |  |
|  Number of offices | 15 | 16 |
|  Number of full-time equivalent employees | 107 | 102 |

---

------

(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 non-interest expenses divided by the sum of net interest
income and non-interest income.

(4) BayVanguard Bank only.

Source: BV Financial's preliminary prospectus.

------

**BV FINANCIAL** 

**Selected Historical Financial Information** 

---

| | | | |
|:---|:---|:---|:---|
|  | **At December 31,** | **At December 31,** | **At December 31,** |
|  | **2022** | **2021** | **2020** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Selected Financial Condition data:** |  |  |  |
|  Total Assets | $844963 | $815130 | $815565 |
|  Cash & cash equivalents | 68652 | 111190 | 91990 |
|  Securities available-for-sale | 33034 | 37793 | 32463 |
|  Securities held to maturity | 10461 | 4059 | 2799 |
|  Loans recievable, net | 659131 | 584438 | 607073 |
|  Investment in life insurance | 19983 | 25966 | 26195 |
|  Goodwill | 14420 | 14420 | 12830 |
|  Deferred tax assets, net | 9113 | 8322 | 8156 |
|  Deposits | 684618 | 680025 | 675096 |
|  Borrowings | 49049 | 36828 | 54655 |
|  Total stockholders' equity | 97751 | 83446 | 74021 |
|  | **For the Years Ended**<br>**December 31,** | **For the Years Ended**<br>**December 31,** | **For the Years Ended**<br>**December 31,** |
|  | **2022** | **2021** | **2020** |
|  | **(in thousands) except per share<br>amounts** | **(in thousands) except per share<br>amounts** | **(in thousands) except per share<br>amounts** |
|  **Selected operating data:** |  |  |  |
|  Interest Income | $33350 | $29378 | $18226 |
|  Interest expense | 3430 | 3733 | 2904 |
|  Net Interest Income | 29920 | 25645 | 15322 |
|  Provision for Loan Losses | 1038 | 575 | 695 |
|  Net Interest Income after provision for loan losses | 28882 | 25070 | 14627 |
|  Non-Interest Income | 5665 | 2371 | 4939 |
|  Non-Interest Expense | 19994 | 14617 | 10572 |
|  Income (loss) before income taxes | 14553 | 12824 | 8994 |
|  Income Taxes (benefit) | 4029 | 3383 | 1349 |
|  Net (loss) income | $10524 | $9441 | $7645 |
|  Basic net income per share | $1.42 | $1.33 | $1.08 |
|  Diluted net income per share | $1.42 | $1.32 | $1.07 |
|  | **At or For December 31,** | **At or For December 31,** | **At or For December 31,** |
|  | **2022** | **2021** | **2020** |
|  **Performance ratios:** |  |  |  |
|  Return on Average Assets | 1.23% | 1.16% | 1.69% |
|  Return on Average Equity | 11.40% | 11.98% | 10.88% |
|  Net Interest Spread (1) | 3.76% | 3.69% | 3.68% |
|  Net Interest Margin (2) | 3.91% | 3.80% | 3.71% |
|  Non-interest expense to average assets | 2.34% | 1.80% | 2.33% |
|  Efficiency ratio (3) | 57.88% | 53.27% | 54.03% |
|  Average interest-earning assets to average interest bearing liabilities | 134.27% | 142.14% | 120.42% |
|  Average Equity to Average assets | 10.82% | 9.69% | 15.50% |

---

------

**EXHIBIT I-4** 

**BV Financial, Inc.** 

**Yields and Costs** 

------

Exhibit I-4

BV Financial, Inc.

Yields and Costs

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **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:** |  |  |  |  |  |  |
|  Loans | $634152 | $31259 | 4.93% | $591466 | $28728 | 4.86% |
|  Securities available for sale | 36766 | 610 | 1.66% | 32688 | 434 | 1.33% |
|  Securities held to maturity | 7730 | 245 | 3.17% | 3022 | 77 | 2.56% |
|  Cash, cash equivalents and other interest-earning assets | 86134 | 1236 | 1.43% | 97322 | 139 | 0.14% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-earning assets | 764782 | 33350 | 4.36% | 724498 | 29378 | 4.06% |
|  Non-interest-earning assets | 87128 |  |  | 88343 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $851910 |  |  | $812841 |  |  |
|  **Interest-bearing liabilities:** |  |  |  |  |  |  |
|  Interest-bearing demand deposits | $95261 | 65 | 0.07% | $86982 | 55 | 0.06% |
|  Savings deposits | 169677 | 97 | 0.06% | 162500 | 116 | 0.07% |
|  Money market deposits | 108492 | 231 | 0.21% | 95156 | 240 | 0.25% |
|  Certificates of deposit | 154346 | 964 | 0.63% | 157228 | 1485 | 0.94% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total interest-bearing deposits | 527776 | 1357 | 0.26% | 501866 | 1896 | 0.38% |
|  Federal Home Loan Bank advances | 296 | 11 | 3.79% | 3080 | 30 | 0.98% |
|  Subordinated debentures | 36938 | 2062 | 5.58% | 36764 | 1807 | 4.91% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total borrowings | 37234 | 2073 | 5.57% | 39844 | 1837 | 4.61% |
|  Total interest-bearing liabilities | 565010 | 3430 | 0.61% | 541710 | 3733 | 0.75% |
|  Non-interest-bearing demand deposits | 169722 |  |  | 170157 |  |  |
|  Other non-interest-bearing liabilities | 24870 |  |  | 21802 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 759602 |  |  | 733669 |  |  |
|  Equity | 92308 |  |  | 79172 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and equity | $851910 |  |  | $812841 |  |  |
|  Net interest income |  | $29920 |  |  | $25645 |  |
|  Net interest rate spread<sup>(1)</sup> |  |  | 3.75% |  |  | 3.37% |
|  Net interest-earning assets<sup>(2)</sup> | $199772 |  |  | $182788 |  |  |
|  Net interest margin<sup>(3)</sup> |  |  | 3.91% |  |  | 3.54% |
|  Average interest-earning assets to interest-bearing liabilities | 135.36% |  |  | 133.74% |  |  |

---

------

(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.

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT I-5** 

**BV Financial, Inc.** 

**Loan Loss Allowance Activity** 

------

Exhibit I-5

BV Financial, Inc.

Loan Loss Allowance Activity

---

| | | |
|:---|:---|:---|
|  | **At or For the Years Ended December 31,** | **At or For the Years Ended December 31,** |
|  | **2022** | **2021** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** |
|  Allowance for loan losses at beginning of year | $2666 | $1841 |
|  Provision for loan losses | 1038 | 575 |
|  Charge-offs: |  |  |
|  Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | 7 | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied |  | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marine |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other consumer | 39 | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guaranteed by the U.S. Government |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial | 10 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total charge-offs | 56 | 128 |
|  Recoveries: |  |  |
|  Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | 43 | 207 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 87 | 93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 19 | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Marine |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other consumer | 15 | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guaranteed by the U.S. Government |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial | 1 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total recoveries | 165 | 378 |
|  Net (charge-offs) recoveries | 109 | 250 |
|  Allowance at end of year | $3813 | $2666 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance to non-performing loans | 111.28% | 32.31% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance to total loans outstanding at the end of the year | 0.57% | 0.45% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net (charge-offs) recoveries to average loans outstanding during the year | (0.02)% | (0.04)% |

---

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT I-6** 

**BV Financial, Inc.** 

**Interest Rate Risk Analysis** 

------

Exhibit I-6

BV Financial, Inc.

Interest Rate Risk Analysis

Estimated Changes in Net Interest Income

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Change in Interest Rates<sup>(1)</sup>: | - 400 bp | - 300 bp | - 200 bp | - 100 bp | + 100bp | + 200 bp | + 300bp | + 400bp |
|  December 31, 2022 | (25.16)% | (17.93)% | (10.44)% | (3.77)% | 0.86% | 1.21% | 1.25% | 1.37% |

---

------

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

Estimated Changes in Economic Value of Equity

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| Change in Interest Rates<sup>(1)</sup>: | - 400 bp | - 300 bp | - 200 bp | - 100 bp | + 100 bp | + 200 bp | + 300 bp | + 400 bp |
|  December 31, 2022 | (39.13)% | (32.84)% | (19.19)% | (8.14)% | 3.50% | 4.64% | 4.24% | 3.19% |

---

------

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

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT I-7** 

**BV Financial, Inc.** 

**Fixed and Adjustable Rate Loans** 

------

Exhibit I-7

BV Financial, Inc.

Fixed and Adjustable Rate Loans

---

| | | | |
|:---|:---|:---|:---|
|  | **Due After December 31, 2023** | **Due After December 31, 2023** | **Due After December 31, 2023** |
|  | **Fixed** | **Adjustable** | **Total** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** |
|  Real estate: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | $109457 | $24885 | $134342 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 69649 | 52640 | 122289 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied | 49728 | 35626 | 85354 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor | 147685 | 69678 | 217363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 5574 | 7913 | 13487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm | 8081 | 3484 | 11565 |
|  Marine | 15791 |  | 15791 |
|  Other consumer | 2049 | 178 | 2227 |
|  Guaranteed by the U.S. Government | 4380 | 525 | 4905 |
|  Commercial | 11234 | 7858 | 19092 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans | $423628 | $202787 | $626415 |

---

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT I-8** 

**BV Financial, Inc.** 

**Loan Portfolio Composition** 

------

Exhibit I-8

BV Financial, Inc.

Loan Portfolio Composition

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **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: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | $137742 | 20.73% | $140675 | 23.90% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 125065 | 18.82 | 96556 | 16.41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied | 91853 | 13.82 | 87077 | 14.80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor<sup>(1)</sup> | 226854 | 34.14 | 170795 | 29.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 17937 | 2.70 | 18731 | 3.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm | 13823 | 2.08 | 12048 | 2.05 |
|  Marine | 15791 | 2.38 | 15923 | 2.71 |
|  Other consumer | 2361 | 0.36 | 2529 | 0.43 |
|  Guaranteed by the U.S. Government | 4933 | 0.74 | 22566 | 3.83 |
|  Commercial | 28052 | 4.22 | 21590 | 3.67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans | 664411 | 100.0% | 588490 | 100.00% |
|  Less: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred origination fees, net | (1467) |  | (1386) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for loan losses | (3813) |  | (2666) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total loans receivable, net | $659131 |  | $584438 |  |

---

------

(1) Includes multi-family loans of $22.1 million at December 31, 2022 and $16.6 million at
December 31, 2021.

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT I-9** 

**BV Financial, Inc.** 

**Contractual Maturity by Loan Type** 

------

Exhibit I-9

BV Financial, Inc.

Contractual Maturity by Loan Type

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **One- to Four-**<br>**Family** –<br>**Owner Occupied** | **One- to Four-**<br>**Family** –<br>**Non-Owned**<br>**Occupied** | **Commercial Real**<br>**Estate – Owner**<br>**Occupied** | **Commercial Real**<br>**Estate – Investor** | **Construction and**<br>**Land** | **Farm** | **Marine** |
|  | | | **(In thousands)** | **(In thousands)** | **(In thousands)** | | |
|  Amounts due in: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One year or less | $3400 | $2776 | $6499 | $9492 | $4449 | $2258 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than one to five years | 12918 | 32446 | 19307 | 75614 | 4788 | 3365 | 139 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than five to 15 years | 31922 | 36465 | 30320 | 105918 | 5351 | 5368 | 5772 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than 15 years | 89502 | 53377 | 35727 | 35830 | 3349 | 2832 | 9880 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $137742 | $125065 | $91853 | $226854 | $17937 | $13823 | $15791 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Other<br>Consumer** | **U.S. Government<br>Guaranteed** | **Commercial** | **Total** |
|  | | | | **(In thousands)** |
|  Amounts due in: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One year or less | $135 | $28 | $8959 | $37996 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than one to five years | 1275 | 1669 | 7343 | 158865 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than five to 15 years | 846 | 2835 | 9961 | 234759 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; More than 15 years | 105 | 401 | 1789 | 232791 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $2361 | $4933 | $28052 | $664411 |

---

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT I-10** 

**BV Financial, Inc.** 

**Non-Performing Assets** 

------

Exhibit I-10

BV Financial, Inc.

Non-Performing Assets

---

| | | |
|:---|:---|:---|
|  | **At December 31,** | **At December 31,** |
|  | **2022** | **2021** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** |
|  Non-accrual loans: |  |  |
|  Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied | $1371 | $1683 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied | 585 | 270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied | 2167 | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor | 1432 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land | 248 | 245 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |
|  Marine |  |  |
|  Other consumer | 81 | 26 |
|  Guaranteed by the U.S. Government |  |  |
|  Commercial |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-accrual loans | 5884 | 2396 |
|  <br> Accruing loans past due 90 days or more: |  |  |
|  Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – owner occupied |  | 214 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One- to four-family – non-owner occupied |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – owner occupied |  | 315 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial – investor |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction and land |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Farm |  |  |
|  Marine |  |  |
|  Other consumer |  |  |
|  Guaranteed by the U.S. Government |  |  |
|  Commercial |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total accruing loans past due 90 days or more |  | 529 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total non-performing loans | 5884 | 2925 |
|  Real estate owned | 1987 | 1987 |
|  Total non-performing assets | $7871 | $4812 |
|  Total non-performing loans to total<br> loans | 0.89% | 0.50% |
|  Total non-accrual loans to total loans | 0.89% | 0.41% |
|  Total non-performing assets to total assets | 0.94% | 0.61% |

---

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT I-11** 

**BV Financial, Inc.** 

**Deposit Composition** 

------

Exhibit I-11

BV Financial, Inc.

Deposit Composition

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** | **At December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Amount** | **Percent** | **Average<br>Rate** | **Amount** | **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 | $167202 | 24.42% | —% | $175019 | 25.73% | —% |
|  Interest-bearing demand deposits | 96829 | 14.14 | 0.07 | 94059 | 13.83 | 0.07 |
|  Savings deposits | 171772 | 25.09 | 0.05 | 170391 | 25.06 | 0.08 |
|  Money market deposits | 102301 | 14.94 | 0.21 | 98639 | 14.51 | 0.27 |
|  Certificates of deposit | 146514 | 21.40 | 0.63 | 141917 | 20.87 | 1.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $684618 | 100.00% | 0.26% | $680025 | 100.00% | 0.42% |

---

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT I-12** 

**BV Financial, Inc.** 

**Uninsured Time Deposits** 

------

Exhibit I-12

BV Financial, Inc.

Uninsured of Time Deposits

---

| | |
|:---|:---|
| | **At**<br>**December 31, 2022** |
| | **(In thousands)** |
|  **Maturity Period:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Three months or less | $2042 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Over three through six months | 17125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Over six through twelve months | 1615 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Over twelve months | 7336 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $28118 |

---

Source: BV Financial's preliminary prospectus.

------

**EXHIBIT II-1** 

**Historical Interest Rates** 

------

Exhibit II-2

Historical Interest Rates(1)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Year/Qtr. Ended | Year/Qtr. Ended | Prime<br>Rate | 90 Day<br>T-Note | One Year<br>T-Note | 10 Year<br>T-Note |
|  2014: | Quarter 1 | 3.25% | 0.05% | 0.13% | 2.73% |
|  | Quarter 2 | 3.25% | 0.04% | 0.11% | 2.53% |
|  | Quarter 3 | 3.25% | 0.02% | 0.13% | 2.52% |
|  | Quarter 4 | 3.25% | 0.04% | 0.25% | 2.17% |
|  2015: | Quarter 1 | 3.25% | 0.03% | 0.26% | 1.94% |
|  | Quarter 2 | 3.25% | 0.01% | 0.28% | 2.35% |
|  | Quarter 3 | 3.25% | 0.00% | 0.33% | 2.06% |
|  | Quarter 4 | 3.50% | 0.16% | 0.65% | 2.27% |
|  2016: | Quarter 1 | 3.50% | 0.21% | 0.59% | 1.78% |
|  | Quarter 2 | 3.50% | 0.26% | 0.45% | 1.49% |
|  | Quarter 3 | 3.50% | 0.29% | 0.59% | 1.60% |
|  | Quarter 4 | 3.75% | 0.51% | 0.85% | 2.45% |
|  2017: | Quarter 1 | 4.00% | 0.76% | 1.03% | 2.40% |
|  | Quarter 2 | 4.25% | 1.03% | 1.24% | 2.31% |
|  | Quarter 3 | 4.25% | 1.06% | 1.31% | 2.33% |
|  | Quarter 4 | 4.50% | 1.39% | 1.76% | 2.40% |
|  2018: | Quarter 1 | 4.75% | 1.73% | 2.09% | 2.74% |
|  | Quarter 2 | 5.00% | 1.93% | 2.33% | 2.85% |
|  | Quarter 3 | 5.25% | 2.19% | 2.59% | 3.05% |
|  | Quarter 4 | 5.50% | 2.45% | 2.63% | 2.69% |
|  2019: | Quarter 1 | 5.50% | 2.40% | 2.40% | 2.41% |
|  | Quarter 2 | 5.00% | 2.12% | 1.92% | 2.00% |
|  | Quarter 3 | 4.75% | 1.88% | 1.75% | 1.68% |
|  | Quarter 4 | 4.75% | 1.55% | 1.59% | 1.92% |
|  2020: | Quarter 1 | 3.25% | 0.11% | 0.17% | 0.70% |
|  | Quarter 2 | 3.25% | 0.16% | 0.16% | 0.66% |
|  | Quarter 3 | 3.25% | 0.10% | 0.12% | 0.69% |
|  | Quarter 4 | 3.25% | 0.09% | 0.10% | 0.93% |
|  2021: | Quarter 1 | 3.25% | 0.03% | 0.07% | 1.74% |
|  | Quarter 2 | 3.25% | 0.05% | 0.08% | 1.44% |
|  | Quarter 3 | 3.25% | 0.04% | 0.09% | 1.52% |
|  | Quarter 4 | 3.25% | 0.06% | 0.39% | 1.52% |
|  2022: | Quarter 1 | 3.50% | 0.52% | 1.63% | 2.32% |
|  | Quarter 2 | 4.75% | 1.72% | 2.80% | 2.98% |
|  | Quarter 3 | 6.25% | 3.33% | 4.05% | 3.83% |
|  | Quarter 4 | 7.50% | 4.42% | 4.73% | 3.88% |
|  | As of Feb. 24, 2023 | 7.75% | 4.83% | 5.12% | 3.95% |

---

(1) End of period data.

Sources: Federal Reserve and The Wall Street Journal.

------

**EXHIBIT II-2** 

**Demographic/Economic Data** 

------

**Demographic Detail: US** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2023*** | ***Projected 2028*** | ***% Change***<br>***2010-2023*** | ***% Change***<br>***2023-2028*** |
|  Total Population (actual) | 308745377 | 334500069 | 341662969 | 8.34 | 2.14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-14 Age Group (%) | 19.83 | 17.97 | 17.31 | (1.83) | (1.59) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15-34 Age Group (%) | 27.43 | 26.49 | 25.69 | 4.63 | (0.95) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35-54 Age Group (%) | 27.88 | 24.96 | 24.99 | (2.99) | 2.25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55-69 Age Group (%) | 15.84 | 18.50 | 18.72 | 26.53 | 3.33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 70+ Age Group (%) | 9.01 | 12.07 | 13.29 | 45.09 | 12.43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Median Age (actual) | 37.1 | 39.3 | 40.4 | 5.93 | 2.80 |
|  Female Population (actual) | 156963363 | 169805750 | 173398703 | 8.18 | 2.12 |
|  Male Population (actual) | 151782014 | 164694319 | 168264266 | 8.51 | 2.17 |
|  Population Density (#/ sq miles) | 87.39 | 94.68 | 96.71 | 8.34 | 2.14 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Black (%) | 12.61 | 12.46 | 12.62 | 7.08 | 3.40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asian (%) | 4.75 | 6.19 | 6.54 | 41.17 | 7.91 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; White (%) | 72.41 | 60.08 | 57.59 | (10.10) | (2.09) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hispanic (%) | 16.35 | 19.88 | 21.67 | 31.73 | 11.32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Islander (%) | 0.17 | 0.22 | 0.25 | 37.73 | 12.64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; American Indian/Alaska Native (%) | 0.95 | 1.19 | 1.30 | 36.20 | 11.30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Multiple races (%) | 2.92 | 10.89 | 11.94 | 304.39 | 11.99 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (%) | 6.19 | 8.96 | 9.76 | 56.78 | 11.34 |
|  Total Households (actual) | 116716406 | 128298155 | 131437810 | 9.92 | 2.45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; < $25K Households (%) | NA | 16.03 | 14.00 | NA | (10.49) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $25-49K Households (%) | NA | 18.81 | 16.86 | NA | (8.16) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50-99K Households (%) | NA | 28.73 | 27.28 | NA | (2.75) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100-$199K Households (%) | NA | 25.15 | 27.11 | NA | 10.41 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200K+ Households (%) | NA | 11.28 | 14.76 | NA | 34.00 |
|  Average Household Income ($) | NA | 104972 | 118758 | NA | 13.13 |
|  Median Household Income ($) | NA | 73503 | 83333 | NA | 13.37 |
|  Per Capita Income ($) | NA | 41287 | 46830 | NA | 13.43 |
|  Total Owner Occupied Housing Units (actual) | 75986090 | 82637768 | 84671748 | 8.75 | 2.46 |
|  Renter Occupied Housing Units (actual) | 40730316 | 45660387 | 46766062 | 12.10 | 2.42 |
|  Vacant Occupied Housing Units (actual) | 14988301 | 14272140 | 14748434 | (4.78) | 3.34 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Maryland** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2023*** | ***Projected 2028*** | ***% Change***<br>***2010-2023*** | ***% Change***<br>***2023-2028*** |
|  Total Population (actual) | 5773552 | 6209088 | 6328929 | 7.54 | 1.93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-14 Age Group (%) | 19.23 | 18.05 | 17.45 | 0.90 | (1.46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15-34 Age Group (%) | 27.05 | 25.44 | 24.73 | 1.12 | (0.92) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35-54 Age Group (%) | 29.41 | 25.67 | 25.32 | (6.11) | 0.54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55-69 Age Group (%) | 15.98 | 19.19 | 19.58 | 29.21 | 4.00 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 70+ Age Group (%) | 8.33 | 11.65 | 12.92 | 50.40 | 13.05 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Median Age (actual) | 37.7 | 39.9 | 41.0 | 5.84 | 2.76 |
|  Female Population (actual) | 2981649 | 3204078 | 3263343 | 7.46 | 1.85 |
|  Male Population (actual) | 2791903 | 3005010 | 3065586 | 7.63 | 2.02 |
|  Population Density (#/ sq miles) | 594.52 | 639.37 | 651.71 | 7.54 | 1.93 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Black (%) | 29.45 | 29.67 | 30.13 | 8.35 | 3.49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asian (%) | 5.52 | 6.88 | 7.00 | 34.04 | 3.69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; White (%) | 58.18 | 46.85 | 43.83 | (13.41) | (4.63) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hispanic (%) | 8.15 | 13.17 | 15.31 | 73.73 | 18.54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Islander (%) | 0.05 | 0.06 | 0.08 | 21.48 | 26.16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; American Indian/Alaska Native (%) | 0.35 | 0.57 | 0.66 | 73.90 | 17.93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Multiple races (%) | 2.85 | 8.50 | 9.60 | 220.33 | 15.15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (%) | 3.58 | 7.47 | 8.70 | 124.16 | 18.80 |
|  Total Households (actual) | 2156418 | 2335230 | 2383359 | 8.29 | 2.06 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; < $25K Households (%) | NA | 11.57 | 10.25 | NA | (9.57) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $25-49K Households (%) | NA | 14.07 | 12.39 | NA | (10.13) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50-99K Households (%) | NA | 26.31 | 24.24 | NA | (5.96) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100-$199K Households (%) | NA | 30.72 | 31.34 | NA | 4.12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200K+ Households (%) | NA | 17.34 | 21.78 | NA | 28.23 |
|  Average Household Income ($) | NA | 132121 | 147715 | NA | 11.80 |
|  Median Household Income ($) | NA | 96089 | 107483 | NA | 11.86 |
|  Per Capita Income ($) | NA | 50691 | 56704 | NA | 11.86 |
|  Total Owner Occupied Housing Units (actual) | 1455782 | 1566031 | 1598310 | 7.57 | 2.06 |
|  Renter Occupied Housing Units (actual) | 700636 | 769199 | 785049 | 9.79 | 2.06 |
|  Vacant Occupied Housing Units (actual) | 222405 | 221052 | 228391 | (0.61) | 3.32 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Baltimore, MD (City)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2023*** | ***Projected 2028*** | ***% Change***<br>***2010-2023*** | ***% Change***<br>***2023-2028*** |
|  Total Population (actual) | 620960 | 569803 | 555025 | (8.24) | (2.59) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-14 Age Group (%) | 17.86 | 17.29 | 17.31 | (11.20) | (2.48) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15-34 Age Group (%) | 32.90 | 29.64 | 27.13 | (17.32) | (10.86) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35-54 Age Group (%) | 26.41 | 24.74 | 26.43 | (14.05) | 4.05 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55-69 Age Group (%) | 14.66 | 17.82 | 17.30 | 11.56 | (5.41) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 70+ Age Group (%) | 8.17 | 10.51 | 11.84 | 18.11 | 9.68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Median Age (actual) | 34.5 | 37.2 | 38.8 | 7.83 | 4.30 |
|  Female Population (actual) | 328706 | 303330 | 294677 | (7.72) | (2.85) |
|  Male Population (actual) | 292254 | 266473 | 260348 | (8.82) | (2.30) |
|  Population Density (#/ sq miles) | 7671.29 | 7039.30 | 6856.73 | (8.24) | (2.59) |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Black (%) | 63.74 | 57.40 | 56.79 | (17.36) | (3.64) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asian (%) | 2.34 | 3.87 | 4.24 | 51.38 | 6.87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; White (%) | 29.60 | 27.52 | 27.04 | (14.69) | (4.32) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hispanic (%) | 4.18 | 8.96 | 10.68 | 96.68 | 16.14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Islander (%) | 0.04 | 0.03 | 0.03 | (38.63) | (12.94) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; American Indian/Alaska Native (%) | 0.37 | 0.44 | 0.50 | 9.77 | 12.14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Multiple races (%) | 2.09 | 5.41 | 5.22 | 138.18 | (6.11) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (%) | 1.82 | 5.33 | 6.18 | 168.53 | 13.10 |
|  Total Households (actual) | 249906 | 247477 | 243962 | (0.97) | (1.42) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; < $25K Households (%) | NA | 24.68 | 22.96 | NA | (8.29) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $25-49K Households (%) | NA | 21.50 | 19.68 | NA | (9.77) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50-99K Households (%) | NA | 25.75 | 25.69 | NA | (1.66) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100-$199K Households (%) | NA | 19.88 | 21.51 | NA | 6.65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200K+ Households (%) | NA | 8.18 | 10.16 | NA | 22.38 |
|  Average Household Income ($) | NA | 85902 | 94859 | NA | 10.43 |
|  Median Household Income ($) | NA | 56247 | 62106 | NA | 10.42 |
|  Per Capita Income ($) | NA | 38449 | 42937 | NA | 11.67 |
|  Total Owner Occupied Housing Units (actual) | 119166 | 118032 | 116043 | (0.95) | (1.69) |
|  Renter Occupied Housing Units (actual) | 130740 | 129445 | 127919 | (0.99) | (1.18) |
|  Vacant Occupied Housing Units (actual) | 46781 | 45009 | 48264 | (3.79) | 7.23 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Baltimore, MD** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2023*** | ***Projected 2028*** | ***% Change***<br>***2010-2023*** | ***% Change***<br>***2023-2028*** |
|  Total Population (actual) | 805028 | 854123 | 865974 | 6.10 | 1.39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-14 Age Group (%) | 17.98 | 17.74 | 17.28 | 4.68 | (1.27) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15-34 Age Group (%) | 27.03 | 25.31 | 24.37 | (0.69) | (2.37) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35-54 Age Group (%) | 27.83 | 24.67 | 24.87 | (5.96) | 2.24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55-69 Age Group (%) | 16.58 | 19.36 | 19.48 | 23.90 | 2.03 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 70+ Age Group (%) | 10.58 | 12.93 | 14.00 | 29.69 | 9.80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Median Age (actual) | 38.9 | 40.4 | 41.3 | 3.86 | 2.23 |
|  Female Population (actual) | 424597 | 450085 | 455584 | 6.00 | 1.22 |
|  Male Population (actual) | 380431 | 404038 | 410390 | 6.21 | 1.57 |
|  Population Density (#/ sq miles) | 1345.40 | 1427.44 | 1447.25 | 6.10 | 1.39 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Black (%) | 26.05 | 30.82 | 32.20 | 25.50 | 5.92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asian (%) | 4.98 | 6.57 | 6.79 | 40.09 | 4.74 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; White (%) | 64.62 | 50.32 | 46.34 | (17.37) | (6.63) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hispanic (%) | 4.19 | 8.03 | 9.33 | 103.36 | 17.72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Islander (%) | 0.04 | 0.04 | 0.05 | 6.60 | 17.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; American Indian/Alaska Native (%) | 0.33 | 0.41 | 0.42 | 34.63 | 2.01 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Multiple races (%) | 2.40 | 7.36 | 9.03 | 225.88 | 24.48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (%) | 1.59 | 4.47 | 5.17 | 198.41 | 17.26 |
|  Total Households (actual) | 316714 | 328641 | 332200 | 3.77 | 1.08 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; < $25K Households (%) | NA | 11.78 | 10.08 | NA | (13.49) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $25-49K Households (%) | NA | 15.25 | 12.66 | NA | (16.09) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50-99K Households (%) | NA | 29.14 | 26.95 | NA | (6.54) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100-$199K Households (%) | NA | 29.77 | 31.43 | NA | 6.73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200K+ Households (%) | NA | 14.06 | 18.88 | NA | 35.75 |
|  Average Household Income ($) | NA | 119250 | 137097 | NA | 14.97 |
|  Median Household Income ($) | NA | 88428 | 100727 | NA | 13.91 |
|  Per Capita Income ($) | NA | 47123 | 54009 | NA | 14.61 |
|  Total Owner Occupied Housing Units (actual) | 211571 | 217048 | 219009 | 2.59 | 0.90 |
|  Renter Occupied Housing Units (actual) | 105143 | 111593 | 113191 | 6.13 | 1.43 |
|  Vacant Occupied Housing Units (actual) | 18907 | 22813 | 24060 | 20.66 | 5.47 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Harford, MD** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2023*** | ***Projected 2028*** | ***% Change***<br>***2010-2023*** | ***% Change***<br>***2023-2028*** |
|  Total Population (actual) | 244826 | 264958 | 272000 | 8.22 | 2.66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-14 Age Group (%) | 20.15 | 17.73 | 16.74 | (4.76) | (3.07) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15-34 Age Group (%) | 24.29 | 24.18 | 24.13 | 7.74 | 2.42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35-54 Age Group (%) | 30.59 | 25.49 | 24.70 | (9.80) | (0.55) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55-69 Age Group (%) | 16.70 | 20.60 | 21.16 | 33.52 | 5.44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 70+ Age Group (%) | 8.28 | 11.99 | 13.28 | 56.81 | 13.64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Median Age (actual) | 39.0 | 41.3 | 42.3 | 5.90 | 2.42 |
|  Female Population (actual) | 125119 | 135437 | 139037 | 8.25 | 2.66 |
|  Male Population (actual) | 119707 | 129521 | 132963 | 8.20 | 2.66 |
|  Population Density (#/ sq miles) | 560.08 | 606.14 | 622.25 | 8.22 | 2.66 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Black (%) | 12.68 | 15.79 | 17.85 | 34.70 | 16.06 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asian (%) | 2.38 | 3.86 | 4.98 | 75.52 | 32.50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; White (%) | 81.19 | 70.90 | 67.84 | (5.49) | (1.77) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hispanic (%) | 3.52 | 5.98 | 6.93 | 83.99 | 18.95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Islander (%) | 0.08 | 0.08 | 0.08 | 2.54 | 3.47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; American Indian/Alaska Native (%) | 0.25 | 0.27 | 0.26 | 14.03 | (1.13) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Multiple races (%) | 2.47 | 6.86 | 6.51 | 200.51 | (2.63) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (%) | 0.95 | 2.25 | 2.49 | 157.14 | 13.50 |
|  Total Households (actual) | 90217 | 100186 | 103273 | 11.05 | 3.08 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; < $25K Households (%) | NA | 9.51 | 8.17 | NA | (11.37) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $25-49K Households (%) | NA | 12.23 | 10.12 | NA | (14.74) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50-99K Households (%) | NA | 26.23 | 23.15 | NA | (9.03) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100-$199K Households (%) | NA | 34.53 | 34.57 | NA | 3.21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200K+ Households (%) | NA | 17.50 | 23.99 | NA | 41.28 |
|  Average Household Income ($) | NA | 134277 | 155297 | NA | 15.65 |
|  Median Household Income ($) | NA | 104364 | 119693 | NA | 14.69 |
|  Per Capita Income ($) | NA | 51109 | 59323 | NA | 16.07 |
|  Total Owner Occupied Housing Units (actual) | 71830 | 79112 | 81458 | 10.14 | 2.97 |
|  Renter Occupied Housing Units (actual) | 18387 | 21074 | 21815 | 14.61 | 3.52 |
|  Vacant Occupied Housing Units (actual) | 5336 | 5043 | 5127 | (5.49) | 1.67 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Anne Arundel, MD** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2023*** | ***Projected 2028*** | ***% Change***<br>***2010-2023*** | ***% Change***<br>***2023-2028*** |
|  Total Population (actual) | 537655 | 596521 | 613985 | 10.95 | 2.93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-14 Age Group (%) | 19.30 | 18.53 | 17.93 | 6.50 | (0.37) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15-34 Age Group (%) | 26.37 | 25.06 | 24.12 | 5.45 | (0.94) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35-54 Age Group (%) | 30.13 | 26.44 | 26.41 | (2.65) | 2.83 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55-69 Age Group (%) | 16.48 | 18.83 | 19.12 | 26.73 | 4.52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 70+ Age Group (%) | 7.71 | 11.15 | 12.41 | 60.28 | 14.65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Median Age (actual) | 38.1 | 39.6 | 40.7 | 3.94 | 2.78 |
|  Female Population (actual) | 271855 | 303035 | 312123 | 11.47 | 3.00 |
|  Male Population (actual) | 265800 | 293486 | 301862 | 10.42 | 2.85 |
|  Population Density (#/ sq miles) | 1296.15 | 1438.06 | 1480.16 | 10.95 | 2.93 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Black (%) | 15.53 | 18.97 | 20.87 | 35.55 | 13.21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asian (%) | 3.41 | 4.45 | 4.63 | 44.53 | 7.07 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; White (%) | 75.41 | 61.16 | 56.53 | (10.02) | (4.87) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hispanic (%) | 6.12 | 10.99 | 13.07 | 99.26 | 22.37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Islander (%) | 0.09 | 0.11 | 0.16 | 36.85 | 52.34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; American Indian/Alaska Native (%) | 0.31 | 0.45 | 0.53 | 60.07 | 20.39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Multiple races (%) | 2.89 | 9.22 | 10.47 | 253.27 | 16.95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (%) | 2.35 | 5.64 | 6.82 | 166.31 | 24.31 |
|  Total Households (actual) | 199382 | 223267 | 230221 | 11.98 | 3.11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; < $25K Households (%) | NA | 6.89 | 5.92 | NA | (11.40) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $25-49K Households (%) | NA | 10.41 | 9.28 | NA | (8.03) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50-99K Households (%) | NA | 26.14 | 22.52 | NA | (11.17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100-$199K Households (%) | NA | 35.05 | 34.98 | NA | 2.90 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200K+ Households (%) | NA | 21.51 | 27.30 | NA | 30.85 |
|  Average Household Income ($) | NA | 150959 | 170249 | NA | 12.78 |
|  Median Household Income ($) | NA | 113988 | 128010 | NA | 12.30 |
|  Per Capita Income ($) | NA | 57373 | 64745 | NA | 12.85 |
|  Total Owner Occupied Housing Units (actual) | 148011 | 165894 | 170834 | 12.08 | 2.98 |
|  Renter Occupied Housing Units (actual) | 51371 | 57373 | 59387 | 11.68 | 3.51 |
|  Vacant Occupied Housing Units (actual) | 13183 | 13506 | 13849 | 2.45 | 2.54 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Dorchester, MD** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2023*** | ***Projected 2028*** | ***% Change***<br>***2010-2023*** | ***% Change***<br>***2023-2028*** |
|  Total Population (actual) | 32618 | 32420 | 32479 | (0.61) | 0.18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-14 Age Group (%) | 17.77 | 17.10 | 16.75 | (4.37) | (1.84) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15-34 Age Group (%) | 22.61 | 22.33 | 21.91 | (1.86) | (1.69) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35-54 Age Group (%) | 27.75 | 21.84 | 21.68 | (21.77) | (0.58) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55-69 Age Group (%) | 19.65 | 22.71 | 22.61 | 14.85 | (0.26) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 70+ Age Group (%) | 12.22 | 16.02 | 17.05 | 30.36 | 6.60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Median Age (actual) | 43.1 | 44.7 | 44.8 | 3.71 | 0.22 |
|  Female Population (actual) | 17048 | 17113 | 17114 | 0.38 | 0.01 |
|  Male Population (actual) | 15570 | 15307 | 15365 | (1.69) | 0.38 |
|  Population Density (#/ sq miles) | 60.32 | 59.95 | 60.06 | (0.61) | 0.18 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Black (%) | 27.72 | 26.42 | 23.83 | (5.28) | (9.63) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asian (%) | 0.93 | 1.17 | 1.28 | 25.17 | 9.79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; White (%) | 67.64 | 60.52 | 58.43 | (11.07) | (3.28) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hispanic (%) | 3.46 | 6.79 | 8.82 | 95.04 | 30.23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Islander (%) | 0.03 | 0.03 | 0.04 | 11.11 | 20.00 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; American Indian/Alaska Native (%) | 0.35 | 0.41 | 0.41 | 16.81 | 0.76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Multiple races (%) | 1.92 | 7.89 | 11.50 | 308.63 | 45.97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (%) | 1.42 | 3.56 | 4.52 | 150.00 | 27.01 |
|  Total Households (actual) | 13522 | 13721 | 13795 | 1.47 | 0.54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; < $25K Households (%) | NA | 20.99 | 18.93 | NA | (9.31) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $25-49K Households (%) | NA | 21.51 | 20.14 | NA | (5.86) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50-99K Households (%) | NA | 30.19 | 29.25 | NA | (2.61) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100-$199K Households (%) | NA | 22.38 | 24.81 | NA | 11.46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200K+ Households (%) | NA | 4.92 | 6.86 | NA | 40.15 |
|  Average Household Income ($) | NA | 80103 | 88581 | NA | 10.58 |
|  Median Household Income ($) | NA | 60863 | 66311 | NA | 8.95 |
|  Per Capita Income ($) | NA | 34267 | 38006 | NA | 10.91 |
|  Total Owner Occupied Housing Units (actual) | 9263 | 9255 | 9293 | (0.09) | 0.41 |
|  Renter Occupied Housing Units (actual) | 4259 | 4466 | 4502 | 4.86 | 0.81 |
|  Vacant Occupied Housing Units (actual) | 3032 | 2721 | 2781 | (10.26) | 2.21 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**Demographic Detail: Talbot, MD** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Base 2010*** | ***Current 2023*** | ***Projected 2028*** | ***% Change***<br>***2010-2023*** | ***% Change***<br>***2023-2028*** |
|  Total Population (actual) | 37782 | 37539 | 37703 | (0.64) | 0.44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-14 Age Group (%) | 15.92 | 14.44 | 13.96 | (9.86) | (2.91) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15-34 Age Group (%) | 19.40 | 19.14 | 19.41 | (1.95) | 1.88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35-54 Age Group (%) | 25.84 | 20.03 | 19.12 | (22.99) | (4.14) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 55-69 Age Group (%) | 22.46 | 23.25 | 23.14 | 2.88 | (0.07) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 70+ Age Group (%) | 16.39 | 23.14 | 24.37 | 40.28 | 5.80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Median Age (actual) | 47.4 | 51.5 | 52.3 | 8.65 | 1.55 |
|  Female Population (actual) | 19763 | 19759 | 19823 | (0.02) | 0.32 |
|  Male Population (actual) | 18019 | 17780 | 17880 | (1.33) | 0.56 |
|  Population Density (#/ sq miles) | 140.68 | 139.78 | 140.39 | (0.64) | 0.44 |
|  Diversity Index (actual) | NA | NA | NA | NA | NA |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Black (%) | 12.78 | 10.39 | 8.96 | (19.20) | (13.40) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asian (%) | 1.25 | 1.38 | 1.29 | 9.53 | (6.19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; White (%) | 81.37 | 74.87 | 73.44 | (8.59) | (1.47) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hispanic (%) | 5.49 | 10.08 | 11.85 | 82.54 | 18.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Islander (%) | 0.06 | 0.03 | 0.03 | (45.45) | (8.33) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; American Indian/Alaska Native (%) | 0.17 | 0.41 | 0.44 | 140.63 | 8.44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Multiple races (%) | 1.64 | 7.29 | 9.34 | 342.16 | 28.68 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other (%) | 2.73 | 5.63 | 6.50 | 104.95 | 15.90 |
|  Total Households (actual) | 16157 | 16348 | 16471 | 1.18 | 0.75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; < $25K Households (%) | NA | 14.09 | 12.95 | NA | (7.38) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $25-49K Households (%) | NA | 16.86 | 15.75 | NA | (5.88) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $50-99K Households (%) | NA | 29.55 | 28.51 | NA | (2.79) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $100-$199K Households (%) | NA | 26.15 | 27.44 | NA | 5.73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $200K+ Households (%) | NA | 13.35 | 15.35 | NA | 15.80 |
|  Average Household Income ($) | NA | 116112 | 124151 | NA | 6.92 |
|  Median Household Income ($) | NA | 80632 | 86325 | NA | 7.06 |
|  Per Capita Income ($) | NA | 51227 | 54982 | NA | 7.33 |
|  Total Owner Occupied Housing Units (actual) | 11650 | 11637 | 11705 | (0.11) | 0.58 |
|  Renter Occupied Housing Units (actual) | 4507 | 4711 | 4766 | 4.53 | 1.17 |
|  Vacant Occupied Housing Units (actual) | 3420 | 3269 | 3288 | (4.42) | 0.58 |

---

Source: Claritas

Demographic data is provided by Claritas based primarily on US Census data. For non-census year data, Claritas uses samples and projections to estimate the demographic data. S&P Global Market Intelligence performs calculations on the underlying data provided by Claritas for some of the data presented on this page.

% Change values are calculated using the underlying actual data.

------

**EXHIBIT III-1** 

**Characteristics of Publicly-Traded Thrifts** 

------

Exhibit III-1

General Characteristics of Publicly-Traded Thrifts

As of December 31, 2022 or the Most Recent Date Available

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | | | |  | | As of<br>February 24, 2023 | As of<br>February 24, 2023 |
| Ticker | Financial Institution | Exchange | Region | City | State | Total<br>Assets |  | Offices | Fiscal<br>Mth End | Conv.<br>Date | Stock<br>Price | Market<br>Value |
|  |  |  |  |  |  | ($Mil) |  |  |  |  | ($) | ($Mil) |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | NASDAQCM | MW | Greenfield | WI | $529 | (1) | 6 | Dec | 1/8/19 | $9.82 | $64 |
|  AFBI | Affinity Bancshares, Inc. | NASDAQCM | SE | Covington | GA | $791 |  | 3 | Dec | 4/27/17 | $15.79 | $104 |
|  BSBK | Bogota Financial Corp. | NASDAQCM | MA | Teaneck | NJ | $951 |  | 8 | Dec | 1/15/20 | $11.45 | $152 |
|  BYFC | Broadway Financial Corporation | NASDAQCM | WE | Los Angeles | CA | $1184 |  | 3 | Dec | 1/8/96 | $1.30 | $63 |
|  CARV | Carver Bancorp, Inc. | NASDAQCM | MA | New York | NY | $712 |  | 7 | Mar | 10/24/94 | $4.35 | $18 |
|  CLST | Catalyst Bancorp, Inc. | NASDAQCM | SW | Opelousas | LA | $263 |  | 6 | Dec | 10/12/21 | $12.98 | $63 |
|  CFSB | CFSB Bancorp, Inc. | NASDAQCM | NE | Quincy | MA | $357 |  | 4 | Jun | 1/12/22 | $9.04 | $57 |
|  CULL | Cullman Bancorp, Inc. | NASDAQCM | SE | Cullman | AL | $406 | (1) | 4 | Dec | 10/8/09 | $11.73 | $87 |
|  ECBK | ECB Bancorp, Inc. | NASDAQCM | NE | Everett | MA | $874 | (1) | 2 | Dec | 7/27/22 | $15.78 | $145 |
|  FSEA | First Seacoast Bancorp, Inc. | NASDAQCM | NE | Dover | NH | $524 | (1) | 5 | Dec | 7/16/19 | $10.28 | $52 |
|  FSBW | FS Bancorp, Inc. | NASDAQCM | WE | Mountlake Terrace | WA | $2633 |  | 29 | Dec | 7/9/12 | $35.80 | $273 |
|  GBNY | Generations Bancorp NY, Inc. | NASDAQCM | MA | Seneca Falls | NY | $374 | (1) | 10 | Dec | 7/10/06 | $11.00 | $26 |
|  GCBC | Greene County Bancorp, Inc. | NASDAQCM | MA | Catskill | NY | $2616 |  | 19 | Jun | 12/30/98 | $55.37 | $471 |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana | NASDAQCM | SW | Shreveport | LA | $577 |  | 11 | Jun | 1/18/05 | $18.02 | $54 |
|  HVBC | HV Bancorp, Inc. | NASDAQCM | MA | Doylestown | PA | $616 |  | 9 | Dec | 1/11/17 | $31.78 | $71 |
|  IROQ | IF Bancorp, Inc. | NASDAQCM | MW | Watseka | IL | $824 |  | 8 | Jun | 7/7/11 | $17.50 | $56 |
|  MSVB | Mid-Southern Bancorp, Inc. | NASDAQCM | MW | Salem | IN | $269 |  | 3 | Dec | 4/8/98 | $13.27 | $38 |
|  NECB | Northeast Community Bancorp, Inc. | NASDAQCM | MA | White Plains | NY | $1425 |  | 12 | Dec | 7/5/06 | $15.66 | $231 |
|  NSTS | NSTS Bancorp, Inc. | NASDAQCM | MW | Waukegan | IL | $268 | (1) | 3 | Dec | 1/18/22 | $10.52 | $57 |
|  OFED | Oconee Federal Financial Corp. | NASDAQCM | SE | Seneca | SC | $565 |  | 8 | Jun | 1/13/11 | $23.02 | $129 |
|  PBBK | PB Bankshares, Inc. | NASDAQCM | MA | Coatesville | PA | $386 |  | 4 | Dec | 7/14/21 | $13.80 | $35 |
|  PBFS | Pioneer Bancorp, Inc. | NASDAQCM | MA | Albany | NY | $1835 |  | 23 | Jun | 7/17/19 | $11.16 | $281 |
|  PVBC | Provident Bancorp, Inc. | NASDAQCM | NE | Amesbury | MA | $1636 |  | 7 | Dec | 7/15/15 | $9.20 | $160 |
|  RBKB | Rhinebeck Bancorp, Inc. | NASDAQCM | MA | Poughkeepsie | NY | $1336 |  | 18 | Dec | 1/16/19 | $9.40 | $103 |
|  SBT | Sterling Bancorp, Inc. (Southfield, MI) | NASDAQCM | MW | Southfield | MI | $2445 |  | 28 | Dec | 11/16/17 | $6.16 | $313 |
|  TCBC | TC Bancshares, Inc. | NASDAQCM | SE | Thomasville | GA | $406 | (1) | 2 | Dec | 7/20/21 | $16.21 | $73 |
|  TCBS | Texas Community Bancshares, Inc. | NASDAQCM | SW | Mineola | TX | $376 | (1) | 6 | Dec | 7/14/21 | $15.61 | $48 |
|  WMPN | William Penn Bancorporation | NASDAQCM | MA | Bristol | PA | $871 |  | 13 | Jun | 4/15/08 | $11.91 | $156 |
|  FNWB | First Northwest Bancorp | NASDAQGM | WE | Port Angeles | WA | $2042 |  | 14 | Dec | 1/29/15 | $14.35 | $131 |
|  HIFS | Hingham Institution for Savings | NASDAQGM | NE | Hingham | MA | $4194 |  | 8 | Dec | 12/13/88 | $282.79 | $607 |
|  HMNF | HMN Financial, Inc. | NASDAQGM | MW | Rochester | MN | $1096 |  | 14 | Dec | 6/30/94 | $22.00 | $95 |
|  KFFB | Kentucky First Federal Bancorp | NASDAQGM | MW | Hazard | KY | $335 |  | 7 | Jun | 3/2/05 | $6.92 | $56 |
|  LSBK | Lake Shore Bancorp, Inc. | NASDAQGM | MA | Dunkirk | NY | $700 |  | 12 | Dec | 4/3/06 | $11.63 | $65 |
|  MGYR | Magyar Bancorp, Inc. | NASDAQGM | MA | New Brunswick | NJ | $822 |  | 7 | Sep | 1/23/06 | $12.57 | $85 |
|  PDLB | Ponce Financial Group, Inc. | NASDAQGM | MA | Bronx | NY | $2312 |  | 14 | Dec | 9/29/17 | $9.28 | $215 |
|  TSBK | Timberland Bancorp, Inc. | NASDAQGM | WE | Hoquiam | WA | $1836 |  | 23 | Sep | 1/12/98 | $33.94 | $279 |
|  BLFY | Blue Foundry Bancorp | NASDAQGS | MA | Rutherford | NJ | $2043 |  | 20 | Dec | 7/15/21 | $12.17 | $339 |
|  CFFN | Capitol Federal Financial, Inc. | NASDAQGS | MW | Topeka | KS | $9930 |  | 50 | Sep | 3/31/99 | $8.36 | $1113 |
|  CLBK | Columbia Financial, Inc. | NASDAQGS | MA | Fair Lawn | NJ | $10408 |  | 67 | Dec | 4/19/18 | $21.07 | $2296 |
|  ESSA | ESSA Bancorp, Inc. | NASDAQGS | MA | Stroudsburg | PA | $1927 |  | 22 | Sep | 4/3/07 | $19.84 | $193 |
|  HONE | HarborOne Bancorp, Inc. | NASDAQGS | NE | Brockton | MA | $5360 |  | 34 | Dec | 6/29/16 | $13.62 | $626 |
|  KRNY | Kearny Financial Corp. | NASDAQGS | MA | Fairfield | NJ | $8289 |  | 45 | Jun | 2/23/05 | $10.01 | $650 |
|  NFBK | Northfield Bancorp, Inc. (Staten Island, NY) | NASDAQGS | MA | Woodbridge | NJ | $5601 |  | 38 | Dec | 11/7/07 | $14.71 | $698 |
|  PROV | Provident Financial Holdings, Inc. | NASDAQGS | WE | Riverside | CA | $1271 |  | 14 | Jun | 6/27/96 | $14.11 | $100 |
|  RVSB | Riverview Bancorp, Inc. | NASDAQGS | WE | Vancouver | WA | $1599 |  | 18 | Mar | 10/26/93 | $7.06 | $152 |
|  TBNK | Territorial Bancorp Inc. | NASDAQGS | WE | Honolulu | HI | $2169 |  | 30 | Dec | 7/10/09 | $23.29 | $205 |
|  TFSL | TFS Financial Corporation | NASDAQGS | MW | Cleveland | OH | $16129 |  | 37 | Sep | 4/20/07 | $14.42 | $3999 |
|  TCBX | Third Coast Bancshares, Inc. | NASDAQGS | SW | Humble | TX | $3773 |  | 16 | Dec | 11/8/21 | $18.51 | $250 |
|  TFIN | Triumph Financial, Inc. | NASDAQGS | SW | Dallas | TX | $5334 |  | 64 | Dec | 11/6/14 | $61.36 | $1403 |
|  TRST | TrustCo Bank Corp NY | NASDAQGS | MA | Glenville | NY | $6000 |  | 143 | Dec | NA | $37.14 | $707 |
|  WSBF | Waterstone Financial, Inc. | NASDAQGS | MW | Wauwatosa | WI | $2032 |  | 16 | Dec | 10/4/05 | $16.05 | $346 |
|  WNEB | Western New England Bancorp, Inc. | NASDAQGS | NE | Westfield | MA | $2553 |  | 27 | Dec | 12/27/01 | $10.08 | $224 |
|  WSFS | WSFS Financial Corporation | NASDAQGS | MA | Wilmington | DE | $19915 |  | 98 | Dec | 11/26/86 | $49.96 | $3078 |
|  AX | Axos Financial, Inc. | NYSE | WE | Las Vegas | NV | $18741 |  | 1 | Jun | 3/14/05 | $47.61 | $2857 |
|  NYCB | New York Community Bancorp, Inc. | NYSE | MA | Hicksville | NY | $90144 |  | 396 | Dec | 11/23/93 | $8.92 | $6076 |
| PFS | Provident Financial Services, Inc. | NYSE | MA | Jersey City | NJ | $13783 |  | 96 | Dec | 1/15/03 | $23.50 | $1766 |

---

Source: S&P Global Market Intelligence.

------

**EXHIBIT III-2** 

**Public Market Pricing of Thrifts Less with Assets Less Than $2.0 Billion** 

------

***RP<sup>®</sup> Financial, LC.***

Exhibit III-2

Publicly-Traded Thrifts, Assets <$2.0 Billion

BV Financial, Inc.

As of February 24, 2023

---

| | | | | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | | | Market | Market | Per Share Data | Per Share Data | | | | | | | | | | | | | | | | |
|  |  | | | Capitalization | Capitalization | | | | | | | | Dividends(4) | Dividends(4) | Dividends(4) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) | Financial Characteristics(6) |
|  |  | | | | | | | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | Pricing Ratios(3) | | | | | | | | Reported (5) | Reported (5) | Core (5) | Core (5) |
|  |  | | | Price/<br>Share(1) | Market<br>Value | Core<br>12 Month<br>EPS(2) | Book<br>Value/<br>Share | P/E | P/B | P/A | P/TB / | P/Core | Amount/<br>Share |<br>Yield | Payout<br>Ratio | Total<br>Assets | Equity/<br>Assets | Tang. Eq./<br>T. Assets | NPAs/<br>Assets | ROAA | ROAE | ROAA | ROAE |
|  |  | | | ($) | ($Mil) | ($) | ($) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) | ($Mil) | (%) | (%) | (%) | (%) | (%) | (%) | (%) |
|  <u>All Fully-Converted, Publicly-Traded Institutions</u> | <u>All Fully-Converted, Publicly-Traded Institutions</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Averages |  |  | $13.74 | $98.67 | $0.93 | $14.85 | 15.35 | 90.95% | 12.44% | 94.29% | 14.20 | $0.27 | 1.67% | 25.27% | $850 | 14.72% | 14.46% | 0.64% | 0.59% | 4.32% | 0.62% | 4.70% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Medians |  |  | $13.00 | $84.62 | $0.80 | $15.74 | 12.02 | 89.07% | 10.30% | 93.54% | 11.40 | $0.24 | 1.53% | 26.29% | $791 | 12.28% | 12.27% | 0.42% | 0.68% | 3.91% | 0.71% | 4.56% |
|  <u>All Fully-Converted, Publicly-Traded Institutions</u> | <u>All Fully-Converted, Publicly-Traded Institutions</u> |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  ESSA | ESSA Bancorp, Inc. |  | PA | $19.80 | $192.28 | $2.10 | $20.78 | 9.52 x | 95.27% | 9.98% | 101.89% | 9.44 x | $0.60 | 3.03% | 21.63% | $1927 | 11.22% | 10.57% | 0.77% | 1.09% | 9.48% | 1.10% | 9.56% |
|  TSBK | Timberland Bancorp, Inc. |  | WA | $34.04 | $279.88 | $3.10 | $27.16 | 11.09 x | 125.34% | 15.25% | 135.01% | 10.99 x | $0.92 | 2.70% | 32.25% | $1836 | 12.18% | 11.41% | 0.25% | 1.38% | 11.92% | 1.39% | 12.03% |
|  PVBC | Provident Bancorp, Inc. |  | MA | $9.28 | $161.06 | 1.28) | $11.75 | NM | 79.01% | 9.84% | 79.01% | NM | $0.16 | 1.72% | NA | $1636 | 12.68% | 12.68% | NA | -1.24% | -9.26% | -1.23% | -9.12% |
|  RVSB | Riverview Bancorp, Inc. |  | WA | $7.10 | $152.62 | $0.88 | $7.07 | 8.07 x | 100.39% | 9.55% | 122.55% | 8.03 x | $0.24 | 3.38% | 26.70% | $1599 | 9.51% | 7.93% | 0.04% | 1.13% | 12.29% | 1.14% | 12.35% |
|  NECB | Northeast Community Bancorp, Inc. |  | NY | $15.66 | $231.06 | $1.68 | $16.33 | 9.91 x | 95.91% | 16.21% | 95.98% | 9.31 x | $0.24 | 1.53% | 26.58% | $1425 | 18.39% | 18.38% | NA | 1.95% | 9.60% | 2.07% | 10.22% |
|  PROV | Provident Financial Holdings, Inc. |  | CA | $14.06 | $99.79 | $1.19 | $18.12 | 11.82 x | 77.59% | 7.85% | 77.59% | 11.82 x | $0.56 | 3.98% | 47.06% | $1271 | 10.17% | 10.17% | 0.10% | 0.71% | 6.69% | 0.71% | 6.69% |
|  BYFC | Broadway Financial Corporation |  | CA | $1.30 | $99.17 | NA | $1.76 | 16.25 x | 73.86% | 8.37% | 94.58% | NA | $0.00 | 0.00% | NA | $1184 | NA | NA | NA | 0.50% | 2.55% | NA | NA |
|  HMNF | HMN Financial, Inc. |  | MN | $22.00 | $95.10 | NA | $21.72 | 12.02 x | 101.28% | 8.68% | 102.12% | NA | $0.24 | 1.09% | 13.11% | $1096 | 8.88% | 8.81% | NA | 0.75% | 7.03% | NA | NA |
|  ECBK | ECB Bancorp, Inc. | (7) | MA | $15.51 | $142.31 | NA | $17.55 | NA | 88.36% | 16.29% | 88.36% | NA | NA | NA | NA | $874 | 18.44% | 18.44% | NA | NA | 1.86% | NA | 5.55% |
|  WMPN | William Penn Bancorporation |  | PA | $11.88 | $155.42 | $0.32 | $12.67 | NM | 93.75% | 17.84% | 96.70% | NM | $0.12 | 1.01% | 40.00% | $871 | 20.58% | 20.08% | 0.55% | 0.46% | 2.05% | 0.50% | 2.21% |
|  IROQ | IF Bancorp, Inc. |  | IL | $17.50 | $55.55 | $1.86 | $21.30 | 10.00 x | 82.16% | 6.74% | 82.16% | 9.39 x | $0.40 | 2.29% | 22.86% | $824 | 8.63% | 8.63% | 0.04% | 0.69% | 7.51% | 0.74% | 8.00% |
|  MGYR | Magyar Bancorp, Inc. |  | NJ | $12.55 | $84.62 | $1.20 | $14.82 | 10.46 x | 84.69% | 10.30% | 84.69% | 10.46 x | $0.12 | 0.96% | 16.67% | $822 | 12.16% | 12.16% | NA | 1.01% | 8.11% | 1.01% | 8.11% |
|  AFBI | Affinity Bancshares, Inc. |  | GA | $15.79 | $104.30 | $1.16 | $17.73 | 14.90 x | 89.07% | 13.18% | 105.84% | 13.63 x | NA | NA | NA | $791 | 14.80% | 12.75% | NA | 0.93% | 6.05% | 1.01% | 6.61% |
|  CARV | Carver Bancorp, Inc. |  | NY | $4.35 | $18.39 | 0.63) | $4.60 | NM | 94.60% | 2.58% | 94.60% | NM | $0.00 | 0.00% | NA | $712 | 6.34% | 6.34% | 2.59% | -0.39% | -5.38% | -0.39% | -5.38% |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana |  | LA | $18.40 | $55.13 | $1.75 | $15.60 | 10.51 x | 117.95% | 9.56% | 117.95% | 10.51 x | $0.48 | 2.61% | 26.29% | $577 | 8.44% | 8.44% | 0.05% | 0.99% | 11.45% | 0.99% | 11.45% |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | (7) | WI | $9.88 | $63.95 | NA | $12.20 | NA | 80.98% | 12.08% | 80.98% | NA | NA | NA | NA | $529 | 14.34% | 14.34% | NA | -0.08% | -0.52% | 0.02% | 0.10% |
|  FSEA | First Seacoast Bancorp, Inc. | (7) | NH | $10.21 | $51.84 | $0.29 | $9.42 | 34.13 x | 108.43% | 9.90% | 108.43% | NM | NA | NA | NA | $524 | 9.11% | 9.11% | NA | 0.29% | 2.58% | 0.28% | 2.50% |
|  TCBC | TC Bancshares, Inc. | (7) | GA | $16.30 | $72.94 | NA | $17.46 | NA | 93.33% | 17.95% | 93.33% | NA | $0.10 | 0.61% | NA | $406 | 20.84% | 20.84% | NA | 0.68% | 3.13% | 0.68% | 3.13% |
|  CULL | Cullman Bancorp, Inc. | (7) | AL | $11.73 | $86.87 | $0.53 | $13.30 | 22.13 x | 88.18% | 21.39% | 88.18% | 22.15 x | $0.12 | 1.02% | 22.64% | $406 | 24.26% | 24.26% | 0.75% | 1.05% | 3.91% | 1.05% | 3.91% |
|  PBBK | PB Bankshares, Inc. |  | PA | $13.23 | $33.45 | $0.60 | $16.16 | 16.13 x | 81.85% | 8.66% | 81.85% | 22.09 x | NA | NA | NA | $386 | 11.90% | 11.90% | NA | 0.57% | 4.51% | 0.41% | 3.29% |
|  TCBS | Texas Community Bancshares, Inc. | (7) | TX | $15.66 | $47.90 | $0.58 | $16.87 | 29.00 x | 92.81% | 12.75% | 93.54% | 26.91 x | $0.08 | 0.51% | 3.70% | $376 | 14.81% | 14.71% | 0.43% | 0.44% | 3.37% | 0.48% | 3.63% |
|  GBNY | Generations Bancorp NY, Inc. | (7) | NY | $11.00 | $26.01 | $0.71 | $15.89 | 16.42 x | 69.23% | 6.96% | 72.16% | 15.47 x | NA | NA | NA | $374 | 10.08% | 9.71% | 1.65% | 0.42% | 3.74% | 0.44% | 3.98% |
|  MSVB | Mid-Southern Bancorp, Inc. |  | IN | $12.82 | $36.99 | $0.69 | $11.55 | 18.58 x | 111.00% | 13.74% | 111.00% | 18.58 x | $0.24 | 1.87% | 28.99% | $269 | 12.38% | 12.38% | NA | 0.71% | 5.15% | 0.71% | 5.15% |
|  NSTS | NSTS Bancorp, Inc. | (7) | IL | $10.54 | $56.89 | NA | $14.66 | NA | 71.87% | 21.22% | 71.87% | NA | NA | NA | NA | $268 | 29.52% | 29.52% | 0.40% | -0.02% | -0.09% | -0.16% | -0.63% |
|  CLST | Catalyst Bancorp, Inc. |  | LA | $13.00 | $63.27 | NA | NA | NM | 76.82% | 24.03% | 76.82% | NA | NA | NA | NA | $263 | 33.60% | 33.60% | NA | 0.06% | 0.19% | NA | NA |

---

(1) Closing price at date indicated, market value equal to public (minority shares) times current stock price.

(2) Core earnings reflect net income less non-recurring items

(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and
P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.

(4) Dividend is as of most recent quarterly dividend. Indicated 12 month dividend as a percent of trailing 12 month
earnings.

(5) ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12
month earnings and average equity and assets balances.

(6) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or
unusual operating characteristics.

(7) Current Quarter is December 31, 2022, footnote reflects data as of September 30, 2022, or most recent
date

Source: S&P Global Market Intelligence and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

------

**EXHIBIT III-3** 

**Peer Group Market Area Comparative Analysis** 

------

Exhibit III-3

Peer Group Market Area Comparative Analysis

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | | | Per Capita Income | Per Capita Income | Deposit |
|  | | Population | Population | Proj.<br>Pop. | 2018-2023 | 2023-2028 | 2023 | % State | Market |
| Institution | County | 2018 | 2023 | 2028 Proj | % Change | % Change | Amount | Average | Share(1) |
|  1895 Bancorp of Wisconsin, Inc. | Milwaukee, WI | 949014 | 924278 | 913957 | -0.5% | -0.2% | 34908 | 87.8% | 0.42% |
|  Affinity Bancshares, Inc. | Newton, GA | 109176 | 117157 | 123539 | 1.4% | 1.1% | 28561 | 74.6% | 22.17% |
|  HMN Financial, Inc. | Olmsted, MN | 155364 | 165766 | 172005 | 1.3% | 0.7% | 51249 | 112.7% | 7.18% |
|  Home Federal Bancorp, Inc. of Louisiana | Caddo, LA | 246000 | 229764 | 221284 | -1.4% | -0.7% | 32334 | 97.3% | 6.47% |
|  IF Bancorp, Inc. | Iroquois, IL | 27964 | 26394 | 25516 | -1.1% | -0.7% | 33915 | 77.9% | 19.95% |
|  Magyar Bancorp, Inc. | Middlesex, NJ | 841338 | 866428 | 880772 | 0.6% | 0.3% | 49878 | 96.9% | 1.11% |
|  Northeast Community Bancorp, Inc. | Westchester,<br>NY | 978809 | 1001569 | 1008982 | 0.5% | 0.1% | 66368 | 139.3% | 0.06% |
|  Provident Financial Holdings, Inc. | Riverside, CA | 2420240 | 2488669 | 2586031 | 0.6% | 0.8% | 35147 | 77.5% | 1.98% |
|  Riverview Bancorp, Inc. | Clark, WA | 478855 | 524176 | 560336 | 1.8% | 1.3% | 43600 | 89.2% | 10.43% |
|  William Penn Bancorporation | Bucks, PA | 626428 | 647873 | 653256 | 0.7% | 0.2% | 53647 | 130.9% | 1.23% |
|  | **Averages:** | **683319** | **699207** | **714568** | **0.4%** | **0.3%** | **42961** | **98.4%** | **7.10%** |
|  | **Medians:** | **552642** | **586025** | **606796** | **0.6%** | **0.2%** | **39374** | **93.1%** | **4.23%** |
|  **BV Financial, Inc.** | **Baltimore, MD** | **835380** | **854123** | **865974** | **0.4%** | **0.3%** | **47123** | **93.0%** | **0.61%** |

---

(1) Total institution deposits in headquarters county as percent of total county deposits as of June 30, 2022.

Sources: S&P Global Market Intelligence, FDIC.

------

**EXHIBIT IV-1** 

**Stock Prices:** 

**As of February 24, 2023** 

------

***RP<sup>®</sup> Financial, LC.***

Exhibit IV-1A

Weekly Bank and Thrift Market Line - Part One

Prices As of February 24, 2023

---

| | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Market Capitalization | Market Capitalization | Market Capitalization | Price Change Data | Price Change Data | Price Change Data | Price Change Data | Price Change Data | Price Change Data | Current Per Share Financials | Current Per Share Financials | Current Per Share Financials | Current Per Share Financials | Current Per Share Financials |
|  |  | | | | 52 Week (1) | 52 Week (1) | | % Change From | % Change From | % Change From | | | | | |
| | | Price/<br>Share(1) | Shares<br>Outstanding | Market<br>Capitalization | High | Low |<br>Last Wk | Last Wk | 52 Wks (2) | MRY (2) | LTM<br>EPS (3) | LTM Core<br>EPS (3) | BV/<br>Share | TBV/<br>Share (4) | Assets/<br>Share |
|  |  | ($) | (000) | ($Mil) | ($) | ($) | ($) | (%) | (%) | (%) | ($) | ($) | ($) | ($) | ($) |
|  **<u>Thrifts, Fully Converted, Not Under Acquisition (45)</u>** | **<u>Thrifts, Fully Converted, Not Under Acquisition (45)</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Average | 23.26 | 37376 | 538.8 | 28.60 | 19.53 | 23.26 | -1.85 | -8.31 | 2.68 | 1.65 | 2.08 | 20.61 | 19.51 | 191.30 |
|  | Median | 14.06 | 9448 | 161.1 | 16.13 | 12.07 | 14.06 | -1.61 | -8.71 | 1.45 | 1.18 | 1.15 | 16.03 | 15.24 | 121.04 |
|  **<u>Thrifts, Fully Converted, Not Under Acquisition (45)</u>** | **<u>Thrifts, Fully Converted, Not Under Acquisition (45)</u>** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | 9.88 | 6475 | 63.9 | 11.63 | 9.71 | 9.88 | -0.82 | -12.60 | -1.24 | NA | NA | 12.20 | 12.20 | 81.75 |
|  AFBI | Affinity Bancshares, Inc. | 15.79 | 6634 | 104.3 | 16.50 | 13.81 | 15.79 | -2.53 | 0.64 | 4.57 | 1.06 | 1.16 | 17.73 | 14.92 | 119.27 |
|  AX | Axos Financial, Inc. | 47.60 | 59999 | 2856 | 55.00 | 33.91 | 47.60 | -5.25 | -8.71 | 24.54 | 4.30 | 4.91 | 29.79 | 27.17 | 312.35 |
|  BLFY | Blue Foundry Bancorp | 12.05 | 27882 | 336 | 14.06 | 11.01 | 12.05 | 0.67 | -11.79 | -6.23 | 0.09 | 0.09 | 14.30 | 14.28 | 73.29 |
|  BYFC | Broadway Financial Corporation | 1.30 | 76281 | 62.6 | 1.89 | 0.83 | 1.30 | -1.14 | -20.25 | 28.71 | 0.08 | NA | 1.76 | 1.37 | 15.53 |
|  CFFN | Capitol Federal Financial, Inc. | 8.42 | 132425 | 1120.5 | 11.30 | 7.19 | 8.42 | -1.75 | -21.67 | -2.66 | 0.58 | 0.59 | 7.75 | 7.66 | 74.98 |
|  CARV | Carver Bancorp, Inc. | 4.35 | 4226 | 18.4 | 12.30 | 3.62 | 4.35 | -6.25 | -40.82 | 5.84 | -0.63 | -0.63 | 4.60 | 4.60 | 168.52 |
|  CLST | Catalyst Bancorp, Inc. | 13.00 | 4867 | 63.3 | 13.90 | 12.03 | 13.00 | 0.00 | -6.34 | 2.36 | 0.04 | NA | NA | NA | 54.11 |
|  CULL | Cullman Bancorp, Inc. | 11.73 | 7406 | 86.9 | 13.25 | 10.40 | 11.73 | 0.17 | 2.27 | 2.09 | 0.53 | 0.53 | 13.30 | 13.30 | 54.83 |
|  ECBK | ECB Bancorp, Inc. | 15.51 | 9175 | 142.3 | 16.91 | 13.82 | 15.51 | 0.00 | 10.08 | -3.36 | NA | NA | 17.55 | 17.55 | 95.21 |
|  ESSA | ESSA Bancorp, Inc. | 19.80 | 9721 | 192.3 | 21.80 | 15.63 | 19.80 | -2.37 | 11.86 | -5.13 | 2.08 | 2.10 | 20.78 | 19.43 | 198.25 |
|  FNWB | First Northwest Bancorp | 14.31 | 9095 | 130.2 | 23.72 | 14.20 | 14.31 | -5.54 | -37.67 | -6.84 | 1.71 | 1.57 | 16.65 | 16.54 | 224.52 |
|  FSEA | First Seacoast Bancorp, Inc. | 10.21 | NA | 51.8 | 13.40 | 10.00 | 10.21 | -0.68 | -15.93 | -10.64 | 0.30 | 0.29 | 9.42 | 9.42 | NA |
|  FSBW | FS Bancorp, Inc. | 35.92 | 7586 | 273.6 | 37.39 | 26.80 | 35.92 | -2.10 | 12.85 | 7.42 | 3.70 | 3.81 | 29.95 | 29.22 | 347.08 |
|  GBNY | Generations Bancorp NY, Inc. | 11.00 | 2365 | 26 | 12.07 | 10.51 | 11.00 | 1.20 | -6.62 | 1.85 | 0.67 | 0.71 | 15.89 | 15.24 | 157.98 |
|  HONE | HarborOne Bancorp, Inc. | 13.57 | 45990 | 624.1 | 15.57 | 12.82 | 13.57 | -2.37 | -6.54 | -2.37 | 0.97 | 1.00 | 12.60 | 11.13 | 116.54 |
|  HIFS | Hingham Institution for Savings | 283.55 | 2145 | 608.9 | 363.91 | 242.99 | 283.55 | -2.93 | -18.17 | 2.75 | 17.04 | 24.85 | 179.74 | 179.74 | 1954.79 |
|  HMNF | HMN Financial, Inc. | 22.00 | 4323 | 95.1 | 25.95 | 20.95 | 22.00 | 0.18 | -11.78 | 3.09 | 1.83 | NA | 21.72 | 21.54 | 253.58 |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana | 18.40 | 2987 | 55.1 | 22.25 | 16.49 | 18.40 | -7.91 | -13.13 | 7.54 | 1.75 | 1.75 | 15.60 | 15.60 | 193.04 |
|  IROQ | IF Bancorp, Inc. | 17.50 | 3169 | 55.5 | 25.18 | 17.00 | 17.50 | -3.21 | -28.25 | 1.45 | 1.75 | 1.86 | 21.30 | 21.30 | 259.91 |
|  KRNY | Kearny Financial Corp. | 9.96 | 65059 | 646.6 | 13.70 | 9.00 | 9.96 | -0.70 | -22.43 | -1.87 | 0.70 | 0.87 | 12.95 | NA | 127.41 |
|  MGYR | Magyar Bancorp, Inc. | 12.55 | 6899 | 84.6 | 13.45 | 11.32 | 12.55 | -3.24 | 3.51 | -2.11 | 1.20 | 1.20 | 14.82 | 14.82 | 119.09 |
|  MSVB | Mid-Southern Bancorp, Inc. | 12.82 | 2705 | 37 | 15.44 | 12.35 | 12.82 | -1.95 | -14.53 | -1.46 | 0.69 | 0.69 | 11.55 | 11.55 | 99.54 |
|  NYCB | New York Community Bancorp, Inc. | 8.93 | 681136 | 6083.3 | 11.73 | 8.17 | 8.93 | -4.90 | -20.27 | 3.84 | 1.26 | 1.13 | 12.21 | 8.23 | 132.34 |
|  NECB | Northeast Community Bancorp, Inc. | 15.66 | 14755 | 231.1 | 15.99 | 10.67 | 15.66 | -1.82 | 28.57 | 4.96 | 1.58 | 1.68 | 16.33 | 16.32 | 96.58 |
|  NFBK | Northfield Bancorp, Inc. (Staten Island, NY) | 14.67 | 47771 | 696 | 16.13 | 11.87 | 14.67 | -1.01 | -3.99 | -6.74 | 1.32 | 1.32 | 14.78 | 13.91 | 117.25 |
|  NSTS | NSTS Bancorp, Inc. | 10.54 | 5398 | 56.9 | 12.58 | 9.82 | 10.54 | -0.85 | -14.38 | 4.05 | NA | NA | 14.66 | 14.66 | 49.68 |
|  PBBK | PB Bankshares, Inc. | 13.23 | 2528 | 33.5 | 14.34 | 12.07 | 13.23 | 0.31 | -5.90 | -2.58 | 0.82 | 0.60 | 16.16 | 16.16 | 152.78 |
|  PDLB | Ponce Financial Group, Inc. | 9.29 | 23131 | 214.9 | 10.70 | 9.04 | 9.29 | 0.65 | -11.27 | -0.32 | -1.32 | NA | 10.77 | 10.77 | 99.95 |
|  PVBC | Provident Bancorp, Inc. | 9.28 | 17356 | 161.1 | 16.80 | 6.10 | 9.28 | -5.40 | -41.82 | 27.47 | -1.30 | -1.28 | 11.75 | 11.75 | 94.28 |
|  PROV | Provident Financial Holdings, Inc. | 14.06 | 7203 | 99.8 | 16.75 | 13.29 | 14.06 | -1.61 | -13.58 | 2.11 | 1.19 | 1.19 | 18.12 | 18.12 | 176.47 |
|  PFS | Provident Financial Services, Inc. | 23.36 | 74377 | 1756 | 25.61 | 19.18 | 23.36 | -2.42 | 1.04 | 9.36 | 2.35 | 2.39 | 21.25 | 15.12 | 185.32 |
|  RVSB | Riverview Bancorp, Inc. | 7.10 | 21507 | 152.6 | 8.00 | 6.08 | 7.10 | -0.70 | -4.18 | -7.55 | 0.88 | 0.88 | 7.07 | 5.79 | 74.34 |
|  SBT | Sterling Bancorp, Inc. (Southfield, MI) | 6.11 | 50800 | 310.4 | 7.26 | 5.61 | 6.11 | -2.08 | -0.33 | 0.33 | 0.08 | 0.09 | 6.51 | 6.51 | 48.12 |
|  TCBC | TC Bancshares, Inc. | 16.30 | 4475 | 72.9 | 17.28 | 12.00 | 16.30 | -0.73 | 18.80 | 9.40 | NA | NA | 17.46 | 17.46 | 90.79 |
|  TBNK | Territorial Bancorp Inc. | 23.29 | 8808 | 205.1 | 25.60 | 17.93 | 23.29 | -1.42 | -7.56 | -3.02 | 1.80 | 1.71 | 28.28 | 28.28 | 246.23 |
|  TCBS | Texas Community Bancshares, Inc. | 15.66 | 3059 | 47.9 | 19.61 | 14.96 | 15.66 | -0.47 | -12.90 | 2.02 | 0.54 | 0.58 | 16.87 | 16.74 | 122.82 |
|  TCBX | Third Coast Bancshares, Inc. | 18.63 | 13532 | 252.1 | 26.75 | 16.35 | 18.63 | -2.92 | -17.35 | 1.09 | 1.25 | NA | 23.32 | 21.90 | 278.84 |
|  TSBK | Timberland Bancorp, Inc. | 34.04 | 8240 | 279.9 | 35.62 | 24.05 | 34.04 | -2.32 | 23.33 | -0.26 | 3.07 | 3.10 | 27.16 | 25.21 | 222.76 |
|  TFIN | Triumph Financial, Inc. | 61.04 | 24478 | 1395.4 | 100.98 | 45.08 | 61.04 | -3.28 | -34.92 | 24.90 | 3.96 | 3.39 | 35.09 | 24.04 | 217.90 |
|  TRST | TrustCo Bank Corp NY | 36.87 | 19052 | 701.4 | 39.36 | 29.50 | 36.87 | -0.46 | 11.36 | -1.92 | 3.93 | 3.92 | 31.54 | 31.51 | 314.93 |
|  WSBF | Waterstone Financial, Inc. | 16.12 | 22304 | 348 | 20.21 | 15.14 | 16.12 | 0.62 | -15.95 | -6.50 | 0.89 | 0.88 | 16.71 | 16.68 | 91.09 |
|  WNEB | Western New England Bancorp, Inc. | 9.94 | 22176 | 220.8 | 10.25 | 7.13 | 9.94 | -0.90 | 8.75 | 5.07 | 1.18 | 1.10 | 10.27 | 9.61 | 115.13 |
|  WMPN | William Penn Bancorporation | 11.88 | 13465 | 155.4 | 12.87 | 11.20 | 11.88 | 0.00 | -4.42 | -1.98 | 0.30 | 0.32 | 12.67 | 12.29 | 64.68 |
|  WSFS | WSFS Financial Corporation | 49.30 | 61587 | 3037.5 | 52.11 | 37.03 | 49.30 | -3.05 | -0.92 | 8.73 | 3.49 | 4.45 | 35.79 | 19.36 | 323.36 |
| **Partial Stock Mutual Holding Companies(8)** | **Partial Stock Mutual Holding Companies(8)** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BSBK | Bogota Financial Corp. | 11.48 | 13616 | 152.3 | 11.75 | 10.20 | 11.48 | 1.86 | 11.46 | 2.68 | 0.51 | 0.51 | 10.19 | 10.18 | 69.85 |
|  CFSB | CFSB Bancorp, Inc. | 9.04 | 6266 | 56.7 | 10.75 | 7.27 | 9.04 | 2.14 | -15.05 | 11.73 | NA | NA | 11.54 | 11.54 | 56.95 |
|  GCBC | Greene County Bancorp, Inc. | 55.45 | 8513 | 472.1 | 89.79 | 38.69 | 55.45 | 4.15 | 40.74 | -3.43 | 1.78 | 1.84 | 9.88 | 9.88 | 307.32 |
|  OFED | Oconee Federal Financial Corp. | 23.02 | 5609 | 129.1 | 27.00 | 20.24 | 23.02 | 0.00 | -2.04 | -7.92 | 0.80 | 0.82 | 12.77 | 12.30 | 100.76 |
|  PBFS | Pioneer Bancorp, Inc. | 11.21 | 25150 | 282 | 11.97 | 9.13 | 11.21 | -5.00 | 6.26 | -1.67 | 0.57 | 0.59 | 9.61 | 9.19 | 72.94 |
|  RBKB | Rhinebeck Bancorp, Inc. | 9.40 | 10930 | 102.7 | 11.20 | 8.46 | 9.40 | -2.08 | -10.90 | 3.18 | 0.64 | 0.66 | 9.58 | 9.35 | 122.23 |
|  KFFB | Kentucky First Federal Bancorp | 6.92 | 8145 | 56.4 | 8.69 | 6.60 | 6.92 | -2.84 | -10.74 | 3.87 | 0.15 | 0.15 | 6.34 | 6.23 | 41.18 |
|  LSBK | Lake Shore Bancorp, Inc. | 11.82 | 5596 | 66.2 | 15.15 | 11.22 | 11.82 | -1.66 | -20.14 | -2.07 | 0.97 | NA | 14.23 | 14.23 | 125.07 |
|  CLBK | Columbia Financial, Inc. | 21.00 | 109575 | 2288.4 | 22.86 | 18.77 | 21.00 | 1.40 | -0.80 | -2.87 | 0.81 | 0.86 | 9.67 | 8.53 | 94.99 |
|  TFSL | TFS Financial Corporation | 14.46 | 280494 | 4009.7 | 17.39 | 12.45 | 14.46 | 0.14 | -13.72 | 0.35 | 0.29 | 0.29 | 6.60 | 6.56 | 57.50 |
| **Merger Target** | **Merger Target** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  HVBC | HV Bancorp, Inc. | 31.72 | 2239 | 71.1 | 34.00 | 18.52 | 31.72 | -1.33 | 49.60 | 11.53 | 1.06 | NA | 18.77 | 18.77 | 275.03 |

---

(1) Average of High/Low or Bid/Ask price per share.

(2) Or since offering price if converted of first listed in the past 52 weeks. Percent change figures are actual year-to-date and are not annualized.

(3) EPS (earnings per share) is based on actual trailing 12 month data and is not shown on a pro forma basis.

(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).

(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12 month common
earnings and average common equity and total assets balances.

(6) Annualized based on last regular quarterly cash dividend announcement.

(7) Indicated dividend as a percent of trailing 12 month earnings.

(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.

(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.

Source: S&P Market Intelligence, LC. and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2023 by RP<sup>®</sup> Financial, LC.

------

***RP<sup>®</sup> Financial, LC.***

Exhibit IV-1B

Weekly Bank and Thrift Market Line - Part Two

Prices As of February 24, 2023

---

| | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Key Financial Ratios | Key Financial Ratios | Key Financial Ratios | Key Financial Ratios | Key Financial Ratios | Key Financial Ratios | Asset Quality Ratios | Asset Quality Ratios | Pricing Ratios | Pricing Ratios | Pricing Ratios | Pricing Ratios | Pricing Ratios | Dividend Data (6) | Dividend Data (6) | Dividend Data (6) |
|  |  | | | Reported Earnings | Reported Earnings | Core Earnings | Core Earnings | | | | | | | | | | |
| | | Equity/<br>Assets | Tg. Equity/<br>Assets | ROA(5) | ROE(5) | ROA(5) | ROE(5) | NPAs/<br>Assets | Rsvs/<br>NPLs | Price/<br>Earnings | Price/<br>Book | Price/<br>Assets | Price/<br>Tang Book | Price/Core<br>Earnings | Div/<br>Share | Dividend<br>Yield | Payout<br>Ratio (7) |
|  |  | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) |
| **Thrifts, Fully Converted, Not Under Acquisition (45)** | **Thrifts, Fully Converted, Not Under Acquisition (45)** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Average | 13.55 | 13.03 | 0.69 | 5.72 | 0.79 | 6.56 | 0.55 | 215.23 | 13.85 | 98.25 | 12.45 | 107.99 | 12.87 | 0.49 | 2.34 | 35.11 |
|  | Median | 11.71 | 11.41 | 0.73 | 6.27 | 0.91 | 6.80 | 0.38 | 165.51 | 12.48 | 93.75 | 11.61 | 96.64 | 11.11 | 0.31 | 2.17 | 26.70 |
| **Thrifts, Fully Converted, Not Under Acquisition (45)** | **Thrifts, Fully Converted, Not Under Acquisition (45)** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BCOW | 1895 Bancorp of Wisconsin, Inc. | 14.34 | 14.34 | -0.08 | -0.52 | 0.02 | 0.10 | NA | 272.96 | NA | 80.98 | 11.61 | 80.98 | NA | NA | NA | NA |
|  AFBI | Affinity Bancshares, Inc. | 14.80 | 12.75 | 0.93 | 6.05 | 1.01 | 6.61 | NA | NA | 14.90 | 89.07 | 13.18 | 105.84 | 13.63 | NA | NA | NM |
|  AX | Axos Financial, Inc. | 9.54 | 8.77 | 1.52 | 15.69 | 1.70 | 17.50 | 0.54 | 165.51 | 11.07 | 159.77 | 15.24 | 175.22 | 9.70 | NA | NA | NM |
|  BLFY | Blue Foundry Bancorp | 19.27 | 19.24 | 0.12 | 0.58 | 0.12 | 0.58 | NA | NA | NM | 84.24 | 16.23 | 84.41 | NM | NA | NA | NM |
|  BYFC | Broadway Financial Corporation | NA | NA | 0.50 | 2.55 | NA | NA | NA | NA | 16.25 | 73.86 | NA | 94.58 | NA | 0.00 | 0.00 | NM |
|  CFFN | Capitol Federal Financial, Inc. | 10.62 | 10.52 | 0.67 | 6.83 | 0.68 | 6.92 | NA | NA | 14.52 | 108.67 | 11.54 | 109.88 | 14.33 | 0.34 | 4.04 | 126.72 |
|  CARV | Carver Bancorp, Inc. | 6.34 | 6.34 | -0.39 | -5.38 | -0.39 | -5.38 | 2.59 | 28.03 | NM | 94.60 | 2.72 | 94.60 | NM | 0.00 | 0.00 | NM |
|  CLST | Catalyst Bancorp, Inc. | 33.60 | 33.60 | 0.06 | 0.19 | NA | NA | NA | NA | NM | 76.82 | NA | 76.82 | NA | NA | NA | NM |
|  CULL | Cullman Bancorp, Inc. | 24.26 | 24.26 | 1.05 | 3.91 | 1.05 | 3.91 | 0.75 | 91.29 | 22.13 | 88.18 | 21.39 | 88.18 | 22.15 | 0.12 | 1.02 | 22.64 |
|  ECBK | ECB Bancorp, Inc. | 18.44 | 18.44 | NA | 1.86 | NA | 5.55 | NA | 863.66 | NA | 88.36 | 16.29 | 88.36 | NA | NA | NA | NA |
|  ESSA | ESSA Bancorp, Inc. | 11.22 | 10.57 | 1.09 | 9.48 | 1.10 | 9.56 | 0.77 | 126.43 | 9.52 | 95.27 | 10.69 | 101.89 | 9.44 | 0.60 | 3.03 | 21.63 |
|  FNWB | First Northwest Bancorp | 7.75 | 7.70 | 0.68 | 7.84 | 0.73 | 8.45 | NA | NA | 8.37 | 85.94 | 6.79 | 86.52 | 9.11 | 0.28 | 1.96 | 16.37 |
|  FSEA | First Seacoast Bancorp, Inc. | 9.11 | 9.11 | 0.29 | 2.58 | 0.28 | 2.50 | NA | NA | 34.13 | 108.43 | 9.88 | 108.43 | NM | NA | NA | NM |
|  FSBW | FS Bancorp, Inc. | 8.80 | 8.60 | 1.22 | 11.66 | 1.25 | 12.01 | NA | NA | 9.71 | 119.93 | 10.55 | 122.95 | 9.43 | 1.00 | 2.78 | 25.68 |
|  GBNY | Generations Bancorp NY, Inc. | 10.08 | 9.71 | 0.42 | 3.74 | 0.44 | 3.98 | 1.65 | 38.16 | 16.42 | 69.23 | 6.98 | 72.16 | 15.47 | NA | NA | NM |
|  HONE | HarborOne Bancorp, Inc. | 11.51 | 10.31 | 0.95 | 7.14 | 0.99 | 7.37 | NA | NA | 13.99 | 107.69 | 12.40 | 121.93 | 13.56 | 0.28 | 2.06 | 28.87 |
|  HIFS | Hingham Institution for Savings | 9.20 | 9.20 | 0.98 | 10.01 | 1.43 | 14.60 | NA | NA | 16.64 | 157.76 | 14.52 | 157.76 | 11.41 | 2.52 | 0.89 | 17.78 |
|  HMNF | HMN Financial, Inc. | 8.88 | 8.81 | 0.75 | 7.03 | NA | NA | NA | NA | 12.02 | 101.28 | 8.99 | 102.12 | NA | 0.24 | 1.09 | 13.11 |
|  HFBL | Home Federal Bancorp, Inc. of Louisiana | 8.44 | 8.44 | 0.99 | 11.45 | 0.99 | 11.45 | 0.05 | NM | 10.51 | 117.95 | 9.96 | 117.95 | 10.51 | 0.48 | 2.61 | 26.29 |
|  IROQ | IF Bancorp, Inc. | 8.63 | 8.63 | 0.69 | 7.51 | 0.74 | 8.00 | 0.04 | NM | 10.00 | 82.16 | 7.09 | 82.16 | 9.39 | 0.40 | 2.29 | 22.86 |
|  KRNY | Kearny Financial Corp. | 10.53 | NA | 0.62 | 5.19 | 0.77 | 6.42 | 0.88 | 81.90 | 14.23 | 76.91 | 8.10 | 102.36 | 11.41 | 0.44 | 4.42 | 62.86 |
|  MGYR | Magyar Bancorp, Inc. | 12.16 | 12.16 | 1.01 | 8.11 | 1.01 | 8.11 | NA | NA | 10.46 | 84.69 | 10.30 | 84.69 | 10.46 | 0.12 | 0.96 | 16.67 |
|  MSVB | Mid-Southern Bancorp, Inc. | 12.38 | 12.38 | 0.71 | 5.15 | 0.71 | 5.15 | NA | 118.16 | 18.58 | 111.00 | 13.74 | 111.00 | 18.58 | 0.24 | 1.87 | 28.99 |
|  NYCB | New York Community Bancorp, Inc. | 9.79 | 6.99 | 1.01 | 9.18 | 0.91 | 8.30 | NA | NA | 7.09 | 73.11 | 6.79 | 108.47 | 7.88 | 0.68 | 7.61 | 40.48 |
|  NECB | Northeast Community Bancorp, Inc. | 18.39 | 18.38 | 1.95 | 9.60 | 2.07 | 10.22 | NA | NA | 9.91 | 95.91 | 17.64 | 95.98 | 9.31 | 0.24 | 1.53 | 26.58 |
|  NFBK | Northfield Bancorp, Inc. (Staten Island, NY) | 12.52 | 11.87 | 1.09 | 8.57 | 1.09 | 8.56 | 0.24 | 314.19 | 11.11 | 99.23 | 12.43 | 105.43 | 11.13 | 0.52 | 3.54 | 39.39 |
|  NSTS | NSTS Bancorp, Inc. | 29.52 | 29.52 | -0.02 | -0.09 | -0.16 | -0.63 | 0.40 | 64.08 | NA | 71.87 | 21.22 | 71.87 | NA | NA | NA | NA |
|  PBBK | PB Bankshares, Inc. | 11.90 | 11.90 | 0.57 | 4.51 | 0.41 | 3.29 | NA | NA | 16.13 | 81.85 | 9.74 | 81.85 | 22.09 | NA | NA | NM |
|  PDLB | Ponce Financial Group, Inc. | 21.31 | 21.31 | -1.55 | -7.47 | NA | NA | NA | 192.69 | NM | 86.27 | 11.07 | 86.27 | NA | NA | NA | NM |
|  PVBC | Provident Bancorp, Inc. | 12.68 | 12.68 | -1.24 | -9.26 | -1.23 | -9.12 | NA | NA | NM | 79.01 | 10.02 | 79.01 | NM | 0.16 | 0.00 | NM |
|  PROV | Provident Financial Holdings, Inc. | 10.17 | 10.17 | 0.71 | 6.69 | 0.71 | 6.69 | 0.10 | 480.23 | 11.82 | 77.59 | 7.89 | 77.59 | 11.82 | 0.56 | 3.98 | 47.06 |
|  PFS | Provident Financial Services, Inc. | 11.59 | 8.53 | 1.29 | 10.86 | 1.31 | 11.05 | NA | NA | 9.94 | 109.90 | 12.74 | 154.46 | 9.77 | 0.96 | 4.11 | 40.85 |
|  RVSB | Riverview Bancorp, Inc. | 9.51 | 7.93 | 1.13 | 12.29 | 1.14 | 12.35 | 0.04 | NM | 8.07 | 100.39 | 9.55 | 122.55 | 8.03 | 0.24 | 3.38 | 26.70 |
|  SBT | Sterling Bancorp, Inc. (Southfield, MI) | 13.53 | 13.53 | 0.15 | 1.19 | 0.17 | 1.32 | NA | 121.99 | NM | 93.80 | 12.70 | 93.80 | NM | 0.00 | 0.00 | NM |
|  TCBC | TC Bancshares, Inc. | 20.84 | 20.84 | 0.68 | 3.13 | 0.68 | 3.13 | NA | NA | NA | 93.33 | 19.45 | 93.33 | NA | 0.10 | 0.61 | NA |
|  TBNK | Territorial Bancorp Inc. | 11.83 | 11.83 | 0.75 | 6.27 | 0.71 | 5.95 | NA | NA | 12.94 | 82.33 | 9.74 | 82.33 | 13.62 | 0.92 | 3.95 | 56.67 |
|  TCBS | Texas Community Bancshares, Inc. | 14.81 | 14.71 | 0.44 | 3.37 | 0.48 | 3.63 | 0.43 | 103.25 | 29.00 | 92.81 | 13.74 | 93.54 | 26.91 | 0.08 | 0.51 | 3.70 |
|  TCBX | Third Coast Bancshares, Inc. | 10.12 | 9.66 | 0.58 | 5.76 | NA | NA | 0.31 | 258.46 | 14.90 | 79.89 | 6.80 | 85.06 | NA | NA | NA | NM |
|  TSBK | Timberland Bancorp, Inc. | 12.18 | 11.41 | 1.38 | 11.92 | 1.39 | 12.03 | 0.25 | 316.34 | 11.09 | 125.34 | 15.26 | 135.01 | 10.99 | 0.92 | 2.70 | 32.25 |
|  TFIN | Triumph Financial, Inc. | 16.67 | 12.30 | 1.79 | 11.46 | 1.54 | 9.86 | 0.38 | 227.71 | 15.41 | 173.97 | 27.76 | 253.93 | 18.00 | NA | NA | NM |
|  TRST | TrustCo Bank Corp NY | 10.00 | 9.99 | 1.22 | 12.60 | 1.22 | 12.56 | NA | NA | 9.38 | 116.91 | 11.69 | 117.02 | 9.41 | 1.44 | 3.91 | 36.13 |
|  WSBF | Waterstone Financial, Inc. | 18.24 | 18.21 | 0.96 | 4.88 | 0.95 | 4.81 | NA | NA | 18.11 | 96.48 | 17.59 | 96.64 | 18.37 | 0.80 | 4.96 | 89.89 |
|  WNEB | Western New England Bancorp, Inc. | 8.94 | 8.41 | 1.02 | 11.85 | 0.95 | 11.08 | 0.34 | 228.80 | 8.42 | 96.80 | 8.65 | 103.45 | 9.01 | 0.28 | 2.82 | 21.19 |
|  WMPN | William Penn Bancorporation | 20.58 | 20.08 | 0.46 | 2.05 | 0.50 | 2.21 | 0.55 | 69.01 | NM | 93.75 | 19.29 | 96.70 | NM | 0.12 | 1.01 | 40.00 |
|  WSFS | WSFS Financial Corporation | 11.06 | 6.29 | 1.09 | 9.28 | 1.39 | 11.83 | 0.22 | 357.02 | 14.13 | 137.75 | 15.25 | 254.63 | 11.08 | 0.60 | 1.22 | 16.62 |
| **Partial Stock Mutual Holding Companies(8)** | **Partial Stock Mutual Holding Companies(8)** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  BSBK | Bogota Financial Corp. | 14.68 | 14.66 | 0.77 | 4.76 | 0.78 | 4.80 | NA | NA | 22.51 | 112.61 | 16.53 | 112.82 | 22.33 | NA | NA | NM |
|  CFSB | CFSB Bancorp, Inc. | 21.10 | 21.10 | 0.19 | 0.95 | 0.19 | 0.94 | NA | NA | NA | 78.31 | 16.52 | 78.31 | NA | NA | NA | NA |
|  GCBC | Greene County Bancorp, Inc. | 6.43 | 6.43 | 1.20 | 18.90 | 1.25 | 19.62 | 0.30 | 279.42 | 31.24 | 561.30 | 36.09 | 561.30 | 30.08 | 0.28 | 0.50 | 15.49 |
|  OFED | Oconee Federal Financial Corp. | 12.68 | 12.27 | 0.83 | 5.84 | 0.85 | 6.02 | 0.19 | 150.21 | 28.78 | 180.23 | 22.85 | 187.13 | 27.92 | 0.40 | 1.74 | 50.00 |
|  PBFS | Pioneer Bancorp, Inc. | 13.61 | 13.09 | 0.72 | 5.79 | 0.75 | 6.00 | 0.45 | 268.15 | 19.67 | 116.61 | 15.87 | 122.03 | 18.99 | NA | NA | NM |
|  RBKB | Rhinebeck Bancorp, Inc. | 8.09 | 7.92 | 0.54 | 6.44 | 0.56 | 6.66 | NA | NA | 14.69 | 98.10 | 7.94 | 100.49 | 14.19 | NA | NA | NM |
|  KFFB | Kentucky First Federal Bancorp | 15.40 | 15.16 | 0.39 | 2.47 | 0.39 | 2.47 | 1.61 | 30.69 | NM | 109.04 | 16.79 | 111.08 | NM | 0.40 | 5.78 | 266.67 |
|  LSBK | Lake Shore Bancorp, Inc. | 11.60 | 11.60 | 0.82 | 6.90 | NA | NA | NA | NA | 12.19 | 83.07 | 9.63 | 83.07 | NA | 0.72 | 6.09 | 53.61 |
|  CLBK | Columbia Financial, Inc. | 10.12 | 9.04 | 0.88 | 8.09 | 0.94 | 8.62 | NA | NA | 25.93 | 217.20 | 21.99 | 246.23 | 24.32 | NA | NA | NM |
|  TFSL | TFS Financial Corporation | 11.47 | 11.41 | 0.53 | 4.40 | 0.53 | 4.40 | 0.73 | 63.66 | NM | 219.19 | 25.14 | 220.35 | NM | 1.13 | 7.81 | 487.07 |
| **Current Merger Target (9)** | **Current Merger Target (9)** |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  HVBC | HV Bancorp, Inc. | 6.84 | 6.84 | 0.39 | 5.42 | NA | NA | NA | NA | 29.92 | 168.98 | 11.55 | 168.98 | NA | NA | NA | NM |

---

(1) Average of High/Low or Bid/Ask price per share.

(2) Or since offering price if converted of first listed in the past 52 weeks. Percent change figures are actual year-to-date and are not annualized.

(3) EPS (earnings per share) is based on actual trailing 12 month data and is not shown on a pro forma basis.

(4) Exludes intangibles (such as goodwill, value of core deposits, etc.).

(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12 month common
earnings and average common equity and total assets balances.

(6) Annualized based on last regular quarterly cash dividend announcement.

(7) Indicated dividend as a percent of trailing 12 month earnings.

(8) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.

(9) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.

Source: S&P Market Intelligence, LC. and RP<sup>®</sup> Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2022 by RP<sup>®</sup> Financial, LC.

------

**EXHIBIT IV-2** 

**Historical Stock Price Indices** 

------

Exhibit IV-2

Historical Stock Price Indices(1)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | | | NASDAQ | S&P U.S.<br>BMI Banks | KBW NASDAQ<br>Regional Bank |
| Year/Qtr. Ended | Year/Qtr. Ended | DJIA | S&P 500 | Composite | Index | Index |
|  2014: | Quarter 1 | 16457.7 | 1872.3 | 4199.0 | 101.0 | 79.8 |
|  | Quarter 2 | 16826.6 | 1960.2 | 4408.2 | 99.0 | 77.4 |
|  | Quarter 3 | 17042.9 | 1972.3 | 4493.4 | 100.1 | 72.6 |
|  | Quarter 4 | 17823.1 | 2058.9 | 4736.1 | 105.5 | 79.2 |
|  2015: | Quarter 1 | 17776.1 | 2067.9 | 4900.9 | 102.0 | 79.9 |
|  | Quarter 2 | 17619.5 | 2063.1 | 4986.9 | 109.1 | 87.5 |
|  | Quarter 3 | 16284.7 | 1920.0 | 4620.2 | 100.1 | 81.2 |
|  | Quarter 4 | 17425.0 | 2043.9 | 5007.4 | 105.4 | 82.0 |
|  2016: | Quarter 1 | 17685.1 | 2059.7 | 4869.9 | 92.8 | 77.6 |
|  | Quarter 2 | 17930.0 | 2098.9 | 4842.7 | 93.9 | 80.0 |
|  | Quarter 3 | 18308.2 | 2168.3 | 5312.0 | 100.7 | 86.5 |
|  | Quarter 4 | 19762.6 | 2238.8 | 5383.1 | 130.4 | 111.2 |
|  2017: | Quarter 1 | 20663.2 | 2362.7 | 5911.7 | 131.2 | 106.7 |
|  | Quarter 2 | 21349.6 | 2423.4 | 6140.4 | 134.9 | 106.6 |
|  | Quarter 3 | 22405.1 | 2519.4 | 6496.0 | 140.4 | 109.0 |
|  | Quarter 4 | 24719.2 | 2673.6 | 6903.4 | 151.0 | 110.9 |
|  2018: | Quarter 1 | 24103.1 | 2640.9 | 7063.5 | 148.9 | 111.9 |
|  | Quarter 2 | 24271.4 | 2718.4 | 7510.3 | 146.2 | 113.9 |
|  | Quarter 3 | 26458.3 | 2914.0 | 8046.4 | 149.1 | 110.7 |
|  | Quarter 4 | 23327.5 | 2506.9 | 6635.3 | 123.4 | 89.4 |
|  2019: | Quarter 1 | 25928.7 | 2834.4 | 7729.3 | 133.9 | 97.1 |
|  | Quarter 2 | 26600.0 | 2941.8 | 8006.2 | 142.2 | 100.2 |
|  | Quarter 3 | 26916.8 | 2976.7 | 7999.3 | 145.3 | 98.8 |
|  | Quarter 4 | 28538.4 | 3230.8 | 8972.6 | 164.6 | 107.6 |
|  2020: | Quarter 1 | 21917.2 | 2584.6 | 7700.1 | 97.1 | 63.6 |
|  | Quarter 2 | 25812.9 | 3100.3 | 10058.8 | 106.3 | 72.2 |
|  | Quarter 3 | 27781.7 | 3363.0 | 11167.5 | 103.1 | 64.1 |
|  | Quarter 4 | 30606.5 | 3756.1 | 12888.3 | 138.9 | 94.6 |
|  2021: | Quarter 1 | 32981.6 | 3972.9 | 13246.9 | 171.3 | 121.9 |
|  | Quarter 2 | 34502.5 | 4297.5 | 14504.0 | 176.0 | 119.4 |
|  | Quarter 3 | 33843.9 | 4307.5 | 14448.6 | 182.7 | 122.5 |
|  | Quarter 4 | 36338.3 | 4766.2 | 15645.0 | 184.0 | 126.0 |
|  2022: | Quarter 1 | 34678.4 | 4530.4 | 14220.5 | 171.0 | 122.5 |
|  | Quarter 2 | 30775.4 | 3785.4 | 11028.7 | 141.2 | 107.1 |
|  | Quarter 3 | 28725.5 | 3585.6 | 10575.6 | 136.7 | 110.5 |
|  | Quarter 4 | 33147.3 | 3839.5 | 10466.5 | 148.4 | 114.1 |
|  | As of Feb. 24, 2023 | 32816.9 | 3970.0 | 11394.9 | 157.1 | 118.0 |

---

(1) End of period data.

Sources: S&P Global Market Intelligence and The Wall Street Journal.

------

**EXHIBIT IV-3** 

**Stock Price Indices as of February 24, 2023** 

------

**Index Summary (Current Data)** 

Industry - Bank

Geography United States and Canada

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ***Index Name*** | ***Current Value*** | ***As Of*** | ***Day's Change*** | ***Day's Change***<br>***(%)*** |  |
| ***Index Name*** | ***Current Value*** | ***As Of*** | ***Day's Change*** | ***Day's Change***<br>***(%)*** | **Banking Indexes** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks | 157.10 | 2/24/2023 | 0.45 | 0.29 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KBW Nasdaq Bank Index | 109.69 | 1:10 PM | 0.62 | 0.57 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; KBW Nasdaq Regional Bank Index | 118.24 | 1:10 PM | 0.26 | 0.22 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Bank | 352.61 | 1:14 PM | 2.85 | 0.82 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NASDAQ Bank | 4207.49 | 1:10 PM | 9.73 | 0.23 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Commercial Banks | 503.76 | 1:14 PM | 4.07 | 0.82 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Diversified Banks | 608.79 | 1:14 PM | 5.88 | 0.98 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Regional Banks | 120.22 | 1:14 PM | 0.39 | 0.33 |  |
|  **Market Cap Indexes** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dow Jones U.S. MicroCap Banks | 29802.07 | 2/24/2023 | (247.18) | (0.82) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. SmallCap Banks | 239.52 | 2/24/2023 | (0.10) | (0.04) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. MidCap Banks | 711.70 | 2/24/2023 | 0.52 | 0.07 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. LargeCap Banks | 393.47 | 2/24/2023 | 1.74 | 0.44 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P United States Between USD1 Billion and USD5 Billion Banks | 715.10 | 2/24/2023 | (0.90) | (0.13) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P United States Over USD5 Billion Banks | 448.73 | 2/24/2023 | 1.69 | 0.38 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P United States Between USD250 Million and USD1 Billion Banks | 1512.53 | 2/24/2023 | (11.85) | (0.78) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P United States Under USD250 Million Banks | 1361.07 | 2/24/2023 | (9.45) | (0.69) |  |
|  **Geographic Indexes** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Mid-Atlantic Region | 628.64 | 2/24/2023 | 3.15 | 0.50 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Midwest Region | 666.11 | 2/24/2023 | 1.56 | 0.24 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - New England Region | 572.61 | 2/24/2023 | (1.55) | (0.27) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Southeast Region | 440.95 | 2/24/2023 | 0.23 | 0.05 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Southwest Region | 1310.92 | 2/24/2023 | 6.63 | 0.51 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P U.S. BMI Banks - Western Region | 1323.87 | 2/24/2023 | 2.73 | 0.21 |  |
|  **Broad Market Indexes** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DJIA | 32981.07 | 1:14 PM | 164.15 | 0.50 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 | 3996.18 | 1:14 PM | 26.14 | 0.66 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 400 Mid Cap | 2614.71 | 1:14 PM | 14.03 | 0.54 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 600 Small Cap | 1254.22 | 1:14 PM | 6.50 | 0.52 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Financials | 593.78 | 1:14 PM | 1.40 | 0.24 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MSCI US IMI Financials | 2111.58 | 2/24/2023 | (0.59) | (0.03) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NASDAQ | 11503.27 | 1:10 PM | 108.33 | 0.95 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NASDAQ Finl | 5098.85 | 1:10 PM | 4.56 | 0.09 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NYSE | 15534.37 | 1:10 PM | 69.91 | 0.45 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Russell 1000 | 2200.25 | 1:10 PM | 12.88 | 0.59 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Russell 2000 | 1901.73 | 1:10 PM | 11.24 | 0.59 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Russell 3000 | 2321.12 | 1:10 PM | 13.59 | 0.59 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P TSX Composite | 20291.64 | 1:10 PM | 72.45 | 0.36 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MSCI AC World (USD) | 628.00 | 2/24/2023 | (7.43) | (1.17) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MSCI World | 2706.91 | 2/24/2023 | (30.51) | (1.11) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bermuda Royal Gazette/BSX | 2533.66 | 2/24/2023 | 0.00 | 0.00 |  |

---

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\* - Intraday data is not currently available. Data is as of the previous close.

\*\* - Non-publicly traded institutions and institutions outside of your current subscription are not included in custom indexes. Data is as of the previous close.

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For graphs, component companies, and historical values, click an index name.

Historical Equity Pricing Data supplied by Interactive Data Pricing and Reference Data LLC

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**EXHIBIT IV-4** 

**Maryland Bank and Thrift Acquisitions 2018 - Present** 

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Exhibit IV-4

State of Maryland Bank and Thrift Acquisitions 2018-Present

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| | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Target Financials at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement | Deal Terms and Pricing at Announcement |
|  |  |  |  |  |  | Total | | | | | NPAs/ | Rsrvs/ | Deal | Value/ | | | | | Prem/ |
| Announce | Complete |  |  |  |  | Assets | E/A | TE/A | ROAA | ROAE | Assets | NPLs | Value | Share | P/B | P/TB | P/E | P/A | Cdeps |
| Date | Date | Buyer Name |  | Target Name | St. | ($000) | (%) | (%) | (%) | (%) | (%) | (%) | ($M) | ($) | (%) | (%) | (x) | (%) | (%) |
|  02/22/2023 | Pending | LINKBANCORP Inc. | PA | Partners Bancorp | MD | 1650710 | 8.10 | 7.47 | 0.65 | 7.88 | 0.40 | 207.17 | 161.3 | 8.970 | 121.11 | 132.30 | 14.66 | 9.77 | NA |
|  12/14/2022 | Pending | Shore Bancshares Inc. | MD | The Community Financial Corporation | MD | 2359621 | 7.59 | 7.14 | 1.19 | 13.86 | 0.28 | 327.64 | 254.6 | 44.711 | 140.86 | 150.58 | 9.26 | 10.79 | 4.46 |
|  12/12/2022 | Pending | Summit Financial Group Inc. | WV | PSB Holding Corp. | MD | 593691 | 6.37 | 6.37 | 0.73 | 9.28 | NA | NA | 51.4 | 33.510 | 135.01 | 135.01 | 12.10 | 8.66 | 2.89 |
|  01/28/2022 | 7/7/2022 | Rosedale FS&LA | MD | CBM Bancorp, Inc. | MD | 249469 | 19.96 | 19.96 | 0.48 | 2.36 | 0.14 | 450.28 | 63.2 | 17.750 | 125.52 | 125.52 | 50.71 | 25.35 | 9.08 |
|  08/05/2021 | 1/1/2022 | BV Financial Inc. | MD | North Arundel Savings Bank | MD | 47471 | 12.24 | 12.24 | 0.13 | 0.99 | 0.44 | 106.25 | NA | NA | NA | NA | NA | NA | NA |
|  07/13/2021 | 1/22/2022 | F.N.B. Corp. | PA | Howard Bancorp, Inc. | MD | 2599541 | 11.67 | 10.42 | 0.89 | 7.70 | 0.65 | 112.76 | 421.7 | 21.960 | 136.10 | 154.45 | 18.00 | 16.22 | 9.03 |
|  03/03/2021 | 10/31/2021 | Shore Bancshares Inc. | MD | Severn Bancorp, Inc. | MD | 952553 | 11.51 | 11.41 | 0.77 | 6.24 | 1.26 | 79.04 | 146.2 | 11.298 | 132.33 | 133.68 | 21.73 | 15.35 | NA |
|  06/18/2020 | 10/31/2020 | BV Financial Inc. (MHC) | MD | Delmarva Bancshares, Inc. | MD | 378333 | 13.27 | 12.81 | 0.83 | 6.43 | NA | NA | 53.9 | 8.900 | 87.03 | 91.44 | 17.12 | 14.25 | 5.39 |
|  03/06/2020 | 10/1/2020 | Farmers & Merchants Bcshs Inc. | MD | Carroll Bancorp, Inc. | MD | 183957 | 9.89 | 9.89 | 0.18 | 1.96 | 1.89 | 64.26 | 25.0 | 21.630 | 137.35 | 137.35 | 69.77 | 13.59 | 6.62 |
|  09/24/2019 | 4/1/2020 | Sandy Spring Bancorp Inc. | MD | Revere Bank | MD | 2626721 | 10.90 | 9.87 | 1.22 | 11.54 | 0.18 | 684.17 | 460.7 | 37.097 | 155.14 | 173.36 | 14.78 | 17.54 | 12.85 |
|  09/05/2019 | 2/28/2020 | BV Financial Inc. (MHC) | MD | MB Bancorp, Inc. | MD | 147096 | 22.84 | 22.84 | 1.38 | 6.31 | NA | NA | 31.9 | 15.850 | 92.49 | 92.49 | 14.03 | 21.69 | -2.82 |
|  07/23/2019 | 11/22/2019 | WesBanco Inc. | WV | Old Line Bancshares, Inc. | MD | 3075613 | 12.66 | 9.46 | 1.20 | 9.44 | 0.27 | 107.95 | 496.7 | 29.219 | 127.58 | 177.02 | 13.98 | 16.15 | 12.45 |
|  07/02/2019 | 1/11/2020 | ACNB Corp. | PA | Frederick County Bancorp, Inc. | MD | 442421 | 8.18 | 8.18 | 0.65 | 7.87 | 0.46 | 203.20 | 61.3 | 38.204 | 162.69 | 162.69 | 21.83 | 13.86 | 7.97 |
|  10/23/2018 | 5/1/2019 | Orrstown Financial Services | PA | Hamilton Bancorp, Inc. | MD | 525275 | 10.46 | 8.87 | -1.07 | -9.38 | 2.14 | 26.28 | 58.4 | 16.849 | 104.82 | 125.76 | NA | 11.11 | NA |
|  08/29/2018 | 2/28/2019 | BV Financial Inc. (MHC) | MD | Kopernik Bank | MD | 157729 | 24.10 | 23.96 | 2.63 | 12.83 | 2.87 | 2.91 | NA | NA | NA | NA | NA | NA | NA |
|  05/03/2018 | 10/12/2018 | FVCBankcorp Inc. | VA | Colombo Bank | MD | 194655 | 10.98 | 10.98 | 0.62 | 5.94 | 1.38 | 94.27 | 31.5 | 0.091 | 147.33 | 147.33 | 25.41 | 16.16 | 11.09 |
|  09/27/2017 | 4/13/2018 | Old Line Bancshares Inc | MD | Bay Bancorp, Inc. | MD | 645940 | 10.72 | 10.36 | 0.57 | 5.34 | 2.17 | 28.01 | 127.6 | 11.800 | 182.45 | 189.56 | 38.06 | 19.76 | 12.59 |
|  08/15/2017 | 3/1/2018 | Howard Bancorp Inc. | MD | 1st Mariner Bank | MD | 975212 | 10.20 | 8.77 | -0.25 | -2.39 | 2.07 | 24.36 | 163.3 | 28.011 | 164.20 | 193.91 | NA | 16.75 | 14.29 |
|  07/31/2017 | 1/1/2018 | Community Finl Corp. | MD | County First Bank | MD | 236196 | 10.95 | NA | 0.57 | 5.18 | 2.97 | 37.38 | 36.4 | 37.852 | 140.93 | 140.87 | 28.25 | 15.43 | NA |
|  |  |  |  | Average: |  | 949590 | 12.24 | 11.72 | 0.70 | 5.76 | 1.22 | 159.75 |  |  | 134.88 | 144.90 | 24.65 | 15.44 | 8.15 |
|  |  |  |  | Median: |  | 525275 | 10.95 | 10.13 | 0.65 | 6.31 | 0.95 | 100.26 |  |  | 136.10 | 140.87 | 18.00 | 15.43 | 9.03 |

---

Source: S&P Global Market Intelligence.

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**EXHIBIT IV-5** 

**BV Financial, Inc.** 

**Director and Senior Management Summary Resumes** 

------

Exhibit IV-5

BV Financial, Inc.

Director and Senior Management Summary Resumes

***Directors with terms ending in 2023:***

***Gary T. Amereihn.*** Age 68. Director since 2019. Mr. Amereihn retired from Kopernik Bank in 2019 as part of BayVanguard Bank's acquisition of Kopernik Bank, having served as Kopernik's Bank's Chairman, Chief Executive Officer and Chief Financial Officer from 1992 to 2019. Mr. Amereihn serves as the Chairman of the Board of BV Financial and BayVanguard Bank. Mr. Amereihn's past service as a chairman, chief executive officer and chief financial officer of a financial institution and his participation in the communities we serve brings an extensive knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for BayVanguard Bank.

***Brian K. McHale.*** Age 68. Director since 1987. Mr. McHale has been a Steamship Clerk with International Longshoremen's Association Local 953 located in Baltimore, Maryland since 1972 and until 2014 was a state delegate to the Maryland General Assembly. Mr. McHale's long-standing involvement in our local community brings knowledge of the local economy and business opportunities to BayVanguard Bank. His leadership skills and knowledge of the financial, economic and regulatory changes we face make him well suited to serve on the Board.

***Directors with terms ending in 2024:***

***Joseph S. Galli.*** Age 59. Director since 2015. For over 30 years, Mr. Galli has been an Executive Vice President of The Bernstein Companies, which is an owner, developer, investor and manager of commercial, residential, industrial and hotel properties in the Mid-Atlantic region of the United States. Within The Bernstein Companies, Mr. Galli is a managing director of Consortium Capital, which is a series of real estate equity funds that invest in commercial real estate throughout the Mid-Atlantic. Mr. Galli is also the Chairman of the Government Relations Committee for the Washington, D.C. chapter of Autism Speaks. Mr. Galli experience and long-standing involvement in our local community provides the Board with business management skills and knowledge regarding real estate and business matters in our market area.

***Kim C. Liddell.*** Age 62. Director since 2020. Mr. Liddell served as the President and Chief Executive Officer of Delmarva Bancshares, Inc. and 1880 Bank from 2010 until its acquisition by BV Financial in 2020. Mr. Liddell also currently serves as a director of the Federal Home Loan Bank of Atlanta. Mr. Liddell's past service as chief executive officer of a financial institution and his participation in the communities we serve brings an extensive knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for BayVanguard Bank.

***Timothy L. Prindle.*** Age 37. Director since 2019. Mr. Prindle was elected as the Co-President and Chief Executive Officer and a member of the Board of Directors of Bay-Vanguard M.H.C., BV Financial and BayVanguard Bank in January 2019. Previously he served as Chief Executive Officer and President of Kopernik Bank since 2012 before it was acquired by BayVanguard in 2019. Mr. Prindle began his career as a Bank Examiner at the Office of Thrift Supervision. In addition to his wide range of management experience and leadership skills, Mr. Prindle's strong regulatory background and his knowledge and understanding of the financial, economic and regulatory environments make him a valuable asset to the Board.

***Machteld V. Thomas.*** Age 68. Director since 2022. Mrs. Thomas served as the President and Chief Executive Officer of North Arundel Savings Bank for 14 years before its acquisition by BV Financial in 2021 and is now retired. Mrs. Thomas serves on the board of directors of Bello Machre, a nonprofit that offers loving care and support for children and adults with developmental disabilities. Ms. Thomas' past service as a chief executive officer of a financial institution and her participation in the communities we serve brings an extensive knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for BayVanguard Bank.

------

Exhibit IV-5 (continued)

BV Financial, Inc.

Director and Senior Management Summary Resumes

***Directors with terms ending in 2025:***

***William Streett Baldwin.*** Age 60. Director since 2012. For over 20 years, Mr. Baldwin has been a director of Ellin & Tucker, Chartered, a business consulting and certified public accounting firm located in Baltimore, Maryland. Mr. Baldwin is a certified public accountant and is a member of the American Institution of Certified Public Accountants and the Maryland Association of Certified Public Accountants. Through his experience as a certified public accountant and his strong risk assessment, financial reporting and internal control expertise, as well as extensive knowledge of accounting and regulatory issues, Mr. Baldwin provides an understanding of public accounting and financial matters to the Board.

***William B. Crompton, III.*** Age 69. Director since 2019. Previously he served as a Director of Kopernik Bank since 2017 prior to its acquisition by BV Financial in 2019. Mr. Crompton retired from the Office of the Comptroller of the Currency in 2015. Mr. Crompton had held managerial positions in the Office of the Comptroller of the Currency, Office of Thrift Supervision and Federal Home Loan Bank System for over 30 years. With his background of directly working in and managing the examination and supervision of financial institutions at several bank regulatory agencies, Mr. Crompton provides the Board with extensive knowledge regarding regulatory matters and the financial and economic challenges confronting banks.

***David M. Flair.*** Age 59. Director since 2012. Mr. Flair became the Chief Executive Officer of BV Financial and BayVanguard in October 2013 and was also named President of BV Financial and BayVanguard in November 2014. Mr. Flair was hired as the Chief Financial Officer of BV Financial and BayVanguard in February 2012 and served in that role until May 2014. Mr. Flair served as the Chief Financial Officer of Advance Bank in Baltimore, Maryland, beginning in December 2006 and was also appointed as a director and named the Acting Chief Executive Officer of Advance Bank before his departure in February 2012. Mr. Flair is a certified public accountant and was a partner with Anderson Associates LLP and Beard Miller Company LLP for almost twenty years before joining Advance Bank. In addition to his wide range of management experience and leadership skills, Mr. Flair's strong financial background and his knowledge and understanding of the financial, economic and regulatory environments make him a valuable asset to the Board.

***Joshua W. Posnick.*** Age 37. Director since 2019. For 3 years, Mr. Posnick has been Managing Director for Mill Creek Residential, a real estate development and management company, located in Washington, D.C. Mr. Posnick provides the Board with business management skills and knowledge regarding real estate and business matters in our market area.

***Director Nominee (Not Currently a Director) for term ending in 2026:***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***P. David Bramble.*** Age 45. Mr. Bramble has been working in real estate investment for over 20 years. **[Need to mention current company and how long he has been there.]** He dedicates his time to sourcing and capitalizing transactions and overseeing project underwriting and execution. Prior to MCB, Mr. Bramble served as the director of commercial lending for a regionally based full-service lending firm –Madison Funding – which he co- founded in 2000. Prior to that, Mr. Bramble worked for the law firm of Steptoe & Johnson LLP where he provided corporate and real estate advisory services. Mr. Bramble serves as the Chairman of the Board of Lendistry, a fintech enabled CDFI focused on providing small business capital to underserved communities nationwide. He serves on the investment committee and board of the Robert W. Deutsch Foundation, which invests in innovative people, projects, and ideas that improve the quality of life in Baltimore. He also serves on the boards of Johns Hopkins Bayview Hospital, Ronald McDonald House, UPENN Institute for Urban Research and the Baltimore Tree Trust. The Board believes that Mr. Bramble will provide the Board with extensive knowledge regarding financial, economic and legal matters and knowledge of our market area due to his long-standing involvement in our local community.

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Exhibit IV-5 (continued)

BV Financial, Inc.

Director and Senior Management Summary Resumes

**Executive Officers Who Are Not Directors** 

***Michael J. Dee****.* ****Age 62. Mr. Dee has been our Senior Vice President, Chief Financial Officer since 2014 and became our Executive Vice President and Chief Financial Officer in 2019.

***Gregory J. Olinde****.* ****Age 55. Mr. Olinde has been our Executive Vice President, Chief Credit Officer and Delmarva Market President since November 2020. Prior to that, Mr. Olinde was Executive Vice President, Chief Credit Officer for 1880 Bank from January 2013 to October 2020, when 1880 was acquired by BayVanguard Bank.

***Rose M. Searcy****.* ****Age 49. Ms. Searcy has been our Executive Vice President, Human Resources since 2003.

Source: BV Financial's preliminary prospectus.

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**EXHIBIT IV-6** 

**BV Financial, Inc.** 

**Pro Forma Regulatory Capital Ratios** 

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Exhibit IV-6

Pro Forma Regulatory Capital Ratios

BV Financial, Inc.

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **BayVanguard Bank<br>Historical at**<br>**December 31, 2022** | **BayVanguard Bank<br>Historical at**<br>**December 31, 2022** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** | **BayVanguard Bank Pro Forma at December 31, 2022 Based Upon the Sale in the Offering of:** |
|  | **Amount** | **Percent**<br>**of Assets** | **10,625,000 Shares** | **10,625,000 Shares** | **12,500,000 Shares** | **12,500,000 Shares** | **14,375,000 Shares** | **14,375,000 Shares** | **16,531,250 Shares<sup>(1)</sup>** | **16,531,250 Shares<sup>(1)</sup>** |
|  | **Amount** | **Percent**<br>**of Assets** | **Amount** | **Percent<br>of Assets** | **Amount** | **Percent<br>of Assets** | **Amount** | **Percent<br>of Assets** | **Amount** | **Percent<br>of 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)** |
|  Equity | $123436 | 14.75% | $162594 | 18.29% | $169637 | 18.89% | $176680 | 19.47% | $184779 | 20.13% |
|  Tier 1 leverage capital <sup>(2)(3)</sup> | $109939 | 13.39% | $149097 | 17.08% | $156140 | 17.70% | $163183 | 18.30% | $171282 | 18.98% |
|  Tier 1 leverage requirement | 41057 | 5.00 | 43652 | 5.00 | 44117 | 5.00 | 44581 | 5.00 | 45116 | 5.00 |
|  Excess | $68882 | 8.39% | $105445 | 12.08% | $112023 | 12.70% | $118602 | 13.30% | $126166 | 13.98% |
|  Tier 1 risk-based capital <sup>(2)(3)</sup> | $109939 | 16.76% | $149097 | 22.37% | $156140 | 23.37% | $163183 | 24.35% | $171282 | 25.48% |
|  Tier 1 risk-based requirement | 52482 | 8.00 | 53312 | 8.00 | 53461 | 8.00 | 53610 | 8.00 | 53781 | 8.00 |
|  Excess | $57457 | 8.76% | $95785 | 14.37% | $102679 | 15.37% | $109573 | 16.35% | $117501 | 17.48% |
|  Total risk-based capital <sup>(2)(3)</sup> | $113757 | 17.34% | $152915 | 22.95% | $159958 | 23.94% | $167001 | 24.92% | $175100 | 26.05% |
|  Total risk-based requirement | 65602 | 10.00 | 66641 | 10.00 | 66826 | 10.00 | 67012 | 10.00 | 67226 | 10.00 |
|  Excess | $48155 | 7.34% | $86274 | 12.95% | $93132 | 13.94% | $99989 | 14.92% | $107874 | 16.05% |
|  Common equity tier 1 risk-based capital <sup>(2)(3)</sup> | $109939 | 16.76% | $149097 | 22.37% | $156140 | 23.37% | $163183 | 24.35% | $171282 | 25.48% |
|  Common equity tier 1<br> risk-based requirement | 42642 | 6.50 | 43316 | 6.50 | 43437 | 6.50 | 43558 | 6.50 | 43697 | 6.50 |
|  Excess | $67297 | 10.26% | $105781 | 15.87% | $112703 | 16.87% | $119625 | 17.85% | $127585 | 18.98% |
|  Reconciliation of capital infused into BayVanguard Bank: | Reconciliation of capital infused into BayVanguard Bank: | Reconciliation of capital infused into BayVanguard Bank: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net proceeds | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net proceeds | $51908 |  | $61201 |  | $70494 |  | $81181 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by stock-based benefit plans | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by stock-based benefit plans | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by stock-based benefit plans | (4250) |  | (5000) |  | (5750) |  | (6613) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by employee stock ownership plan | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by employee stock ownership plan | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Common stock acquired by employee stock ownership plan | (8500) |  | (10000) |  | (11500) |  | (13225) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma increase | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma increase | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma increase | $39158 |  | $46201 |  | $53244 |  | $61343 |  |

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(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 offering.

(2) 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.

(3) Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.

Source: BV Financial's preliminary prospectus.

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**EXHIBIT IV-7** 

**BV Financial, Inc.** 

**Pro Forma Analysis Sheet** 

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**Exhibit IV-7** 

**PRO FORMA ANALYSIS SHEET** 

**BV Financial, Inc.** 

**Prices as of February 24, 2023** 

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | |  | **Subject** |  | Peer Group | Peer Group | Peer Group |  | All Public | All Public | All Public |  |
| Valuation Midpoint Pricing Multiples | Valuation Midpoint Pricing Multiples | Symbol | **at Midpoint** |  | Mean |  | Median |  | Mean |  | Median |  |
|  Price-earnings multiple | = | P/E | 12.72 | x | 10.96 | x | 10.49 | x | 13.85 | x | 12.48 | x |
|  Price-core earnings multiple | = | P/CE | 13.26 | x | 10.45 | x | 10.46 | x | 12.87 | x | 11.11 | x |
|  Price-book ratio | = | P/B | 70.62 | % | 92.38 | % | 91.41 | % | 98.25 | % | 93.75 | % |
|  Price-tangible book ratio | = | P/TB | 76.44 | % | 96.66 | % | 96.34 | % | 107.99 | % | 96.64 | % |
|  Price-assets ratio | = | P/A | 15.21 | % | 11.20 | % | 9.93 | % | 12.30 | % | 11.64 | % |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Valuation Parameters |  |  |  | Adjusted |  |
|  Pre-Conversion Earnings (Y) | $10524000 | (12 Mths 12/22) | ESOP Stock Purchases (E) | 8.00% |  |
|  Pre-Conv. Core Earnings (YC) | $10060000 | (12 Mths 12/22) | Cost of ESOP Borrowings (S) | 0.00% |  |
|  Pre-Conversion Book Value (B) | $97751000 | 12/2022 | ESOP Amortization (T) | 20.00 | Years |
|  Intangible Assets | $15615000 | 12/2022 | RRP Programs as % of Offering (M) | 4.00% |  |
|  Pre-Conv. Tang. Book Value (TB) | $82136000 | 12/2022 | RRP Programs Vesting (N) | 5.00 | Years |
|  Pre-Conversion Assets (A) | $844963000 | 12/2022 | Fixed Expenses | $1540000 |  |
|  Reinvest Rate(12/2022 1Yr Treas) | 3.99% |  | Variable Expenses (@Midpoint) | 0.85% |  |
|  Tax rate (TAX) | 27.00% |  | Percentage Sold (PCT) | 86.28% |  |
|  After Tax Reinvest. Rate (R) | 2.91% |  | MHC Assets (cash on dep at bank) | $0 |  |
|  Est. Conv. Expenses (1)(X) | 2.08% |  | MHC Equity | $0 |  |
|  Insider Purchases | $3665000 |  | Options as % of Offering (O1) | 10.00% |  |
|  Price/Share | $10.00 |  | Estimated Option Value (O2) | 50.20% |  |
|  Foundation Cash Contrib. (FC) | 0.00% |  | Option Vesting Period (O3) | 5.00 | Years |
|  Foundation Stock Contrib. (FS) | 0.00% | Shares | % of Options taxable (O4) | 25.00% |  |
|  Foundation Tax Benefit (FT) | $0 |  |  |  |  |

---

<u>Calculation of Pro Forma Value After Conversion</u> 

---

| | | | |
|:---|:---|:---|:---|
| 1. V= | P/E \* (Y) | V= | $144875620 |
|  | 1 - P/E \* PCT \* ((1-X-E-M-FC-FS)\*R - (1-TAX)\*E/T - (1-TAX)\*M/N)-(1-(TAX\*O4))\*(O1\*O2)/O3) |  |  |
| 2. V= | P/E \* (Y) | V= | $144875620 |
|  | 1 - P/Core E \* PCT \* ((1-X-E-M-FC-FS)\*R - (1-TAX)\*E/T - (1-TAX)\*M/N)-(1-(TAX\*O4))\*(O1\*O2)/O3) |  |  |
| 3. V= | P/B \* (B+Z) | V= | $144875620 |
|  | 1 - P/B \* PCT \* (1-X-E-M-FC-FS) |  |  |
| 4. V= | P/TB \* (TB+Z) | V= | $144875620 |
|  | 1 - P/TB \* PCT \* (1-X-E-M-FC-FS) |  |  |
| 5. V= | P/A \* (A+Z) | V= | $144875620 |
|  | 1 - P/A \* PCT \* (1-X-E-M-FC-FS) |  |  |

---

**<u>Shares</u>** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Conclusion | 2nd Step<br>Offering Shares | 2nd Step<br>Exchange<br>Shares | Full<br>Conversion<br>Shares | Plus:<br>Foundation<br>Shares | Total Market<br>Capitalization<br>Shares | Exchange<br>Ratio |
|  Supermaximum | 16531250 | 2628550 | 19159800 | 0 | 19159800 | 2.5827 |
|  Maximum | 14375000 | 2285696 | 16660696 | 0 | 16660696 | 2.2458 |
|  Valuation | 12500000 | 1987562 | 14487562 | 0 | 14487562 | 1.9529 |
|  Minimum | 10625000 | 1689427 | 12314427 | 0 | 12314427 | 1.6599 |

---

**<u>Market Value</u>** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Conclusion | 2nd Step<br>Offering Value | 2nd Step<br>Exchange<br>Shares Value | Full<br>Conversion<br>Value | Foundation<br>Value | Total Market<br>Capitalization |
|  Supermaximum | $165312500 | $26285500 | $191598000 | $0 | $191598000 |
|  Maximum | $143750000 | $22856960 | $166606960 | 0 | $166606960 |
|  Valuation | **125000000** | 19875620 | 144875620 | 0 | 144875620 |
|  Minimum | 106250000 | 16894270 | 123144270 | 0 | 123144270 |

---

(1) Estimated offering expenses at the valuation conclusion.

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**EXHIBIT IV-8** 

**BV Financial, Inc.** 

**Pro Forma Effect of Conversion Proceeds** 

------

Exhibit IV-8

PRO FORMA EFFECT OF CONVERSION PROCEEDS

BV Financial, Inc.

At the Minimum of the Range

---

| | | |
|:---|:---|:---|
| 1. | Fully Converted Value and Exchange Ratio |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp; Fully Converted Value | $123144270.0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; Exchange Ratio | 1.6599 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; 2nd Step Offering Proceeds | $106250000.0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | 2433808.0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp; 2nd Step Net Conversion Proceeds (Including Foundation) | $103816193.0 |

---

---

| | | |
|:---|:---|:---|
| 2. | Estimated Additional Income from Conversion Proceeds |  |
|  | Net Conversion Proceeds | $103816193 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Contribution to Foundation | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: ESOP Stock Purchases (1) | (8500000) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: MRP Stock Purchases (2) | (4250000) |
|  | Net Proceeds to be Reinvested | $91066193 |
|  | Estimated after-tax net incremental rate of return | 2.91% |
|  | Earnings Increase | $2652485 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings(3) | (310250) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (3) | (620500) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Option Plan Vesting (4) | (994744) |
|  | Net Earnings Increase | $726991 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net<br>Earnings<br>Increase | After<br>Conversion |
| 3. | Pro Forma Earnings |  |  |  |
|  | 12 Months December 31, 2022, (reported) | $11484000 | $726991 | $12210991 |
|  | 12 Months December 31, 2022, (core) | $10060000 | $726991 | $10786991 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net Addition<br>to Equity | Tax Benefit<br>of Foundation | After<br>Conversion |
| 4. | Pro Forma Net Worth |  |  |  |  |
|  | December 31, 2022 | $97751000 | $91066193 | $0 | $188817193 |
|  | December 31, 2022 (Tangible) | $82136000 | $91066193 | $0 | $173202193 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net Capital<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 5. | Pro Forma Assets |  |  |  |  |
|  | December 31, 2022 | $844075000 | $91066193 | $0 | $935141193 |

---

(1) Includes ESOP purchases of 8.0% of the 2nd step offering amount.

(2) Includes MRP purchases of 4.0% of the 2nd step offering amount.

(3) ESOP amortized over 20 years, MRP amortized over 5 years, tax effected at: 27.00%

(4) Options of 10.0% of the second step offering, valuation based on Black-Scholes model, 5 year vesting, assuming
25% taxable.

------

Exhibit IV-8

PRO FORMA EFFECT OF CONVERSION PROCEEDS

BV Financial, Inc.

At the Midpoint of the Range

---

| | | |
|:---|:---|:---|
| 1. | Fully Converted Value and Exchange Ratio |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fully Converted Value | $144875630 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange Ratio | 1.95290 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2nd Step Offering Proceeds | $125000000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | 2597683 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2nd Step Net Conversion Proceeds (Including Foundation) | $122402318 |
| 2. | Estimated Additional Income from Conversion Proceeds |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Conversion Proceeds | $122402318 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: ESOP Stock Purchases (1) | (10000000) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: MRP Stock Purchases (2) | (5000000) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Proceeds to be Reinvested | $107402318 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimated after-tax net incremental rate of return | 2.91% |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings Increase | $3128307 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings(3) | (365000) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (3) | (730000) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Option Plan Vesting (4) | (1170288) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Earnings Increase | $863020 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net<br>Earnings<br>Increase | After<br>Conversion |
| 3. | Pro Forma Earnings |  |  |  |
|  | 12 Months December 31, 2022, (reported) | $11484000 | $863020 | $12347020 |
|  | 12 Months December 31, 2022, (core) | $10060000 | $863020 | $10923020 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 4. | Pro Forma Net Worth |  |  |  |  |
|  | December 31, 2022 | $97751000 | $107402318 | $0 | $205153318 |
|  | December 31, 2022 (Tangible) | $82136000 | $107402318 | $0 | $189538318 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br>Conversion |
| 5. | Pro Forma Assets |  |  |  |  |
|  | December 31, 2022 | $844075000 | $107402318 | $0 | $951477318 |

---

(1) Includes ESOP purchases of 8.0% of the 2nd step offering amount.

(2) Includes MRP purchases of 4.0% of the 2nd step offering amount.

(3) ESOP amortized over 20 years, MRP amortized over 5 years, tax effected at: 27.00%

(4) Options of 10.0% of the second step offering, valuation based on Black-Scholes model, 5 year vesting, assuming
25% taxable.

------

Exhibit IV-8

PRO FORMA EFFECT OF CONVERSION PROCEEDS

BV Financial, Inc.

At the Maximum of the Range

---

| | | |
|:---|:---|:---|
| 1. | Fully Converted Value and Exchange Ratio |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fully Converted Value | $166606960 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange Ratio | 2.24580 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2nd Step Offering Proceeds | $143750000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | 2761558 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2nd Step Net Conversion Proceeds (Including Foundation) | $140988443 |
| 2. | Estimated Additional Income from Conversion Proceeds |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Conversion Proceeds | $140988443 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Contribution to Foundation | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: ESOP Stock Purchases (1) | (11500000) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: MRP Stock Purchases (2) | (5750000) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Proceeds to be Reinvested | $123738443 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimated after-tax net incremental rate of return | 2.91% |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings Increase | $3604130 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings(3) | (419750) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (3) | (839500) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Option Plan Vesting (4) | (1345831) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Earnings Increase | $999049 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net<br> Earnings<br>Increase | After<br> Conversion |
| 3. | Pro Forma Earnings |  |  |  |
|  | 12 Months December 31, 2022, (reported) | $11484000 | $999049 | $12483049 |
|  | 12 Months December 31, 2022, (core) | $10060000 | $999049 | $11059049 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br> Conversion |
| 4. | Pro Forma Net Worth |  |  |  |  |
|  | December 31, 2022 | $97751000 | $123738443 | $0 | $221489443 |
|  | December 31, 2022 (Tangible) | $82136000 | $123738443 | $0 | $205874443 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br> Conversion |
| 5. | Pro Forma Assets |  |  |  |  |
|  | December 31, 2022 | $844075000 | $123738443 | $0 | $967813443 |

---

(1) Includes ESOP purchases of 8.0% of the 2nd step offering amount.

(2) Includes MRP purchases of 4.0% of the 2nd step offering amount.

(3) ESOP amortized over 20 years, MRP amortized over 5 years, tax effected at: 27.00%

(4) Options of 10.0% of the second step offering, valuation based on Black-Scholes model, 5 year vesting, assuming
25% taxable.

------

Exhibit IV-8

PRO FORMA EFFECT OF CONVERSION PROCEEDS

BV Financial, Inc.

At the Supermaximum Value

---

| | | |
|:---|:---|:---|
| 1. | Fully Converted Value and Exchange Ratio |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fully Converted Value | $191598000 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exchange Ratio | 2.58270 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2nd Step Offering Proceeds | $165312500 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated Offering Expenses | 2950014 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2nd Step Net Conversion Proceeds (Including Foundation) | $162362486 |
| 2. | Estimated Additional Income from Conversion Proceeds |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Conversion Proceeds | $162362486 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Cash Contribution to Foundation | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Contribution to Foundation | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: ESOP Stock Purchases (1) | (13225000) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: MRP Stock Purchases (2) | (6612500) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Proceeds to be Reinvested | $142524986 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimated after-tax net incremental rate of return | 2.91% |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Earnings Increase | $4151325 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Estimated cost of ESOP borrowings | 0 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Amortization of ESOP borrowings(3) | (482713) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Programs Vesting (3) | (965425) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Stock Option Plan Vesting (4) | (1547705) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Earnings Increase | $1155483 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net<br> Earnings<br>Increase | After<br> Conversion |
| 3. | Pro Forma Earnings |  |  |  |
|  | 12 Months December 31, 2022, (reported) | $11484000 | $1155483 | $12639483 |
|  | 12 Months December 31, 2022, (core) | $10060000 | $1155483 | $11215483 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br> Conversion |
| 4. | Pro Forma Net Worth |  |  |  |  |
|  | December 31, 2022 | $97751000 | $142524986 | $0 | $240275986 |
|  | December 31, 2022 (Tangible) | $82136000 | $142524986 | $0 | $224660986 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Before<br>Conversion | Net Cash<br>Proceeds | Tax Benefit<br>of Foundation | After<br> Conversion |
| 5. | Pro Forma Assets |  |  |  |  |
|  | December 31, 2022 | $844075000 | $142524986 | $0 | $986599986 |

---

(1) Includes ESOP purchases of 8.0% of the 2nd step offering amount.

(2) Includes MRP purchases of 4.0% of the 2nd step offering amount.

(3) ESOP amortized over 20 years, MRP amortized over 5 years, tax effected at: 27.00%

(4) Options of 10.0% of the second step offering, valuation based on Black-Scholes model, 5 year vesting, assuming
25% taxable.

------

**EXHIBIT V-1** 

**RP<sup>®</sup> Financial, LC.** 

**Firm Qualifications Statement** 

------

![LOGO](g447808dsp101.jpg)

**FIRM QUALIFICATION STATEMENT** 

RP<sup>®</sup> Financial ("RP<sup>®</sup>) provides financial and management consulting, merger advisory and valuation services to the financial services industry nationwide. We offer a broad array of services, high quality and prompt service, hands-on involvement by principals and senior staff, careful structuring of strategic initiatives and sophisticated valuation and other analyses consistent with industry practices and regulatory requirements. Our staff maintains extensive background in financial and management consulting, valuation and investment banking. Our clients include commercial banks, thrifts, credit unions, mortgage companies, insurance companies and other financial services companies.

***STRATEGIC PLANNING SERVICES***

RP<sup>®</sup>'s strategic planning services are designed to provide effective feasible plans with quantifiable results. We analyze strategic options to enhance shareholder value, achieve regulatory approval or realize other objectives. Such services involve conducting situation analyses; establishing mission/vision statements, developing strategic goals and objectives; and identifying strategies to enhance franchise and/or market value, capital management, earnings enhancement, operational matters and organizational issues. Strategic recommendations typically focus on: capital formation and management, asset/liability targets, profitability, return on equity and stock pricing. Our proprietary financial simulation models provide the basis for evaluating the impact of various strategies and assessing their feasibility and compatibility with regulations.

***MERGER ADVISORY SERVICES***

RP<sup>®</sup>'s merger advisory services include targeting potential buyers and sellers, assessing acquisition merit, conducting due diligence, negotiating and structuring merger transactions, preparing merger business plans and financial simulations, rendering fairness opinions, preparing mark-to-market analyses, valuing intangible assets and supporting the implementation of post-acquisition strategies. Our merger advisory services involve transactions of financially healthy companies and failed bank deals. RP<sup>®</sup> is also expert in de novo charters and shelf charters. Through financial simulations, comprehensive data bases, valuation proficiency and regulatory familiarity, RP<sup>®</sup>'s merger advisory services center on enhancing shareholder returns.

***VALUATION SERVICES***

RP<sup>®</sup>'s extensive valuation practice includes bank and thrift mergers, thrift mutual-to-stock conversions, goodwill impairment, insurance company demutualizations, ESOPs, subsidiary companies, merger accounting and other purposes. We are highly experienced in performing appraisals which conform to regulatory guidelines and appraisal standards. RP<sup>®</sup> is the nation's leading valuation firm for thrift mutual-to-stock conversions, with appraised values ranging up to $4 billion.

***OTHER CONSULTING SERVICES***

RP<sup>®</sup> offers other consulting services including evaluating the impact of regulatory changes, branching and diversification strategies, feasibility studies and special research. We assist banks/thrifts in preparing CRA plans and evaluating wealth management activities on a de novo or merger basis. Our other consulting services are facilitated by proprietary valuation and financial simulation models.

***KEY PERSONNEL (Years of Relevant Experience & Contact Information)***

---

| | | |
|:---|:---|:---|
| Ronald S. Riggins, Managing Director (42) | (703) 647-6543 | <u>rriggins@rpfinancial.com</u> |
| William E. Pommerening, Managing Director (39) | (703) 647-6546 | wpommerening@rpfinancial.com |
| James J. Oren, Director (35) | (703) 647-6549 | joren@rpfinancial.com |
| James P. Hennessey, Director (36) | (703) 647-6544 | jhennessey@rpfinancial.com |
| Gregory E. Dunn, Director (38) | (703) 647-6548 | gdunn@rpfinancial.com |

---

------

---

| | |
|:---|:---|
| 1311-A Dolley Madison Boulevard | Telephone: (703) 528-1700 |
| Suite 2A | Fax No.: (703) 528-1788 |
| McLean, VA 22101 | Toll-Free No.: (866) 723-0594 |
| www.rpfinancial.com | E-Mail: mail@rpfinancial.com |

---

## Exhibit 99.6

**Exhibit 99.6**![LOGO](g447808dsp101.jpg)

March 9, 2023

Boards of Directors

Bay-Vanguard, M.H.C., Inc.

BV Financial, Inc.

BayVanguard Bank

7114 North Point Road

Baltimore, Maryland 21219

Re: Plan of Conversion

Bay-Vanguard, M.H.C., Inc.

<u>BV Financial, Inc.</u>

Members of the Boards of Directors:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion (the "Plan") adopted by the Boards of Directors of Bay-Vanguard, M.H.C., Inc. (the "MHC") and BV Financial, Inc. (the "Mid-Tier" or the "Company"). The Plan provides for the conversion of the MHC into the full stock form of organization. As a result of the conversion, the MHC will be merged into the Mid-Tier and as a result the MHC will cease to exist. As part of the conversion, the 86.28% ownership interest of the MHC in the Company will be offered for sale in the offering. When the conversion is completed, the Company will continue to own all of the outstanding common stock of BayVanguard Bank and public stockholders will own all of the outstanding common stock of the Company.

We understand that in accordance with the Plan, Eligible Account Holders and Supplemental Eligible Account Holders will receive rights in a liquidation account maintained by the Company representing the amount equal to (i) the MHC's ownership interest in the Mid-Tier's total stockholders' equity as of the date of the latest statement of financial condition contained in the prospectus plus (ii) the value of the net assets of the MHC as of the date of the latest statement of financial condition of the MHC before the consummation of the conversion (excluding its ownership of the Mid-Tier). The Company shall continue to hold the liquidation account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain deposits in BayVanguard Bank. The liquidation account is designed to provide payments to depositors of their liquidation interests in the event of liquidation of BayVanguard Bank (or the Company and BayVanguard Bank).

In the unlikely event that either BayVanguard Bank (or the Company and BayVanguard Bank) were to liquidate after the conversion (including, a liquidation of BayVanguard Bank following a purchase and assumption transaction with a credit union acquiror), all claims of creditors, including those of depositors, would be paid first, followed by distribution to depositors as of December 31, 2021 and depositors as of March 31, 2023. Also, in a complete liquidation of both entities, or of BayVangaurd Bank only, when the Company has insufficient assets (other than the stock of BayVanguard Bank), or of BayVanguard Bank following a purchase and assumption transaction with a credit union acquiror, to fund the liquidation account distribution owed to Eligible Account Holders and Supplemental Eligible Account Holders and BayVanguard Bank has positive net worth, then BayVanguard Bank shall immediately make a distribution to fund the Company's remaining obligations under the liquidation account. If BV Financial is completely liquidated or sold apart from a sale or liquidation of BayVanguard Bank, then the BV Financial liquidation account will cease to exist and Eligible Account Holders and Supplemental Eligible Account Holders will receive an equivalent interest in the BayVanguard Bank liquidation account, subject to the same rights and terms as the BV Financial liquidation account.

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| | |
|:---|:---|
| **Washington Headquarters** |  |
|  1311-A Dolley Madison Boulevard | Telephone: (703) 528-1700 |
|  Suite 2A | Fax No.: (703) 528-1788 |
|  McLean, VA 22101 | Toll Free No.: (866) 723-0594 |
|  www.rpfinancial.com | E-Mail: mail@rpfinancial.com |

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*RP<sup>®</sup> Financial, LC.* 

*Boards of Directors* 

*March 13, 2023* 

 *Page 2* 

Based upon our review of the Plan and our observations that the liquidation rights become payable only upon the unlikely event of the liquidation of BayVanguard Bank (or the Company and BayVanguard Bank), that liquidation rights in the Company automatically transfer to BayVanguard Bank in the event the Company is completely liquidated or sold apart from a sale or liquidation of BayVanguard Bank, and that after two years from the date of conversion and upon written request of the Federal Reserve Board, the Company will transfer the liquidation account and depositors' interest in such account to BayVanguard Bank and the liquidation account shall thereupon be subsumed into the liquidation account of BayVanguard Bank no longer subject to the Company's creditors, we are of the belief that: the benefit provided by the BayVanguard Bank liquidation account supporting the payment of the liquidation account in the event the Company lacks sufficient net assets or following a purchase and assumption transaction with a credit union acquiror does not have any economic value at the time of the transactions contemplated in the first and second paragraphs above. We note that we have not undertaken any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue.

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| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sincerely, |
| ![LOGO](g447808g0309102314717.jpg) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RP<sup>®</sup> Financial, LC. |

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## Ex-Filing

**Exhibit 107** 

**Calculation of Filing Fee Tables** 

**Form S-1** 

(Form Type)

**BV Financial, Inc.** 

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered Securities</u> 

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Security<br>Type | Security<br> Class<br> Title  | Fee<br>Calculation<br>Rule | Amount<br>Registered | Proposed<br>Maximum<br>Aggregate<br>Offering<br>Price Per<br>Unit | Maximum<br>Aggregate<br>Offering<br> Price (1) | Fee<br> Rate | Amount of<br>Registration<br>Fee |
| &nbsp;&nbsp;&nbsp;Fees to be<br>paid | Equity | Common stock, $0.01 par value per share | Rule 457(a) | 19159800 | $10.00 | $191598000 | 0.00011020 | $21114.10 |
|  | Other | Participation Interests | Rule 457(h) | 332610 |  |  |  | (2) |
|  | Total Offering Amounts | Total Offering Amounts | Total Offering Amounts | Total Offering Amounts |  | $191598000 |  | $21114.10 |
|  | 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 |  |  |  | $21114.10 |

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(1) Estimated solely for the purpose of calculating the registration fee.

(2) The securities of BV Financial, Inc. to be purchased by the BayVanguard Bank 401(k) Profit Sharing Plan are
included in the amount shown for common stock. However, pursuant to Rule 457(h) of the Securities Act of 1933, as amended, no separate fee is required for the participation interests. Pursuant to such rule, the amount being registered has been
calculated on the basis of the number of shares of common stock that may be purchased with the current assets of such plan.