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<P STYLE="margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 8.5pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>As filed with the Securities and Exchange
Commission on March 10, 2017 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 8.5pt Times New Roman, Times, Serif; margin: 0; text-align: right"><B>Registration No. 333-________</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8.5pt"><B>UNITED
STATES SECURITIES AND EXCHANGE COMMISSION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8.5pt"><B>WASHINGTON,
D.C. 20549</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8.5pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8.5pt"><B>FORM
S-1</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8.5pt"><B>REGISTRATION
STATEMENT UNDER</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8.5pt"><B>THE
SECURITIES ACT OF 1933</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8.5pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 14pt"><B>Heritage
NOLA Bancorp, Inc.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 10pt">(Exact
Name of Registrant as Specified in Its Charter)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 13.25in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 33%; text-align: center"><FONT STYLE="font-size: 10pt"><B>Maryland</B></FONT></TD>
    <TD STYLE="width: 34%; text-align: center"><FONT STYLE="font-size: 10pt"><B>6035</B></FONT></TD>
    <TD STYLE="width: 33%; text-align: center"><FONT STYLE="font-size: 10pt"><B>82-0688069</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">(State or Other Jurisdiction of</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">(Primary Standard Industrial</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">(I.R.S. Employer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Incorporation or Organization)</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Classification Code Number)</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Identification Number)</FONT></TD></TR>
</TABLE>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">205 North Columbia Street</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">Covington, Louisiana 70433</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(985) 892-4565</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(Address, Including Zip Code, and Telephone
Number, Including Area Code, of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">Registrant&rsquo;s Principal Executive Offices)</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">Mr. W. David Crumhorn</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">President and Chief Executive Officer</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">205 North Columbia Street, Covington, Louisiana</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(985) 892-4565</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(Address, Including Zip Code, and Telephone
Number, Including Area Code, of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">Agent for Service)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Copies to:</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Kip Weissman, Esq.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Steven Lanter, Esq.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Luse Gorman, PC</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>5335 Wisconsin Avenue, N.W., Suite 780</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Washington, D.C. 20015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>(202) 274-2000</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>Approximate date of commencement of proposed
sale to the public: </B>As soon as practicable after this registration statement becomes effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">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: <FONT STYLE="font-family: Wingdings">x</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">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: <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">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: <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">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: <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer&rdquo; and &ldquo;smaller reporting company&rdquo; in Rule 12b-2
of the Exchange Act. (Check one):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 21%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 20%; text-align: justify"><FONT STYLE="font-size: 10pt">Large accelerated filer</FONT></TD>
    <TD STYLE="width: 15%; text-align: justify"><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD STYLE="width: 25%; text-align: justify"><FONT STYLE="font-size: 10pt">Accelerated filer</FONT></TD>
    <TD STYLE="width: 19%; text-align: justify"><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Non-accelerated filer</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Wingdings; font-size: 10pt">&uml;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Smaller reporting company</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Wingdings; font-size: 10pt">x</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD COLSPAN="2" STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(Do not check if a smaller reporting company)</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CALCULATION OF REGISTRATION FEE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Title
    of each class of<BR> securities to be registered</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount
    to be <BR> registered</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Proposed
    maximum<BR> &nbsp;offering price per share</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Proposed
    maximum <BR> aggregate offering price</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount
    of <BR> registration fee</FONT></TD><TD NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 20%; text-align: justify">Common Stock, $0.01 par value per share</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 19%; text-align: center">1,653,125 shares</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 17%; text-align: right">10.00</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 19%; text-align: center">$16,531,250 (1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 17%; text-align: right">1,916</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Estimated solely for the purpose of calculating the registration
fee.</TD>
</TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>


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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">PROSPECTUS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>HERITAGE NOLA BANCORP, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Proposed Holding Company for Heritage
Bank of St. Tammany)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Up to 1,437,500 of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Subject to Increase to up to 1,653,125
shares)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Heritage NOLA Bancorp,
Inc., a Maryland corporation and the proposed holding company for Heritage Bank of St. Tammany, is offering shares of common stock
for sale at $10.00 per share in connection with the conversion of Heritage Bank of St. Tammany from the mutual to the stock form
of organization. There is currently no established market for our common stock. We expect that our common stock will be quoted
on the OTC Pink Marketplace (OTCPK) operated by OTC Markets Group upon conclusion of the stock offering. Following completion of
the conversion, if we meet the Nasdaq listing requirements, we will use our best efforts to seek approval to list the common stock
on the Nasdaq Capital Market. We are an &ldquo;emerging growth company&rdquo; as defined in the Jumpstart Our Business Startups
Act of 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">We are offering up to
1,437,500 shares of common stock for sale at a price of $10.00 per share on a best efforts basis. We may sell up to 1,653,125 shares
of common stock because of demand for the shares of common stock or changes in market conditions, without resoliciting subscribers.
We must sell a minimum of 1,062,500 shares in order to complete the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">We are offering the shares
of common stock in a &ldquo;subscription offering&rdquo; to eligible depositors of Heritage Bank of St. Tammany. Shares of common
stock not purchased in the subscription offering may be offered for sale to the public in a &ldquo;community offering,&rdquo; with
a preference given to natural persons and trusts of natural persons residing in St. Tammany Parish, Louisiana. We also may offer
for sale shares of common stock not purchased in the subscription offering or community offering to the general public through
a &ldquo;syndicated community offering&rdquo; managed by FIG Partners, LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The minimum number of
shares of common stock you may order is 25 shares. Generally, the maximum number of shares of common stock that can be ordered
by any person in the offering is 5,000 shares ($50,000), and no person, together with an associate or group of persons acting in
concert, may purchase more than 20,000 shares ($200,000) in the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The offering is expected
to expire at 2:00 p.m., Central Time, on [expiration date]. We may extend this expiration date without notice to you until [extended
expiration date]. The Office of the Comptroller of the Currency may approve a later date, which may not be beyond [final date].
Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [extended expiration date], or the
number of shares of common stock to be sold is increased to more than 1,653,125 shares or decreased to fewer than 1,062,500 shares.
If the offering is extended past [extended expiration date], we will resolicit subscribers. You will have the opportunity to confirm,
change or cancel your order within a specified period of time. If you do not respond during that period, your stock order will
be cancelled and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly
with interest at 0.15% per annum. If the number of shares to be sold is increased to more than 1,653,125 shares or decreased to
fewer than 1,062,500 shares, all funds submitted for the purchase of shares of common stock in the offering will be returned promptly
with interest at 0.15% per annum. All subscribers will be resolicited and given an opportunity to place a new order within a specified
period of time. Funds received in the subscription and the community offerings and, if applicable, the syndicated community offering
will be held in a segregated account at Heritage Bank of St. Tammany and will earn interest at 0.15% per annum until completion
or termination of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">FIG Partners, LLC will
assist us in selling our shares of common stock on a best efforts basis in the offering. FIG Partners, LLC is not required to purchase
any of the shares of common stock that are being offered for sale.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>OFFERING SUMMARY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Price: $10.00 per Share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 18pt">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Minimum</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Midpoint</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Maximum</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Adjusted<BR>
    Maximum</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; padding-left: 0.45pt">Number of shares</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,062,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,250,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,437,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,653,125</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.45pt">Gross offering proceeds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,625,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,375,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">16,531,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -8.1pt; padding-left: 8.55pt">Estimated offering expenses, excluding selling agent commissions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">890,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">890,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">890,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">890,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.45pt"><FONT STYLE="font-size: 10pt">Selling agent commissions <SUP>(1) (2)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">310,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">310,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">310,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">310,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.45pt">Estimated net proceeds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,425,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">11,300,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13,175,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">15,331,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.45pt">Estimated net proceeds per share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8.87</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9.04</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9.17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9.27</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 31.7pt; text-indent: -13.7pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><FONT STYLE="font-weight: normal"></FONT></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18pt"></TD><TD STYLE="width: 13.7pt"><FONT STYLE="font-weight: normal"><SUP>(1)</SUP></FONT></TD><TD><FONT STYLE="font-weight: normal">See &ldquo;The Conversion and Offering &ndash; Marketing and Distribution; Compensation&rdquo;
for information regarding compensation to be received by FIG Partners, LLC in this offering.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18pt"></TD><TD STYLE="width: 13.7pt"><FONT STYLE="font-weight: normal"><SUP>(2)</SUP></FONT></TD><TD><FONT STYLE="font-weight: normal">Assumes
                                         that all shares are sold in the subscription and community offerings, and excludes reimbursable
                                         expenses and records agent fees, which are included in estimated offering expenses.
                                         If all shares of common stock were sold in a syndicated community offering, the maximum
                                         selling agent commissions would be 6.0% of the aggregate offering dollar amount of all
                                         shares sold in the syndicated community offering (net of shares purchased by our directors
                                         and executive officers and shares purchased by our employee stock ownership plan), or
                                         approximately $529,000, $632,000, $736,000 and $855,000 at the minimum, midpoint, maximum,
                                         and adjusted maximum levels of the offering, respectively.</FONT></TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in">This investment involves
a degree of risk, including the possible loss of principal.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in">Please read &ldquo;Risk
Factors&rdquo; beginning on page 15.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>These securities are not deposits
or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. None
of the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Board of Governors of the Federal
Reserve System or any state securities regulator has approved or disapproved of these securities or determined if this prospectus
is accurate or complete. Any representation to the contrary is a criminal offense.</I></B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">________________________________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center; text-indent: -0.25in"><FONT STYLE="font-size: 12pt">FIG
Partners, LLC</FONT>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">________________________________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">For assistance, please contact
the Stock Information Center, toll-free, at (866) 806-1790.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">The date of this prospectus is _________,
2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>[INSERT MAP]</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="TOC"></A>TABLE OF CONTENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 93%; text-align: right; padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 7%; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><FONT STYLE="font-size: 8pt"><B>Page</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_01">SUMMARY</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>1</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><A HREF="#pro_02"><FONT STYLE="font-size: 10pt"><B>RISK FACTORS</B></FONT></A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>15</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_03">SELECTED FINANCIAL AND OTHER DATA OF HERITAGE BANK OF ST. TAMMANY</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>29</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_04">FORWARD-LOOKING STATEMENTS</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>31</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_05">HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>34</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_06">OUR DIVIDEND POLICY</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>36</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_07">MARKET FOR THE COMMON STOCK</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>36</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_08">HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>38</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_09">CAPITALIZATION</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>39</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_10">PRO FORMA DATA</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>40</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_11">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>44</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_12">BUSINESS OF HERITAGE NOLA BANCORP</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>56</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_13">BUSINESS OF HERITAGE BANK OF ST. TAMMANY</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>56</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_14">REGULATION AND SUPERVISION</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>82</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_15">TAXATION</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>92</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_16">MANAGEMENT</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>93</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_17">SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>103</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_18">THE CONVERSION AND OFFERING</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>104</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_19">RESTRICTIONS ON ACQUISITION OF HERITAGE NOLA BANCORP</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>126</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_20">DESCRIPTION OF CAPITAL STOCK OF HERITAGE NOLA BANCORP</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>133</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_21">TRANSFER AGENT</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>134</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_22">EXPERTS</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>134</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_23">LEGAL MATTERS</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>134</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><FONT STYLE="font-size: 10pt"><B><A HREF="#pro_24">WHERE YOU CAN FIND ADDITIONAL INFORMATION</A></B></FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>135</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt"><B><A HREF="#pro_25">INDEX TO FINANCIAL STATEMENTS OF HERITAGE BANK OF ST. TAMMANY</A></B></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><B>F-1</B></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><A NAME="pro_01"></A>SUMMARY</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>The following summary explains the significant
and important material aspects of Heritage Bank of St. Tammany&rsquo;s mutual-to-stock conversion and the related offering of Heritage
NOLA Bancorp, Inc. common stock. It may not contain all of the information that is important to you. For additional information
before making an investment decision, you should read this entire document carefully, including the financial statements and the
notes to the financial statements, and the section entitled &ldquo;Risk Factors.&rdquo; </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>In this prospectus, the terms &ldquo;we,&rdquo;
&ldquo;our,&rdquo; and &ldquo;us&rdquo; refer to Heritage NOLA Bancorp, Inc. and Heritage Bank of St. Tammany, unless the context
indicates another meaning. In addition, we sometimes refer to Heritage NOLA Bancorp, Inc. as &ldquo;Heritage NOLA Bancorp,&rdquo;
and to Heritage Bank of St. Tammany as &ldquo;Heritage Bank&rdquo; or the &ldquo;Bank.&rdquo; </I></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">&nbsp;</FONT></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">Heritage Bank of
St. Tammany</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany is a federal
mutual savings association that was founded in 1924. We have operated continuously in Covington, Louisiana since our founding,
and prior to 2014, operated under the name St. Tammany Homestead Savings and Loan Association. We conduct our business from our
main office in Covington, Louisiana, and our branch office in Slidell, Louisiana, both of which are located in St. Tammany Parish,
within the greater metropolitan area of New Orleans. Covington is the Parish Seat of St. Tammany Parish, which is located on the
north shore of Lake Pontchartrain which separates St. Tammany Parish from New Orleans. Our primary market area is St. Tammany Parish.
To a lesser extent, we also originate loans in the greater New Orleans metropolitan area and the parishes contiguous to St. Tammany
Parish.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our business consists primarily of taking
deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family
residential real estate loans, including non-owner-occupied properties and home equity lines of credit, and commercial real estate.
We also originate land, construction and multifamily loans, and to a much lesser extent, consumer and commercial business loans.
At December 31, 2016, $57.6 million, or 75.1% of our total loan portfolio, was comprised of one- to four-family residential real
estate loans, $11.2 million of which were non-owner-occupied loans. While we originate conforming one- to four-family residential
real estate loans that we sell to Freddie Mac, historically we have also originated a substantial amount of non-conforming loans
that we retain in our portfolio. Following completion of the conversion and stock offering, we intend to consider hiring an experienced
commercial lender and increase our emphasis on the origination of commercial real estate loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In 2016, we began purchasing loans to healthcare
professionals from the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals. Consistent with our
business plan to grow our loan portfolio while managing our interest rate risk, subject to market conditions, we may significantly
increase our holdings of these types of commercial business loans in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We offer a variety of deposit accounts,
including noninterest-bearing demand accounts, savings accounts, NOW accounts and certificates of deposit. We utilize advances
from the FHLB-Dallas for asset/liability management purposes. At December 31, 2016, we had $13.3 million in advances outstanding
with the FHLB-Dallas.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In recent years we have accepted jumbo certificates
of deposit through National CD Rateline, an online service. Pursuant to our business strategy, we are seeking to increase our core
deposits by</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">aggressively marketing and pricing these deposit products and
by growing our commercial lending relationships, and reduce our reliance on certificates of deposit as a funding source.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For the years ended December 31, 2016 and
2015, we had net income of $158,000 and $277,000, respectively. The decrease in net income resulted primarily from increases in
provision for loan losses and income tax expense in 2016 versus 2015, offset in part by higher net interest income in 2016 resulting
from an increase in our average loan balances in 2016 versus 2015. See &ldquo;Management Discussion and Analysis of Financial Condition
and Results of Operation &ndash; Comparison of Operating Results for the Years Ended December 31, 2016 and 2015.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany is subject
to comprehensive regulation and examination by its primary federal regulator, the Office of the Comptroller of the Currency (&ldquo;OCC&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our executive and administrative office
is located at 205 North Columbia Street, Covington, Louisiana 70433, and our telephone number at this address is (985) 892-4565.
Our website address is <U>www.heritagebank.org.</U> Information on our website is not incorporated into this prospectus and should
not be considered part of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-style: normal">Heritage NOLA Bancorp,
Inc.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The shares being offered will be issued
by Heritage NOLA Bancorp, Inc., a newly formed Maryland corporation that will own all of the outstanding shares of common stock
of Heritage Bank of St. Tammany upon completion of the Bank&rsquo;s mutual-to-stock conversion. Heritage NOLA Bancorp was incorporated
in February 2017 and has not engaged in any business to date. Upon completion of the conversion, Heritage NOLA Bancorp will register
as a savings and loan holding company and will be subject to comprehensive regulation and examination by the Board of Governors
of the Federal Reserve System, which we refer to as the Federal Reserve Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp&rsquo;s executive
and administrative office is located at 205 North Columbia Street, Covington, Louisiana 70433, and its telephone number at this
address is (985) 892-4565.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Conversion and Our Organizational Structure</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to the terms of the plan of conversion,
Heritage Bank of St. Tammany will convert from a mutual (meaning no stockholders) savings bank to a stock savings bank. As part
of the conversion, Heritage NOLA Bancorp, the newly formed proposed holding company for Heritage Bank of St. Tammany, will offer
for sale shares of its common stock in a subscription offering, and, if necessary, a community offering and a syndicated community
offering. Upon the completion of the conversion and stock offering, Heritage NOLA Bancorp will be 100% owned by stockholders and
Heritage Bank of St. Tammany will be a wholly owned subsidiary of Heritage NOLA Bancorp. A full description of the conversion begins
on page 104 of this prospectus under the heading &ldquo;The Conversion and Offering.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Business Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our principal objective is to build long-term
value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking
needs of our customers by emphasizing personalized and efficient customer service. We are a very small financial institution, and
we believe that managing prudent yet consistent asset growth in order to increase revenue is critical to our long-term success.
We intend to operate as a well-capitalized and profitable community bank dedicated to providing exceptional personal service to
our individual and business customers. We believe that we have a competitive advantage in the markets we serve because of our knowledge
of the local marketplace and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">our long-standing history of providing superior, relationship-based
customer service. Highlights of our current business strategy include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Continuing to focus on one- to four-family residential real estate lending, including our practice of originating for retention
in our portfolio, nonconforming long-term loans.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Increasing commercial real estate lending and commercial business lending.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Maintaining our strong asset quality through conservative loan underwriting.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Attracting and retaining customers in our market area and build our &ldquo;core&rdquo; deposits consisting of demand, NOW and
savings accounts.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>Remaining a community-oriented institution and relying <FONT STYLE="background-color: white">on high quality service to maintain
and build a loyal local customer base. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Expanding our banking franchise as opportunities arise through de novo branching and/or branch acquisitions.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">These strategies are intended to guide our
investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and
the offering, subject to changes necessitated by future market conditions and other factors. See &ldquo;Business of Heritage Bank
of St. Tammany&rdquo; and &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations &ndash;
Business Strategy&rdquo; for a further discussion of our business strategy.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Reasons for the Conversion and Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Consistent with our business strategy, our
primary reasons for converting and raising additional capital through the offering are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>to increase capital to support future growth and profitability;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>to retain and attract qualified personnel by establishing stock-based benefit plans for management and employees;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>to have greater flexibility to structure and finance the opportunistic expansion of our operations; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>to offer our customers and employees an opportunity to purchase our stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2016, Heritage Bank of
St. Tammany was considered &ldquo;well capitalized&rdquo; for regulatory purposes. As a result of the conversion, the proceeds
from the stock offering will further improve our capital position during a period of significant economic, regulatory and political
uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">See &ldquo;The Conversion and Offering&rdquo;
for a more complete discussion of our reasons for conducting the conversion and offering.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Terms of the Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are offering between 1,062,500 shares
and 1,437,500 shares of common stock to eligible depositors of Heritage Bank of St. Tammany and to our tax-qualified employee benefit
plans in a</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">subscription offering. To the extent shares remain available,
we may offer shares for sale in a community offering, with a preference given to natural persons and trusts of natural persons
residing in St. Tammany Parish, Louisiana. We may also offer for sale shares of common stock not purchased in the subscription
offering or the community offering to the general public in a syndicated community offering. The number of shares of common stock
to be sold may be increased to up to 1,653,125 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 offered is increased to more than 1,653,125 shares or decreased
to fewer than 1,062,500 shares, or the offering is extended beyond [extended expiration date], subscribers will not have the opportunity
to change or cancel their stock orders once submitted. If the offering is extended past [extended expiration date], we will resolicit
subscribers. You will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do
not respond during that period of time, your stock order will be cancelled and your deposit account withdrawal authorizations will
be cancelled or your funds submitted will be returned promptly with interest at 0.15% per annum. If the number of shares to be
sold is increased to more than 1,653,125 shares or decreased to fewer than 1,062,500 shares, all subscribers&rsquo; stock orders
will be cancelled, their deposit account withdrawal authorizations will be cancelled and funds delivered for the purchase of shares
of common stock in the offering will be returned promptly with interest at 0.15% per annum. We will give these subscribers an opportunity
to place new orders for a specified period of time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The purchase price of each share of common
stock to be offered for sale in the offering is $10.00. All investors will pay the same purchase price per share. Investors will
not be charged a commission to purchase shares of common stock in the offering. FIG Partners, LLC, our marketing agent in the offering,
will use its best efforts to assist us in selling shares of our common stock but is not obligated to purchase any shares of common
stock in the offering.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Important Risks in Owning Heritage NOLA Bancorp&rsquo;s
Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Before you purchase shares of our common
stock, you should read the &ldquo;Risk Factors&rdquo; section beginning on page 15 of this prospectus.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How We Determined the Offering Range and the $10.00 per
Share Stock Price</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The amount of common stock we are offering
for sale is based on an independent appraisal of the estimated market value of Heritage NOLA Bancorp, assuming the conversion and
offering are completed. RP Financial, LC., our independent appraiser, has estimated that, as of February 10, 2017, this market
value was $12.5 million. Based on regulations of the OCC, this market value forms the midpoint of a valuation range with a minimum
of $10.6 million and a maximum of $14.4 million. Based on this valuation and a $10.00 per share price, the number of shares of
common stock being offered for sale by us will range from 1,062,500 shares to 1,437,500 shares. We may sell up to 1,653,125 shares
of common stock because of demand for the shares or changes in market conditions without resoliciting subscribers. The $10.00 per
share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The appraisal is based in part on Heritage
Bank of St. Tammany&rsquo;s financial condition and results of operations, the pro forma effect of the additional capital raised
by the sale of shares of common stock in the offering and an analysis of a peer group of ten publicly traded thrift holding companies
with assets between $228 million and $528 million as of September 30, 2016 that RP Financial, LC. (&ldquo;RP Financial&rdquo;)
considers comparable to Heritage NOLA Bancorp. See &ldquo;The Conversion and Offering &ndash; Determination of Share Price and
Number of Shares to be Issued.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table presents a summary of
selected pricing ratios for the peer group companies and for Heritage NOLA Bancorp (on a pro forma basis) utilized by RP Financial
in its appraisal. These ratios are based on Heritage NOLA Bancorp&rsquo;s book value, tangible book value and core earnings as
of and for the 12 months ended December 31, 2016. The peer group ratios are based on the latest date for which complete financial
data are publicly available and stock prices as of February 10, 2017. Compared to the average pricing of the peer group, our pro
forma pricing ratios at the midpoint of the offering range indicated a discount of 40.2% on a price-to-book value basis and a discount
of 42.2% on a price-to-tangible book value basis and a premium of 1,268.6% on a price-to-earnings basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Price-to-core&nbsp;earnings<BR>
multiple&nbsp;<FONT STYLE="font-family: Times New Roman, Times, Serif"><SUP>(1)</SUP></FONT></B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Price-to-book&nbsp;<BR>
    value&nbsp;ratio</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Price-to-tangible<BR>
    book&nbsp;value&nbsp;ratio</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Heritage NOLA Bancorp (on a pro forma basis, assuming completion of the conversion):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 55%; text-align: left; padding-left: 0.25in">Adjusted Maximum</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">976.42</TD><TD STYLE="width: 1%; text-align: left">x</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">72.46</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">72.46</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in">Maximum</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">487.11</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68.73</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68.73</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in">Midpoint</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">306.71</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64.89</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64.89</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in">Minimum</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">204.33</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60.35</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Valuation of peer group companies, all of which are fully converted (on an historical basis):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in">Average</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22.41</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108.54</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112.27</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in">Median</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20.38</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">109.85</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">111.74</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -13.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -13.5pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -13.5pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(1)</TD><TD STYLE="text-align: left">Price-to-earnings multiples calculated by RP Financial
in the independent appraisal are based on an estimate of &ldquo;core&rdquo; or recurring earnings. These ratios are different
from those presented in &ldquo;Pro Forma Data.&rdquo;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>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 utilized by RP Financial to estimate our <I>pro forma </I>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.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For a more complete discussion of the amount
of common stock we are offering for sale and the independent appraisal, see &ldquo;The Conversion and Offering &ndash; Determination
of Share Price and Number of Shares to be Issued.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Stock price performance is affected by
many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount
of proceeds a company raises in its offering; and numerous factors relating to the specific company, including the experience
and ability of management, historical and anticipated operating results, the nature and quality of the company&rsquo;s assets,
and the company&rsquo;s market area.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Our stock price may trade below $10.00
per share, as the stock prices of certain mutual-to-stock conversions have decreased below the initial offering price. If you purchase
shares of common stock, you may not be able to sell them at or above $10.00 per share. Before you make an </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>investment decision, we urge you to carefully
read this prospectus, including, but not limited to, the section entitled &ldquo;Risk Factors&rdquo; beginning on page 15.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How We Intend to Use the Proceeds From the Stock Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany will receive
a capital contribution equal to at least 50% of the net proceeds of the offering, plus such additional amounts as may be necessary
so that, upon completion of the offering, Heritage Bank of St. Tammany will have a Tier 1 leverage ratio of at least 10.0%. Based
on this formula, we anticipate that Heritage NOLA Bancorp will invest, at the minimum, midpoint, maximum and adjusted maximum of
the offering range, approximately $4.7 million, $5.7 million, $6.6 million and $7.7 million, respectively, of the net proceeds
from the stock offering in Heritage Bank of St. Tammany. Of the remaining funds, we intend that Heritage NOLA Bancorp will loan
funds to our employee stock ownership plan to fund the plan&rsquo;s purchase of shares of common stock in the stock offering, and
retain the remainder of the net proceeds from the offering. Assuming we sell 1,250,000 shares of common stock in the stock offering
and have net proceeds of $11.3 million, based on the above formula, we anticipate that Heritage NOLA Bancorp will invest $5.7 million
in Heritage Bank of St. Tammany, loan $1.0 million to our employee stock ownership plan to fund its purchase of shares of common
stock, and retain the remaining $4.7 million of the net proceeds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp may use the remaining
funds that it retains to repurchase shares of common stock (subject to compliance with regulatory requirements), to pay cash dividends,
for investments, or for other general corporate purposes. Heritage Bank of St. Tammany intends to the net proceeds it receives
from us to fund new loans, enhance existing products and services, invest in securities, expand its banking franchise by establishing
or acquiring a new branch or acquiring another financial institution as opportunities arise, or for general corporate purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For more information on the proposed use
of the proceeds from the offering, see &ldquo;How We Intend to Use the Proceeds from the Offering.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Persons Who May Order Shares of Common Stock in the Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are offering the shares of common stock
in a subscription offering in the following descending order of priority:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(i)</FONT></TD><TD>First, to depositors with accounts at Heritage Bank of St. Tammany with aggregate balances of at least $50 at the close of
business on December 31, 2015.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(ii)</FONT></TD><TD>Second, to our tax-qualified employee benefit plans (including Heritage Bank of St. Tammany&rsquo;s employee stock ownership
plan), which 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. We expect our employee stock ownership plan to purchase up to 8% of the shares
of common stock sold in the offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(iii)</FONT></TD><TD>Third, to depositors with accounts at Heritage Bank of St. Tammany with aggregate balances of at least $50 at the close of
business on [_______].</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(iv)</FONT></TD><TD>Fourth, to depositors of Heritage Bank of St. Tammany at the close of business on [voting record date].</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Shares of common stock not purchased in
the subscription offering may be offered for sale in a community offering, with a preference given to natural persons and trusts
of natural persons residing in</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">St. Tammany Parish, Louisiana. The community
offering may begin concurrently with, during or after the subscription offering. We also may offer for sale shares of common stock
not purchased in the subscription offering or the community offering to the general public through a syndicated community offering,
which will be managed by FIG Partners, LLC. We have the right to accept or reject, in our sole discretion, orders received in the
community offering or syndicated community offering. Any determination to accept or reject stock orders in the community offering
or the syndicated community offering will be based on the facts and circumstances available to management at the time of the determination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we receive orders for more shares than
we are offering, we may not be able to fully or partially fill your order. Shares will be allocated first to categories in the
subscription offering. A detailed description of the subscription offering, the community offering and the syndicated community
offering, as well as a discussion regarding allocation procedures, can be found in the section of this prospectus entitled &ldquo;The
Conversion and Offering.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Limits on How Much Common Stock You May Purchase</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The minimum number of shares of common stock
that may be purchased is 25.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Generally, no individual, or individuals
through a single account held jointly, may purchase more than the greater of: (i) 5,000 shares ($50,000) of common stock; (ii)
0.10% of the total number of shares of common stock issued in the offering, or (iii) 15 times the number of shares offered multiplied
by a fraction of which the numerator is the depositor&rsquo;s total deposit balance (as of the eligibility record date or supplemental
eligibility record date, as applicable) and the denominator is the aggregate of all deposits (as of the eligibility record date
or supplemental eligibility record date, as applicable), subject to the overall purchase limitations. If any of the following purchase
shares of common stock, their purchases, in all categories of the offering combined, when combined with your purchases, cannot
exceed 20,000 shares ($200,000) of common stock:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>your spouse or relatives of you or your spouse who reside with you;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>most companies, trusts or other entities in which you are a trustee, have a substantial beneficial interest or hold a senior
position; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>other persons who may be your associates or persons acting in concert with you.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Unless we determine otherwise, persons having
the same address and persons exercising subscription rights through qualifying accounts registered to the same address will be
subject to the overall purchase limitation of 20,000 shares ($200,000). See the detailed descriptions of &ldquo;acting in concert&rdquo;
and &ldquo;associate&rdquo; in the section of this prospectus headed &ldquo;The Conversion and Offering &ndash; Limitations on
Common Stock Purchases.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Subject to OCC approval, we may increase
or decrease the purchase limitations at any time. See the detailed description of the purchase limitations in the section of this
prospectus headed &ldquo;The Conversion and Offering &ndash; Limitations on Common Stock Purchases.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How You May Purchase Shares of Common Stock in the Subscription
Offering and the Community Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the subscription offering and community
offering, you may pay for your shares only by:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>personal check, bank check or money order made payable directly to Heritage NOLA Bancorp, Inc.; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>authorizing us to withdraw available funds (without any early withdrawal penalty) from your account(s) maintained with Heritage
Bank of St. Tammany, other than checking accounts or individual retirement accounts (IRAs).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Please do not submit cash or wire transfers.
For orders paid for by check or money order, the funds must be available in the account. Heritage Bank of St. Tammany is not permitted
to lend funds to anyone for the purpose of purchasing shares of common stock in the offering. Additionally, you may not use a Heritage
Bank of St. Tammany line of credit check or any type of third-party check to pay for shares of common stock. <B>On the stock order
form, you may not designate withdrawal from Heritage Bank of St. Tammany accounts with check-writing privileges; instead, please
submit a check. </B> If you request that we directly withdraw the funds 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 we will immediately withdraw the amount from your checking account. Funds received in the subscription and community offerings
and, if applicable, the syndicated community offering will be held in a segregated account at Heritage Bank of St. Tammany and
will earn interest at 0.15% per annum until completion or termination of the offering. You may not authorize direct withdrawal
from a Heritage Bank of St. Tammany retirement account. See &ldquo;&ndash; Using Retirement Account Funds to Purchase Shares of
Common Stock in the Subscription and Community Offerings.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Withdrawals from certificates of deposit
at Heritage Bank of St. Tammany for the purpose of purchasing common stock in the offering may be made without incurring an early
withdrawal penalty. All funds authorized for withdrawal from deposit accounts with Heritage Bank of St. Tammany must be in the
deposit accounts at the time the stock order form is received. A hold will be placed on those funds when your stock order form
is received, making the designated funds unavailable to you. However, funds will not be withdrawn from the accounts until the offering
is completed and will continue to earn interest at the applicable deposit account rate until the completion of the offering. If
a withdrawal results in a certificate of deposit account with a balance less than the applicable minimum balance requirement, the
certificate will be canceled at the time of withdrawal without penalty, and the remaining balance will earn interest at Heritage
Bank of St. Tammany&rsquo; current statement savings rate thereafter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">You may subscribe for shares of common stock
in the offering by delivering a signed and completed original stock order form, together with full payment payable to Heritage
NOLA Bancorp, Inc. or authorization to withdraw funds from one or more of your Heritage Bank of St. Tammany deposit accounts, provided
that the stock order form is <I>received</I> (not postmarked) before 2:00 p.m., Central Time, on [expiration date]. You may submit
your stock order form and payment by mail using the stock order reply envelope provided, by overnight delivery to our Stock Information
Center at the address noted on the stock order form or by hand-delivery to Heritage Bank of St. Tammany&rsquo;s main office, located
at 205 North Columbia Street, Covington, Louisiana. <B>Please do not mail stock order forms to Heritage Bank of St. Tammany.</B>
Once submitted, your order will be irrevocable unless the offering is terminated or is extended beyond [extended expiration date],
or the number of shares of common stock to be sold is increased to more than 1,653,125 shares or decreased to fewer than 1,062,500
shares. We are not required to accept incomplete stock order forms, unsigned stock order forms, or copies or facsimiles of stock
order forms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For a complete description of how to purchase
shares in the stock offering, see &ldquo;The Conversion and Offering &ndash; Procedure for Purchasing Shares.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Using Retirement Account Funds to Purchase
Shares of Common Stock in the Subscription and Community Offerings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">You may be able to subscribe for shares
of common stock using funds in your individual retirement account (&ldquo;IRA&rdquo;), or other retirement account. If you wish
to use some or all of the funds in your IRA or other retirement account held at Heritage Bank of St. Tammany, the applicable funds
must be transferred to a self-directed account maintained by an independent custodian or trustee, such as a brokerage firm, <I>before</I>
you place your stock order. If you do not have such an account, you will need to establish one. 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
held at Heritage Bank of St. Tammany or elsewhere. Whether you may use such funds for the purchase of shares in the stock offering
may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For a complete description of how to use
IRA funds to purchase shares in the stock offering, see &ldquo;The Conversion and Offering &ndash; Procedure for Purchasing Shares
&ndash; Using Retirement Account Funds.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">You May Not Sell or Transfer Your Subscription Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Federal regulations prohibit you from transferring
your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that
you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription
rights. We intend to take legal action against anyone who we believe has sold or transferred his or her subscription rights. In
addition, we intend to advise the appropriate federal agencies of any person who we believe has sold or transferred his or her
subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription
rights. On the stock order form, you may not add the names of others for joint stock registration who do not have subscription
rights or who qualify only in a lower subscription offering priority than you do. You may add only those who were eligible to purchase
shares of common stock in the subscription offering at your date of eligibility. In addition, the stock order form requires that
you list all qualifying accounts, giving all names on each account and the account number at the applicable eligibility date. Failure
to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share
allocation if there is an oversubscription.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Purchases by Executive Officers and Directors</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We expect our directors and executive officers,
together with their associates, to subscribe for 97,850 shares ($978,500) of common stock in the offering, representing
9.2% of shares to be sold at the minimum of the offering range. However, there can be no assurance that any individual
director or executive officer, or the directors and executive officers as a group, will purchase any specific number of shares
of our common stock. 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. Our directors and executive officers will be subject to the same minimum purchase requirements
and purchase limitations as other participants in the offering set forth under &ldquo;&ndash; Limits on How Much Stock You May
Purchase.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Purchases by our directors, executive officers
and their associates will be included in determining whether the required minimum number of shares has been subscribed for in the
offering. Any purchases made by our directors or executive officers, or their associates, for the explicit purpose of meeting the
minimum 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For more information on the proposed purchases
of shares of common stock by our directors and executive officers, see &ldquo;Subscriptions by Directors and Executive Officers.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Deadline for Orders of Shares of Common Stock in the Subscription
and Community Offerings</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The deadline for submitting orders for shares
of common stock in the subscription and community offerings is 2:00 p.m., Central Time, on [expiration date], unless we extend
the subscription offering and/or the community offering. If you wish to purchase shares of common stock, a properly completed and
signed original stock order form, together with full payment, must be <I>received</I> (not postmarked) by this time. <B>Orders
received after 2:00 p.m., Central Time, on [expiration date] will be rejected unless the offering is extended.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 2:00 p.m., Central Time, on [expiration date], whether or not we have been able to locate each person entitled
to subscription rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For a complete description of the deadline
for purchasing shares in the stock offering, see &ldquo;The Conversion and Offering &ndash; Procedure for Purchasing Shares &ndash;
Expiration Date.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Steps We May Take if We Do Not Receive Orders for the Minimum
Number of Shares</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we do not receive orders for at least
1,062,500 shares of common stock, we may take additional steps in order to issue the minimum number of shares of common stock in
the offering range. Specifically, we may:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>increase the purchase limitations; and/or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>seek regulatory approval to extend the offering beyond [extended expiration date].</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we extend the offering past [extended
expiration date], we will resolicit subscribers and you will have the opportunity to confirm, change or cancel your order within
a specified period of time. If you do not respond during that period of time, your stock order will be cancelled and your deposit
account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest at 0.15% per
annum from the date the stock order was processed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If one or more purchase limitations are
increased we will not resolicit all subscribers, however, subscribers in the subscription offering who ordered the maximum amount
and who indicated a desire to be resolicited on the stock order form will be and, in our sole discretion, some other large subscribers
may be, given the opportunity to increase their subscriptions up to the newly applicable limit. We may increase the individual
or aggregate purchase limitations to an amount not to exceed 5.0% of the common stock sold in the offering, see &ldquo;The Conversion
and Offering &ndash; Limitations on Common Stock Purchases.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Conditions to Completion of the Conversion</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The board of directors of Heritage Bank
of St. Tammany has approved the plan of conversion. In addition, the OCC has conditionally approved the plan of conversion and
the Federal Reserve Board has conditionally approved our holding company application. We cannot complete the conversion unless:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The plan of conversion is approved by a majority of votes eligible to be cast by members of Heritage Bank of St. Tammany (depositors
of Heritage Bank of St. Tammany). A special meeting of members to consider and vote upon the plan of conversion has been scheduled
for [special meeting date];</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We have received orders for at least the minimum number of shares of common stock offered; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We receive the final approval required from the OCC to complete the conversion and offering and the final approval from the
Federal Reserve Board on the holding company application.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Any approval by the OCC or the Federal Reserve
Board does not constitute a recommendation or endorsement of the plan of conversion.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our Dividend Policy</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Following completion of the stock offering,
our board of directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements.
However, no decision has been made with respect to the amount, if any, and timing of any dividend payments. The payment and amount
of any dividend payments will depend upon a number of factors, including the following: regulatory capital requirements; our financial
condition and results of operations; our other uses of funds for the long-term value of stockholders; tax considerations; statutory
and regulatory limitations; and general economic conditions. See &ldquo;Our Dividend Policy&rdquo; in this prospectus for additional
information regarding our dividend policy.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Market for Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We anticipate that the common stock sold
in the offering will be quoted on the OTC Pink Marketplace (OTCPK) operated by OTC Markets Group. FIG Partners, LLC currently intends
to make a market in the shares of our common stock, but is under no obligation to do so. See &ldquo;Market for the Common Stock.&rdquo;
Following completion of the conversion, if we meet the Nasdaq listing requirements, we will use our best efforts to seek approval
to list our common stock on the Nasdaq Capital Market.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Delivery of Shares of Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">All shares of common stock of Heritage NOLA
Bancorp sold in the subscription offering and community offering will be issued in book entry form and held electronically on the
books of our transfer agent. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock
sold in the offering will be mailed by our transfer agent to the persons entitled thereto at the address noted by them on their
stock order form as soon as practicable following consummation of the conversion. Shares of common stock sold in the syndicated
community offering may be delivered electronically through the services of The Depository Trust Company. We expect trading in the
stock to begin on the business day of or on the business day immediately following the completion of the conversion and stock offering.
<B>It is possible that until a statement reflecting ownership of shares of common stock is available and delivered to purchasers,
purchasers might not be able to sell the shares of common </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>stock that they ordered, even though the
common stock will have begun trading. </B>Your ability to sell the shares of common stock before receiving your statement will
depend on arrangements you may make with a brokerage firm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Possible Change in the Offering Range</B><BR>
<BR>
</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">RP Financial will update its appraisal before
we complete the 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 1,653,125 shares in the offering without further notice to you. If
our pro forma market value at that time is either below $10.6 million or above $16.5 million, then, after consulting with the OCC,
we may:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>terminate the stock offering, cancel deposit account withdrawal authorizations and promptly return all funds received in the
offering with interest at 0.15% per annum;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>set a new offering range; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>take such other actions as may be permitted by the OCC, the Federal Reserve Board, the Financial Industry Regulatory Authority
(&ldquo;FINRA&rdquo;) and the Securities and Exchange Commission.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we set a new offering range, we will
promptly return funds, with interest at 0.15% per annum for funds received in the offering, cancel deposit account withdrawal authorizations
and commence a resolicitation. In connection with the resolicitation, we will notify subscribers of their right to place a new
stock order for a specified period of time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Possible Termination of the Offering</B><BR>
<BR>
</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may terminate the offering at any time
prior to the special meeting of members of Heritage Bank of St. Tammany that is being called to vote on the conversion, and at
any time after member approval with the concurrence of the OCC. If we terminate the offering, we will promptly return funds, as
described above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Benefits to Management and Potential Dilution to Stockholders
Resulting from the Conversion</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We expect our employee stock ownership plan,
which is a tax-qualified retirement plan for the benefit of all of our employees being established in connection with the conversion
and stock offering, to purchase up to 8% of the shares of common stock that we sell in the offering. If we receive orders for more
shares of common stock than the maximum of the offering range, the employee stock ownership plan will have first priority to purchase
shares over this maximum, up to a total of 8% of the shares of common stock that we sell in the offering. This would reduce the
number of shares available for allocation to eligible depositors. For further information, see &ldquo;Management &ndash; Benefit
Plans and Agreements &ndash; Employee Stock Ownership Plan.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Purchases by the employee stock ownership
plan in the offering will be included in determining whether the required minimum number of shares have been sold in the offering.
Subject to market conditions and receipt of regulatory approval, the employee stock ownership plan may instead elect to purchase
shares of common stock in the open market following the completion of the offering in order to fill all or a portion of the employee
stock ownership plan&rsquo;s intended subscription.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We also intend to implement a stock-based
benefit plan no earlier than six months after completion of the conversion. Stockholder approval of this plan will be required,
and the stock-based benefit plan cannot be implemented until at least six months after the completion of the conversion pursuant
to applicable OCC regulations. If adopted within 12 months following the completion of the conversion, and provided that upon completion
of the offering Heritage Bank of St. Tammany has at least a 10% tangible capital to assets ratio, the OCC conversion regulations
would allow for the stock-based benefit plan to reserve a number of shares of common stock equal to not more than 4% of the shares
sold in the offering, or up to 57,500 shares of common stock at the maximum of the offering range, for restricted stock awards
to key employees and directors, at no cost to the recipients. If adopted within 12 months following the completion of the conversion,
the stock-based benefit plan will also reserve a number of shares equal to not more than 10% of the shares of common stock sold
in the offering, or up to 143,750 shares of common stock at the maximum of the offering range, for the exercise of stock options
granted to key employees and directors. If the stock-based benefit plan is adopted after one year from the date of the completion
of the conversion, the 4% and 10% limitations described above will no longer apply, and we may adopt a stock-based benefit plan
encompassing more than 201,250 shares of our common stock assuming the maximum of the offering range. We have not yet determined
whether we will present this plan for stockholder approval within 12 months following the completion of the conversion or whether
we will present this plan for stockholder approval more than 12 months after the completion of the conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table summarizes the number
of shares of common stock and aggregate dollar value of grants (valuing each share granted at the offering price of $10.00) that
would be available under a stock-based benefit plan if such plan is adopted within one year following the completion of the conversion
and the offering and Heritage Bank of St. Tammany has at least a 10% tangible capital to assets ratio at that time. The table shows
the dilution to stockholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in
the open market. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership
plan for allocation to all employees. A portion of the stock grants shown in the table below may be made to non-management employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Number&nbsp;of&nbsp;Shares&nbsp;to&nbsp;be&nbsp;Granted&nbsp;or&nbsp;Purchased&nbsp;(1)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Dilution</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
    <FONT STYLE="font-size: 8pt">Resulting</FONT></FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Value&nbsp;of&nbsp;Grants&nbsp;(2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">At
    </FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR> <FONT STYLE="font-size: 8pt">Minimum </FONT><BR> <FONT STYLE="font-size: 8pt">of
    Offering </FONT><BR> <FONT STYLE="font-size: 8pt">Range</FONT></FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">At
    </FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR> <FONT STYLE="font-size: 8pt">Maximum </FONT><BR> <FONT STYLE="font-size: 8pt">of
    Offering </FONT><BR> <FONT STYLE="font-size: 8pt">Range</FONT></FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">As
    a </FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR> <FONT STYLE="font-size: 8pt">Percentage </FONT><BR>
    <FONT STYLE="font-size: 8pt">of Common </FONT><BR> <FONT STYLE="font-size: 8pt">Stock to be </FONT><BR> <FONT STYLE="font-size: 8pt">Issued</FONT></FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">From</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
    <FONT STYLE="font-size: 8pt">Issuance&nbsp;of</FONT><BR> <FONT STYLE="font-size: 8pt">Shares&nbsp;for</FONT><BR> <FONT STYLE="font-size: 8pt">Stock&nbsp;Benefit</FONT><BR>
    <FONT STYLE="font-size: 8pt">Plans</FONT></FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.05in; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt"><B>At</B></FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
                                         <FONT STYLE="font-size: 8pt"><B>Minimum</B></FONT><BR> <FONT STYLE="font-size: 8pt"><B>of
                                         </B></FONT></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.05in; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt"><B>Offering</B></FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
                                         <FONT STYLE="font-size: 8pt"><B>Range</B></FONT></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.05in; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt"><B>At</B></FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
                                         <FONT STYLE="font-size: 8pt"><B>Maximum</B></FONT><BR> <FONT STYLE="font-size: 8pt"><B>of
                                         </B></FONT></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.05in; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt"><B>Offering</B></FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
                                         <FONT STYLE="font-size: 8pt"><B>Range</B></FONT></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%; text-align: left; padding-left: 0.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Employee
    stock ownership plan</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">85,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">115,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">8.00</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">n/a</FONT></TD><TD NOWRAP STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><SUP>(3)</SUP></FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">850,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,150,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Stock awards</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">42,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">57,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">4.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3.85</FONT></TD><TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">425,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">575,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Stock
    options</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">106,250</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">143,750</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">10.00</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">9.09</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">291,125</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">393,875</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">233,750</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">316,250</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">22.00</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">12.28</FONT></TD><TD NOWRAP STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,566,125</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2,118,875</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><B></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"></P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>The stock-based benefit plan may award a greater number of options and shares, respectively, if the plan is adopted more than
12 months after the completion of the conversion.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>The actual value of restricted stock grants will be determined based on their fair value as of the date grants are made. For
purposes of this table, fair value is assumed to be the same as the offering price of $10.00 per share. The fair value of stock
options has been estimated at $2.74 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date
share price and option exercise price of $10.00; dividend yield of 0%; an expected option life of 10 years; a risk-free interest
rate of 2.45%; and a volatility rate of 12.57%. The actual expense of stock options granted under a stock-based benefit plan will
be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions
used in the option pricing model ultimately adopted, which may or may not be the Black-Scholes model.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>Represents the dilution of stock ownership interest. No dilution is reflected for the employee stock ownership plan because
these shares are assumed to be purchased in the offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Tax Consequences</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany and Heritage
NOLA Bancorp have received an opinion of counsel, Luse Gorman, PC, regarding the material federal income tax consequences of the
conversion, including an opinion that it is more likely than not that the fair market value of the nontransferable subscription
rights to purchase the common stock will be zero and, accordingly, no gain or loss will be recognized by depositors upon the distribution
to them of the nontransferable subscription rights to purchase the common stock and no taxable income will be realized by depositors
as a result of the exercise of the nontransferable subscription rights. Heritage Bank of St. Tammany and Heritage NOLA Bancorp
have also received an opinion of Hannis T. Bourgeois, LLP regarding the material Louisiana state 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 Heritage
Bank of St. Tammany, Heritage NOLA Bancorp or persons eligible to subscribe in the subscription offering. See the section of this
prospectus entitled &ldquo;Taxation&rdquo; for additional information regarding taxes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How You Can Obtain Additional Information &ndash; Stock
Information Center</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our banking personnel may not, by law, assist
with investment-related questions about the offering. If you have questions regarding the conversion or offering, please call our
Stock Information Center. The toll-free telephone number is (866) 806-1790. The Stock Information Center is open for telephone
calls Monday through Friday between 10:00 a.m. and 4:00 p.m., Central Time. The Stock Information Center will be closed on bank
holidays.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>


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    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><A NAME="pro_02"></A>RISK FACTORS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>You should consider carefully the following
risk factors in evaluating an investment in the shares of common stock. </B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Risks Related to Our Business</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our commercial real estate lending activities may expose
us to increased lending risks. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal">We intend
to continue to originate and purchase commercial real estate loans for portfolio, as well as participate in larger commercial real
estate loans. Such lending activities generally are considered to involve a higher degree of risk than one- to four-family residential
real estate lending due to a variety of factors, including generally larger loan balances, shorter terms to maturity and loan terms
which often do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity.
As a result, we may need to increase our provision for loan losses in future periods to address possible loan losses in our commercial
real estate loan portfolio. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>A portion of our one- to four-family residential real estate
loans is comprised of non-owner-occupied properties which increases the credit risk on this portion of our loan portfolio.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal">The housing
stock in our primary market area is comprised in part of single-family rental properties as well as two- to four-unit properties.&nbsp;&nbsp;At
December 31, 2016, of the $57.6 million of one- to four-family residential real estate loans in our portfolio, $11.2 million, or
14.7% of this amount, was comprised of non-owner-occupied properties.&nbsp;&nbsp;Our non-owner-occupied residential loans are secured
primarily by single-family properties, and to a much lesser extent, by two- to four-unit properties.&nbsp;&nbsp;We believe that
there is a greater credit risk inherent in non-owner-occupied properties than in owner-occupied properties since, similar to commercial
real estate and multifamily loans, the repayment of these loans may depend, in part, on the successful management of the property
and/or the borrower&rsquo;s ability to lease the units of the property.&nbsp;&nbsp;In addition, the physical condition of non-owner-occupied
properties may be below that of owner-occupied properties due to lesser property maintenance standards, which has a negative impact
on the value of the collateral properties.&nbsp;&nbsp;Furthermore, some of our non-owner-occupied borrowers have more than one
loan outstanding with us, which may expose us to a greater risk of loss compared to residential borrowers with only one loan.&nbsp;&nbsp;A
downturn in the real estate market or the local economy could adversely affect the value of properties securing these loans or
the revenues derived from these properties which could affect the borrower&rsquo;s ability to repay the loan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>We utilize wholesale certificates of
deposit which are interest-rate sensitive and which increase our interest rate risk sensitivity.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal">In recent
years, we have accepted wholesale certificates of deposits through National CD Rateline, an on-line service, and directly from
other federally insured institutions. At December 31, 2016, $11.9 million, or 16.0% of our total deposits, consisted of these wholesale
certificates of deposit. Our reliance on certificates of deposit to fund our operations may result in a higher cost of funds than
would otherwise be the case if we had a higher percentage of noninterest-bearing demand deposits, savings deposits and NOW accounts.
Additionally, wholesale certificates of deposit are generally considered rate-sensitive instruments which contribute to our interest
rate risk sensitivity. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Future changes in interest rates could reduce our profits
and asset values.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Future changes in interest rates could impact
our financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Net income is the amount by which net interest
income and noninterest income exceeds noninterest expense and the provision for loan losses. Net interest income makes up a majority
of our income and is based on the difference between:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>interest income earned on interest-earning assets, such as loans and securities; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>interest expense paid on interest-bearing liabilities, such as deposits and borrowings.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are vulnerable to changes in interest
rates including the shape of the yield curve because of a mismatch between the terms to repricing of our assets and liabilities.
We maintain in our portfolio a substantial amount of long-term, fixed-rate one- to four-family residential real estate loans. The
retention of these loans makes us extremely sensitive to a decrease in the value of our equity in a rising interest rate environment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We utilize a computer simulation model to
provide an analysis of estimated changes in net interest income (&ldquo;NII&rdquo;) and in the economic value of equity (&ldquo;EVE&rdquo;)
in various interest rate scenarios. At December 31, 2016, our &ldquo;rate shock&rdquo; analysis indicated that our NII would decrease
$101,000, or 3.5%, to $2.8 million, and our EVE would decrease $1.6 million, or 17.3%, in the event of an immediate 200 basis point
increase in interest rates. 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Additionally, increases in interest rates
may decrease loan demand and/or make it more difficult for borrowers to repay adjustable-rate loans. Conversely, a reduction in
interest rates can result in increased prepayments of loans and mortgage-backed and related securities, as borrowers refinance
their debt in order to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able
to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Finally, a significant increase in interest
rates could make it more difficult to attract the funding needed to support our operations.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>A portion of our loan portfolio consists of loan participations.
Loan participations may have a higher risk of loss than loans we originate because we are not the lead lender and we have limited
control over credit management. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal">A portion
of our loan portfolio consists of loan participations purchased from other banks. Historically, our loan participations have been
secured by commercial properties. Although we underwrite these loan participations consistent with our general underwriting criteria,
loan participations may have a higher risk of loss than loans we originate because we rely on the lead lender to manage the performance
of the loan. Moreover, our decision regarding the classification of a loan participation and loan loss provisions associated with
a loan participation is made in part based upon information provided by the lead lender. A lead lender also may not monitor a participation
loan in the same manner as we would for loans that we originate. At December&nbsp;31, 2016, our loan participations totaled $2.4
million, or 3.0% of our loan portfolio. We intend to continue to purchase loan participations following completion of the stock
offering. If the underwriting, administration or performance of these participation loans is not adequate, our non-performing loans
may increase and our earnings may decrease. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our small size makes it more difficult for us to compete
and to achieve significant profitability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our small asset size makes it more difficult
to compete with other financial institutions which are generally larger and can more easily afford to invest in the marketing and
technologies needed to attract and retain customers. Because our principal source of income is the net interest income we earn
on our loans after deducting interest paid on deposits and other sources of funds, our ability to generate the revenues needed
to cover our expenses and finance such investments is limited by the size of our loan portfolio. Accordingly, we are not always
able to offer new products and services as quickly as our competitors. Our lower earnings also make it more difficult to offer
competitive salaries and benefits. In addition, our smaller customer base makes it difficult to generate meaningful noninterest
income from such activities as securities and insurance brokerage. Finally, as a smaller institution, we are disproportionately
affected by the continually increasing costs of compliance with new banking and other regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our future success will be largely due to
the efforts of our senior management team, including W. David Crumhorn, our President and Chief Executive Officer, Dana Whitaker,
our Executive Vice President and Chief Credit Officer and Lisa Hughes, our Senior Vice President and Chief Financial Officer, who
have each been employed by Heritage Bank 25, 28 and 10 years, respectively. Because we are a small community savings bank with
a small management team, each member of our senior management team has more responsibility than his or her counterpart typically
would have at a larger institution with more employees, and we have fewer management-level personnel who are in a position to assume
the responsibilities of our senior management team. The loss of services of either of these individuals may have a material adverse
effect on our ability to implement our business plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If our allowance for loan losses is not sufficient to cover
actual loan losses, our earnings could decrease.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We make various assumptions and judgments
about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate
and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan
losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions are
incorrect, our allowance for loan losses may not be sufficient to cover probable incurred losses in our loan portfolio, resulting
in additions to our allowance for loan losses. Additions to the allowance for loan losses are established through the provision
for losses on loans which is charged against income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal">Material
additions to our allowance could materially decrease our net income. In addition, bank regulators periodically review our allowance
for loan losses and, based on judgments different than management&rsquo;s, we may determine to increase our provision for loan
losses or recognize further loan charge-offs as a result of these regulatory reviews. Any material increase in our allowance for
loan losses or loan charge-offs may adversely affect our financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">If our nonperforming assets increase, our earnings will
be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, our nonperforming
assets, which consist of nonaccruing loans and foreclosed assets, were $611,000, or 0.62% of total assets. Our nonperforming assets
adversely affect our net income in various ways, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we forego the interest income that we would otherwise recognize were the assets accruing;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we must provide for probable loan losses through a current period charge to the provision for loan losses;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>noninterest expense increases when we write down the value of properties in our real estate owned portfolio to reflect changing
market values or recognize other-than-temporary impairment on nonperforming securities;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>there are legal fees associated with the resolution of problem assets, as well as carrying costs, such as taxes, insurance,
and maintenance fees related to our real estate owned; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the resolution of nonperforming assets requires the active involvement of management, which can distract them from more profitable
activity.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If additional borrowers become delinquent
and do not pay their loans and we are unable to successfully manage our nonperforming assets, our losses and troubled assets could
increase significantly, which could have a material adverse effect on our financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>If our real estate owned is not properly
valued or if our allowance for loan losses is insufficient, our earnings could be reduced. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We obtain updated valuations in the form
of appraisals when a loan has been foreclosed and the property taken in as real estate owned and at certain other times during
the holding period of the asset. Our net book value (&ldquo;NBV&rdquo;) in the loan at the time of foreclosure and thereafter is
compared to the updated fair value of the foreclosed property less estimated selling costs (fair value). A charge-off is recorded
for any excess in the asset&rsquo;s NBV over its fair value less estimated selling costs. If our valuation process is incorrect,
or if property values decline, the fair value of our real estate owned may not be sufficient to recover our carrying value in such
assets, resulting in the need for additional charge-offs. Significant charge-offs to our real estate owned could have a material
adverse effect on our financial condition and results of operations. In addition, bank regulators periodically review our real
estate owned and may require us to recognize further charge-offs. Any increase in our charge-offs may have a material adverse effect
on our financial condition and results of operations.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Strong competition within our market areas may limit our
growth and profitability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Competition in the banking and financial
services industry is intense. In our market area, we compete with commercial banks, savings institutions, mortgage brokerage firms,
credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally
and elsewhere. Some of our competitors have greater name recognition and market presence that benefit them in attracting business,
and offer certain services that we do not or cannot provide. In addition, larger competitors may be able to price loans and deposits
more aggressively than we do, which could affect our ability to grow and remain profitable on a long-term basis. Our ability to
achieve significant profitability depends upon our ability to successfully compete in our market area. If we must</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">raise interest rates paid on deposits or lower interest rates
charged on our loans, our net interest margin and profitability could be adversely affected. For additional information see &ldquo;Business
of Heritage Bank of St. Tammany &ndash; Market Area&rdquo; and &ldquo;Business of Heritage Bank of St. Tammany &ndash; Competition.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The financial services industry could become
even more competitive as a result of new legislative, regulatory and technological changes and continued consolidation. Banks,
securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually
any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant
banking. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally
provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints
and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale
and, as a result, may offer a broader range of products and services as well as better pricing for those products and services
than we can.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We have become subject to more stringent capital requirements,
which may adversely impact our return on equity, require us to raise additional capital, or constrain us from paying dividends
or repurchasing shares.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In July 2013, the federal banking agencies
approved a new rule that has substantially amended regulatory risk-based capital rules. The final rule implements the regulatory
capital reforms from the Basel Committee on Banking Supervision (&ldquo;Basel III&rdquo;) and changes required by the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the &ldquo;Dodd-Frank Act&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The final rule includes new minimum risk-based
capital and leverage ratios, which were effective for us on January 1, 2015, and refines the definition of what constitutes &ldquo;capital&rdquo;
for purposes of calculating these ratios. The new minimum capital requirements are: (i) a new common equity Tier 1 capital ratio
of 4.5%; (ii) a Tier 1 to risk-based assets capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged
from prior rules); and (iv) a Tier 1 leverage ratio of 4%. The final rule also requires unrealized gains and losses on certain
&ldquo;available-for-sale&rdquo; securities holdings to be included for purposes of calculating regulatory capital requirements
unless a one-time opt-out is exercised. We have elected to exercise our one-time option to opt-out of the requirement under the
final rule to include certain &ldquo;available-for-sale&rdquo; securities holdings for purposes of calculating our regulatory capital
requirements. The final rule also establishes a &ldquo;capital conservation buffer&rdquo; of 2.5%, and, when fully phased in, will
result in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 to risk-based assets capital
ratio of 8.5%, and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement were phased in beginning
in January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019. 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 buffer amount. These limitations will establish a maximum percentage of eligible retained income that can
be utilized for such actions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have analyzed the effects of these new
capital requirements, and we believe that, upon completion of the offering, we would meet all of these new requirements, including
the full 2.5% capital conservation buffer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The application of more stringent capital
requirements could, among other things, result in lower returns on equity, require the raising of additional capital, and result
in regulatory actions if we were to be unable to comply with such requirements. Furthermore, the imposition of liquidity requirements
in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure
our business models, and/or increase our holdings of liquid assets. Implementation of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">changes to asset risk weightings for risk-based capital calculations,
items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management
modifying its business strategy, and could limit our ability to make distributions, including paying out dividends or buying back
shares. Specifically, our ability to pay dividends will be limited if we do not have the capital conservation buffer required by
the new capital rules, which may further limit our ability to pay dividends to shareholders. See &ldquo;Supervision and Regulation
&ndash; Federal Banking Regulation &ndash; Capital Requirements.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks associated with system failures, interruptions, or
breaches of security could negatively affect our earnings.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Information technology systems are critical
to our business. We use various technology systems to manage our customer relationships, general ledger, securities, deposits,
and loans. However, while our policies and procedures are designed to prevent or limit the impact of system failures, interruptions,
and security breaches, they may not be adequate. In addition any compromise of our systems could deter customers from using our
products and services. Although we rely on security systems to provide security and authentication necessary to effect the secure
transmission of data, these precautions may not protect our systems from compromises or breaches of security.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, we outsource a majority of
our data processing to certain third-party providers. If these third-party providers encounter difficulties, or if we have difficulty
communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations
could be adversely affected. Threats to information security also exist in the processing of customer information through various
other vendors and their personnel.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The occurrence of any system failures, interruption,
or breach of security could damage our reputation and result in a loss of customers and business, subject us to additional regulatory
scrutiny or expose us to litigation and possible financial liability. Any of these events could have a material adverse effect
on our financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We are a community bank and our ability to maintain our reputation
is critical to the success of our business and the failure to do so may materially adversely affect our performance.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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. This is done, in part, by recruiting, hiring and retaining employees
who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and
caring about our customers and associates. If our reputation is negatively affected, by the actions of our employees, or by our
inability to conduct our operations in a manner that is appealing to current or prospective customers, our business and, therefore,
our operating results may be materially adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Changes to federal programs that subsidize flood insurance
could result in increased premiums for owners of flood insurance which could result in increased loan defaults.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The National Flood Insurance Program (NFIP)
enables property owners in participating communities to purchase insurance, administered by the government, against losses from
flooding, and requires flood insurance for all loans or lines of credit that are secured by existing buildings, manufactured homes,
or buildings under construction, that are located in a designated Special Flood Hazard Area, including a large portion of our primary
market area. This insurance is designed to provide</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">an insurance alternative to disaster assistance to meet the
escalating costs of repairing damage to buildings and their contents caused by floods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In 2012, in response to the insolvency of
the NFIP, The Biggert-Waters Flood Insurance Reform Act of 2012 was introduced to allow flood insurance premiums to rise to reflect
the true risk of living in high-flood areas, by reducing the government subsidies provided by the NFIP. In recent years, there
has been ongoing legislative discussions about reducing governmental subsidies for flood insurance, which could result in much
larger flood insurance premiums to be paid by owners of the insurance. Increases in flood insurance premiums could result in certain
borrowers no longer being able to meet their monthly loan payments and could therefore result in increased loan defaults.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We could be adversely affected by a failure in our internal
controls.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A failure in our internal controls could
have a significant negative impact not only on our earnings, but also on the perception that customers, regulators and investors
may have of us. We continue to devote a significant amount of effort, time and resources to strengthen our controls and ensuring
compliance with complex accounting standards and banking regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>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.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a result of the completion of this offering,
we will become a public reporting company. We expect that the obligations of being a public company, including the substantial
public reporting obligations, will require significant expenditures and place additional demands on our management team. We have
made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems
to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy
our obligations as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the
effectiveness of our internal control over financial reporting, starting with the second annual report that we would expect to
file with the Securities Exchange Commission. Any failure to achieve and maintain an effective internal control environment could
have a material adverse effect on our business and stock price. In addition, we may need to hire additional compliance, accounting
and financial staff with appropriate public company experience and technical knowledge, and we may not be able to do so in a timely
fashion. As a result, we may need to rely on outside consultants to provide these services for us until qualified personnel are
hired. These obligations will increase our operating expenses and could divert our management&rsquo;s attention from our operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We operate in a highly regulated environment and may be adversely
affected by changes in laws and regulations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are subject to extensive regulation,
supervision, and examination by the Federal Reserve Board, the OCC and, to a lesser extent, the Federal Deposit Insurance Corporation
(the &ldquo;FDIC&rdquo;). Such regulators govern the activities in which we may engage, primarily for the protection of depositors.
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including
the imposition of restrictions on the operation of a financial institution, the classification of assets by a financial institution,
and the adequacy of a financial institution&rsquo;s allowance for loan losses. Any change in such regulation and oversight, whether
in the form of regulatory policy, regulations, or legislation, could have a material impact on us and our operations. Because our
business is highly regulated, the laws, rules and applicable regulations are subject to regular modification and change. Laws,
rules and regulations may be adopted in the future that could make compliance more</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">difficult or expensive or otherwise adversely affect our business,
financial condition or prospects. See &ldquo;Regulation and Supervision&rdquo; for a discussion of the regulations to which we
are subject.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Changes in accounting standards could affect reported earnings.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The bodies responsible for establishing
accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory
bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our consolidated 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Future legislative or regulatory actions responding to perceived
financial and market problems could impair our rights against borrowers. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">There have been proposals made by members
of Congress and others that would reduce the amount distressed borrowers are otherwise contractually obligated to pay under their
mortgage loans and limit an institution&rsquo;s ability to foreclose on mortgage collateral. If proposals such as these, or other
proposals limiting our rights as a creditor, are implemented, we could experience increased credit losses or increased expense
in pursuing our remedies as a creditor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Risks Related to the Offering</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">The future price of our common stock may be less than the
purchase price in the stock offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you purchase shares of common stock in
the stock offering, you may not be able to sell them at or above the purchase price in the stock offering. The purchase price in
the offering is based upon an independent third-party appraisal of the pro forma market value of Heritage Bank of St. Tammany,
pursuant to federal banking regulations and subject to review and approval by the OCC. The appraisal is not intended, and should
not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. Our aggregate
pro forma market value as reflected in the final independent appraisal may exceed the market price of our shares of common stock
after the completion of the offering, which may result in our stock trading below the initial offering price of $10.00 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">After the shares of our common stock begin
trading, the trading price of the common stock will be determined by the marketplace, and will be influenced by many factors outside
of our control, including prevailing interest rates, investor perceptions, securities analyst research reports and general industry,
geopolitical and economic conditions. Publicly traded stocks, including stocks of financial institutions, often experience substantial
market price volatility. These market fluctuations might not be related to the operating performance of particular companies whose
shares are traded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>There will be a limited trading market in our common stock,
which could hinder your ability to sell our common stock and may lower the market price of the stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have never issued stock and, therefore,
there is no current trading market for the shares of common stock. Moreover, our public &ldquo;float,&rdquo; which is the total
number of our outstanding shares less the shares held by our employee stock ownership plan and our directors and executive officers
and is used as a measurement of shares available for trading, will be limited. The limited trading market could also result in
a wider spread between the &ldquo;bid&rdquo; and &ldquo;ask&rdquo; prices for the stock, which could make it more difficult to
sell a large number of shares at one time and could mean a sale of a large number of shares at one time could depress the market
price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">Upon completion of the conversion, we expect
the common stock will also be quoted on the OTC Pink Marketplace (OTCPK).&nbsp;Following completion of the conversion, if we meet
the Nasdaq listing requirements, we will use our best efforts to seek approval to trade on the Nasdaq Capital Market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>You may not be able to sell your shares of common stock until
you have received ownership statements, which may affect your ability to sell your common stock immediately following the offering.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Statements of ownership for the shares of
common stock purchased in the offering may not be delivered for several days after the completion of the offering and the commencement
of trading in the common stock. Your ability to sell the shares of common stock before receiving your ownership statement will
depend on arrangements you may make with a brokerage firm, and you may not be able to sell your shares of common stock until you
have received these statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our stock-based benefit plans will increase our costs,
which will reduce our income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We anticipate that our employee stock ownership
plan will purchase up to 8.0% of the total shares of common stock sold in the stock offering, with funds borrowed from Heritage
NOLA Bancorp. The cost of acquiring the shares of common stock for the employee stock ownership plan will be between $850,000 at
the minimum of the offering range and $1.3 million at the adjusted maximum of the offering range. We will record annual employee
stock ownership plan expense in an amount equal to the fair value of shares of common stock committed to be released to employees.
If shares of common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will
increase.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We also intend to adopt a stock-based benefit
plan after the stock offering that would award participants (at no cost to them) shares of our common stock and/or options to purchase
shares of our common stock. The number of shares reserved for awards of restricted stock or grants of stock options under any initial
stock-based benefit plan may not exceed 4% and 10%, respectively, of the total shares sold in the offering, if these plans are
adopted within 12 months after the completion of the conversion. We may reserve shares of common stock for stock awards and stock
options in excess of these amounts, provided the stock-based benefit plan is adopted more than one year following the stock offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Assuming the market price of the common
stock is $10.00 per share; the options are granted with an exercise price of $10.00 per share; the dividend yield on the stock
is 0%; the expected option life is ten years; the risk free interest rate is 2.45% (based on the ten-year Treasury rate) and the
volatility rate on the shares of common stock is 12.57% (based on an index of publicly traded thrift institutions), the estimated
grant-date fair value of the options using a Black-Scholes option pricing analysis is $2.74 per option granted. Assuming this value
is amortized over a five-year vesting period, the corresponding annual pre-tax expense associated with the stock options in the
first year after the offering would be $91,000 at the adjusted maximum of the offering range. In addition, assuming that all shares
of restricted stock are awarded at a price of $10.00 per share, and that the awards vest over a five-year period, the corresponding
annual pre-tax expense associated with restricted stock awarded under the stock-based benefit plan would be $132,000 at the adjusted
maximum of the offering range in the first year after the offering. Moreover, if we grant shares of common stock or options in
excess of these amounts, such grants would increase our costs further.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The fair value of the shares of restricted
stock on the date granted under the stock-based benefit plan will be expensed by us over the vesting period of the shares. If the
shares of restricted stock to be granted under the plan are repurchased in the open market (rather than issued directly from authorized
but unissued shares by Heritage NOLA Bancorp) and cost the same as the purchase price in the stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">offering, the reduction to stockholders&rsquo;
equity due to the stock-based benefit plan would be between $425,000 at the minimum of the offering range and $661,000 at the adjusted
maximum of the offering range. To the extent we repurchase shares of common stock in the open market to fund the grants of shares
under the plan, and the price of such shares exceeds the offering price of $10.00 per share, the reduction to stockholders&rsquo;
equity would exceed the range described above. Conversely, to the extent the price of such shares is below the offering price of
$10.00 per share, the reduction to stockholders&rsquo; equity would be less than the range described above.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">The implementation of a stock-based benefit plan will dilute
your ownership interest.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We intend to adopt a stock-based benefit
plan, which will allow participants to be awarded shares of common stock (at no cost to them) and/or options to purchase shares
of our common stock, following the stock offering. If this stock-based benefit plan is funded from the issuance of authorized but
unissued shares of common stock, stockholders would experience a reduction in ownership interest totaling 12.28%. Although the
implementation of the stock-based benefit plan will 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have not determined whether we will adopt a stock-based
benefit plan more than one year following the stock offering. Stock-based benefit plans adopted more than one year following the
stock offering may exceed regulatory restrictions on the size of stock-based benefit plans adopted within one year, which would
increase our costs and the dilution to other shareholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we adopt a stock-based benefit plan within
one year following the completion of the stock offering, then we may grant shares of common stock or stock options under our stock-based
benefit plan for up to 4% and 10%, respectively, of our total outstanding shares. The amount of stock awards and stock options
available for grant under the stock-based benefit plan may exceed these amounts, provided the stock-based benefit plans are adopted
more than one year following the stock offering. Although the implementation of the stock-based benefit plan will be subject to
stockholder approval, the determination as to the timing of the implementation of such a plan will be at the discretion of our
board of directors. Stock-based benefit plans that provide for awards in excess of these amounts would increase our costs beyond
the amounts estimated in &ldquo; &ndash; Our stock-based benefit plans will increase our costs, which will reduce our income.&rdquo;
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 &ldquo; &ndash; The implementation of stock-based benefit plans will dilute your ownership interest.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have entered into employment agreements with our executive
officers, which may increase our compensation costs upon the occurrence of certain events or increase the cost of acquiring us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have entered into employment agreements
with our President and Chief Executive Officer, our Executive Vice President and Chief Credit Officer and our Senior Vice President
and Chief Financial Officer. In the event of termination of employment other than for cause, or in the event of certain types
of termination following a change in control, as set forth in the employment agreements, assuming each of the agreements has
three years remaining, the agreements will provide for cash severance benefits that would cost us up to $1.3 million
based on the three executives&rsquo; current total compensation. The cost of these severance payments would increase the cost
of acquiring us. For additional information see &ldquo;Management &ndash; Executive Officer Compensation.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have broad discretion in using the proceeds of the stock
offering. Our failure to effectively deploy the net proceeds of the offering may have an adverse effect on our financial performance
and the value of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We intend to invest between $4.7 million
and $6.6 million of the net proceeds of the offering (or $7.7 million at the adjusted maximum of the offering range) in Heritage
Bank of St. Tammany. We also expect to use a portion of the net proceeds we retain to fund a loan for the purchase of shares of
common stock in the offering by the employee stock ownership plan. We may use the remaining net proceeds to invest in short-term
and other investments, repurchase shares of common stock, pay dividends, or for other general corporate purposes. Heritage Bank
of St. Tammany may use the remaining net proceeds it receives to fund new loans, enhance existing products and services, invest
in securities, expand its banking franchise by establishing or acquiring a new branch or acquiring another financial institution
as opportunities arise, or for other general corporate purposes. However, with the exception of 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 significant
flexibility in determining the amount of the net proceeds we apply to different uses and the timing of such applications. Also,
certain of these uses, such as opening new branches or acquiring other financial institutions, paying dividends and repurchasing
common stock, may require the approval of the OCC or the Federal Reserve Board. We have not established a timetable for investing
the net proceeds, and, accordingly, we may not invest the net proceeds at the time that is most beneficial to Heritage NOLA Bancorp,
Heritage Bank of St. Tammany or the shareholders. For additional information see &ldquo;How We Intend To Use The Proceeds From
The Offering.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Certain provisions of our articles of incorporation and
bylaws, and state and federal law could prevent or impede the ability of stockholders to obtain representation on our board of
directors, and may discourage hostile acquisitions of control of Heritage NOLA Bancorp, Inc., which could negatively affect our
stock value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Certain provisions in our articles of incorporation
and bylaws may discourage attempts to acquire Heritage NOLA Bancorp, pursue a proxy contest for control of Heritage NOLA Bancorp,
assume control of Heritage NOLA Bancorp by a holder of a large block of common stock, and remove Heritage NOLA Bancorp&rsquo;s
management, all of which shareholders might think are in their best interests. These provisions include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>restrictive requirements regarding eligibility for service on the board of directors, including a requirement that non-employee
directors, other than the Company&rsquo;s initial directors, maintain their primary residence within 10 miles of one of the Bank&rsquo;s
offices for at least one year prior to their initial appointment or election to the board, a prohibition on service by persons
who are or have been the subject of certain legal or regulatory proceedings, a prohibition on service by persons who are party
to agreements that may affect their voting discretion, a prohibition on service by persons who have lost more than one campaign
for election, and a prohibition on service by nominees or representatives (as defined in applicable Federal Reserve Board regulations)
of another person who would not be eligible for service or of an entity the partners or controlling persons of which would not
be eligible for service;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42pt; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the election of directors to staggered terms of three years;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42pt; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>provisions requiring advance notice of shareholder proposals and director nominations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42pt; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a limitation on the right to vote more than 10% of the outstanding shares of common stock;</TD></TR></TABLE>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a prohibition on cumulative voting;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42pt; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a requirement that the calling of a special meeting by shareholders requires the request of a majority of all votes entitled
to be cast at the special meeting;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42pt; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a requirement that directors may only be removed for cause and by a majority of the votes entitled to be cast;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42pt; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the board of directors&rsquo; ability to cause Heritage NOLA Bancorp to issue preferred stock; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42pt; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the requirement of the vote of 80% of the votes entitled to be cast in order to amend certain provisions of the articles of
incorporation, including those set forth above.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For further information, see &ldquo;Restrictions
on Acquisition of Heritage NOLA Bancorp &ndash; Heritage NOLA Bancorp&rsquo;s Articles of Incorporation and Bylaws.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Federal regulations prohibit, for three
years following the completion of a mutual-to-stock conversion, the offer to acquire or the acquisition of more than 10% of any
class of equity security of Heritage Bank of St. Tammany or Heritage NOLA Bancorp without the prior approval of the Federal Reserve
Board. In addition, the business corporation law of Maryland, the State where Heritage NOLA Bancorp is incorporated, provides for
certain restrictions on acquisition of Heritage NOLA Bancorp. See &ldquo;Restrictions on Acquisitions of Heritage NOLA Bancorp
&ndash; Maryland Corporate Law;&rdquo; &ldquo; &ndash; Heritage Bank of St. Tammany&rsquo; Charter&rdquo; and &ldquo; &ndash; Change
in Control Regulations.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>A significant percentage of our common stock will be held
or controlled by our directors and executive officers and benefit plans.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board of directors and executive officers
intend to purchase in the aggregate approximately 9.2% and 6.8% of our common stock at the minimum and maximum of
the offering range, respectively. These purchases, together with the purchase by the employee stock ownership plan of 8.0% of
the aggregate shares sold in the offering, as well as the potential acquisition of common stock through the proposed equity incentive
and stock award plan will result in ownership by insiders of Heritage NOLA Bancorp and Heritage Bank of St. Tammany of approximately
31.2% of the total shares issued in the offering at the minimum and approximately 28.8% of the total shares issued
in the offering at the maximum of the offering range. The ownership by executive officers, directors and our stock plans could
result in actions being taken that are not in accordance with other shareholders&rsquo; wishes, and could prevent any action requiring
a supermajority vote under our articles of incorporation and bylaws (including the amendment of certain protective provisions
of our articles and bylaws discussed immediately above).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our stock value may be negatively affected by federal regulations
that restrict takeovers.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For three years following the stock offering,
OCC regulations prohibit any person from acquiring or offering to acquire more than 10% of our common stock without the prior written
approval of the OCC, or successor regulator. See &ldquo;Restrictions on Acquisition of Heritage NOLA Bancorp&rdquo; for a discussion
of applicable OCC regulations regarding acquisitions. Certain prospective investors may choose to purchase shares of a company
if they believe that the company will be acquired, thereby potentially increasing its stock value. Because federal regulations
will restrict any such acquisition of us</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">or Heritage Bank of St. Tammany for at least
three years after the completion of the conversion, these regulations may negatively affect our stock value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We are an emerging growth company within the meaning of the
Securities Act, and if we decide to take advantage of certain exemptions from various reporting requirements applicable to emerging
growth companies, our common stock could be less attractive to investors. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are an &ldquo;emerging growth company,&rdquo;
as defined in Section 2(a) of the Securities Act of 1933 (the &ldquo;Securities Act&rdquo;), as modified by the Jumpstart Our Business
Startups Act of 2012 ( the &ldquo;JOBS Act&rdquo;). We are eligible to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to,
reduced disclosure about our executive compensation and omission of compensation discussion and analysis, and an exemption from
the requirement of holding a non-binding advisory vote on executive compensation. In addition, we will not be subject to certain
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, including the additional level of review of our internal control
over financial reporting as may occur when outside auditors attest as to our internal control over financial reporting. As a result,
our stockholders may not have access to certain information they may deem important. Taking advantage of any of these exemptions
may adversely affect the value and trading price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We could remain an &ldquo;emerging growth
company&rdquo; for up to five years, or until the earliest of (a)&nbsp;the last day of the first fiscal year in which our annual
gross revenues exceed $1.0 billion, (b)&nbsp;the date that we become a &ldquo;large accelerated filer&rdquo; as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended, which would occur if the market value of our common stock that is
held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or
(c)&nbsp;the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We have elected to delay the adoption of new and revised
accounting pronouncements, which means that our financial statements may not be comparable to those of other public companies.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As an &ldquo;emerging growth company,&rdquo;
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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We may take other actions to meet the minimum required sales
of shares if we cannot find enough purchasers in the community.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we are not able to reach the minimum
of the offering range, we may do any of the following: increase the maximum purchase limitations and allow all maximum purchase
subscribers to increase their orders to the new maximum purchase limitations; terminate the offering and promptly return all funds;
set a new offering range, notify all subscribers of the opportunity to confirm, cancel or change their orders; or take such other
actions as may be permitted, to the extent such permission is required, by the Federal Reserve Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The distribution of subscription rights could have adverse
income tax consequences and the cost basis of the stock to purchasers with subscription rights could be less than the purchase
price.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If the subscription rights granted to certain
current or former depositors or certain borrowers of Heritage Bank of St. Tammany are deemed to have an ascertainable value, receipt
of such rights may be taxable in an amount equal to such value. Whether subscription rights are considered to have ascertainable
value is an inherently factual determination. Additionally, if the subscription rights were deemed to have an ascertainable value,
it is possible that the cost basis of the stock to any purchaser who used subscription rights could be reduced by an amount equal
to the value ascribed to the subscription rights. We have received an opinion of counsel, Luse Gorman, PC, that it is more likely
than not that such rights have no value and that it is more likely than not that the basis of the common stock to its stockholders
will be the purchase price thereof; however, such opinion is not binding on the Internal Revenue Service.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_03"></A>SELECTED FINANCIAL AND OTHER DATA<BR CLEAR="ALL">
OF HERITAGE BANK OF ST. TAMMANY</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following tables set forth selected
consolidated historical financial and other data of Heritage Bank of St. Tammany for the periods and at the dates indicated. The
information at and for the years ended December 31, 2016 and 2015 is derived in part from, and should be read together with, the
audited financial statements and notes thereto of Heritage Bank of St. Tammany beginning at page F-1 of this prospectus. The following
information is only a summary, and should be read in conjunction with our financial statements and notes beginning on page F-1
of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Selected Financial Condition Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left">Total assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">98,015</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">96,462</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,014</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,572</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,896</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Securities held to maturity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">832</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,114</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Loans, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74,659</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,966</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Premises and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,892</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Cash surrender value of life insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,949</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,618</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,073</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74,251</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73,579</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,274</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,656</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Total equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,326</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Years Ended<BR> December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Selected Operations Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left">Interest income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">4,085</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,658</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">993</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">924</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,092</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,734</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">180</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.35pt">Net interest income after provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,912</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,714</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Noninterest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">351</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">403</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Noninterest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,995</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,841</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Income before income tax expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">268</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">276</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income tax expense (benefit)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">110</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Net income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">158</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


<!-- Field: Page; Sequence: 34; Value: 2 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->29<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At&nbsp;or&nbsp;For&nbsp;the&nbsp;Years&nbsp;Ended<BR>
December&nbsp;31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Selected Financial Ratios and Other Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Performance Ratios:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; text-indent: -9pt; padding-left: 9pt">Return on average assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.16</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.30</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Return on average equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.66</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.99</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Interest rate spread (1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.36</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.20</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Net interest margin (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.45</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.28</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Efficiency ratio (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">86.99</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90.57</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Non-interest expense to average total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.08</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.11</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Average interest-earning assets to average
    interest-bearing liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106.33</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Average equity to average total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.79</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.14</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Asset Quality Ratios:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Non-performing assets to total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.62</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.06</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Non-performing loans to total loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.68</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.65</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Allowance for loan losses to non-performing loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48.05</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Allowance for loan losses to total loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.90</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.79</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Capital Ratios:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Total capital (to risk-weighted assets)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18.16</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Common equity Tier 1 capital (to risk-weighted assets)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.07</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Tier 1 capital (to risk-weighted assets)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.07</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Tier 1 capital (to avg assets) (Tier1 Leverage Ratio)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.79</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.82</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Other Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Number of full service offices</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 103.65pt; text-indent: -18.7pt"><SUP>&nbsp;</SUP>&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-left: 81.35pt; margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 103.65pt; text-indent: -18.7pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 81.35pt"></TD><TD STYLE="width: 18pt">(1)</TD><TD>Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing
liabilities for the year.</TD></TR></TABLE>

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<TD STYLE="width: 81.35pt"></TD><TD STYLE="width: 18pt">(2)</TD><TD>The net interest margin represents net interest income as a percent of average interest-earning assets for the year.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 81.35pt"></TD><TD STYLE="width: 18pt">(3)</TD><TD>The efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 99.35pt; text-indent: -0.25in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_04"></A>FORWARD-LOOKING STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This prospectus contains forward-looking
statements, which can be identified by the use of words such as &ldquo;estimate,&rdquo; &ldquo;project,&rdquo; &ldquo;believe,&rdquo;
&ldquo;intend,&rdquo; &ldquo;anticipate,&rdquo; &ldquo;assume,&rdquo; &ldquo;plan,&rdquo; &ldquo;seek,&rdquo; &ldquo;expect,&rdquo;
&ldquo;will,&rdquo; &ldquo;may,&rdquo; &ldquo;should,&rdquo; &ldquo;indicate,&rdquo; &ldquo;would,&rdquo; &ldquo;believe,&rdquo;
&ldquo;contemplate,&rdquo; &ldquo;continue,&rdquo; &ldquo;target&rdquo; and words of similar meaning. These forward-looking statements
include, but are not limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>statements of our goals, intentions and expectations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>statements regarding our business plans, prospects, growth and operating strategies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>statements regarding the asset quality of our loan and investment portfolios; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>estimates of our risks and future costs and benefits.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">These forward-looking statements are based
on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties
and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions
with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any
obligation to update any forward-looking statements after the date of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our ability to manage our operations under the economic conditions in our market area;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>adverse changes in the financial industry, securities, credit and national and local real estate markets (including real estate
values);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>significant increases in our loan losses, including as a result of our inability to resolve classified and non-performing assets
or reduce risks associated with our loans, and management&rsquo;s assumptions in determining the adequacy of the allowance for
loan losses;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our
allowance for loan losses and provision for loan losses;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>the use of estimates in determining fair value of certain of our assets, which may prove to be incorrect and result in significant
declines in valuations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>competition among depository and other financial institutions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our success in increasing our one- to four-family residential real estate lending and commercial real estate lending;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our ability to attract and maintain deposits and to grow our core deposits, and our success in introducing new financial products;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our ability to maintain our asset quality even as we continue to grow our commercial real estate and commercial business loan
portfolios;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>changes in interest rates generally, including changes in the relative differences between short term and long term interest
rates and in deposit interest rates, that may affect our net interest margin and funding sources;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>fluctuations in the demand for loans;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>changes in consumer spending, borrowing and savings habits;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>declines in the yield on our assets resulting from the current low interest rate environment;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>risks related to a high concentration of loans secured by real estate located in our market area;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>the results of examinations by our regulators, including the possibility that our regulators may, among other things, require
us to increase our allowance for loan losses, write down assets, change our regulatory capital position, limit our ability to borrow
funds or maintain or increase deposits, or prohibit us from paying dividends, which could adversely affect our dividends and earnings;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>changes in the level of government support of housing finance;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our ability to enter new markets successfully and capitalize on growth opportunities;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank Act and the
JOBS Act, which could result in, among other things, increased deposit insurance premiums and assessments, capital requirements,
regulatory fees and compliance costs, particularly the new capital regulations, and the resources we have available to address
such changes;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards
Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>changes in our compensation and benefit plans, and our ability to retain key members of our senior management team and to address
staffing needs in response to product demand or to implement our strategic plans;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>loan delinquencies and changes in the underlying cash flows of our borrowers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our ability to control costs and expenses, particularly those associated with operating as a publicly traded company;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>the failure or security breaches of computer systems on which we depend;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>the ability of key third-party service providers to perform their obligations to us;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>changes in the financial condition or future prospects of issuers of securities that we own; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>other economic, competitive, governmental, regulatory and operational factors affecting our operations, pricing, products and
services described elsewhere in this prospectus.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Because of these and a wide variety of other
uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.
Please see &ldquo;Risk Factors&rdquo; beginning on page 15.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_05"></A>HOW WE INTEND TO USE THE PROCEEDS FROM
THE OFFERING</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 $9.4 million and $13.2 million, or $15.3 million if the offering range is increased by 15%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We intend to distribute the net proceeds
as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="30" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Based
    Upon the Sale at $10.00 Per Share of</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,062,500
    shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,250,000
    shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,437,500
    shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,653,125
    shares (1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent<BR>
    of Net<BR> Proceeds</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent<BR>
    of Net<BR> Proceeds</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent<BR>
    of Net<BR> Proceeds</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent<BR>
    of Net<BR> Proceeds</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="30" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 28%; text-align: left">Offering proceeds</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">10,625</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">12,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">14,375</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">16,531</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less offering expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Net offering proceeds (2)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,425</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,300</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,175</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,331</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Distribution of net proceeds:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">To Heritage Bank of St. Tammany</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,713</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,650</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50.0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.25in">To fund loan to employee stock ownership plan</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">850</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9.0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.8</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,150</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,323</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Retained by Heritage NOLA Bancorp</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,862</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,650</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,438</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,342</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41.4</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>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.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>Assumes that all shares of common stock are sold in the subscription and community offerings.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 result in
a reduction of Heritage Bank of St. Tammany&rsquo;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 a syndicated community offering were
used to sell shares of common stock not purchased in the subscription and community offerings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp intends to fund a
loan to the employee stock ownership plan to purchase shares of common stock in the stock offering. Heritage NOLA Bancorp may also
use the proceeds it retains from the offering:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>to invest in short-term and other securities consistent with our investment policy;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>to pay cash dividends to our stockholders;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>to repurchase shares of our common stock subject to compliance with applicable regulatory requirements; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>for other general corporate purposes.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">With the exception of the funding of the
loan to the employee stock ownership plan, Heritage NOLA Bancorp has not quantified its plans for use of the offering proceeds
for each of the foregoing purposes. Initially, we intend to invest a substantial portion of the net proceeds in investment grade
securities, including securities issued by U.S. Government agencies and mortgage-backed securities issued by U.S. Government agencies
and U.S. Government-sponsored enterprises.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">See &ldquo;Our Dividend Policy&rdquo; for
a discussion of our expected dividend policy following the completion of the conversion. Under applicable 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 management recognition plans (which would
require notification to the Federal Reserve Board) or tax-qualified employee stock benefit plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany will receive
a capital contribution equal to at least 50% of the net proceeds of the offering, plus such additional amounts as may be necessary
so that, upon completion of the offering, Heritage Bank of St. Tammany will have a Tier 1 leverage ratio of at least 10.00%. Based
on this formula, we anticipate that Heritage NOLA Bancorp will invest $4.7 million, $5.7 million, $6.6 million and $7.7 million,
respectively, of the net proceeds at the minimum, midpoint, maximum and adjusted maximum of the offering in Heritage Bank of St.
Tammany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany and may use
the remaining net proceeds it receives from the stock offering:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>to fund new loans, including one- to four-family residential real estate loans, including non-owner-occupied loans and home
equity lines of credit, commercial real estate loans and commercial business loans;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>to enhance existing products and services and to support the development of new products and services;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>to invest in securities issued by U.S. Government agencies and mortgage-backed securities issued by U.S. Government agencies
and U.S. Government-sponsored enterprises, municipal securities and other securities in accordance with our investment policy;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>to expand our retail banking franchise by establishing or acquiring a new branch or acquiring another financial institution
as opportunities arise, although we do not currently have any understandings or agreements to establish or acquire any new branch
offices or other financial institution; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>for other general corporate purposes.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany has not quantified
its plans for use of the offering proceeds for each of the foregoing purposes. Initially, a substantial portion of the net proceeds
will be invested in securities issued by U.S. Government agencies and mortgage-backed securities issued by U.S. Government agencies
and U.S. Government-sponsored enterprises. The use of the proceeds outlined above may change based on many factors, including,
but not limited to, changes in interest rates, equity markets, laws and regulations affecting the financial services industry,
our relative position in the financial services industry, the attractiveness of opportunities to expand our operations through
establishing or acquiring new branches, our ability to receive regulatory approval for any such expansion activities, and overall
market conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We expect our return on equity to decrease,
until we are able to reinvest effectively the additional capital raised in the stock offering. See &ldquo;Risk Factors &ndash;
Risks Related to the Offering &ndash; We have broad discretion in using the proceeds of the stock offering. Our failure to effectively
deploy the net proceeds of the offering may have an adverse effect on our financial performance and the value of our common stock.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><A NAME="pro_06"></A>OUR DIVIDEND POLICY</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Following completion of the stock offering,
our board of directors will have the authority to declare dividends on our shares of common stock, subject to statutory and regulatory
requirements. However, no decision has been made with respect to the payment of dividends. In determining whether to pay a cash
dividend and the amount of such cash dividend, the board of directors is expected to take into account a number of factors, including
capital requirements, our financial condition and results of operations, other uses of funds for the long-term value of stockholders,
tax considerations, statutory and regulatory limitations and general economic conditions. No assurances can be given that any dividends
will be paid or that, if paid, will not be reduced or eliminated in the future. Special cash dividends, stock dividends or returns
of capital, to the extent permitted by regulations and policies of the Federal Reserve Board and the Office of the Comptroller
of the Currency, may be paid in addition to, or in lieu of, regular cash dividends.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We expect to file a consolidated federal
tax return with Heritage Bank of St. Tammany. Accordingly, it is anticipated that any cash distributions that we make to our stockholders
would be treated as cash dividends and not as a non-taxable return of capital for federal and state tax purposes. Additionally,
pursuant to regulations of the Federal Reserve Board, during the three-year period following the stock offering, we will not take
any action to declare an extraordinary dividend to stockholders that would be treated by recipients as a tax-free return of capital
for federal income tax purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to our articles of incorporation,
we are authorized to issue preferred stock. If we issue preferred stock, the holders thereof may have a priority over the holders
of our shares of common stock with respect to the payment of dividends. For a further discussion concerning the payment of dividends
on our shares of common stock, see &ldquo;Description of Capital Stock of Heritage NOLA Bancorp &ndash; Common Stock.&rdquo; Dividends
we can declare and pay will depend, in part, upon receipt of dividends from Heritage Bank of St. Tammany, because initially we
will have no source of income other than dividends from Heritage Bank of St. Tammany and earnings from the investment of the net
proceeds from the sale of shares of common stock retained by Heritage NOLA Bancorp and interest payments received in connection
with the loan to the employee stock ownership plan. Regulations of the OCC impose limitations on &ldquo;capital distributions&rdquo;
by savings institutions. See &ldquo;Regulation and Supervision &ndash; Federal Banking Regulation &ndash; Capital Distributions.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Any payment of dividends by Heritage Bank
of St. Tammany to us that would be deemed to be drawn out of Heritage Bank of St. Tammany&rsquo; bad debt reserves, if any, would
require a payment of taxes at the then-current tax rate by Heritage Bank of St. Tammany on the amount of earnings deemed to be
removed from the reserves for such distribution. Heritage Bank of St. Tammany does not intend to make any distribution to us that
would create such a federal tax liability. See &ldquo;Taxation.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_07"></A>MARKET FOR THE COMMON STOCK</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp is a newly formed
company and has never issued capital stock. Heritage Bank of St. Tammany, as a mutual institution, has never issued capital stock.
Heritage NOLA Bancorp expects that that its common stock will be quoted on the OTC Pink Marketplace (OTCPK) operated by OTC Markets
Group. Following completion of the offering, if we satisfy the Nasdaq listing requirements, we will use our best efforts to seek
approval to list the common stock on the Nasdaq Capital Market. FIG Partners, LLC. has advised us that it intends to make a market
in our common stock following the conversion and stock offering, but it is under no obligation to do so.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The development of an active trading market
depends on the existence of willing buyers and sellers, the presence of which is not within our control, or that of any market
maker. The number of active buyers and sellers of the shares of common stock at any particular time may be limited. Furthermore,
we cannot assure you that, if you purchase shares of common stock, you will be able to sell them at or above $10.00 per share.
Purchasers of common stock in this stock offering should have long-term investment intent and should recognize that there will
be a limited trading market in the common stock. This may make it difficult to sell the common stock after the stock offering and
may have an adverse impact on the price at which the common stock can be sold.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_08"></A>HISTORICAL AND PRO FORMA REGULATORY
CAPITAL COMPLIANCE</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, Heritage Bank of St.
Tammany exceeded all of the applicable regulatory capital requirements and was considered &ldquo;well capitalized.&rdquo; The table
below sets forth the historical equity capital and regulatory capital of Heritage Bank of St. Tammany at December 31, and the pro
forma equity capital and regulatory capital of Heritage Bank of St. Tammany after giving effect to the sale of shares of common
stock at $10.00 per share. The table assumes the receipt by Heritage Bank of St. Tammany of $4.7 million, $5.7 million, $6.6 million
and $7.7 million, respectively at the minimum, midpoint, maximum and adjusted maximum of the offering range. See &ldquo;How We
Intend to Use the Proceeds from the Offering.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Heritage Bank of St.</B><BR> <B>Tammany Historical at</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="30" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Pro Forma at December 31, 2016, Based Upon the Sale in the Offering of (1)</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>December 31, 2016</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>1,062,500 shares</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>1,250,000 shares</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>1,437,500 shares</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>1,653,125 shares (2)</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Percent of <BR>
Assets (3)</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Percent of <BR>
Assets (3)</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Percent of <BR>
Assets (3)</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Percent of <BR>
Assets (3)</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Percent of <BR>
Assets (3)</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="38" STYLE="font-weight: bold; text-align: center">(Dollars in thousands)</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="38" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 20%; text-indent: -0.1in; padding-left: 0.1in">Equity</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">9,460</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; text-align: right">9.65</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">12,898</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; text-align: right">12.56</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">13,610</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; text-align: right">13.13</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">14,323</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; text-align: right">13.69</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">15,142</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; text-align: right">14.33</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 leverage capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,418</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.79</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12,856</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12.74</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13,568</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.32</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,281</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.89</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">15,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.54</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Tier 1 leverage capital requirement</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,811</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,046</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,093</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,140</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,194</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Excess</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,607</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4.79</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,810</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7.74</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,475</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8.32</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,141</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8.89</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,906</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9.54</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 risk-based <BR> capital (4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,418</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12,856</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.27</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13,568</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24.48</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,281</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25.68</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">15,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27.05</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Risk-based requirement</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,344</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,419</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,434</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,449</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,466</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Excess</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,074</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9.35</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,437</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15.27</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,134</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16.48</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,832</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17.68</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,634</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">19.05</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total risk-based <BR> capital (4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,096</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13,534</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24.50</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,246</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25.70</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,959</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26.90</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">15,778</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28.26</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Risk-based requirement</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,430</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,524</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,543</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,562</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,583</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Excess</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,666</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8.59</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,010</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14.50</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,703</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15.70</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,397</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16.90</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,195</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">18.26</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Common equity Tier 1 risk-based capital (4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,418</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12,856</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.27</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13,568</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24.48</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,281</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25.68</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">15,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27.05</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Risk-based requirement</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,529</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.50</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,591</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.50</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,603</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.50</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,615</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.50</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,629</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.50</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Excess</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,889</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10.85</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,265</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16.77</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,965</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17.98</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,666</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">19.18</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,471</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">20.55</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Reconciliation of capital infused into Heritage Bank of St. Tammany:</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Proceeds to Heritage Bank of St. Tammany</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,713</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,650</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Less:&nbsp;&nbsp;Common stock acquired by employee stock ownership plan</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(850</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,150</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,323</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Less:&nbsp;&nbsp;Common stock acquired by stock-based incentive plan</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(425</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(575</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(661</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Pro forma increase</TD><TD STYLE="font-size: 10pt; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 10pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,438</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,150</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,863</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,682</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Pro forma capital levels assume that the employee stock ownership plan purchases 8% of the shares of common stock sold in the
stock offering with funds we lend and that our stock-based equity plan purchases 4% of the shares sold in the offering for restricted
stock awards. Pro forma capital calculated under generally accepted accounting principles (&ldquo;GAAP&rdquo;) and regulatory capital
have been reduced by the amount required to fund these plans. See &ldquo;Management&rdquo; for a discussion of the employee stock
ownership plan.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>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.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>Tier 1 leverage capital levels are shown as a percentage of total adjusted assets. Risk-based capital levels are shown as a
percentage of risk-weighted assets.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_09"></A>CAPITALIZATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table presents the historical
consolidated capitalization of Heritage Bank of St. Tammany at December 31, 2016 and the pro forma consolidated capitalization
of Heritage NOLA Bancorp after giving effect to the conversion and offering, based upon the assumptions set forth in the &ldquo;Pro
Forma Data&rdquo; section.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Heritage
    Bank<BR> of St. Tammany</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Pro
                                         Forma at December 31, 2016</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Based
                                         upon the Sale in the Offering at $10.00 per Share of</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">at
    December 31,<BR> 2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,062,500<BR>
    Shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,250,000<BR>
    Shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,437,500<BR>
    Shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,653,125<BR>
    Shares (1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="18" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands,
    except per share amounts)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 45%; text-indent: -3.25pt; padding-left: 3.25pt">Deposits (2)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">74,251</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">74,251</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">74,251</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">74,251</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">74,251</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -7.75pt; padding-left: 16.75pt">Total deposits and borrowings</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,525</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,525</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,525</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,525</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,525</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -7.75pt; padding-left: 16.75pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -3.25pt; padding-left: 3.25pt">Stockholders&rsquo; equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -7.75pt; padding-left: 12.25pt">Preferred stock, $0.01 par value, 1,000,000 shares authorized (post-conversion)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -7.75pt; padding-left: 12.25pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -7.75pt; padding-left: 12.25pt">Common stock, $0.01 par value, 9,000,000 shares
    authorized (post-conversion); shares to be issued as reflected (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -7.75pt; padding-left: 12.25pt">Additional paid-in capital (4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,414</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,287</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,161</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,315</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -7.75pt; padding-left: 12.25pt">Retained earnings (5)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,429</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,429</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,429</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,429</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,429</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -7.75pt; padding-left: 12.25pt">Accumulated other comprehensive income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -7.75pt; padding-left: 12.25pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-indent: -3.25pt; padding-left: 3.25pt">Less:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -7.75pt; padding-left: 12.25pt">Common stock held by employee stock ownership plan (7)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(850</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,150</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,323</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -7.75pt; padding-left: 12.25pt">Common stock to be acquired by stock-based benefit plan (8)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(425</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(575</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(661</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -7.75pt; padding-left: 12.25pt">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,460</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,610</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">19,261</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">20,910</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22,808</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -7.75pt; padding-left: 12.25pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -7.75pt; padding-left: 12.25pt">Pro forma shares outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,062,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,250,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,437,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,653,125</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -7.75pt; padding-left: 15.85pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -7.75pt; padding-left: 12.25pt">Total stockholders&rsquo; equity as a percentage of total assets (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.65</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.86</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19.10</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20.48</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -7.75pt; padding-left: 12.25pt">Tangible equity as a percentage of tangible assets (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.65</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.86</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19.10</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20.48</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>As adjusted to give effect to an increase in the number of shares of common stock that could occur due to a 15% increase in
the offering range to reflect demand for shares or changes in market conditions following the commencement of the subscription
and community offerings.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>Does not reflect withdrawals from deposit accounts for the purchase of shares of common stock in the conversion and offering.
These withdrawals would reduce pro forma deposits and assets by the amount of the withdrawals.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>No effect has been given to the issuance of additional shares of Heritage NOLA Bancorp common stock pursuant to the exercise
of options under a stock-based benefit plan. If the plan is implemented within the first year after the closing of the offering,
an amount up to 10% of the shares of Heritage NOLA Bancorp common stock sold in the offering will be reserved for issuance upon
the exercise of options under the plan.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>On a pro forma basis, common stock and additional paid-in capital have been revised to reflect the number of shares of Heritage
NOLA Bancorp common stock to be outstanding.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(5)</TD><TD>The retained earnings of Heritage Bank of St. Tammany will be substantially restricted after the conversion. See &ldquo;The
Conversion and Offering &ndash; Liquidation Rights&rdquo; and &ldquo;Regulation and Supervision.&rdquo;</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(6)</TD><TD>Assumes that 8% of the shares sold in the offering will be acquired by the employee stock ownership plan financed by a loan
from Heritage NOLA Bancorp. The loan will be repaid principally from Heritage Bank of St. Tammany&rsquo; contributions to the employee
stock ownership plan. Since Heritage NOLA Bancorp will finance the employee stock ownership plan debt, this debt will be eliminated
through consolidation and no liability will be reflected on Heritage NOLA Bancorp&rsquo;s consolidated financial statements. Accordingly,
the amount of shares of common stock acquired by the employee stock ownership plan is shown in this table as a reduction of total
stockholders&rsquo; equity.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(7)</TD><TD>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 a stock-based benefit plan in open market purchases by Heritage NOLA Bancorp. The dollar amount of common stock to
be purchased is based on the $10.00 per share subscription 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 subscription price in the offering.
As Heritage NOLA Bancorp accrues compensation expense to reflect the vesting of shares pursuant to the stock-based benefit plan,
the credit to equity will be offset by a charge to noninterest expense. Implementation of the stock-based benefit plans will require
stockholder approval.</TD></TR></TABLE>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_10"></A>PRO FORMA DATA</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following tables summarize historical
data of Heritage Bank of St. Tammany and pro forma data of Heritage NOLA Bancorp at and for the year ended December 31, 2016. This
information is based on assumptions set forth below and in the table, and should not be used as a basis for projections of market
value of the shares of common stock following the conversion and offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The net proceeds in the tables are based
upon the following assumptions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>all shares of common stock will be sold in the subscription offering;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our employee stock ownership plan will purchase 8% of the shares of common stock sold in the stock offering with a loan from
Heritage NOLA Bancorp. The loan will be repaid in substantially equal payments of principal and interest (at the prime interest
rate, adjusted annually) over a period of 25 years; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>expenses of the stock offering, including fees and expenses to be paid to FIG Partners, LLC, will be $1.2 million.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pro forma earnings on net proceeds have
been calculated assuming the stock has been sold at the beginning of the period and the net proceeds have been invested at a yield
of 1.93% for the year ended December 31, 2016. This represents the five-year U.S. Treasury Note rate as of December 31, 2016, 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 generally required by regulations of the OCC. The pro forma after-tax yield on the net proceeds
from the offering is assumed to be 1.27% for the year ended December 31, 2016, based on an effective tax rate of 34%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We calculated historical and pro forma per
share amounts by dividing historical and pro forma amounts of consolidated net income and stockholders&rsquo; equity by the indicated
number of shares of common stock. We adjusted the earnings figures to give effect to the shares of common stock purchased by the
employee stock ownership plan. We computed per share amounts for each period as if the shares of common stock were outstanding
at the beginning of each period, but we did not adjust per share historical or pro forma stockholders&rsquo; equity to reflect
the earnings on the estimated net proceeds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The pro forma tables give effect to the
implementation of a stock-based benefit plan. Subject to the receipt of stockholder approval, we have assumed that the stock-based
benefit plan will acquire for restricted stock awards a number of shares of common stock equal to 4% of our outstanding shares
of common stock at the same price for which they were sold in the stock offering. We assume that shares of common stock are granted
under the plan in awards that vest over a five-year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have also assumed that the stock-based
benefit plan will grant options to acquire shares of common stock equal to 10% of our outstanding shares of common stock. In preparing
the tables below, we assumed that stockholder approval was obtained, that the exercise price of the stock options and the market
price of the stock at the date of grant were $10.00 per share and that the stock options 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 $2.74 for each option. In
addition to the terms of the options described above, the Black-Scholes option pricing model assumed an estimated volatility rate
of 12.57% for the shares of common stock, no dividend yield, an expected option life of 10 years and a risk-free interest rate
of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">2.45%. Finally, we assumed that 25% of the
stock options were non-qualified options granted to directors, resulting in a tax benefit (at an assumed tax rate of 34%) for a
deduction equal to the grant date fair value of the options.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may reserve shares for the exercise of
stock options and the grant of stock awards under a stock-based benefit plan in excess of 10% and 4%, respectively, of our total
outstanding shares if the stock-based benefit plan is adopted more than one year following the stock offering. In addition, we
may grant options and award shares that vest more rapidly than over a five-year period if the stock-based benefit plan is adopted
more than one year following the stock offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As discussed under &ldquo;How We Intend
to Use the Proceeds from the Offering,&rdquo; we intend to contribute at the minimum, midpoint, maximum and adjusted maximum of
the offering range approximately $4.7 million, $5.7 million, $6.6 million and $7.7 million, respectively, of the net proceeds from
the stock offering to Heritage Bank of St. Tammany, and we will retain the remainder of the net proceeds from the stock offering.
We will use portions of the proceeds we retain for the purpose of making a loan to the employee stock ownership plan and retain
the rest of the proceeds for future use.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The pro forma table does not give effect
to: (i) withdrawals from deposit accounts for the purpose of purchasing shares of common stock in the stock offering; (ii) our
results of operations after the stock offering; or (iii) changes in the market price of the shares of common stock after the stock
offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following pro forma information may
not represent the financial effects of the stock offering at the date on which the stock offering actually occurs and you should
not use the table to indicate future results of operations. Pro forma stockholders&rsquo; equity represents the difference between
the stated amount of our assets and liabilities, computed in accordance with GAAP. We did not increase or decrease stockholders&rsquo;
equity to reflect the difference between the carrying value of loans and other assets and their market value. Pro forma stockholders&rsquo;
equity is not intended to represent the fair market value of the shares of common stock and may be different than the amounts that
would be available for distribution to stockholders if we liquidated. Pro forma stockholders&rsquo; equity does not give effect
to the impact of intangible assets, bad debt reserve or the liquidation account we will establish in the conversion in the unlikely
event we are liquidated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At&nbsp;or&nbsp;for&nbsp;the&nbsp;year&nbsp;ended&nbsp;December&nbsp;31,&nbsp;2016<BR>
    Based&nbsp;upon&nbsp;the&nbsp;Sale&nbsp;at&nbsp;$10.00&nbsp;Per&nbsp;Share&nbsp;of</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,062,500<BR>
    Shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,250,000<BR>
    Shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,437,500<BR>
    Shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1,653,125<BR>
    Shares&nbsp;(1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars&nbsp;in&nbsp;thousands,&nbsp;except&nbsp;per&nbsp;share&nbsp;amounts)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Gross proceeds of offering</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,625</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">12,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">14,375</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">16,531</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Less: Expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Estimated net proceeds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,425</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,331</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Less: Common stock acquired by ESOP (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(850</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,150</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,323</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Less: Common stock acquired by stock-based benefit plans (3)(4)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(425</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(575</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(661</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Estimated net proceeds</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,150</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,800</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,347</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-indent: -0.1in; padding-left: 0.1in">For the year ended December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Consolidated net income:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Historical</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">158</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">158</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">158</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">158</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Pro forma adjustments:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Income on adjusted net proceeds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">104</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">146</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">170</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">State share/franchise tax</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(111</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(120</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(129</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(139</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Employee stock ownership plan (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(22</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(26</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(30</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(35</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Stock awards (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(56</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(66</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(76</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(87</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Stock options (4)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(53</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(63</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(72</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(83</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Pro forma net income (loss)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">20</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(3</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(16</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Income per share:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Historical</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.15</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.10</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Pro forma adjustments:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Income on adjusted net proceeds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.11</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">State share/franchise tax</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.11</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.09</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Employee stock ownership plan (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.02</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.02</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.02</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.02</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Stock awards (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.06</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.06</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.06</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.06</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Stock options (4)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.05</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.05</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.05</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.05</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Pro forma earnings (loss) per share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.02</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.01</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.01</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Offering price to pro forma net earnings per share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,000</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">n/m</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">n/m</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Number of shares used in earnings per share calculations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">980,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,154,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,327,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,526,165</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-indent: -0.1in; padding-left: 0.1in">At December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Stockholders&rsquo; equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Historical</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,460</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Estimated net proceeds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,425</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,331</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Less: Common stock acquired by ESOP (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(850</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,150</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,323</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Less: Common stock acquired by stock-based benefit plans (3)(4)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(425</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(575</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(661</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Pro forma stockholders&rsquo; equity (5)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,610</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">19,260</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">20,910</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22,807</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Stockholders&rsquo; equity per share:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Historical</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8.90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">7.57</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6.58</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5.72</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Estimated net proceeds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.87</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.04</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.27</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Less: Common stock acquired by ESOP (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.80</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.80</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.80</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.80</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Less: Common stock acquired by stock-based benefit plans (3)(4)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Pro forma stockholders&rsquo; equity per share (5)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16.57</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15.41</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14.55</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13.79</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Pro forma price to book value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64.89</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68.73</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72.52</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Number of shares outstanding for pro forma book value per share calculations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,062,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,250,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,437,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,653,125</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><I>(Footnotes begin on following page)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>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.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>Assumes that 8% of shares of common stock sold in the offering will be purchased by the employee stock ownership plan (&ldquo;ESOP&rdquo;).
For purposes of this table, the funds used to acquire these shares are assumed to have been borrowed by the ESOP from Heritage
NOLA Bancorp. Heritage Bank of St. Tammany intends to make annual contributions to the ESOP in an amount at least equal to the
required principal and interest payments on the debt. Heritage Bank of St. Tammany&rsquo; total annual payments on the employee
stock ownership plan debt are based upon 25 equal annual installments of principal and interest. Financial Accounting Standards
Board Accounting Standards Codification 718-40, &ldquo;Employers&rsquo; Accounting for Employee Stock Ownership Plans&rdquo; (&ldquo;ASC
718-40&rdquo;) 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 ESOP shares are allocated in equal annual installments based
on the number of loan repayment installments assumed to be paid by Heritage Bank of St. Tammany, the fair value of the common stock
remains equal to the subscription price and the employee stock ownership plan expense reflects an effective tax rate of 34%. The
unallocated ESOP shares are reflected as a reduction of stockholders&rsquo; equity. No reinvestment is assumed on proceeds contributed
to fund the ESOP. The pro forma net income further assumes that 3,400, 4,000, 4,600 and 5,290 were committed to be released during
the year ended December 31, 2016, respectively, at the minimum, midpoint, maximum, and adjusted maximum of the offering range,
respectively, and in accordance with ASC 718-40, only the ESOP shares committed to be released during the period were considered
outstanding for purposes of income per share calculations.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>If approved by Heritage NOLA Bancorp&rsquo;s stockholders, a stock-based benefit plan may purchase an aggregate number of shares
of common stock equal to 4% of the shares to be sold in the offering (or possibly a greater number of shares if the plan is implemented
more than one year after completion of the conversion or a lesser number if Heritage Bank of St. Tammany has a tier 1 leverage
ratio of less than 10.00% within one year of the completion of the conversion). Stockholder approval of the stock-based benefit
plan, and purchases by the plan may not occur earlier than six months after the completion of the conversion. The shares may be
acquired directly from Heritage NOLA Bancorp or through open market purchases. The funds to be used by the stock-based benefit
plans to purchase the shares will be provided by Heritage NOLA Bancorp. The table assumes that (i)&nbsp;the stock-based benefit
plan acquires the shares through open market purchases at $10.00 per share, (ii)&nbsp;20% of the amount contributed to the stock-based
benefit plan is amortized as an expense during the year, and (iii)&nbsp;the stock-based benefit plan expense reflects an effective
tax rate of 34%. Assuming stockholder approval of the stock-based benefit plan 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 3.85%.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>If approved by Heritage NOLA Bancorp&rsquo;s stockholders, a stock-based benefit plan may grant options to acquire an aggregate
number of shares of common stock equal to 10% of the shares to be sold in the offering (or possibly a greater number of shares
if the plan is implemented more than one year after completion of the conversion). Stockholder approval of the stock-based benefit
plan may not occur earlier than six months after the completion of the conversion. In calculating the pro forma effect of the stock
options to be granted under a stock-based benefit plan, it is assumed that the exercise price of the stock options and the trading
price of the common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the
Black-Scholes option pricing model was $2.74 for each option, and the aggregate grant-date fair value of the stock options was
amortized to expense on a straight-line basis over a five-year vesting period of the options. The actual expense of the stock options
to be granted under the stock-based benefit plan will be determined by the grant-date fair value of the options, which will depend
on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted. Under the above
assumptions, the adoption of the stock-based benefit plan will result in no additional shares under the treasury stock method for
purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will
be equal to the $10.00 price per share. If a portion of the shares to satisfy the exercise of options under the stock-based benefit
plans is obtained from the issuance of authorized but unissued shares, our net income per share and stockholders&rsquo; equity
per share would decrease. Assuming stockholder approval of the stock-based benefit plan and that shares of common stock used to
fund stock options (equal to 10% of the 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 9.09%.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(5)</TD><TD>The retained earnings of Heritage Bank of St. Tammany will be substantially restricted after the conversion. See &ldquo;Our
Dividend Policy,&rdquo; &ldquo;The Conversion and Offering &ndash; Liquidation Rights&rdquo; and &ldquo;Regulation and Supervision.&rdquo;
The number of shares used to calculate pro forma stockholders&rsquo; equity per share is equal to the total number of shares to
be outstanding upon completion of the offering.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_11"></A>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND<BR>
RESULTS OF OPERATIONS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This discussion and analysis reflects our
financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition
and results of operations. The information in this section has been derived from the audited financial statements, which appear
beginning on page F-1 of this prospectus. You should read the information in this section in conjunction with the business and
financial information regarding Heritage Bank of St. Tammany provided in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our business consists primarily of taking
deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family
residential real estate loans, including non-owner-occupied properties and home equity lines of credit, and commercial real estate.
We also originate land, construction and multifamily loans, and to a much lesser extent, we originate consumer loans and purchase
commercial business loans. At December 31, 2016, $57.6 million, or 75.1% of our total loan portfolio, was comprised of one- to
four-family residential real estate loans, $11.2 million of which were non-owner-occupied loans. While we originate conforming
one- to four-family residential real estate loans that we sell to Freddie Mac, historically we have also originated a substantial
amount of non-conforming loans that we retain in our portfolio. Following completion of the conversion and stock offering, we intend
to consider hiring an experienced commercial lender and increase our emphasis on the origination of commercial real estate loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In 2016, we began purchasing loans from
the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals. Consistent with our business plan to
grow our loan portfolio while managing our interest rate risk, subject to market conditions, we may significantly increase our
holdings of these types of commercial business loans in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We offer a variety of deposit accounts,
including noninterest-bearing demand accounts, savings accounts, NOW accounts and certificates of deposit. We utilize advances
from the FHLB-Dallas for asset/liability management purposes. At December 31, 2016, we had $13.3 million in advances outstanding
with the FHLB-Dallas.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In recent years we have accepted jumbo certificates
of deposit through National CD Rateline, an on-line service. Pursuant to our business strategy, we are seeking to increase our
core deposits by aggressively marketing and pricing these deposit products and by growing our commercial lending relationships,
while reducing our reliance on certificates of deposit as a funding source.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our current business strategy includes continuing
our disciplined underwriting practices to maintain our strong asset quality, continuing our emphasis on originating one- to four-family
residential real estate loans, increasing our emphasis on the origination of commercial real estate loans and the purchase of commercial
business loans to healthcare professionals, and enhancing core earnings by increasing lower-cost transaction and savings accounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany is subject
to comprehensive regulation and examination by its primary federal regulator, the OCC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our executive and administrative office
is located at 205 North Columbia Street, Covington, Louisiana 70433, and our telephone number at this address is (985) 892-4565.
Our website address is</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">www.heritagebank.org. Information on our website
is not incorporated into this prospectus and should not be considered part of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Business Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our principal objective is to build long-term
value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking
needs of our customers by emphasizing personalized and efficient customer service. Highlights of our current business strategy
include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Continuing to focus on one- to four-family residential real estate lending, including our practice of originating for
retention in our portfolio, nonconforming long-term loans. </I></B>We have been, and will continue to be, primarily a one- to four-family
residential real estate lender for borrowers in our market area. As of December 31, 2016, $57.6 million, or 75.1%, of our total
loan portfolio, consisted of one- to four-family residential real estate loans, including $11.2 million, or 14.7% of non-owner-occupied
loans, and at that date an additional $2.2 million, or 2.9%, of our total loan portfolio, consisted of home equity lines of credit.
While we intend to increase our focus on the origination and purchase of commercial real estate lending and the purchase of commercial
business lending in an effort to increase yield, we expect that one- to four-family residential real estate lending will remain
our primary lending activity.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Increasing commercial real estate lending and commercial business lending. </I></B>In order to increase the yield on
our loan portfolio and reduce the term to maturity of our loan portfolio, we intend to increase our emphasis on the origination
and purchase of commercial real estate lending and the purchase of commercial business loans, while maintaining conservative underwriting
standards. As part of this strategy we intend to consider hiring additional lending personnel, including an experienced commercial
real estate lender. The additional capital raised in the offering will increase our commercial lending capacity by increasing our
loans to one borrower limit and we believe enable us to originate more loans. Additionally, we intend to increase our holdings
of loans to healthcare professionals to increase our commercial business portfolio.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Maintaining our strong asset quality through conservative loan underwriting.</I></B> As we seek to diversify our loan
portfolio, we intend to maintain strict, quality-oriented loan underwriting and credit monitoring processes. In recent years, management
and the board of directors have focused on improving the Bank&rsquo;s asset quality by implementing such policies and procedures.
At December 31, 2016, nonperforming assets totaled $611,000, or 0.62%of total assets, down from $2.0 million, or 2.06% of total
assets at December 31, 2015.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Attracting and retaining customers in our market area and increasing our &ldquo;core&rdquo; deposits consisting of demand,
NOW and savings accounts. </I></B> We also intend to increase our core deposits, including noninterest-bearing transaction accounts,
and decrease our dependence on certificates of deposit.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD><B><I>Remaining a community-oriented institution and relying <FONT STYLE="background-color: white">on high quality service
to maintain and build a loyal local customer base</FONT></I></B>. We were established in 1924 and have been operating continuously
in and around Covington, Louisiana since that time. Through the goodwill we have developed over years of providing timely, efficient
</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in"><FONT STYLE="background-color: white">banking services,
we believe we have been able to attract a solid base of local retail customers on which to continue to build our banking business.
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><B><I>Expanding our banking franchise as opportunities arise through de novo branching and/or branch acquisitions. </I></B>
We currently operate from our two full-service banking offices. We believe there are branch expansion opportunities in our primary
market area. We intend to evaluate branch expansion opportunities, including through establishing a <I>de novo</I> branch and/or
branch acquisitions as such opportunities arise. However, we currently have no understandings or agreements with respect to establishing
a new branch or acquiring a branch.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">These strategies are intended to guide our
investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and
the offering, subject to changes necessitated by future market conditions, regulatory restrictions and other factors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Anticipated Increase in Noninterest Expense</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Following the completion of the conversion,
our noninterest expense is expected to increase because of the increased costs associated with operating as a public company, and
the increased compensation expenses associated with the purchase of shares of common stock by our employee stock ownership plan
and the possible implementation of a stock-based benefit plan, if approved by our stockholders, no earlier than six months after
the completion of the conversion. For further information, see &ldquo;Summary &ndash; Benefits to Management and Potential Dilution
to Stockholders Resulting from the Conversion;&rdquo; &ldquo;Risk Factors &ndash; Risks Related to the Offering &ndash; Our stock-based
benefit plan will increase our costs, which will reduce our income;&rdquo; and &ldquo;Management &ndash; Benefit Plans and Agreements.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Critical Accounting Policies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The discussion and analysis of the financial
condition and results of operations are based on our financial statements, which are prepared in conformity with generally accepted
accounting principles used in the United States of America. The preparation of these financial statements requires management to
make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities,
and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting
policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed
to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions,
resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of
operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The JOBS Act contains provisions that, among
other things, reduce certain reporting requirements for qualifying public companies. As an &ldquo;emerging growth company&rdquo;
we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are
made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly,
our financial statements may not be comparable to companies that comply with such new or revised accounting standards.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following represent our critical accounting
policies:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Allowance for Loan Losses. </I></B>The
allowance for loan losses is the estimated amount considered necessary to cover inherent, but unconfirmed, credit losses in the
loan portfolio at the balance sheet date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The allowance is established through the provision for loan
losses which is charged against income. In determining the allowance for loan losses, management makes significant estimates and
has identified this policy as one of our most critical accounting policies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Management performs a quarterly evaluation
of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not
limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying
collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation
is inherently subjective as it requires material estimates that may be susceptible to significant change.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The analysis has two components, specific
and general allowances. The specific percentage allowance is for unconfirmed losses related to loans that are determined to be
impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans,
the fair value of the collateral, adjusted for market conditions and selling expenses. If the fair value of the loan is less than
the loan&rsquo;s carrying value, a charge is recorded for the difference. The general allowance, which is for loans reviewed collectively,
is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze
historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis
establishes historical loss percentages and qualitative factors that are applied to the loan groups to determine the amount of
the allowance for loan losses necessary for loans that are reviewed collectively. The qualitative component is critical in determining
the allowance for loan losses as certain trends may indicate the need for changes to the allowance for loan losses based on factors
beyond the historical loss history. Not incorporating a qualitative component could misstate the allowance for loan losses. Actual
loan losses may be significantly more than the allowances we have established which could result in a material negative effect
on our financial results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Fair Value Measurements. </I></B>The
fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale. The Bank estimates the fair value of a financial instrument
and any related asset impairment using a variety of valuation methods. Where financial instruments are actively traded and have
quoted market prices, quoted market prices are used for fair value. When the financial instruments are not actively traded, other
observable market inputs, such as quoted prices of securities with similar characteristics, may be used, if available, to determine
fair value. When observable market prices do not exist, the Bank estimates fair value. These estimates are subjective in nature
and imprecision in estimating these factors can impact the amount of gain or loss recorded. A more detailed description of the
fair values measured at each level of the fair value hierarchy and the methodology utilized by the Bank can be found in Note 13
of the Financial Statements &ldquo;&ndash; Disclosures About Fair Value of Assets and Liabilities.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Mortgage Servicing Rights. </I></B>We
sell all of our conforming conventional one- to four-family residential real estate loans on a servicing-retained basis to Freddie
Mac. When we acquire mortgage servicing rights through the origination of mortgage loans and sale of those loans with servicing
rights retained, we allocate a portion of the total cost of the mortgage loans to the mortgage servicing rights based on their
relative fair value. At December 31, 2016, we were servicing loans sold to others totaling $40.0 million. We amortize capitalized
mortgage servicing rights as a reduction of servicing fee income in proportion to, and over the period of, estimated net servicing
income by use of a method that approximates the level-yield method. We periodically evaluate capitalized mortgage servicing rights
for impairment using a model that takes into account several variables including expected prepayment speeds and prevailing interest
rates. If we identify impairment, we charge the amount of the impairment to earnings by establishing a valuation allowance against
the capitalized mortgage servicing rights asset. The primary risk of material changes to the value of the servicing rights resides
in the potential volatility in the</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">economic assumptions used, particularly the prepayment speed.
We monitor this risk and adjust the valuation allowance as necessary to adequately record any probable impairment in the portfolio.
Management believes the estimation of these variables makes this a critical accounting policy. For purposes of measuring impairment,
the mortgage servicing rights are stratified based on financial asset type and interest rates. In general, the value of mortgage
servicing rights increases as interest rates rise and decreases as interest rates fall. This is because the estimated life and
estimated income from a loan increase as interest rates rise and decrease as interest rates fall.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Comparison of Financial Condition at December&nbsp;31, 2016
and December&nbsp;31, 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Total Assets.</I></B>&nbsp;Total assets
increased $1.5 million, or 1.6%, to $98.0 million at December 31, 2016 from $96.5 million at December 31, 2015. The increase resulted
primarily from an increase in net loans of $2.7 million, offset in part by a decrease of $663,000 in foreclosed real estate and
a decrease of $558,000 in cash and cash equivalents.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Cash and Cash Equivalents.</I></B>
Cash and cash equivalents decreased $558,000, or 6.5%, to $8.0 million at December 31, 2016 from $8.6 million at December 31, 2015.
The decrease was due to the deployment of these funds into loan originations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Net Loans.</I></B>&nbsp; Net loans
increased $2.7 million, or 3.8%, to $74.7 million at December 31, 2016 from $72.0 million at December 31, 2015. During the year
ended December 31, 2016, we originated $20.8 million of loans, $15.4 million of which were one- to four-family residential real
estate loans, $3.1 million of which were construction loans and the remaining $2.3 million were land, consumer and commercial real
estate loans. During 2016, one- to four-family residential real estate loans increased $2.8 million, or 5.0%, to $59.8 million
at December 31, 2016, from $57.0 million at December 31, 2015, commercial real estate loans decreased $790,000, or 9.9%, to $7.2
million at December 31, 2016 from $8.0 million at December 31, 2015 and construction loans decreased $775,000, or 18.2%, to $3.5
million at December 31, 2016 from $4.3 million at December 31, 2015. Increases in loan balances reflect our strategy to prudently
grow our loan portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In 2016, we sold $6.6 million of loans,
all of which were one- to four-family residential real estate loans, on both a servicing-retained and servicing-released basis.
Management intends to continue this sales activity in future periods to generate gain on sale revenue and servicing fee income.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Securities.</I></B>&nbsp; The balance
of our securities available-for-sale and held-to-maturity, which consist entirely of government-sponsored mortgage-backed securities,
remained unchanged at $8.0 million at December 31, 2016 and December 31, 2015. &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Premises and Equipment. </I></B> Premises
and equipment decreased $176,000, or 4.5%, to $3.7 million at December 31, 2016 from $3.9 million at December 31, 2015. The decrease
resulted from the recognition of depreciation of $184,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Bank-Owned Life Insurance. </I></B>At
December 31, 2016, our investment in bank owned life insurance was $2.0 million, an increase of $52,000, from $1.9 million at December
31, 2015. We invest in bank-owned life insurance to provide us with a funding offset for our benefit plan obligations. Bank owned
life insurance also generally provides us noninterest income that is non-taxable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Deposits.</I></B>&nbsp; Deposits increased
$672,000, or 1.0%, to $74.3 million at December 31, 2016 from $73.6 million at December 31, 2015. Checking accounts increased $1.3
million, or 28.9%, to $5.8 million at December 31, 2016 from $4.5 million at December 31, 2015 and time deposits decreased $1.3
million, or 2.4%, to $51.0 million at December 31, 2016 from $52.3 million at December 31, 2015. The decrease</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">in time deposits was due in part to maturities of certificates
of deposit owned by other financial institutions that were not renewed. The growth in the balance of checking accounts and the
decrease in the balance of certificates of deposit reflect management&rsquo;s effort to change the deposit mix and increase core
deposits.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Borrowings. </I></B> Borrowings, consisting
entirely of Federal Home Loan Bank advances, totaled $13.3 million at December 31, 2016 compared to $12.7 million at December 31,
2015. The increase in borrowings was attributable to management utilizing advances as a funding source for loan originations and
purchases, as opposed to utilizing certificates of deposits. At December 31, 2016, the aggregate cost of outstanding advances from
the Federal Home Loan Bank was 1.29%, compared to 1.55% for our certificates of deposit and 1.19% for the Bank&rsquo;s cost of
deposits at that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Total Equity.</I></B>&nbsp; Total
equity increased $134,000, or 1.4%, to $9.5 million at December 31, 2016 from $9.3 million at December 31, 2015. The increase resulted
from net income of $158,000 during the year ended December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Comparison of Operating Results for the Years Ended December
31, 2016 and December 31, 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>General.</I></B>&nbsp; We had net
income of $158,000 for the year ended December 31, 2016, compared to net income of $277,000 for the year ended December 31, 2015,
a decrease of $119,000, or 43.0%. The decrease in net income resulted from an increase in the provision for loan losses of $160,000,
a decrease of $52,000 in noninterest income, a $154,000 increase in noninterest expense and a $111,000 increase in income tax expense,
offset, in part, by a $198,000 increase in net interest income. Income tax expense increased as a result of an adjustment of prior
year&rsquo;s deferred tax balances and a charge-off of a small tax receivable balance. The increase in interest income resulted
primarily from the increase in the balance of our loan portfolio in 2016, including the purchase of $5.0 million of one-to four-family
residential real estate loans in November of 2015 that significantly affected our interest income in 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Interest Income.&nbsp; </I></B>Interest
income increased $426,000, or 11.6%, to $4.1 million for the year ended December 31, 2016 from $3.7 million for the year ended
December 31, 2015. This increase was primarily attributable to a $462,000 increase in interest on loans receivable, offset in part
by a $51,000 decrease in interest on investment securities due to a decrease in the average balance of investment securities year
to year. The average balance of loans increased $9.0 million, or 14.1%, to $72.7 million for the year ended December 31, 2016 from
$63.7 million for the year ended December 31, 2015 while the average yield on loans decreased two basis points to 5.30% during
2016 from 5.32% during 2015. The average balance of investment securities decreased $2.2 million, or 22.7%, to $7.5 million at
December 31, 2016 from $9.7 million for the year ended December 21, 2015 and the average yield on investment securities decreased
nine basis points to 1.90% for 2016 from 1.99% for 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Interest Expense.&nbsp;</I></B>Total
interest expense increased $69,000, or 7.5%, to $993,000 for the year ended December 31, 2016 from $924,000 for the year ended
December 31, 2015. The increase was primarily due to an increase of $71,000, or 79.8%, in the interest expense on FHLB advances.
The average balance of interest-bearing deposits remained stable, increasing $100,000, or 0.1%, to $70.9 million for the year ended
December 31, 2016 from $70.8 million for the year ended December 31, 2015. The average cost of interest-bearing deposits was unchanged
at 1.18% for both 2016 and 2015. The average balance of FHLBs advances increased $4.6 million, or 60.0%, to $12.3 million for the
year ended December 31, 2016 compared to $7.7 million for the year ended December 31, 2015, while the average cost of these advances
increased 12 basis points to 1.30% from 1.18%. The increase in the average balance of FHLB advances is due to management utilizing
advances as a funding source for loan originations and purchases.<B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Net Interest Income.</I></B>&nbsp;
Net interest income increased $358,000, or 13.1%, to $3.1 million for the year ended December 31, 2016 from $2.7 million for the
year ended December 31, 2015. Average net interest-earning assets increased $1.4 million year to year<B>.</B>&nbsp;This increase
was due primarily to an increase in the average balance of loans year to year. Our interest rate spread increased to 3.36% for
the year ended December 31, 2016 from 3.20% for the year ended December 31, 2015, and our net interest margin increased to 3.45%
for the year ended December 31, 2016 from 3.28% for the year ended December 31, 2015. The increase in interest rate spread and
net interest margin was primarily a result of the yield on other interest-earning assets, primarily interest-earning deposits in
banks, increasing 23 basis points to 1.00% for 2016 from 0.77% for 2015 reflecting higher market interest rates in 2016, and the
increase in interest income caused by the increase in our loan balances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Provision for Loan Losses.&nbsp; </I></B>We
recorded a provision for loan losses of $180,000 for the year ended December 31, 2016, compared to a $20,000 provision for the
year ended December 31, 2015. The increase in the provision for loan losses in 2016 compared to 2015 resulted from our analysis
of the factors described in &ldquo;Critical Accounting Policies &ndash; Allowance for Loan Losses&rdquo;. The allowance for loan
losses was $692,000, or 0.90% of total loans, at December 31, 2016, compared to $592,000, or 0.79% of total loans, at December
31, 2015. Classified (substandard, doubtful and loss) loans decreased to $892,000 at December 31, 2016 from $1.4 million at December
31, 2015. Total non-performing loans decreased to $518,000 at December 31, 2016 from $1.2 million at December 31, 2015. Net charge-offs
for 2016 were $80,000, an increase of $2,000 over 2015. At December 31, 2016, $305,000, or 59.0%, of the non-performing loans were
contractually current.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Noninterest Income</I></B><I>.&nbsp;</I>Noninterest
income decreased $52,000, or 12.9%, to $351,000 for the year ended December 31, 2016 from $403,000 for the year ended December
31, 2015. The decrease was primarily due to a decrease in gains (losses) on the sale of foreclosed assets of $119,000 as there
was a net loss of ($51,000) in 2016 on these types of transactions compared to a net gain of $68,000 during 2015, partially offset
by an increase in loan-servicing income of $37,000 to $200,000 during 2016 from $163,000 in 2015.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Noninterest Expense.&nbsp; </I></B>Noninterest
expense increased $153,000, or 5.4%, to $3.0 million for 2016 from $2.8 million for 2015. The increase was due primarily to an
increase of $103,000, or 6.9%, in salaries and employee benefits, to $1.6 million in 2016 from $1.5 million in 2015. The increase
resulted from an increase in full-time equivalent employees during 2016, normal salary increases and an increase in the 401(k)
contributions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Data processing expense increased $11,000,
or 5.9%, in 2016 to $197,000 from $186,000 in 2015 resulting from added products and services. Write-downs on foreclosed real estate
increased $35,000, or 63.6%, to $90,000 from $55,000 in 2015. Other noninterest expense increased $42,000, or 11.2%, to $416,000
in 2016 from $374,000 in 2015 primarily due to increased costs related to consulting and advisory fees.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Upon consummation of the conversion and
stock offering, we expect noninterest expense to increase because of costs associated with operating as a public company and increased
compensation costs related to possible implementation of a stock-based benefit plan, if approved by our stockholders.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Income Tax Expense (Benefit).&nbsp;
</I></B>Income tax expense increased $111,000 to an expense of $110,000 for 2016 from a benefit of ($1,000) in 2015, resulting
from an adjustment of prior year&rsquo;s deferred tax balances and a charge-off of a small tax receivable balance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Average balances and yields</I>.
<FONT STYLE="font-weight: normal">The following table sets forth average balance sheets, average yields and costs, and certain
other information at and for the years indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not
material. All average balances are daily average balances. Nonaccrual loans were included in the computation of average balances,
but have been reflected in the table as loans carrying a zero yield. 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>At</B><BR>
                                         <B>December</B><BR> <B>31, </B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>For
                                         the Year Ended December 31,</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Yield/
                                         Cost</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Average</B><BR>
                                         <B>Outstanding</B><BR> <B>Balance</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Interest</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Yield/
                                         Rate</B><BR> <B><SUP>(1)</SUP></B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Average</B><BR>
                                         <B>Outstanding</B><BR> <B>Balance</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Interest</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Yield/
                                         Rate</B><BR> <B><SUP>(1)</SUP></B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 10pt">Interest-earning assets:</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 23%; text-align: left"><FONT STYLE="font-size: 10pt">Loans, net</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 10pt">4.84</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 10pt">72,667</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 10pt">3,849</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 10pt">5.30</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 10pt">63,704</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 10pt">3,387</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 10pt">5.32</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Investment securities</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.97</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">7,523</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">143</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.90</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">9,740</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">194</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.99</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -8.6pt; padding-left: 8.6pt"><FONT STYLE="font-size: 10pt">Other
    interest-earning assets</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">1.23</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">9,315</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">93</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1.00</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">9,979</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">77</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">0.77</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Total interest-earning assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4.28</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">89,505</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,085</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4.56</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">83,423</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">3,658</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4.38</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Noninterest-earning assets</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">7,650</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">7,844</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Total assets</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">97,155</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">91,267</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-size: 10pt">Interest-bearing liabilities:</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Interest-bearing demand</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.17</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">3,102</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">7</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.23</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">2,492</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">6</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.24</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Savings accounts</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.22</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">16,244</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">40</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.25</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">15,967</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">57</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.36</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Certificates of deposit</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">1.55</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">51,538</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">786</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1.53</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">52,326</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">772</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1.48</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Total interest-bearing deposits</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.19</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">70,884</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">833</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.18</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">70,785</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">835</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.18</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -8.6pt; padding-left: 8.6pt"><FONT STYLE="font-size: 10pt">Borrowings</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">1.29</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">12,305</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">160</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1.30</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">7,672</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">89</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1.18</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.35pt"><FONT STYLE="font-size: 10pt">Total interest-bearing
    liabilities</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.20</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">83,189</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">993</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.20</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">78,457</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">924</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1.18</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -4.8pt; padding-left: 4.8pt"><FONT STYLE="font-size: 10pt">Other
    non-interest bearing liabilities</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">4,452</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">3,558</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Total liabilities</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">87,641</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">82,015</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Equity</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">9,514</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">9,252</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 18.35pt"><FONT STYLE="font-size: 10pt">Total
    liabilities and equity</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">97,155</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">91,267</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Net interest income</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3,092</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">2,734</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Net interest rate spread <SUP>(1)</SUP></FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">3.08</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3.36</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3.20</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Net interest-earning assets <SUP>(2)</SUP></FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">6,316</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">4,966</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Net interest margin <SUP>(3)</SUP></FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3.45</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3.28</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Average
    of interest-earning assets to interest-bearing liabilities</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">107.59</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">106.33</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt; text-indent: -27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt; text-indent: -27pt"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-left: 27pt; margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27pt; text-indent: -27pt"></P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 27pt">(1)</TD><TD>Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average
interest-bearing liabilities.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27pt">(2)</TD><TD>Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27pt">(3)</TD><TD>Net interest margin represents net interest income divided by total interest-earning assets.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Rate/Volume Analysis</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 net 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Years
                                         Ended December 31,</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>2016
                                         vs. 2015</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Increase
    (Decrease) Due to</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Volume</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Rate</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Increase<BR>
    (Decrease)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Interest-earning assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%; text-indent: -9.35pt; padding-left: 0.25in">Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">477</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(15</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">462</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Investment securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(44</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(51</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -7.45pt; padding-left: 16.45pt">Other interest-earning assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">16</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 27.35pt">Total interest-earning assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">428</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">427</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Interest-bearing liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Interest-bearing demand</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Savings accounts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(18</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(17</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 0.25in">Certificates of deposit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(12</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 27.35pt">Total deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -9.7pt; padding-left: 9.7pt">Borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">54</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">71</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 27.35pt">Total interest-bearing liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">44</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">69</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 27.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Change in net interest income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">384</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(26</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">358</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Management of Market Risk&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>General</I>.</B>&nbsp;Our most significant
form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive
to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure
of our financial condition and results of operations to changes in market interest rates. Our Asset/Liability Committee 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.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">Our asset/liability management strategy
attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques
we use to manage interest rate risk are:&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>originating and purchasing commercial real estate loans, and, to a lesser extent, originating construction, multifamily and
land loans and purchasing commercial business loans, all of which tend to have shorter terms and higher interest rates than one-
to four-family residential real estate loans, and which generate customer relationships that can generate noninterest-bearing checking
accounts which are less interest rate sensitive;&nbsp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>selling substantially all of our conforming, conventional longer-term, fixed-rate one- to four-family residential real estate
loans and retaining the non-conforming and shorter-term, fixed-rate and adjustable-rate one- to four-family residential real estate
loans that we originate, subject to market conditions and periodic review of our asset/liability management needs;&nbsp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>reducing our dependence on certificates of deposit to support lending and investment activities and increasing our reliance
on core deposits, including checking accounts and savings accounts, which are less interest rate sensitive than certificates of
deposit; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>lengthening the weighted average maturity of our liabilities through longer-term funding sources such as fixed-rate advances
from the FHLB-Dallas with terms to maturity of seven to 10 years.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board of directors is responsible for
the review and oversight of our executive management team and other essential operational staff which are responsible for our asset/liability
analysis. These officers act as an asset/liability committee and are charged with developing and implementing an asset/liability
management plan, and generally meet monthly to review pricing and liquidity needs and assess our interest rate risk. 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.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We do not engage in hedging activities,
such as engaging in futures, options or swap transactions, 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.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Economic Value of Equity and Changes
in Net Interest Income.</I></B> We monitor interest rate risk through the use of a simulation model that estimates the amounts
by which the fair value of our assets and liabilities (our economic value of equity or &ldquo;EVE&rdquo;) would change in the event
of a range of assumed changes in market interest rates. The quarterly reports developed in the simulation model assist us in identifying,
measuring, monitoring and controlling interest rate risk to ensure compliance within our policy guidelines.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The tables below set forth, as of December
31, 2016, the estimated changes in our EVE that would result from the designated instantaneous changes in market interest rates.
Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative
levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="12" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">December 31, 2016</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Change
                                         in</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Interest</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Rates</B></FONT></P></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Estimated</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Estimated
                                         Increase</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>(Decrease)
                                         in EVE</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">(basis points) (1)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">EVE (2)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="13" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="13">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 25%; text-align: center; padding-left: 5.4pt">+300</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 24%; text-align: right">7,067</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 21%; text-align: right">(2,393</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 21%; text-align: right">(25.3</TD><TD STYLE="width: 1%; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center; padding-left: 5.4pt">+200</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,826</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,634</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(17.3</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: center; padding-left: 5.4pt">+100</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,621</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(839</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8.9</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center; padding-left: 5.4pt">&nbsp;&nbsp;&#8213;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: center; padding-left: 5.4pt">(100)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">724</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Assumes an instantaneous uniform change in interest rates at all maturities.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The tables above indicate that at December
31, 2016, in the event of a 100 basis point decrease in interest rates, we would have experienced a 7.7% increase in EVE. In the
event of a 200 basis point increase in interest rates at December 31, 2016, we would have experienced a 17.3% decrease in EVE.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition to modeling changes to our EVE,
we also analyze estimated changes to net interest income (&ldquo;NII&rdquo;) for a prospective twelve-month period under the interest
rate scenarios set forth above. The following tables set forth our NII model as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change&nbsp;in&nbsp;Interest&nbsp;Rates&nbsp;<BR>
    (Basis&nbsp;Points)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Estimated&nbsp;Net&nbsp;Interest<BR>
Income&nbsp;<SUP>(1)</SUP></B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Increase&nbsp;(Decrease)<BR>
    in&nbsp;Estimated&nbsp;Net<BR> &nbsp;Interest&nbsp;Income</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 44%; text-align: center">+300</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 25%; text-align: right">2,771</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 25%; text-align: right">(5.2</TD><TD STYLE="width: 1%; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">+200</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,823</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3.5</TD><TD STYLE="text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: center">+100</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,874</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1.7</TD><TD STYLE="text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">&nbsp;&nbsp;&mdash;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,924</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: center">&ndash;100</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,004</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.7</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 49.5pt"></TD><TD STYLE="width: 18pt">(1)</TD><TD>The calculated changes assume an immediate shock of the static yield curve.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Certain shortcomings are inherent in the
methodology used in the above interest rate risk measurement. Modeling changes in EVE and NII require making certain assumptions
that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard,
the EVE and NII 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 EVE and NII 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 on EVE and NII and
will differ from actual results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">EVE and NII calculations also may not reflect
the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans,
deposits and borrowings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Liquidity and Capital Resources</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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, proceeds from the sale of loans, and proceeds from maturities
of securities. We also have the ability to borrow from the FHLB-Dallas. At December 31, 2016, we had $13.3 million outstanding
in advances from the FHLB-Dallas, and had the capacity to borrow approximately an additional $26.8 million from the FHLB-Dallas
and an additional $3.0 million on a line of credit with First National Bankers&rsquo; Bank, Baton Rouge, Louisiana at this date.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">interest-bearing demand deposits. The levels of these assets
are dependent on our operating, financing, lending, and investing activities during any given period.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 $704,000 and $496,000 for the years ended December 31, 2016 and 2015, respectively. Net cash used in investing activities,
which consists primarily of net change in loans receivable, net change in investment securities and proceeds from the sale of loans,
was ($2.6 million) and ($8.6 million) for the years ended December 31, 2016 and 2015, respectively. Net cash provided by financing
activities, consisting primarily of the activity in deposit accounts and Federal Home Loan Bank advances, was $1.3 million and
$7.3 million for the years ended December 31, 2016 and 2015, respectively, resulting from our strategy of borrowing at lower interest
rates to fund loan originations.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are committed to maintaining a strong
liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet
our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant
portion of maturing time deposits will be retained. We also anticipate continued participation in the National CD Rateline, an
on-line source of certificates of deposit, and continued use of FHLB-Dallas advances.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, we exceeded all of
our regulatory capital requirements with a Tier 1 leverage capital level of $9.4 million, or 9.79% of adjusted total assets, which
is above the well-capitalized required level of $3.8 million, or 4.0%; and total risk-based capital of $10.1 million, or 18.59%
of risk-weighted assets, which is above the well-capitalized required level of $4.3 million, or 8.0%. At December 31, 2015, we
exceeded all of our regulatory capital requirements with a Tier 1 leverage capital level of $9.2 million, or 9.82% of adjusted
total assets, which is above the well-capitalized required level of $3.8 million, or 4.0%; and total risk-based capital of $9.8
million, or 18.16% of risk-weighted assets, which is above the well-capitalized required level of $4.3 million, or 8.0%. Accordingly,
Heritage Bank of St Tammany was categorized as well capitalized at December 31, 2016 and 2015. Management is not aware of any conditions
or events since the most recent notification that would change our category.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Off-Balance Sheet Arrangements. </I></B>At
December 31, 2016, we had outstanding commitments to originate loans of $995,000 and lines of credit of $1.8 million. We anticipate
we will have sufficient funds available to meet our current loan originations commitments. Certificates of deposit that are scheduled
to mature in less than one year from December 21, 2016 total $23.7 million. Management expects that a substantial portion of the
maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize
FHLB-Dallas advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest
expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Recent Accounting Pronouncements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For a discussion of the impact of recent
accounting pronouncements, see Note A of the notes to our financial statements beginning on page F-1 of this prospectus.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Impact of Inflation and Changing Prices</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The financial statements and related data
presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America
which require the measurement of financial position and operating results in terms of historical dollars without considering changes
in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">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&rsquo;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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_12"></A>BUSINESS OF HERITAGE NOLA BANCORP</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp was incorporated in
the State of Maryland on February 13, 2017, and has not engaged in any business to date. Upon completion of the conversion, Heritage
NOLA Bancorp will own all of the issued and outstanding stock of Heritage Bank of St. Tammany. We intend to contribute at least
50% of the net proceeds from the stock offering to Heritage Bank of St. Tammany, plus such additional amounts as may be necessary
so that, upon completion of the offering, Heritage Bank of St. Tammany will have a Tier 1 leverage ratio of at least 10.0%. Heritage
NOLA Bancorp will retain the remainder of the net proceeds from the stock offering and use a portion of the retained net proceeds
to make a loan to the employee stock ownership plan. At a later date, we may use the net proceeds to repurchase shares of common
stock, subject to our planned growth, capital needs and regulatory limitations. We will invest our initial capital as discussed
in &ldquo;How We Intend to Use the Proceeds from the Offering.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">After the conversion and the offering are
complete, Heritage NOLA Bancorp, as the holding company of Heritage Bank of St. Tammany, will be authorized to pursue other business
activities permitted by applicable laws and regulations. See &ldquo;Regulation and Supervision &ndash; Holding Company Regulation&rdquo;
for a discussion of the activities that are permitted for savings and loan holding companies. We may also borrow funds for reinvestment
in Heritage Bank of St. Tammany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Following the offering, our cash flow will
depend on earnings from the investment of the net proceeds from the offering that we retain, and any dividends we receive from
Heritage Bank of St. Tammany. Heritage Bank of St. Tammany is subject to regulatory limitations on the amount of dividends that
it may pay. See &ldquo;Regulation and Supervision &ndash; Federal Banking Regulation &ndash; Capital Distributions.&rdquo; Initially,
Heritage NOLA Bancorp will neither own nor lease any property, but will instead pay a fee to Heritage Bank of St. Tammany for the
use of its premises, equipment and furniture. At the present time, we intend to employ only persons who are officers of Heritage
Bank of St. Tammany to serve as officers of Heritage NOLA Bancorp. We will, however, use the support staff of Heritage Bank of
St. Tammany from time to time. We will pay a fee to Heritage Bank of St. Tammany for the time devoted to Heritage NOLA Bancorp
by employees of Heritage Bank of St. Tammany; however, these persons will not be separately compensated by Heritage NOLA Bancorp.
Heritage NOLA Bancorp may hire additional employees, as appropriate, to the extent it expands its business in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_13"></A>BUSINESS OF HERITAGE BANK OF ST. TAMMANY</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">General</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We conduct our business from our main office
in Covington, Louisiana, and our branch office in Slidell, Louisiana, both of which are located in St. Tammany Parish, within the
metropolitan area of New Orleans. Covington is the Parish Seat of St. Tammany Parish, which is located on the north shore of Lake
Pontchartrain which separates St. Tammany Parish from New Orleans. Our primary market area is St. Tammany Parish. To a lesser extent,
we also originate loans in the greater New Orleans metropolitan area and the parishes contiguous to St. Tammany Parish.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our business consists primarily of taking
deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family
residential real estate</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">loans, including non-owner-occupied properties and home equity
lines of credit, and commercial real estate. We also originate land, construction and multifamily loans, and to a much lesser extent,
consumer and commercial business loans. At December 31, 2016, $57.6 million, or 75.1% of our total loan portfolio, was comprised
of one- to four-family residential real estate loans, $11.2 million of which were non-owner-occupied loans. While we originate
conforming one- to four-family residential real estate loans that we sell to Freddie Mac, historically we have also originated
a substantial amount of non-conforming loans that we retain in our portfolio. Following completion of the conversion and stock
offering, we intend to consider hiring an experienced commercial lender and intend to increase our emphasis on the origination
of commercial real estate loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In 2016, we began purchasing loans from
the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals. Consistent with our business plan to
grow our loan portfolio while managing our interest rate risk, subject to market conditions, we may significantly increase our
holdings of these types of commercial business loans in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We offer a variety of deposit accounts,
including noninterest-bearing demand deposit accounts, savings accounts, NOW accounts and certificates of deposit. We utilize advances
from the FHLB-Dallas for asset/liability management purposes. At December 31, 2016, we had $13.3 million in advances outstanding
with the FHLB-Dallas.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In recent years we have accepted wholesale
certificates of deposit through National CD Rateline, an on-line service, and directly from other federally insured institutions.
Pursuant to our business strategy, we are seeking to increase our core deposits, which we define as demand deposit, NOW and statement
savings accounts, by aggressively marketing and pricing these deposit products and by growing our commercial lending relationships,
and reduce our reliance on wholesale certificates of deposit as a funding source.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany is subject
to comprehensive regulation and examination by its primary federal regulator, the Office of the Comptroller of the Currency (&ldquo;OCC&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our executive and administrative office
is located at 205 North Columbia Street, Covington, Louisiana 70433, and our telephone number at this address is (985) 892-4565.
Our website address is <U>www.heritagebank.org</U>. Information on our website is not incorporated into this prospectus and should
not be considered part of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Market Area</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We conduct our business from our main office
in Covington, Louisiana, and our branch office in Slidell, Louisiana, both of which are located in St. Tammany Parish, within the
greater metropolitan area of New Orleans. Covington is the Parish Seat of St. Tammany Parish, which is located on the north shore
of Lake Pontchartrain which separates St. Tammany Parish from New Orleans. Our primary market area is St. Tammany Parish, and to
a lesser extent, the parishes contiguous to St. Tammany Parish. Our business is dependent on the local economy in southeastern
Louisiana which includes the petrochemical industry, port activity along the Mississippi River, healthcare and tourism. Service
jobs, primarily in healthcare, education and construction and development, represent the largest employment sector in St. Tammany
Parish.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">According to the United States census, the
estimated July 2015 population of St. Tammany Parish was 250,000, representing an increase of 7.0% from the 2010 census population
of 234,000. During this same time period, the New Orleans City population is estimated to have grown by 13.3%, the Louisiana population
grew by an estimated 3.0% and the United States population grew by an estimated 4.1%. From 2011 through 2015, the median household
income for St. Tammany Parish was $62,000, compared to median household incomes of $54,000 and $45,000 for the State of Louisiana
and for the United States, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Competition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 commercial banks, savings institutions,
mortgage banking firms, consumer finance companies and credit unions and, with respect to deposits, from money market funds, brokerage
firms, mutual funds and insurance companies. As of June 30, 2016, based on the most recent available FDIC data, there were 26 FDIC-insured
financial institutions with offices in St. Tammany Parish, of which we ranked 12th, with a market share of deposits of 1.4%. We
do not have a significant market share of either deposits or residential lending in any other parish in Louisiana.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Lending Activities</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>General. </I></B>Our principal lending
activity is originating one- to four-family residential real estate loans, including non-owner-occupied loans and home equity lines
of credit, and commercial real estate. We also originate land, construction and multifamily loans, and to a much lesser extent,
we originate consumer loans and, beginning in 2016, have purchased commercial business loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Historically a significant amount of the
loans that we have originated are non-conforming loans, and we have retained these loans in our portfolio. Generally, we sell most
of the conforming conventional, fixed-rate one- to four-family residential real estate loans that we originate to Freddie Mac on
a servicing-retained basis. In 2016 and 2015, approximately 50% and 68% of the owner-occupied, one-to four-family residential real
estate loans that we originated, respectively, did not conform to Freddie Mac guidelines and we retained these loans in our portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">While commercial real estate loans have
not historically comprised a significant portion of our total loan portfolio, we intend to increase our emphasis on the origination
of these types of loans. Upon completion of the conversion and stock offering, the proceeds from the stock offering will increase
our capital levels and will correspondingly increase our loans to one borrower limit. We believe that increasing our loans to one
borrower limit will allow us to compete more effectively for commercial real estate loans subject to our conservative underwriting
standards. After completion of the conversion, we will consider hiring an experienced commercial loan officer. We have also purchased
participations in commercial real estate loans from other institutions that are secured by properties within our market area of
St. Tammany Parish and in the parishes contiguous to St. Tammany Parish, and we intend to continue to purchase these types of participations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In 2016, we began purchasing loans from
the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals. Consistent with our business plan to
grow our loan portfolio while managing our interest rate risk, subject to market conditions, we may significantly increase our
holdings of these types of commercial business loans in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">However, we expect that one- to four-family
residential real estate lending will continue to be the primary emphasis of our lending operations in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Loan Portfolio Composition. </I></B>The
following table sets forth the composition of our loan portfolio, by type of loan, at the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">46,353</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">60.5</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">43,034</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">57.7</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,237</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,873</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.9</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,246</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,091</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,234</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,907</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,667</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,475</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,629</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,352</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.1</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">285</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">297</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">295</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 9.35pt">Total loans receivable</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">76,661</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">74,588</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Deferred loan costs (fees)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(459</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(496</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Loans in process</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(851</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,534</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Allowance for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(692</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(592</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 9.35pt">Total loans receivable, net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">74,659</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">71,966</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 58.5pt; text-indent: -22.5pt">&nbsp;</P>


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    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->59<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Loan Portfolio Maturities. </I></B>The
following table summarizes the scheduled repayments of our loan portfolio at December 31, 2016. Demand loans, loans having no stated
repayment schedule or maturity, and overdraft loans are reported as being due in the year ending December 31, 2017. Maturities
are based on the final contractual payment date and do not reflect the impact of prepayments and scheduled principal amortization.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 8pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>One-&nbsp;to&nbsp;four-</B><BR>
                                         <B>family</B><BR> <B>residential</B><BR> <B>real&nbsp;estate</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B><BR>
                                         <B>real&nbsp;estate</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt">Land</FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt">Construction</FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt">Multifamily&nbsp;</FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt">Consumer</FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt">Commercial<BR>
                                         business</FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Due During the Years <BR> <U>Ending December 31,</U></FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 20%; text-align: left"><FONT STYLE="font-size: 10pt">2017</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 10pt">325</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 10pt">817</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 10pt">27</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 10pt">1,169</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">2018</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">78</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">32</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">17</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">55</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">182</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">2019</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">76</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">182</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">136</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">410</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">2020 to 2021</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">849</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">81</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">629</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,013</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">145</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">2,717</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">2022 to 2026</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,149</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,167</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,271</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">218</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">42</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">295</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">10,142</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">2027 to 2031</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">28,967</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,425</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">854</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,569</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">32,815</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">2032 and beyond</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">25,392</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">530</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">1,906</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">1,398</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">29,226</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 0.5in"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">59,836</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">7,234</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">2,907</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3,475</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">2,629</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">285</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">295</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">76,661</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth the scheduled
repayments of fixed- and adjustable-rate loans at December 31, 2016 that are contractually due after December 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Due
    After December 31, 2017</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fixed</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Adjustable</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 61%; text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">42,625</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,405</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">46,030</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,647</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,235</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,246</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,246</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,850</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">567</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,417</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,804</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,103</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,907</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,475</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,475</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,629</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,629</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">219</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">258</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">295</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#9;&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">295</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.35pt; padding-left: 9.35pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">67,364</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,128</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">75,492</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Loan Approval Procedures and Authority</I>.</B>
Our lending is subject to written, non-discriminatory underwriting standards and origination procedures. Decisions on loan applications
are made on the basis of detailed applications submitted by the prospective borrower and property valuations. Our policies require
that for all real estate loans that we originate with a principal balance of greater than $100,000, property valuations must be
performed by outside independent state-licensed appraisers approved by our board of directors. The loan applications are designed
primarily to determine the borrower&rsquo;s ability to repay the requested loan, and the more significant items on the application
are verified through use of credit reports, financial statements and tax returns. We will also evaluate a guarantor when a guarantee
is provided as part of the loan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to applicable law, the aggregate
amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of
Heritage Bank of St. Tammany&rsquo;s unimpaired capital and surplus (25% if the amount in excess of 15% is secured by &ldquo;readily
marketable collateral&rdquo; or 30% for certain residential development loans). At December 31, 2016, our largest credit relationship
consisted of one loan which totaled $1.4 million and was secured by a 58-unit multifamily property. Our second largest relationship
at this date was to a director of Heritage Bank and consisted of two loans totaling $1.3 million and was secured by commercial
real estate consisting of a warehouse and office space and a one- to four-family residential real estate. At December 31, 2016,
these loans were performing in accordance with their repayment terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have a loan committee comprised of the
Chairman of the Board, the Chief Credit Officer and three outside directors. A majority of our loan committee must approve any
loan which we will retain in our portfolio. Any loan originated for sale must be approved by at least two members of the loan committee.
Loans which are secured by certificates of deposits or savings accounts may be approved by any officer of the Bank up to 90% of
the amount of the collateralized account.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Generally, we require fire and extended
coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property,
depending on the type of loan. In addition, we require flood insurance (where appropriate) and may require escrow for property
taxes and insurance on our one- to four-family residential loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>One- to Four-Family Residential Real
Estate Lending</I>.</B> At December 31, 2016, $46.4 million, or 60.5% of our total loans, was secured by owner-occupied, one- to
four-family residential real estate. At this date, we had an additional $11.2 million, or 14.7% of our total loan portfolio, secured
by non-owner-occupied, one- to four-family residential real estate loans. We originate both fixed- and adjustable-</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">rate one- to four-family residential real
estate loans, and at December 31, 2016, these types of loans were comprised of 93.1% fixed-rate loans, and 6.9% adjustable-rate
loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We generally limit the loan-to-value ratios
of our owner-occupied, one- to four-family residential real estate loans to 89% of the purchase price or appraised value, whichever
is lower, and to 80% of the lower of the purchase price or appraised value, for non-owner-occupied, one- to four-family residential
real estate loans. In addition, we may make one- to four-family residential real estate loans with loan-to-value ratios above 89%
of the purchase price or appraised value, whichever is less, where the borrower obtains private mortgage insurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We originate one- to four-family residential
real estate loans for retention in our portfolio as well as for sale in the secondary market. Loans originated for sale are underwritten
according to Freddie Mac guidelines, typically with terms of up to 30 years. We generally retain the servicing on loans we sell
to Freddie Mac. Additionally, we originate a substantial amount of non-conforming, one- to four-family residential real estate
loans that we retain in our portfolio. These loans might be nonconforming as a result of the loan to value of the appraised property
securing the loan, or the debt to income ratio or the credit score of the borrower, or other nonconforming aspects of the credit.
Fixed rate loans that we retain in our portfolio have a maximum fixed-rate term of 30 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, the majority of our
one- to four-family residential real estate loans, including $11.2 million of non-owner occupied loans, were secured by properties
located in our market area. On a limited basis we have purchased one- to four-family residential real estate loans from outside
of our market area.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our adjustable-rate, one- to four-family
residential real estate loans generally have fixed rates of interest for initial terms of three and five years, and adjust thereafter
every three and five years, respectively, at a margin, which in recent years has been between 3.00% and 4.00%, depending on the
amortization schedule, over the Federal Cost of Funds Index. Our adjustable-rate loans with a three-year fixed rate have had a
maximum lifetime adjustment of 5% above the initial rate of the loan, and the maximum amount by which the interest rate may be
increased is generally 2% per adjustment period. Our adjustable-rate loans with a five-year fixed rate have had a maximum lifetime
adjustment of 6% above the initial rate of the loan, and the maximum amount by which the interest rate may be increased is generally
3% per adjustment period&nbsp; Our adjustable-rate loans carry terms to maturity of up to 30 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We originate fixed-rate and adjustable-rate
non-owner-occupied, one- to four-family residential real estate loans. Our fixed-rate loans have terms of up to 15 years. Our adjustable-rate
loans have terms and amortization schedules of up to 20 years, and have balloon payments after five, seven or 10 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Although adjustable-rate one- to four-family
residential real estate loans may reduce our vulnerability to changes in market interest rates because they periodically reprice,
as interest rates increase, the required payments due from the borrower also increase (subject to rate caps), 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 the maximum periodic and lifetime rate adjustments permitted by our loan documents. As a result, the effectiveness of adjustable-rate
one- to four-family residential real estate loans in compensating for changes in market interest rates may be limited during periods
of rapidly rising interest rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We do not offer &ldquo;interest only&rdquo;
mortgage loans on permanent 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). We also do not offer one- to four-family residential real estate
loans that provide for</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">negative amortization of principal, such as
&ldquo;Option ARM&rdquo; loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal
balance during the life of the loan. We generally do not offer &ldquo;subprime loans&rdquo; on one- to four- family residential
real estate loans (<I>i.e.</I>, loans to borrowers with weakened credit histories typically characterized by payment delinquencies,
previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores
or high debt-burden ratios), or &ldquo;Alt-A&rdquo; (<I>i.e.</I>, loans to borrowers with better credit scores who borrow with
alternative documentation such as little or no verification of income).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Home Equity Lines of Credit.</I></B>
We offer home equity lines of credit on owner-occupied homes, which are secured by first or second mortgages on residences. We
generally offer these loans with a maximum total loan-to-value ratio (including senior liens on the collateral property) of up
to 89%. Our home equity lines of credit are interest-only revolving lines of credit with a draw period of up to 10 years. Generally
the rates on our home equity lines of credit are tied to the prevailing Prime Rate as published in <I>The Wall Street Journal</I>.
Our home equity lines of credit require additional underwriting criteria, including that the loan must be in the borrower&rsquo;s
personal name and generally that the borrower must have a deposit relationship with the Bank. At December 31, 2016, we had $2.2
million of home equity lines of credit, representing 2.9% of our total loan portfolio. At December 31, 2016, we had one home equity
line of credit that was 60 days or more delinquent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The majority of our home equity lines of
credit are secured by properties in which we hold or service the first mortgage. However, home equity lines of credit may have
greater risk than one- to four family residential real estate loans secured by first mortgages. Our interest is generally subordinated
to the interest of the institution holding the first mortgage. Even where we hold the first mortgage, we face the risk that the
value of the collateral may not be sufficient to compensate us for the amount of the unpaid loan and costs of foreclosure and we
may be unsuccessful in recovering the remaining balance from those customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Commercial Real Estate Lending</I>.
</B>In addition to one- to four-family residential real estate lending, we also originate and purchase, and intend to increase
our emphasis on the origination and purchase of, commercial real estate loans. At December 31, 2016, $7.2 million, or 9.4% of our
total loan portfolio, was comprised of commercial real estate loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our commercial real estate loans are fixed-rate
loans with three to 10 year balloon payments, with amortization schedules of not more than 20 years. The maximum loan-to-value
ratio of our commercial real estate loans made on improved property is generally 80% of the lower of the purchase price or appraised
value of the property securing the loan, and is 75% on land development and vacant lots. Our commercial real estate loans are typically
secured by retail, service or other commercial properties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to our growth plan, after completion
of the conversion, we intend to consider hiring an experienced commercial lender and we intend to increase our originations and
purchases of commercial real estate loans. Set forth below is information regarding our commercial real estate loans at December
31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Type
    of Loan</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number
    of Loans</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Balance</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="text-indent: 0in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left; text-indent: 0in">General commercial</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">7</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,895</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in">Oil &amp; Gas</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">689</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in">Service/Professional</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,710</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 0in">Office/Retail- Non-Owner Occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,123</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: 0in">Miscellaneous</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">817</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: 0in; padding-left: 19.8pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">34</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,234</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, our largest outstanding
commercial real estate loans had a balance of $831,000 and was secured by a commercial office building. This loan was performing
in accordance with its original repayment terms at December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We consider a number of factors in originating
commercial real estate loans. We evaluate the qualifications and financial condition of the borrower, including project-level and
global cash flows, credit history, and management expertise, as well as the value and condition of the property securing the loan.
When evaluating the qualifications of the borrower, we first consider the financial resources of the borrower, then value of the
property, the borrower&rsquo;s experience in owning or managing similar property and the borrower&rsquo;s payment history with
us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating
income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the
mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service). We generally require
a debt service ratio of at least 1.20 times.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Commercial real estate loans entail greater
credit risks compared to one- to four-family residential real estate loans because they typically involve larger loan balances
concentrated with single borrowers or groups of related borrowers. In addition, the payment of loans secured by income-producing
properties typically depends on the successful operation of the property, as repayment of the loan generally is dependent, in large
part, on sufficient income from the property to cover operating expenses and debt service. Changes in economic conditions that
are not in the control of the borrower or lender could affect the value of the collateral for the loan or the future cash flow
of the property. Additionally, any decline in real estate values may be more pronounced for commercial real estate than residential
properties. There may be additional risk on commercial rentals, where the borrower is not the occupant of the collateral property.
If we foreclose on a commercial real estate loan, our holding period for the collateral is typically longer than for one- to four-family
residential real estate loans because there are fewer potential purchasers of the collateral. Further, our commercial real estate
loans generally have relatively large balances to single borrowers or related groups of borrowers. Accordingly, if any of our judgments
regarding the collectability of our commercial real estate loans prove incorrect, the resulting charge-offs may be larger on a
per loan basis than those incurred with respect to one- to four-family residential loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Multifamily Real Estate Loans. </I></B>At
December 31, 2016, multifamily real estate loans were comprised of three lending relationships and totaled $2.6 million, or 3.4%
of our total loan portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We originate a variety of fixed- and adjustable-rate
multifamily real estate loans with balloon and amortization terms up to 20 years. Multifamily real estate loan amounts generally
do not exceed 80% of the property&rsquo;s appraised value at the time the loan is originated. Aggregate debt service ratios, including
the guarantor&rsquo;s cash flow and the borrower&rsquo;s other projects, have a guideline minimum income to debt service ratio
of 1.20x. We require multifamily real estate loan borrowers with loan relationships in excess of $150,000 to submit annual financial
statements and/or rent rolls on the subject property. We may request such information for smaller loans on a case-by-case basis.
These properties may also be subject to annual inspections with pictures as evidence appropriate maintenance is being performed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, our largest multifamily
real estate loan totaled $1.4 million and was a participation that we purchased that is secured by a 58-unit property located in
our market area. At December 31, 2016, this loan was performing in accordance with its terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Construction and Land Lending</I></B>.
At December 31, 2016, we had $3.5 million, or 4.5% of our total loan portfolio, in construction loans, all of which were secured
by owner-occupied, single-family residences, except for one loan with a principal balance of $100,000 which was secured by a single-</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">family residence being built on speculation. At this date we
had an additional $2.9 million, or 3.8% of our total loan portfolio, in land loans. We offer loans for the construction of owner-occupied
residential properties as well as non-owner occupied residential and commercial properties. At December 31, 2016, our largest construction
loan was a $575,000 loan secured by an owner-occupied, one- to four-family residential real estate loan. This loan was performing
in accordance with its original repayment terms at December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our residential construction loans generally
have initial terms of 12 months (subject to extension), during which the borrower pays interest only. Upon completion of construction,
these loans convert to conventional amortizing mortgage loans. We do not extend credit if construction has already commenced, except
in unique circumstances and upon the approval of the President and Chief Executive Officer or the loan committee and if title insurance
is obtained. Our residential construction loans have rates and terms comparable to residential real estate loans that we originate.
The maximum loan-to-value ratio of our residential construction loans is generally 85% of the lesser of the appraised value of
the completed property or the total cost of the construction project. Residential construction loans are generally underwritten
pursuant to the same guidelines used for originating permanent residential mortgage loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Raw land loans have terms of not more than
15 years. The maximum loan-to-value of these loans is 65% of the lesser of the appraised value or the purchase price of the property.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Construction and land lending generally
involves greater credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction or
loan depends largely 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 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 and land loans also
expose us to the risk that improvements will not be completed on time in accordance with specifications and projected costs. In
addition, the ultimate sale or rental of the property may not occur as anticipated. Land loans pose additional risk because the
property generally does not produce income and may be relatively illiquid.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Commercial Business Lending</I>.</B>
In 2016, we began purchasing loans from the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals.
At December 31, 2016, we had $295,000 of commercial business loans, all of which were loans to healthcare professionals secured
by personal guarantees from the borrower, purchased from Bankers Healthcare Group, representing 0.4% of our total loan portfolio.
Consistent with our business plan to grow our loan portfolio while managing our interest rate risk, subject to market conditions,
we may increase our holdings of these types of commercial business loans such that the aggregate outstanding balance of these loans
would equal our regulatory loans to one borrower limitation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Consumer Lending. </I></B>At December
31, 2016, we had $285,000, or 0.4% of our loan portfolio, in consumer loans. Our consumer loans are interest-only loans and have
either a variable or fixed-rate of interest for a term of up to five years, depending on the type of collateral and the creditworthiness
of the borrower. Our consumer loans are primarily secured by savings accounts or certificates of deposit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Loan Originations, Participations, Purchases
and Sales</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We originate real estate and other loans
through employee marketing and advertising efforts, our existing customer base, walk-in customers and referrals from customers.
Since 2015 we have hired two residential real estate lenders. Consistent with our growth strategy, after consummation of the conversion,
we intend to consider hiring an experienced commercial lender and increase our emphasis on the origination and purchase of commercial
real estate loans. Additionally, we intend to increase our holdings of loans to healthcare professionals through the Bankers Healthcare
Group.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We originate one-to four-family residential
real estate loans that conform to Freddie Mac guidelines for sale into the secondary market. In 2016 and 2015, we originated for
sale and sold $6.6 million and $5.0 million, respectively, of one- to four-family residential real estate loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On occasion, we have purchased one- to four-family
residential real estate loans in order to supplement our loan originations of this type of lending. In 2016, we repurchased $3.1
million of one- to four-family residential real estate loans that we were servicing from the Federal Home Loan Bank&rsquo;s Mortgage
Partnership Finance Program, and in 2015 we purchased $5.7 million of one- to four-family residential real estate loans. In each
case, these loans were seasoned loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth our loan
origination, purchase, sale and principal repayment activity during the periods indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Years
    Ended December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Total loans, at beginning of period</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">74,588</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">61,632</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Loans originated:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,162</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,613</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">939</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">843</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,263</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">958</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,220</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,003</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">942</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">322</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,111</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,815</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&#8213;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">232</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">239</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">177</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 9.35pt">Total loans originated</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">20,876</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">23,963</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Loans purchased:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,742</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,689</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">295</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Total loans purchased</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,437</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,689</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Loans sold:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,641</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,952</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Total loans sold</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,641</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,952</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-indent: -9.35pt; padding-left: 9.35pt">Other:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Principal repayments, etc</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,599</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,744</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Net loan activity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,073</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,956</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 9.35pt">Total loans, including loans held for sale, at end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">76,661</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">74,588</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Delinquencies, Classified Assets and Nonperforming
Assets </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Delinquency Procedures. </I></B>When
a borrower fails to make a required monthly payment on a residential real estate loan, after 60 days the delinquent loan is reported
to the board of directors and is placed on a watch list. After 90 days delinquent the loan is transferred to the appropriate collections
or risk management personnel. Our policies provide that a late notice be sent when a loan is 15 days past due, and continuing with
late notices sent after 30, 60 and 90 days. In addition, we may call the borrower when the loan is 30 days past due, and we attempt
to cooperate with the borrower to determine the reason for nonpayment and to work with the borrower to establish a repayment schedule
that will cure the delinquency. Once the loan is considered in default, generally at 90 days past due, a letter is generally sent
to the borrower explaining that the entire balance of the loan is due and payable, the loan is placed on non-accrual status, and
additional efforts are made to contact the borrower. If the borrower does not respond, we generally initiate foreclosure proceedings
when the loan is 120 days past due. If the loan is reinstated, foreclosure proceedings will be discontinued and the borrower will
be permitted to continue to make payments. In certain instances, we may modify the loan or grant a limited exemption from loan
payments to allow the borrower to reorganize his or her financial affairs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">When we acquire real estate as a result
of foreclosure or by deed in lieu of foreclosure, the real estate is classified as other real estate owned until it is sold. The
real estate is recorded at estimated fair value at the date of acquisition less estimated costs to sell, and any write-down resulting
from the acquisition is charged to the allowance for loan losses. Subsequent decreases in the value of the property are charged
to operations. After acquisition, all costs in maintaining the property are expensed as incurred. Costs relating to the development
and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Delinquent commercial real estate, multifamily,
construction and land loans are handled in a similar fashion. Our procedures for repossession and sale of consumer collateral are
subject to various requirements under applicable laws, including consumer protection laws. In addition, we may determine that foreclosure
and sale of such collateral would not be cost-effective for us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Troubled Debt Restructurings. </I></B>We
occasionally modify loans to extend the term or make other concessions to help a borrower stay current on his or her loan and to
avoid foreclosure.&nbsp; We consider modifications only after analyzing the borrower&rsquo;s current repayment capacity, evaluating
the strength of any guarantors based on documented current financial information, and assessing the current value of any collateral
pledged. We generally do not forgive principal or interest on loans, but may do so if it is in our best interest and increases
the likelihood that we can collect the remaining principal balance. We may modify the terms of loans to lower interest rates (which
may be at below market rates), to provide for fixed interest rates on loans where fixed rates are otherwise not available, to provide
for longer amortization schedules, or to provide for interest-only terms. These modifications are made only when there is a reasonable
and attainable workout plan that has been agreed to by the borrower and that is in our best interests. At December 31, 2016, we
had four loans, all of which were one- to four-family residential real estate loans, which were classified as troubled debt restructuring.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Delinquent Loans</I></B>. The following
table sets forth our loan delinquencies by type and amount at the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Loans
    Delinquent For</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 1pt; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">30-89
    Days</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">90
    Days and Over</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline">At December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">11</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">1,438</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">11</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">1,438</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">141</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">141</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 27.35pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,754</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">117</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">24</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,871</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline">At December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"></FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"></FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"></FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,223</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">143</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,366</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">233</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">341</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">201</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">201</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.35pt; padding-left: 27.35pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,613</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">376</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">26</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,989</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Classified Assets</I></B>. Federal
regulations provide that loans and other assets of lesser quality should be classified as &ldquo;substandard,&rdquo; &ldquo;doubtful&rdquo;
or &ldquo;loss.&rdquo; An asset is considered &ldquo;substandard&rdquo; if it is inadequately protected by the current net worth
and paying capacity of the obligor or of the collateral pledged, if any. &ldquo;Substandard&rdquo; assets include those characterized
by the &ldquo;distinct possibility&rdquo; that the insured institution will sustain &ldquo;some loss&rdquo; if the deficiencies
are not corrected. Assets classified as &ldquo;doubtful&rdquo; have all of the weaknesses inherent in those classified &ldquo;substandard,&rdquo;
with the added characteristic that the weaknesses present make &ldquo;collection or liquidation in full,&rdquo; on the basis of
currently existing facts, conditions, and values, &ldquo;highly questionable and improbable.&rdquo; Assets classified as &ldquo;loss&rdquo;
are those considered &ldquo;uncollectible&rdquo; and of such little value that their continuance as assets without the establishment
of a specific allowance for loan losses is not warranted. Assets that do not currently expose the insured institution to sufficient
risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as &ldquo;special
mention.&rdquo; At December 31, 2016, we had no loans designated as &ldquo;special mention.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">When an insured institution classifies problem
assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover
losses that were both probable and reasonable to estimate. General allowances represent allowances which have been established
to cover accrued losses associated with lending activities that were both probable and reasonable to estimate, but which, unlike
specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets
as &ldquo;loss,&rdquo; 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&rsquo;s determination as to the classification of its assets and
the</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">amount of its valuation allowances is subject
to review by the regulatory authorities, which may require the establishment of additional general or specific allowances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with the filing of our periodic
regulatory reports 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. If a problem loan deteriorates
in asset quality, the classification is changed to &ldquo;special mention,&rdquo; &ldquo;substandard,&rdquo; &ldquo;doubtful&rdquo;
or &ldquo;loss&rdquo; depending on the circumstances and the evaluation. Generally, loans 90 days or more past due are placed on
nonaccrual status and classified &ldquo;substandard.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth our amounts
of classified assets as of the dates indicated. Amounts shown at December 31, 2016 and 2015 include approximately $518,000 and
$1.2 million of nonperforming loans, respectively. The related specific valuation allowance in the allowance for loan losses for
such nonperforming loans was $38,000 and $194,000 at December 31, 2016 and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Substandard assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">892</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,403</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Doubtful assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loss assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&#9;&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total classified assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">892</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,403</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Nonperforming Assets. </I></B>The
table below sets forth the amounts and categories of our non-performing assets at the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">(Dollars
    in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Non-accrual loans:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Real estate:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">One-
    to four-family residential:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Owner-occupied</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT>$</TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">96</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">238</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Non-owner-occupied</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">405</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">718</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Home
    equity lines of credit</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">23</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Commercial
    real estate</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Land</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">17</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">253</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Construction</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Multifamily</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Consumer</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Commercial
    business</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.35pt; padding-left: 9.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">518</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,232</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accruing
    loans 90 days or more past due:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Real estate:</FONT></TD><TD></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">One-
    to four-family residential:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Owner-occupied</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Non-owner-occupied</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Home
    equity lines of credit</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Commercial
    real estate</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Land</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Construction</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Multifamily</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Consumer</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Commercial
    business</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.35pt; padding-left: 9.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
    accruing loans 90 days or more past due</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; text-underline-style: double">&#8213;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; text-underline-style: double">&#8213;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
    non-performing loans</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">518</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,232</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Real
    <FONT STYLE="font-size: 10pt">estate owned</FONT></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">93</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">756</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
    non-performing assets</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">611</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,988</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accruing
    troubled debt restructurings:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Real estate:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">One-
    to four-family residential:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Owner-occupied</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT>$</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT>$</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Non-owner-occupied</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">20</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Home
    equity lines of credit</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Commercial
    real estate</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Land</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Construction</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Multifamily</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Consumer</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Commercial
    business</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.35pt; padding-left: 9.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">20</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Ratios:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -8.65pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
    non-performing loans to total loans</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">0.68</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1.65</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -8.65pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
    non-performing assets to total assets</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">0.62</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2.06</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -8.65pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
    non-performing loans and TDRs to total loans</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">0.70</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1.65</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -8.65pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
    non-performing assets and TDRs to total assets</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">0.64</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2.06</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For the year ended December 31, 2016, gross
interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms was
$56,000. No interest income was recognized on such loans for the year ended December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Other Loans of Concern. </I></B>At
December 31, 2016 and 2015, there were $374,000 and $197,000, respectively, of other loans, all of which were classified as substandard,
that are not already disclosed in the nonperforming assets and troubled debt restructurings table above where there is information
about possible credit problems of borrowers that caused management to have serious doubts about the ability of the borrowers to
comply with present loan repayment terms and that may result in disclosure of such loans in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Allowance for Loan Losses </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Analysis and Determination of the
Allowance for Loan Losses</I></B>. Our allowance for loan losses is the amount considered necessary to reflect probable incurred
losses in our loan portfolio. We evaluate the need to establish allowances against losses on loans on a quarterly basis. When additional
allowances are necessary, a provision for loan losses is charged to earnings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our methodology for assessing the appropriateness
of the allowance for loan losses consists of two key elements: (1) specific allowances for identified impaired loans; and (2) a
general valuation allowance on the remainder of the loan portfolio. Although we determine the amount of each element of the allowance
separately, the entire allowance for loan losses is available for the entire portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We identify loans that may need to be charged
off as a loss by reviewing all delinquent loans, classified loans, and other loans about which management may have concerns about
collectability. For individually reviewed loans, the borrower&rsquo;s inability to make payments under the terms of the loan as
well as the shortfall in collateral value could result in our charging off the loan or the portion of the loan that was impaired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Among other factors, we consider current
general economic conditions, including current housing price depreciation, in determining the appropriateness of the allowance
for loan losses for our residential real estate portfolio. We use evidence obtained from our own loan portfolio as well as published
housing data on our local markets from third party sources we believe to be reliable as a basis for assumptions about the impact
of housing depreciation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Substantially all of our loans are secured
by collateral. Loans 90 days past due and other classified loans are evaluated for impairment and general or specific allowances
are established. Typically for a nonperforming real estate loan in the process of collection, the value of the underlying collateral
is estimated using either the original independent appraisal if it is less than 12 months old, adjusted for current economic conditions
and other factors, or a new independent appraisal, and related general or specific allowances for loan losses are adjusted on a
quarterly basis. If a nonperforming real estate loan is in the process of foreclosure and/or there are serious doubts about further
collectability of principal or interest, and there is uncertainty about the value of the underlying collateral, we will order a
new independent appraisal if it has not already been obtained. Any shortfall would result in immediately charging off the portion
of the loan that was impaired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Specific Allowances for Identified
Problem Loans</I></B>. We establish a specific allowance when loans are determined to be impaired. Loss is measured by determining
the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral less estimated
selling expenses. Factors in identifying a specific problem loan include: (1) the strength of the customer&rsquo;s personal or
business cash flows; (2) the availability of other sources of repayment; (3) the amount due or</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">past due; (4) the type and value of collateral;
(5) the strength of our collateral position; (6) the estimated cost to sell the collateral; and (7) the borrower&rsquo;s effort
to cure the delinquency. In addition, for loans secured by real estate, we consider the extent of any past due and unpaid property
taxes applicable to the property serving as collateral on the mortgage.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>General Valuation Allowance on the
Remainder of the Loan Portfolio</I></B>. We establish a general allowance for loans that are not classified as impaired to recognize
the inherent losses associated with lending activities, but which, unlike specific allowances, has not been allocated to particular
problem assets. This general valuation allowance is determined by segregating the loans by loan category and assigning allowance
percentages based on our historical loss experience, delinquency trends and management&rsquo;s evaluation of the collectability
of the loan portfolio. The allowance may be adjusted for significant factors that, in management&rsquo;s judgment, affect the collectability
of the portfolio as of the evaluation date. These significant factors may include changes in lending policies and procedures, changes
in existing general economic and business conditions affecting our primary market area, credit quality trends, collateral value,
loan volumes and concentrations, seasoning of the loan portfolio, recent loss experience in particular segments of the portfolio,
duration of the current business cycle and bank regulatory examination results. The applied loss factors are re-evaluated quarterly
to ensure their relevance in the current real estate environment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth activity
in our allowance for loan losses for the years indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    or For the Years Ended<BR> December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left; text-indent: -8.65pt; padding-left: 8.65pt">Balance at beginning of year</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">592</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">650</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -8.65pt; padding-left: 8.65pt">Charge-offs:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 2.3pt; padding-left: 9.35pt">Total charge-offs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">118</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">79</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -8.65pt; padding-left: 8.65pt">Recoveries:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -2.3pt; padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -2.3pt; padding-left: 0.25in">Home equity lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9.35pt; padding-left: 9.35pt">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 2.3pt; padding-left: 9.35pt">Total recoveries</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">38</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 12.25pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -8.65pt; padding-left: 8.65pt">Net charge-offs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">80</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">78</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -8.65pt; padding-left: 8.65pt">Provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">180</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -8.65pt; padding-left: 8.65pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -8.65pt; padding-left: 8.65pt">Balance at end of year</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">692</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">592</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -8.65pt; padding-left: 8.65pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -8.65pt; padding-left: 8.65pt">Ratios:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -8.65pt; padding-left: 8.65pt">Net charge-offs to average loans outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.11</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.12</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -8.65pt; padding-left: 8.65pt">Allowance for loan losses to non-performing loans at end of year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48.05</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -8.65pt; padding-left: 8.65pt">Allowance for loan losses to total loans at end of year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.90</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.79</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


<!-- Field: Page; Sequence: 79; Value: 2 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->74<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Allocation of Allowance for Loan Losses.
</I></B>The following table sets forth the allowance for loan losses allocated by loan category, the total loan balances by category,
and the percent of loans in each category to total loans 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. At the dates indicated, we had no unallocated allowance for loan losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent
    of<BR> Allowance to<BR> Total<BR> Allowance</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent
    of<BR> Loans in<BR> Category to<BR> Total Loans</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent
    of<BR> Allowance to<BR> Total<BR> Allowance</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent
    of<BR> Loans in<BR> Category to<BR> Total Loans</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; text-align: left; text-indent: -9.35pt; padding-left: 0.25in">One- to four-family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">528</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">76.3</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">78.0</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">447</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">75.5</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">76.4</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 0.25in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">101</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9.35pt; padding-left: 0.25in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.25in; padding-left: 0.25in">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.4</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in">Commercial business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1.3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -8.65pt; padding-left: 0.25in">Total allowance for loan losses</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">692</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">591</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, our allowance for
loan losses represented 0.90% of total loans and 133.6% of nonperforming loans, and at December 31, 2015, our allowance for loan
losses represented 0.82% of total loans and 48.1% of nonperforming loans. There were $80,000 and $78,000 in net loan charge-offs
during the years ended December 31, 2016 and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Although we believe that we use the best
information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary
and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making
the determinations. Because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance
for loan losses may not be adequate and management may determine that increases in the allowance are necessary if the quality of
any portion of our loan portfolio deteriorates as a result. Furthermore, as an integral part of its examination process, the OCC
will periodically review our allowance for loan losses. The OCC may have judgments different than management&rsquo;s, and we may
determine to increase our allowance as a result of these regulatory reviews. Any material increase in the allowance for loan losses
may adversely affect our financial condition and results of operations.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Investment Activities</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>General.</I></B> Our investment policy
is established by the board of directors. The objectives of the policy are to: (i) ensure adequate liquidity for loan demand and
deposit fluctuations, and to allow us to alter our liquidity position to meet both day-to-day and long-term changes in assets and
liabilities; (ii) manage interest rate risk in accordance with our interest rate risk policy; (iii) provide collateral for pledging
requirements; (iv) maximize return on our investments; and (v) maintain a balance of high quality diversified investments to minimize
risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our executive officers meet monthly to assess
our asset/liability risk profile and this group is responsible for implementing our investment policy, subject to the board of
director&rsquo;s approval of the investment strategies and monitoring of the investment performance. The Chief Financial Officer
has the</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">overall responsibility for managing the investment
portfolio and executing transactions. The board of directors regularly reviews our investment strategies and the market value of
our investment portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We account for investment and mortgage-backed
securities in accordance with Accounting Standards Codification Topic 320, &ldquo;Investments - Debt and Equity Securities.&rdquo;
Accounting Standards Codification 320 requires that investments be categorized as held-to-maturity, trading, or available-for-sale.
Our decision to classify certain of our securities as available-for-sale is based on our need to meet daily liquidity needs and
to take advantage of profits that may occur from time to time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Federally chartered savings institutions
have authority to invest in various types of assets, including government-sponsored enterprise obligations, securities of various
federal agencies, residential mortgage-backed securities, certain certificates of deposit of insured financial institutions, overnight
and short-term loans to other banks, corporate debt instruments, debt instruments of municipalities and Fannie Mae and Freddie
Mac equity securities. At December 31, 2016 and 2015, our investment portfolio consisted of mortgage-backed securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Mortgage-Backed Securities</I></B>.
At December 31, 2016, we had mortgage-backed securities with a carrying value of $8.0 million, which constituted 100.0% of our
securities portfolio. Mortgage-backed securities are securities issued in the secondary market that are collateralized by pools
of mortgages. Certain types of mortgage-backed securities are commonly referred to as &ldquo;pass-through&rdquo; certificates because
the principal and interest of the underlying loans is &ldquo;passed through&rdquo; to investors, net of certain costs, including
servicing and guarantee fees. Mortgage-backed securities typically are collateralized by pools of one- to four-family or multifamily
mortgages, although we invest primarily in mortgage-backed securities backed by one- to four-family mortgages. The issuers of such
securities pool and resell the participation interests in the form of securities to investors such as Heritage Bank of St. Tammany.
The interest rate of the security is lower than the interest rates of the underlying loans to allow for payment of servicing and
guaranty fees. All of our mortgage-backed securities are either backed by Ginnie Mae, a United States Government agency, or government-sponsored
enterprises, such as Fannie Mae and Freddie Mac.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Residential mortgage-backed securities issued
by United States Government agencies and government-sponsored enterprises are more liquid than individual mortgage loans because
there is an active trading market for such securities. In addition, residential mortgage-backed securities may be used to collateralize
our borrowings. Investments in residential mortgage-backed securities involve a risk that actual payments will be greater or less
than the prepayment rate estimated at the time of purchase, which may require adjustments to the amortization of any premium or
accretion of any discount relating to such interests, thereby affecting the net yield on our securities. Current prepayment speeds
determine whether prepayment estimates require modification that could cause amortization or accretion adjustments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Other Securities</I></B>. We hold
common stock of the FHLB-Dallas in connection with our borrowing activities. The FHLB-Dallas common stock is carried at cost and
classified as restricted equity securities. It is not practicable to determine the fair value of FHLB-Dallas stock due to restrictions
placed on its transferability. We may be required to purchase additional FHLB-Dallas stock if we increase borrowings in the future.
We also hold stock in First National Bankers Bank, (FNBB), a correspondent bank, as well as in our data service provider, Financial
Institutions Service Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth the amortized
cost and fair value of our investment securities portfolio, at the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Amortized</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Cost</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fair<BR>
    Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Amortized</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Cost</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fair<BR>
    Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -16.75pt; padding-left: 16.75pt">Available for sale:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; padding-bottom: 1pt; text-indent: -2.55pt; padding-left: 8.65pt">Mortgage-backed securities</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">7,126</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">7,175</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">6,812</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">6,896</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -8.65pt; padding-left: 0.25in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -16.75pt; padding-left: 16.75pt">Held to maturity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -2.55pt; padding-left: 8.65pt">Mortgage-backed securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">832</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">824</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,114</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,102</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -8.65pt; padding-left: 8.65pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 6.1pt; padding-left: 0.25in">Total investment securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,958</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,999</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,926</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,998</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Portfolio Maturities and Yields. </I></B>The
composition and maturities of the investment securities portfolio at December 31, 2016 are summarized in the following table. Maturities
are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>One&nbsp;Year&nbsp;or&nbsp;Less</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>More&nbsp;than&nbsp;One&nbsp;Year</B><BR> <B>through&nbsp;Five&nbsp;Years</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>More&nbsp;than&nbsp;Five&nbsp;Years</B><BR> <B>through&nbsp;Ten&nbsp;Years</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>More&nbsp;than&nbsp;Ten&nbsp;Years</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Total&nbsp;Securities</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amortized<BR>
Cost</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Weighted</B><BR> <B>Average</B><BR> <B>Yield</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amortized<BR>
Cost</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Weighted</B><BR> <B>Average</B><BR> <B>Yield</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amortized&nbsp;<BR>
Cost</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Weighted</B><BR> <B>Average</B><BR> <B>Yield</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amortized<BR>
Cost</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Weighted</B><BR> <B>Average</B><BR> <B>Yield</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Amortized<BR>
Cost</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Fair</B><BR> <B>Value</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><FONT STYLE="font-size: 8pt"><B>Weighted</B><BR> <B>Average</B><BR> <B>Yield</B></FONT></P></TD><TD NOWRAP STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="42" STYLE="font-weight: bold; text-align: center">(Dollars&nbsp;in&nbsp;thousands)</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 12%; font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Securities available for sale:</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 10pt; text-align: right"></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 20pt">Mortgage-backed securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.93</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">2.06</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,647</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">2.32</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,464</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.89</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,126</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,175</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.99</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -8.65pt; padding-left: 0.25in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 10pt; text-indent: -10pt">Securities held to-to-maturity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 20pt">Mortgage-backed securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">832</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.81</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">832</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">824</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.81</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: 1.9pt; padding-left: 0.25in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 1.9pt; padding-left: 0.25in">Total securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">1.93</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">2.06</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,647</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">2.32</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,296</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1.88</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,958</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,999</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">1.97</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->78<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Sources of Funds</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>General.</I></B> Deposits, scheduled
amortization and prepayments of loan principal, amortization payments from mortgage-backed securities, proceeds from loan sales,
maturities and calls of securities and funds provided by operations are our primary sources of funds for use in lending, investing
and for other general purposes. We also use borrowings, primarily FHLB-Dallas advances, to supplement cash flow needs, lengthen
the maturities of liabilities for interest rate risk purposes and to manage the cost of funds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Deposits.</I></B> We offer deposit
products having a range of interest rates and terms. We currently offer noninterest-bearing demand accounts, savings accounts,
NOW accounts and certificates of deposit. In recent years we have accepted jumbo certificates of deposit through National CD Rateline,
an on-line service. Pursuant to our business strategy, we are seeking to increase our core deposits by aggressively marketing and
pricing these deposit products and by growing our commercial lending relationships, and reduce our reliance on certificates of
deposit as a funding source.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The flow of deposits is influenced significantly
by general economic conditions, changes in market and other prevailing interest rates and competition. Our deposits are primarily
obtained from areas surrounding our offices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth the distribution
of our average total deposit accounts, by account type, for the years indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 92%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For&nbsp;the&nbsp;Years&nbsp;Ended&nbsp;December&nbsp;31,</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Average<BR> Balance</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted<BR> Average<BR>
    Rate</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Average<BR> Balance</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted<BR> Average<BR>
    Rate</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars&nbsp;in&nbsp;thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Deposit type:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; text-align: left">Statement savings</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">16,244</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">21.9</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">0.25</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">15,967</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">21.9</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">0.36</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Non-interest bearing demand</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,162</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,215</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>NOW</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,492</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.24</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Certificates of deposit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">51,538</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">69.6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">1.53</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">52,326</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">71.7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">1.48</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total deposits</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">74,046</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1.13</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">73,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.0</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1.15</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2016, the aggregate amount
of our outstanding certificates of deposit in amounts greater than or equal to $100,000 was approximately $29.0 million. The following
table sets forth the maturity of those certificates as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 50%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>At</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>December
                                         31, 2016</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 87%">Three months or less</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,817</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Over three months through six months</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,613</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Over six months through one year</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,141</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Over one year to three years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,569</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Over three years</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,271</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">29,411</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 84; Value: 2 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">Table of Contents</A>&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth all our certificates
of deposit classified by interest rate as of the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 60%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Interest Rate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt">Less than 1.00%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,633</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">17,822</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">1.00% - 1.99%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,441</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,064</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">2.00% - 2.99%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,142</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,807</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">3.00% - 3.99%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,694</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,497</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">4.00% - 4.99%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">5.00% - 5.99%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">99</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">99</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 0.25in">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">51,009</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52,289</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth the amount
and maturities of all our certificates of deposit by interest rate at December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">At&nbsp;December&nbsp;31,&nbsp;2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Period&nbsp;to&nbsp;Maturity&nbsp;(1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Less&nbsp;Than</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
    <FONT STYLE="font-size: 8pt">or&nbsp;Equal&nbsp;to</FONT><BR> <FONT STYLE="font-size: 8pt">One&nbsp;Year</FONT></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Over&nbsp;One</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
    <FONT STYLE="font-size: 8pt">Year&nbsp;to</FONT><BR> <FONT STYLE="font-size: 8pt">Two&nbsp;Years</FONT></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Over&nbsp;Two</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
    <FONT STYLE="font-size: 8pt">Years&nbsp;to</FONT><BR> <FONT STYLE="font-size: 8pt">Three&nbsp;Years</FONT></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Over&nbsp;Three</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
    <FONT STYLE="font-size: 8pt">Years</FONT></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Percentage</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif"><BR>
    <FONT STYLE="font-size: 8pt">of&nbsp;Total</FONT><BR> <FONT STYLE="font-size: 8pt">Certificate</FONT><BR> <FONT STYLE="font-size: 8pt">Accounts</FONT></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">(Dollars&nbsp;in&nbsp;thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Interest Rate:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; text-align: left; text-indent: -4.5pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Less
    than or equal to1.00%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,621</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9;&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">12</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,633</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">7.1</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -4.5pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">1.00% - 1.99%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">18,201</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">10,124</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">5,073</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2,043</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">35,441</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">69.5</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -4.5pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">2.00% - 2.99%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">256</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">56</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">7,828</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">8,142</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">16.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -4.5pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">3.00% - 3.99%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,750</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,944</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,694</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">7.2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -4.5pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">4.00% - 4.99%</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -4.5pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">5.00%
    - 5.99%</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">99</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8213;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">99</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">0.2</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">23,673</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">10,380</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">5,129</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">11,827</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">51,009</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">100.00</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">%</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B><I></I></B></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-left: 0; margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B><I></I></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(1)</TD><TD>Includes $13,000 of certificates of deposit held within individual retirement accounts which have no stated maturity.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Borrowings.</I></B> We may obtain
advances from the FHLB-Dallas upon the security of our capital stock in the FHLB-Dallas and our one- to four-family residential
real estate portfolio. We utilize these advances for asset/liability management purposes and for additional funding for our operations.
Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities.
To the extent such borrowings have different terms to reprice than our deposits, they can change our interest rate risk profile.
At December 31, 2016, we had $13.3 million in outstanding advances from the FHLB-Dallas. At December 31, 2016, based on available
collateral and our ownership of FHLB-Dallas stock, and based upon our internal policy, we had access to additional FHLB-Dallas
advances of up to $26.8 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, Heritage Bank of St. Tammany
has the ability to borrow up to $3.0 million on a line of credit with First National Bankers&rsquo; Bank. At December 31, 2016,
there was no balance on this line of credit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
concerning balances and interest rates on our borrowings at and for the periods shown:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>At
                                         or For the Years Ended</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>December
                                         31,</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>FHLB:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%">Balance at end of period</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">13,273</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">12,657</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Average balance during period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,305</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,672</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Maximum outstanding at any month end</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,365</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,657</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Weighted average interest rate at end of period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.29</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.33</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Average interest rate during period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.30</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.18</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Properties</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, the net book value
of our properties was $3.6 million. We own our two full-service offices located at 205 North Columbia Street, Covington, Louisiana
and 200 Gause Boulevard, Slidell, Louisiana, and believe that our current facilities are adequate to meet our present and foreseeable
needs, other than modest and customary repair and replacement needs.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Subsidiary Activities</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Upon completion of the conversion, Heritage
Bank of St. Tammany will become the wholly owned subsidiary of Heritage NOLA Bancorp. Heritage Bank of St. Tammany has no subsidiaries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Legal Proceedings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are not involved in any pending legal
proceedings other than routine legal proceedings occurring in the ordinary course of business. At December 31, 2016, we were not
involved in any legal proceedings the outcome of which would be material to our financial condition or results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Expense and Tax Allocation Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany will enter
into an agreement with Heritage NOLA Bancorp to provide it with certain administrative support services, whereby Heritage Bank
of St. Tammany will be compensated at not less than the fair market value of the services provided. In addition, Heritage Bank
of St. Tammany and Heritage NOLA Bancorp will enter into an agreement to establish a method for allocating and for reimbursing
the payment of their consolidated tax liability.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Employees</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2016 we had 21 full-time
equivalent employees. Our employees are not represented by any collective bargaining group. Management believes that we have a
good working relationship with our employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_14"></A>REGULATION AND SUPERVISION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>General</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a federal savings association, Heritage
Bank of St. Tammany is subject to examination and regulation by the OCC, and is also subject to examination by the FDIC. This regulation
and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily
for the protection of the FDIC&rsquo;s deposit insurance fund and depositors, and not for the protection of security holders. Heritage
Bank of St. Tammany also is a member of and owns stock in the FHLB-Dallas, which is one of the 11 regional banks in the Federal
Home Loan Bank System.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under this system of regulation, the regulatory
authorities have extensive discretion in connection with their supervisory, enforcement, rulemaking and examination activities
and policies, including rules or policies that: establish minimum capital levels; restrict the timing and amount of dividend payments;
govern the classification of assets; determine the adequacy of loan loss reserves for regulatory purposes; and establish the timing
and amounts of assessments and fees. Moreover, as part of their examination authority, the banking regulators assign numerical
ratings to banks and savings institutions relating to capital, asset quality, management, liquidity, earnings and other factors.
These ratings are inherently subjective and the receipt of a less than satisfactory rating in one or more categories may result
in enforcement action by the banking regulators against a financial institution. A less than satisfactory rating may also prevent
a financial institution, such as Heritage Bank of St. Tammany or its holding company, from obtaining necessary regulatory approvals
to access the capital markets, pay dividends, acquire other financial institutions or establish new branches.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, we must comply with significant
anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and fair lending
laws and regulations. Government agencies have the authority to impose monetary penalties and other sanctions on institutions that
fail to comply with these laws and regulations, which could significantly affect our business activities, including our ability
to acquire other financial institutions or expand our branch network.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a savings and loan holding company following
the conversion, Heritage NOLA Bancorp will be required to comply with the rules and regulations of the Federal Reserve Board. It
will be required to file certain reports with the Federal Reserve Board and will be subject to examination by the enforcement authority
of the Federal Reserve Board. Heritage NOLA Bancorp will also be subject to the rules and regulations of the Securities and Exchange
Commission under the federal securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Any change in applicable laws or regulations,
whether by the OCC, the FDIC, the Federal Reserve Board or Congress, could have a material adverse impact on the operations and
financial performance of Heritage NOLA Bancorp and Heritage Bank of St. Tammany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Set forth below is a brief description of
material regulatory requirements that are or will be applicable to Heritage Bank of St. Tammany and Heritage NOLA Bancorp. The
description is limited to certain material aspects of the statutes and regulations addressed, and is not intended to be a complete
description of such statutes and regulations and their effects on Heritage Bank of St. Tammany and Heritage NOLA Bancorp.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Federal Banking Regulation </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Business Activities. </I></B>A federal
savings association derives its lending and investment powers from the Home Owners&rsquo; Loan Act, as amended, and applicable
federal regulations. Under these laws and regulations, Heritage Bank of St. Tammany may invest in mortgage loans secured by residential
and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">commercial real estate, commercial business and consumer loans,
certain types of debt securities and certain other assets, subject to applicable limits. Heritage Bank of St. Tammany may also
establish subsidiaries that may engage in certain activities not otherwise permissible for Heritage Bank of St. Tammany, including
real estate investment and securities and insurance brokerage.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Capital Requirements</I></B>. Federal
regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1
capital to risk-weighted assets ratio of 4.5%, a Tier 1 capital to risk-weighted assets ratio of 6.0%, a total capital to risk-weighted
assets of 8.0%, and a 4.0% Tier 1 capital to adjusted average total assets leverage ratio. These capital requirements were effective
January 1, 2015 and are the result of a final rule implementing recommendations of the Basel Committee on Banking Supervision and
certain requirements of the Dodd-Frank Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In determining the amount of risk-weighted
assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (<I>e.g.</I>,
recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations
based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed
to present greater risk. Common equity Tier&nbsp;1 capital is generally defined as common stockholders&rsquo; equity and retained
earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital
includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated
subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital.
Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative
preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated
debt. Also included in Tier 2 capital is the allowance for loan 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, up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. In assessing
an institution&rsquo;s capital adequacy, the OCC takes into consideration not only these numeric factors, but qualitative factors
as well, and has the authority to establish higher capital requirements for individual institutions when deemed necessary.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition to establishing the minimum
regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management
if the institution does not hold a &ldquo;capital conservation buffer&rdquo; consisting of 2.5% of common equity Tier 1 capital
to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation
buffer requirement was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully
implemented at 2.5% of risk-weighted assets on January 1, 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, Heritage Bank of St.
Tammany&rsquo; capital exceeded all applicable requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Loans-to-One Borrower.</I></B> Generally,
a federal savings association may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of
unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan
is secured by readily marketable collateral, which generally does not include real estate. As of December 31, 2016, Heritage Bank
of St. Tammany was in compliance with the loans-to-one borrower limitations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Qualified Thrift Lender Test.</I></B>
As a federal savings association, Heritage Bank of St. Tammany must satisfy the qualified thrift lender, or &ldquo;QTL,&rdquo;
test. Under the QTL test, Heritage Bank of St.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Tammany must maintain at least 65% of its &ldquo;portfolio assets&rdquo;
in &ldquo;qualified thrift investments&rdquo; (primarily residential mortgages and related investments, including mortgage-backed
securities) in at least nine months of the most recent 12-month period. &ldquo;Portfolio assets&rdquo; generally means total assets
of a savings association, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets,
and the value of property used in the conduct of the savings association&rsquo;s business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany also may satisfy
the QTL test by qualifying as a &ldquo;domestic building and loan association&rdquo; as defined in the Internal Revenue Code of
1986, as amended. This test generally requires a savings association to have at least 75% of its deposits held by the public and
earn at least 25% of its income from loans and U.S. government obligations. Alternatively, a savings association can satisfy this
test by maintaining at least 60% of its assets in cash, real estate loans and U.S. Government or state obligations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A savings association that fails the qualified
thrift lender test must operate under specified restrictions set forth in the Home Owners&rsquo; Loan Act. The Dodd-Frank Act made
noncompliance with the QTL test subject to agency enforcement action for a violation of law. At December 31, 2016, Heritage Bank
of St. Tammany satisfied the QTL test.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Capital Distributions.</I></B> Federal
regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and
other transactions charged to the savings association&rsquo;s capital account. A federal savings association must file an application
with the OCC for approval of a capital distribution if:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the total capital distributions for the applicable calendar year exceed the sum of the savings association&rsquo;s net income
for that year to date plus the savings association&rsquo;s retained net income for the preceding two years;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the savings association would not be at least adequately capitalized following the distribution;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the distribution would violate any applicable statute, regulation, agreement or regulatory condition; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the savings association is not eligible for expedited treatment of its filings, generally due to an unsatisfactory CAMELS rating
or being subject to a cease and desist order or formal written agreement that requires action to improve the institution&rsquo;s
financial condition.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Even if an application is not otherwise
required, every savings association that is a subsidiary of a savings and loan holding company, such as Heritage Bank of St. Tammany,
must still file a notice with the Federal Reserve Board at least 30 days before the board of directors declares a dividend or approves
a capital distribution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A notice or application related to a capital
distribution may be disapproved if:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the federal savings association would be undercapitalized following the distribution;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the proposed capital distribution raises safety and soundness concerns; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the capital distribution would violate a prohibition contained in any statute, regulation or agreement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, the Federal Deposit Insurance
Act provides that an insured depository institution may not make any capital distribution if, after making such distribution, the
institution would fail to meet any applicable regulatory capital requirement. A federal savings association also may not make a
capital distribution that would reduce its regulatory capital below the amount required for the liquidation account established
in connection with its conversion to stock form.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Community Reinvestment Act and Fair
Lending Laws.</I></B> All federal savings associations have a responsibility under the Community Reinvestment Act and related regulations
to help meet the credit needs of their communities, including low- and moderate-income borrowers. In connection with its examination
of a federal savings association, the OCC is required to assess the federal savings association&rsquo;s record of compliance with
the Community Reinvestment Act. A savings association&rsquo;s failure to comply with the provisions of the Community Reinvestment
Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on
its activities. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in
their lending practices on the basis of characteristics specified in those statutes. The failure to comply with the Equal Credit
Opportunity Act and the Fair Housing Act could result in enforcement actions by the OCC, as well as other federal regulatory agencies
and the Department of Justice.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Community Reinvestment Act requires
all institutions insured by the Federal Deposit Insurance Corporation to publicly disclose their rating. Heritage Bank of St. Tammany
received a &ldquo;satisfactory&rdquo; Community Reinvestment Act rating in its most recent federal examination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Transactions with Related Parties.</I></B>
A federal savings association&rsquo;s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B
of the Federal Reserve Act and federal regulation. An affiliate is generally a company that controls, or is under common control
with, an insured depository institution such as Heritage Bank of St. Tammany. Heritage NOLA Bancorp will be an affiliate of Heritage
Bank of St. Tammany because of its control of Heritage Bank of St. Tammany. In general, transactions between an insured depository
institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations
prohibit a savings association from lending to any of its affiliates that are engaged in activities that are not permissible for
bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with
affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets and be on terms
that are as favorable to the institution as comparable transactions with non-affiliates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany&rsquo; authority
to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons,
is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal
Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent
than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk
of repayment or present other unfavorable features; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits
are based, in part, on the amount of Heritage Bank of St. Tammany&rsquo;s capital.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, extensions of credit in excess
of certain limits must be approved by Heritage Bank of St. Tammany&rsquo; board of directors. Extensions of credit to executive
officers are subject to additional limits based on the type of extension involved.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Enforcement.</I></B> The OCC has primary
enforcement responsibility over federal savings associations and has authority to bring enforcement action against all &ldquo;institution-affiliated
parties,&rdquo; including directors, officers, shareholders, attorneys, appraisers and accountants who knowingly or recklessly
participate in wrongful action likely to have an adverse effect on a federal savings association. Formal enforcement action by
the OCC may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of
the institution and the appointment of a receiver or conservator. Civil penalties cover a wide range of violations and actions,
and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million
per day. The FDIC also has the authority to terminate deposit insurance or recommend to the OCC that enforcement action be taken
with respect to a particular savings association. If such action is not taken, the FDIC has authority to take the action under
specified circumstances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Standards for Safety and Soundness.
</I></B>Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions.
These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit
underwriting, interest rate risk exposure, asset growth, compensation and other operational and managerial standards as the agency
deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to
identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking
agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution
to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards,
the appropriate federal banking agency may require the institution to implement an acceptable compliance plan. Failure to implement
such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil
money penalties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Interstate Banking and Branching.
</I></B>Federal law permits well capitalized and well managed holding companies to acquire banks in any state, subject to Federal
Reserve Board approval, certain concentration limits and other specified conditions. Interstate mergers of banks are also authorized,
subject to regulatory approval and other specified conditions. In addition, among other things, recent amendments made by the Dodd-Frank
Act permit banks to establish <I>de novo</I> branches on an interstate basis provided that branching is authorized by the law of
the host state for the banks chartered by that state.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Prompt Corrective Action. </I></B>Federal
law requires, among other things, that federal bank regulators take &ldquo;prompt corrective action&rdquo; with respect to institutions
that do not meet minimum capital requirements. For this purpose, the law establishes five capital categories: well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. The applicable OCC regulations
were amended to incorporate the previously mentioned increased regulatory capital standards that were effective January 1, 2015.
Under the amended regulations, an institution is deemed to be &ldquo;well capitalized&rdquo; 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 &ldquo;adequately capitalized&rdquo; 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</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">and a common equity Tier 1 ratio of 4.5% or greater. An institution
is &ldquo;undercapitalized&rdquo; if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio
of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed
to be &ldquo;significantly undercapitalized&rdquo; if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based
capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution
is considered to be &ldquo;critically undercapitalized&rdquo; if it has a ratio of tangible equity (as defined in the regulations)
to total assets that is equal to or less than 2.0%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At each successive lower capital category,
an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions
on interest rates paid on deposits, restrictions or prohibitions on payment of dividends, and restrictions on the acceptance of
brokered deposits. 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, and the holding company must guarantee
the performance of that plan. Based upon its capital levels, 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 appropriate federal banking agency,
after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants
such treatment. An &ldquo;undercapitalized&rdquo; bank&rsquo;s compliance with a capital restoration plan is required to be guaranteed
by any company that controls the &ldquo;undercapitalized&rdquo; institution in an amount equal to the lesser of 5.0% of the institution&rsquo;s
total assets when deemed &ldquo;undercapitalized&rdquo; or the amount necessary to achieve the status of &ldquo;adequately capitalized.&rdquo;
If an &ldquo;undercapitalized&rdquo; bank fails to submit an acceptable plan, it is treated as if it is &ldquo;significantly undercapitalized.&rdquo;
&ldquo;Significantly undercapitalized&rdquo; banks must comply with one or more of a number of additional restrictions, including
but not limited to an order by the Federal Reserve Board to sell sufficient voting stock to become adequately capitalized, requirements
to reduce total assets, cease receipt of deposits from correspondent banks or dismiss directors or officers, and restrictions on
interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company. &ldquo;Critically
undercapitalized&rdquo; institutions are subject to additional measures including, subject to a narrow exception, the appointment
of a receiver or conservator within 270 days after it obtains such status.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At December 31, 2016, Heritage Bank of St.
Tammany met the criteria for being considered &ldquo;well capitalized.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Insurance of Deposit Accounts. </I></B>The
Deposit Insurance Fund of the FDIC insures deposits at FDIC-insured financial institutions such as Heritage Bank of St. Tammany.
Deposit accounts in Heritage Bank of St. Tammany are insured by the FDIC generally up to a maximum of $250,000 per separately insured
depositor. The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the FDIC&rsquo;s risk-based assessment
system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels
and certain other risk factors. Rates are based on each institution&rsquo;s risk category and certain specified risk adjustments.
Institutions deemed to be less risky pay lower rates while institutions deemed riskier pay higher rates. Assessment rates (inclusive
of possible adjustments) currently range from 2.5 to 45 basis points of each institution&rsquo;s total assets less tangible capital.
The FDIC may increase or decrease the scale uniformly, except that no adjustment can deviate more than two basis points from the
base scale without notice and comment rulemaking. The FDIC&rsquo;s current system represents a change, required by the Dodd-Frank
Act, from its prior practice of basing the assessment on an institution&rsquo;s deposits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Dodd-Frank Act increased the minimum
target Deposit Insurance Fund ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC must
seek to achieve the</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">1.35% ratio by September&nbsp;30, 2020. Insured institutions
with assets of $10 billion or more are supposed to fund the increase. The Dodd-Frank Act eliminated the 1.5% maximum fund ratio,
instead leaving it to the discretion of the FDIC, which has exercised that discretion by establishing a long range fund ratio of
2%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The FDIC has authority to increase insurance
assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of Heritage
Bank of St. Tammany. We cannot predict what assessment rates will be in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Insurance of deposits may be terminated
by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not
know of any practice, condition or violation that may lead to termination of our deposit insurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition to the FDIC assessments, the
Financing Corporation (&ldquo;FICO&rdquo;) is authorized to impose and collect, with the approval of the FDIC, assessments for
anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the former Federal
Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended
December 31, 2016, the annualized FICO assessment was equal to 0.60 basis points of total assets less tangible capital.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Privacy Regulations. </I></B>Federal
regulations generally require that Heritage Bank of St. Tammany disclose its privacy policy, including identifying with whom it
shares a customer&rsquo;s &ldquo;non-public personal information,&rdquo; to customers at the time of establishing the customer
relationship and annually thereafter. In addition, Heritage Bank of St. Tammany is required to provide its customers with the ability
to &ldquo;opt-out&rdquo; of having their personal information shared with unaffiliated third parties and not to disclose account
numbers or access codes to non-affiliated third parties for marketing purposes. Heritage Bank of St. Tammany currently has a privacy
protection policy in place and believes that such policy is in compliance with the regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>USA Patriot Act. </I></B>Heritage
Bank of St. Tammany is subject to the USA PATRIOT Act, which gives federal agencies additional powers to address terrorist threats
through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money
laundering requirements. The USA PATRIOT Act contains provisions intended to encourage information sharing among bank regulatory
agencies and law enforcement bodies and imposes affirmative obligations on financial institutions, such as enhanced recordkeeping
and customer identification requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Prohibitions Against Tying Arrangements</I>.</B>
Federal savings associations are prohibited, subject to some exceptions, from extending credit to or offering any other service,
or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some
additional service from the institution or its affiliates or not obtain services of a competitor of the institution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Other Regulations </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Interest and other charges collected or
contracted for by Heritage Bank of St. Tammany 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:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public
officials to determine whether a financial</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: 0in">institution is fulfilling its obligation
to help meet the housing needs of the community it serves;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending
credit;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such federal
and state laws.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">The deposit operations of Heritage Bank
of St. Tammany also are subject to, among others, the:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>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;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>Check Clearing for the 21st Century Act (also known as &ldquo;Check 21&rdquo;), which gives &ldquo;substitute checks,&rdquo;
such as digital check images and copies made from that image, the same legal standing as the original paper check; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from
deposit accounts and customers&rsquo; rights and liabilities arising from the use of automated teller machines and other electronic
banking services.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Federal Reserve System </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Federal Reserve Board regulations require
depository institutions to maintain noninterest-earning reserves against their transaction accounts (primarily NOW and regular
checking accounts). The Federal Reserve Board regulations generally require that reserves be maintained against aggregate transaction
accounts as follows: for that portion of transaction accounts aggregating $103.6 million or less (which may be adjusted by the
Federal Reserve Board) the reserve requirement is 3.0% and the amounts greater than $103.6 million require a 10.0% reserve (which
may be adjusted annually by the Federal Reserve Board between 8.0% and 14.0%). The first $14.5 million of otherwise reservable
balances (which may be adjusted by the Federal Reserve Board) are exempted from the reserve requirements. Heritage Bank of St.
Tammany is in compliance with these requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Federal Home Loan Bank System </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany is a member
of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank provides
a central credit facility primarily for member institutions. Members of the Federal Home Loan Bank are required to acquire and
hold shares of capital stock in the Federal Home Loan Bank. Heritage Bank of St. Tammany was in compliance with this requirement
at December 31, 2016. Based on redemption provisions of the FHLB-Dallas, the stock has no quoted market value and is carried at
cost. Heritage Bank of St. Tammany reviews for impairment, based on the ultimate recoverability, the cost basis of the FHLB-Dallas.
As of December 31, 2016, no impairment has been recognized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Holding Company Regulation </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp will be a unitary
savings and loan holding company subject to regulation and supervision by the Federal Reserve Board. The Federal Reserve Board
will have enforcement authority over Heritage NOLA Bancorp and its non-savings institution subsidiaries. Among other things, this
authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a risk to Heritage Bank
of St. Tammany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a savings and loan holding company, Heritage
NOLA Bancorp&rsquo;s activities will be limited to those activities permissible by law for financial holding companies (if Heritage
NOLA Bancorp makes an election to be treated as a financial holding company and meets the other requirements to be a financial
holding company) or multiple savings and loan holding companies. A financial holding company may engage in activities that are
financial in nature, incidental to financial activities or complementary to a financial activity. Such activities include lending
and other activities permitted for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, insurance and
underwriting equity securities. Multiple savings and loan holding companies are authorized to engage in activities specified by
federal regulation, including activities permitted for bank holding companies under Section 4(c)(8) of the Bank Holding Company
Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Federal law prohibits a savings and loan
holding company, directly or indirectly, or through one or more subsidiaries, from acquiring more than 5% of another savings institution
or savings and loan holding company without prior written approval of the Federal Reserve Board, and from acquiring or retaining
control of any depository institution not insured by the FDIC. In evaluating applications by holding companies to acquire savings
institutions, the Federal Reserve Board must consider such things as the financial and managerial resources and future prospects
of the company and institution involved, the effect of the acquisition on and the risk to the federal deposit insurance fund, the
convenience and needs of the community and competitive factors. A savings and loan holding company may not acquire a savings institution
in another state and hold the target institution as a separate subsidiary unless it is a supervisory acquisition under Section
13(k) of the Federal Deposit Insurance Act or the law of the state in which the target is located authorizes such acquisitions
by out-of-state companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Savings and loan holding companies historically
have not been subject to consolidated regulatory capital requirements. The Dodd-Frank Act requires the Federal Reserve Board to
establish minimum consolidated capital requirements for all depository institution holding companies that are as stringent as those
required for the insured depository subsidiaries. However, legislation was enacted in December 2014 that required the Federal Reserve
Board to amend its &ldquo;Small Bank Holding Company&rdquo; exemption from consolidated holding company capital requirements to
generally extend its applicability to bank and savings and loan holding companies of up to $1 billion in assets. Regulations implementing
this amendment were effective May 15, 2015. Consequently, savings and loan holding companies of under $1 billion in consolidated
assets remain exempt from consolidated regulatory capital requirements, unless the Federal Reserve determines otherwise in particular
cases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Dodd-Frank Act extended the &ldquo;source
of strength&rdquo; doctrine to savings and loan holding companies. The Federal Reserve Board has promulgated regulations implementing
the &ldquo;source of strength&rdquo; policy that require holding companies to act as a source of strength to their subsidiary depository
institutions by providing capital, liquidity and other support in times of financial stress.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Federal Reserve Board has issued a policy
statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies and savings
and loan holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only
if the prospective rate of earnings retention by the holding company appears consistent with the</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">organization&rsquo;s capital needs, asset quality and overall
financial condition. Regulatory guidance provides for prior regulatory consultation with respect to capital distributions in certain
circumstances such as where the company&rsquo;s net income for the past four quarters, net of dividends previously paid over that
period, is insufficient to fully fund the dividend or the company&rsquo;s overall rate of earnings retention is inconsistent with
the company&rsquo;s capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted
if a subsidiary bank becomes undercapitalized. The policy statement also states that a holding company should inform the Federal
Reserve Board supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the holding company
is experiencing financial weaknesses or if the repurchase or redemption would result in a net reduction, 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. These regulatory policies may affect the ability of Heritage NOLA Bancorp to pay dividends, repurchase shares of common
stock or otherwise engage in capital distributions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In order for Heritage NOLA Bancorp to be
regulated as savings and loan holding company by the Federal Reserve Board, rather than as a bank holding company, Heritage Bank
of St. Tammany must qualify as a &ldquo;qualified thrift lender&rdquo; under federal regulations or satisfy the &ldquo;domestic
building and loan association&rdquo; test under the Internal Revenue Code. Under the qualified thrift lender test, a savings institution
is required to maintain at least 65% of its &ldquo;portfolio assets&rdquo; (total assets less: (i)&nbsp;specified liquid assets
up to 20% of total assets; (ii)&nbsp;intangible assets, including goodwill; and (iii)&nbsp;the value of property used to conduct
business) in certain &ldquo;qualified thrift investments&rdquo; (primarily residential mortgages and related investments, including
certain mortgage-backed and related securities) in at least nine out of each 12 month period. At December 31, 2016, Heritage Bank
of St. Tammany maintained 81.6% of its portfolio assets in qualified thrift investments and was in compliance with the qualified
thrift lender requirement.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Federal Securities Laws</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp common stock will
be registered with the Securities and Exchange Commission after the conversion and stock offering. Heritage NOLA Bancorp will be
subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange
Act of 1934.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The registration under the Securities Act
of 1933 of shares of common stock issued in Heritage NOLA Bancorp&rsquo;s public offering does not cover the resale of those shares.
Shares of common stock purchased by persons who are not affiliates of Heritage NOLA Bancorp may be resold without registration.
Shares purchased by an affiliate of Heritage NOLA Bancorp will be subject to the resale restrictions of Rule 144 under the Securities
Act of 1933. If Heritage NOLA Bancorp meets the current public information requirements of Rule 144 under the Securities Act of
1933, each affiliate of Heritage NOLA Bancorp that complies with the other conditions of Rule 144, including those that require
the affiliate&rsquo;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 Heritage NOLA Bancorp,
or the average weekly volume of trading in the shares during the preceding four calendar weeks. In the future, Heritage NOLA Bancorp
may permit affiliates to have their shares registered for sale under the Securities Act of 1933.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Sarbanes-Oxley Act of 2002</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">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.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Change in Control Regulations</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the Change in Bank Control Act, no
person may acquire control of a savings and loan holding company such as Heritage NOLA Bancorp unless the Federal Reserve Board
has been given 60 days prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration
certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition.
Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of
any class of voting stock, control in any manner of the election of a majority of the institution&rsquo;s directors, or a determination
by the regulator that the acquiror has the power, directly or indirectly, to exercise a controlling influence over the management
or policies of the institution. Acquisition of more than 10% of any class of a savings and loan holding company&rsquo;s voting
stock constitutes a rebuttable determination of control under the regulations under certain circumstances including where, as will
be the case with Heritage NOLA Bancorp, the issuer has registered securities under Section 12 of the Securities Exchange Act of
1934.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, federal regulations provide
that no company may acquire control of a savings and loan holding company without the prior approval of the Federal Reserve Board.
Any company that acquires such control becomes a &ldquo;savings and loan holding company&rdquo; subject to registration, examination
and regulation by the Federal Reserve Board.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_15"></A>TAXATION</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Federal Taxation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>General.</I></B> Heritage NOLA Bancorp
and Heritage Bank of St. Tammany are subject to federal income taxation in the same general manner as other corporations, with
some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income
tax matters and is not a comprehensive description of the tax rules applicable to Heritage NOLA Bancorp and Heritage Bank of St.
Tammany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Method of Accounting.</I></B> For
federal income tax purposes, Heritage Bank of St. Tammany currently reports its income and expenses on the cash method of accounting
and uses a tax year ending December 31 for filing its federal income tax returns. The Small Business Protection Act of 1996 eliminated
the use of the reserve method of accounting for bad debt reserves by savings institutions, effective for taxable years beginning
after 1995.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Minimum Tax.</I></B> The Internal
Revenue Code of 1986, as amended, 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 &ldquo;alternative minimum taxable income.&rdquo; 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. Net operating losses can, in general, offset no more than 90% of alternative minimum taxable income. Certain payments of
alternative minimum tax may be used as credits against regular tax liabilities in future years. At December 31, 2016, Heritage
Bank of St. Tammany had no minimum tax credit carryforward.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Net Operating Loss Carryovers.</I></B>
Generally, a financial institution may carry back net operating losses to the preceding two taxable years and forward to the succeeding
20 taxable years. At December</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">31, 2016, Heritage Bank of St. Tammany had
$0 of federal net operating loss carryforwards and no Louisiana state net operating loss carryforwards available for future use.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Capital Loss Carryovers.</I></B> 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 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, 2016, Heritage Bank of St. Tammany had no
capital loss carryover.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Corporate Dividends.</I></B> We may
generally exclude from our income 100% of dividends received from Heritage Bank of St. Tammany as a member of the same affiliated
group of corporations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Audit of Tax Returns. </I></B>Heritage
Bank of St. Tammany&rsquo; federal income tax returns have not been audited in the most recent five-year period.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">State Taxation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp will be subject to
the Louisiana Corporation Income Tax based on our Louisiana taxable income. The Corporation Income Tax applies at graduated rates
from 4% upon the first $25,000 of Louisiana taxable income to 8% on all Louisiana taxable income in excess of $200,000. For these
purposes, &ldquo;Louisiana taxable income&rdquo; means net income which is earned by us within or derived from sources within the
State of Louisiana, after adjustments permitted under Louisiana law, including a federal income tax deduction. In addition, Heritage
Bank will be subject to the Louisiana Shares Tax which is imposed on the assessed value of Heritage Bank of St. Tammany&rsquo;s
capital. The formula for deriving the assessed value is to apply the applicable rate to the sum of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63pt; text-indent: -27pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 36pt"></TD><TD STYLE="width: 27pt">(1)</TD><TD>20% of our capitalized earnings, plus</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 36pt"></TD><TD STYLE="width: 27pt">(2)</TD><TD>80% of our taxable stockholders&rsquo; equity, minus</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 36pt"></TD><TD STYLE="width: 27pt">(3)</TD><TD>50% of our real and personal property assessment.&nbsp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Various items may also be subtracted in
calculating a company&rsquo;s capitalized earnings. We believe that the Louisiana Shares Tax will result in a significant additional
tax liability following the conversion on an annual basis. See &ldquo;Unaudited Pro Forma Data.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a Maryland business corporation, Heritage
NOLA Bancorp will be required to file an annual report with and pay personal property taxes to the State of Maryland.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_16"></A>MANAGEMENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Shared Management Structure</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The directors of Heritage NOLA Bancorp are
the same persons who are the directors of Heritage Bank of St. Tammany. In addition, each executive officer of Heritage NOLA Bancorp
is also an executive officer of Heritage Bank of St. Tammany. We expect that Heritage NOLA Bancorp and Heritage Bank of St. Tammany
will continue to have common executive officers and directors until there is a business reason to establish separate management
structures.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Executive Officers of Heritage NOLA Bancorp and Heritage
Bank of St. Tammany</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
regarding the executive officers of Heritage NOLA Bancorp and Heritage Bank of St. Tammany. Age information is as of December 31,
2016. The executive officers of Heritage NOLA Bancorp and Heritage Bank of St. Tammany are elected annually.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: bottom; width: 26%; border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Name</FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; width: 8%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt"><B>Age</B></FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 62%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt"><B>Position</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">W. David Crumhorn</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">63</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">President and Chief Executive Officer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Dana Whitaker</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">47</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Executive Vice President and Chief Credit Officer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Lisa Hughes</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">55</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Senior Vice President and Chief Financial Officer</FONT></TD></TR>
</TABLE>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Directors of Heritage NOLA Bancorp and Heritage Bank of
St. Tammany</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp has six directors.
Directors serve three-year staggered terms so that approximately one-third of the directors are elected at each annual meeting.
Directors of Heritage Bank of St. Tammany will be elected by Heritage NOLA Bancorp as its sole stockholder. The following table
states our directors&rsquo; names, their ages as of December 31, 2016, the years when they began serving as directors of Heritage
Bank of St. Tammany and when their current terms expire.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: bottom; width: 24%; text-align: center; text-indent: 0in; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Name<SUP>(1)</SUP></B></FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: center; text-indent: 0in; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 42%; text-align: center; text-indent: 0in; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Position(s)&nbsp;Held&nbsp;With</B></FONT><BR>
<FONT STYLE="font-size: 8pt"><B>Heritage&nbsp;Bank&nbsp;of&nbsp;St.&nbsp;Tammany&nbsp;</B></FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: center; text-indent: 0in; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 6%; text-align: center; text-indent: 0in; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Age</B></FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: center; text-indent: 0in; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 8%; text-align: center; text-indent: 0in; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Director&nbsp;</B><BR>
    <B>Since</B></FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: center; text-indent: 0in; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 12%; text-align: center; text-indent: 0in; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Current&nbsp;Term</B><BR>
    <B>Expires</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">W. David Crumhorn</FONT></TD>
    <TD STYLE="vertical-align: top; padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Chairman of the Board, President and Chief Executive Offer</FONT></TD>
    <TD STYLE="vertical-align: top; padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">63</FONT></TD>
    <TD STYLE="vertical-align: top; padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">1993</FONT></TD>
    <TD STYLE="vertical-align: top; padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2020</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">W. Thomas Ballantine, Jr.</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">72</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2012</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2018</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Salvatore A. Caruso, Jr.</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">49</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2012</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2018</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Elizabeth M. Eustis</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">58</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2010</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2019</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Jason S. Hunt</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">41</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2013</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2019</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Julian J. Rodrigue, Jr.</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">62</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">1997</FONT></TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt">&nbsp;</TD>
    <TD STYLE="padding-left: 9.35pt; text-align: center; text-indent: -9.35pt"><FONT STYLE="font-size: 10pt">2020</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><SUP>&nbsp;</SUP></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-left: 0; margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(1)</TD><TD>The mailing address for each person listed is 205 North Columbia Street, Covington, Louisiana 70433.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Board Independence</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp has determined to
adopt the standards for &ldquo;independence&rdquo; for purposes of board and committee service set forth in the listing standards
of the Nasdaq Stock Market. The board of directors has determined that each of our directors, with the exception director W. David
Crumhorn, is &ldquo;independent&rdquo; as defined in the listing standards of the Nasdaq Stock Market. Mr. Crumhorn is not independent
because he is an executive officer of Heritage Bank of St. Tammany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To our knowledge, there were no other transactions
between Heritage Bank of St. Tammany and any director or entity controlled by any director, which would interfere with the directors&rsquo;
exercise of independent judgment in carrying out his responsibilities as a director.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Business Background of Our Directors
and Executive Officers</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The business experience for the past five
years of each of our directors and executive officers is set forth below. With respect to directors, the biographies also contain
information regarding the person&rsquo;s experience, qualifications, attributes or skills that caused the Nominating Committee
and the board of directors to determine that the person should serve as a director. Each director is also a director of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">Heritage Bank of St. Tammany. Unless otherwise
indicated, directors and executive officers have held their positions for the past five years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Directors</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>W. David Crumhorn </I></B>is our President
and Chief Executive Officer, positions he has held since 1994. Mr. Crumhorn has been employed with the Bank since 1992 and has
over 40 years of experience in the banking profession. Mr. Crumhorn&rsquo;s experience provides the board with a perspective on
the day-to-day operations of Heritage Bank, and assists the board in assessing the trends and developments in the financial institutions
industry on a local and national basis. Additionally, Mr. Crumhorn has extensive ties to the communities that support our business
generation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>W. Thomas Ballantine, Jr. </I></B>is
retired. Prior to his retirement in 2007, Mr. Ballantine was President and Chief Operating Officer of Newpark Resources, a publicly
traded oil services company headquartered in New Orleans, Louisiana. Mr. Ballantine has over 40 years of managerial and business
experience. This experience provides the board with broad knowledge of corporate responsibilities and oversight of management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Salvatore A. Caruso, Jr.</I></B> is
Director of Business Development, Marketing and Strategic Planning for Slidell Memorial Hospital, located in Slidell, Louisiana.
Mr. Caruso&rsquo;s experience leading fundraising and business development and municipal government relations provides the board
of directors with insight into the growth efforts being made in Heritage Bank&rsquo;s market area.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Elizabeth M. Eustis </I></B>is a commercial
real estate agent and, since 2010, has held the position of Director of Commercial Real Estate for Keller Williams Realty, located
in Mandeville, Louisiana. Ms. Eustis previously was a residential real estate agent. Ms. Eustis extensive knowledge of both the
residential and commercial real estate markets in our market area provide the board with insight and expertise with respect to
the Bank&rsquo;s lending operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Jason S. Hunt </I></B>is the Chief
Executive Officer and co-founder of Hunt Telecommunications, LLC, Louisiana&rsquo;s largest privately owned telecom and data provider
that specializes in fiber optics, cloud-based computing, internet and next generation telecommunication services.&nbsp;Mr. Hunt&rsquo;s
business experience as a business owner provides the board with valuable business and leadership skills and financial acumen.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Julian J. Rodrigue, Jr.</I></B> is
an attorney at the law firm Rodrigue &amp; Rodrigue. Mr. Rodrigue has practiced law in Covington, Louisiana for over 30
years with a specialty in real estate law. Mr. Rodrigue&rsquo;s knowledge of real estate law provides the board with valuable
business acumen and knowledge of the real estate market in Heritage Bank&rsquo;s market area.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Executive Officers who are not Directors</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Dana Whitaker </I></B>is our Executive
Vice President and Chief Credit Officer, positions she has held since 2009. Ms. Whitaker has been employed by Heritage Bank since
1989 and has held positions of increased responsibility during her tenure at the Bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Lisa Hughes </I></B>is our Senior
Vice President and Chief Financial Officer, positions she has held since 2010. She began her employment with Heritage Bank in 2007
and has over 30 years of experience in community banking.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Transactions With Certain Related Persons
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Federal law 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 Heritage Bank of St. Tammany, to their executive officers and
directors in compliance with federal banking regulations. At December 31, 2016, all of our loans to directors and executive officers
were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable loans with persons not related to Heritage Bank of St. Tammany, and did not involve
more than the normal risk of collectability or present other unfavorable features. These loans were performing according to their
original terms at December 31, 2016, and were made in compliance with federal banking regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Executive Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Summary Compensation Table. </I></B>The
table below summarizes the total compensation paid to or earned by our President and Chief Executive Officer, and our two other
most highly compensated executive officers for the year ended December 31, 2016. Each individual listed in the table below is referred
to as a &ldquo;named executive officer.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 92%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="18" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Summary&nbsp;Compensation&nbsp;Table</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name&nbsp;and&nbsp;principal<BR>
    position</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Year</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Salary&nbsp;<BR>
    ($)(1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Bonus<BR>
    ($)(2)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">All&nbsp;other&nbsp;<BR>
    Compensation<BR> ($)(3)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total<BR>
    ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 37%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">W. David Crumhorn, President and Chief Executive Officer</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: center">2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">160,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">25,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">26,459</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">211,459</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Dana Whitaker, Chief Credit Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,360</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">121,360</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Lisa Hughes, Chief Financial Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">87,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,580</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">101,580</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 22.5pt">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 22.5pt"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>The 2017 annual base salaries for Mr. Crumhorn and Mss. Whitaker and Hughes are $173,200, $100,000 and $87,000, respectively.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>Represents discretionary cash bonuses, which were paid during the year ending December 31, 2016.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>A break-down of the various elements of compensation in this column is set forth in the following table:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 40.3pt; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 92%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="20" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">All Other Compensation</FONT></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">401(k)
    Match<BR> ($)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Director
    Fees <BR> ($) (i)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Life
    Insurance <BR> ($)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Sick
    Pay<BR> &nbsp;($) (ii)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total
    All&nbsp;Other<BR> Compensation<BR> ($)</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-align: left">W. David Crumhorn</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">8,100</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">13,200</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">851</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">4,308</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">26,459</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Dana Whitaker</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,668</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,692</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,360</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Lisa Hughes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,907</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,673</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,580</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(i)</TD><TD>Represents the value of term life insurance protection received under Mr. Crumhorn&rsquo;s split dollar life insurance agreement.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(ii)</TD><TD>Represents the value of unused sick days paid to the named executive officer.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Benefit Plans and Agreements</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Employment Agreements. </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank has entered into employment
agreements with each of Mr. Crumhorn and Mss. Whitaker and Hughes. Our continued success depends to a significant degree on the
skills and competence of our executive officers and the employment agreements are intended to ensure that we maintain a
stable management base following the conversion and offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Each of the employment agreements has a
fixed term of three years, expiring February 16, 2020. Ninety days prior to the expiration of the term of each agreement, the board
of directors will make a determination whether or not to renew the agreement for an additional three years or some other period
of time as mutually agreed by the parties. In addition to base salary, the agreements provide for, among other things, participation
in bonus programs and other benefit plans and arrangements applicable to executive employees. The current base salaries for Mr.
Crumhorn and Mss. Whitaker and Hughes are $173,200, $100,000 and $87,000, respectively. We may terminate the employment of the
executives for cause at any time, in which event they would have no right to receive compensation or other benefits for any period
after their termination of employment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Certain events resulting in an executive&rsquo;s
termination or resignation will entitle the executive to payments of severance benefits following the termination of employment.
In the event of an executive&rsquo;s involuntary termination for reasons other than for cause or in the event the executive resigns
during the term of the agreement following (a)&nbsp;the failure to appoint the executive to the executive&rsquo;s position set
forth in the agreement or to re-nominate the executive to the board of directors (in the case of Mr. Crumhorn), (b)&nbsp;a material
change in function, duties or responsibilities resulting in a reduction of the responsibility, scope, or importance of the executive&rsquo;s
position, (c) a relocation by more than 50 miles, (d) a material reduction in the benefits or perquisites paid to the executive
unless the reduction is part of a reduction that is generally applicable to employees of Heritage Bank, (e) a liquidation or dissolution
of the holding company of Heritage Bank (other than one that does not affect the status of the executive) or (f) a material breach
of the employment agreement by Heritage Bank, then the executive would become entitled to a severance payment in the form of a
cash lump sum equal to the base salary and bonus or incentive award the executive would have earned for the remaining unexpired
term of the employment agreement. In addition, the executive would become entitled, at no expense to him or her, to the continuation
of life insurance and non-taxable medical and dental coverage for the remaining unexpired term of the employment agreement, or
if the coverage is not permitted by applicable law or if providing the benefits would subject Heritage Bank to penalties, the executive
will receive a cash lump sum payment equal to the value of the benefits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the event of a change in control of Heritage
Bank or Heritage NOLA Bancorp followed by the executive&rsquo;s involuntary termination other than for cause or upon the executive&rsquo;s
resignation for one of the reasons set forth above thereafter, the executive would become entitled to a severance payment in the
form of a cash lump sum equal to three times the executive&rsquo;s &ldquo;base amount,&rdquo; as that term is defined for purposes
of Internal Revenue Code Section 280G (<I>i.e.</I>, the average annual taxable income paid to him or her for the five taxable years
preceding the taxable year in which the change in control occurs). In addition, the executive would become entitled, at no expense
to the executive, to the continuation of life insurance and non-taxable medical and dental coverage for thirty-six (36) months
following his or her termination of employment, or if the coverage is not permitted by applicable law or if providing the benefits
would subject Heritage Bank to penalties, the executive will receive a cash lump sum payment equal to the value of the benefits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the event of the executive&rsquo;s death,
the executive&rsquo;s estate or beneficiaries will be paid the executive&rsquo;s base salary through the end of the month in which
the death occurs and the executive&rsquo;s dependents will be entitled to continued non-taxable medical, dental and other insurance
for one year following the executive&rsquo;s death.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Upon termination of the executive&rsquo;s
employment (other than following a change in control), the executive will be subject to certain restrictions on the executive&rsquo;s
ability to compete or to solicit business or employees of Heritage Bank for a period of one year following his termination of employment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Salary Continuation Agreement</I>.</B>
Heritage Bank has entered into a salary continuation agreement with Mr. Crumhorn, effective as of January 1, 2017. The salary continuation
agreement is a non-qualified retirement plan intended to provide supplemental retirement benefits to Mr. Crumhorn.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the salary continuation agreement,
Heritage Bank will pay Mr. Crumhorn a normal retirement benefit of $21,560 per year for 10 years commencing the first day of the
second month following the date Mr. Crumhorn attains his normal retirement age of 72 under the agreement. If Mr. Crumhorn separates
from service prior to attaining age 72, Heritage Bank will provide him with a benefit equal to the accrued benefit (<I>i.e.</I>,
the amount accrued to date toward the normal retirement benefit), paid in annual installments over 10 years, commencing the first
day of the second month following the date he attains age 72. If Mr. Crumhorn dies prior to a separation from service and prior
to attaining his normal retirement age, his beneficiary will be paid the accrued benefit as of the time of his death, in a lump
sum on the first day of the second month following the date of his death. If he dies after attaining his normal retirement age
but prior to the commencement of benefit payments or prior to the completion of the 10 annual payments, his beneficiary will receive
the benefits Mr. Crumhorn would have received had he survived and will receive those benefits at the same time Mr. Crumhorn would
have received them. Mr. Crumhorn will not receive any benefit under the plan if his separation from service is for cause (as defined
in the agreement). Following a change in control of Heritage Bank or Heritage NOLA Bancorp, and his separation of service within
two years of the change in control, Mr. Crumhorn is entitled to the present value of the normal retirement benefit (regardless
of his age at the time of the change in control), payable in a lump sum on the first day of the second month following his separation
from service.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Executive Supplemental Retirement
Plan.</I></B> Heritage Bank has entered into an Executive Supplemental Retirement Plan with Mr. Crumhorn. Under the agreement,
if Mr. Crumhorn remains in service as an employee of Heritage Bank until the normal retirement age specified in the agreement (age
65), he will be entitled to receive the balance of a pre-retirement account in 10 equal annual installments commencing 30 days
following his separation from service. In addition, the &ldquo;indexed retirement benefit&rdquo; will be paid annually to Mr. Crumhorn
until his death. The &ldquo;pre-retirement account&rdquo; is a liability reserve account for Mr. Crumhorn, which is increased or
decreased each year prior to his termination of service by the &ldquo;indexed retirement benefit.&rdquo; The &ldquo;indexed retirement
benefit&rdquo; equals the excess of the &ldquo;index&rdquo; (the aggregate annual after-tax income from certain specified insurance
policies), if any, over the &ldquo;cost of funds expense.&rdquo; The &ldquo;cost of funds expense&rdquo; is a floating rate that
equals Heritage Bank&rsquo;s cost of funds as reported each year in Heritage Bank&rsquo;s FDIC Call Report for the September 30
quarter. If Mr. Crumhorn voluntarily resigns prior to the specified normal retirement age (age 65), he will be entitled to receive
the vested balance in the pre-retirement account in 10 equal annual installments, commencing 30 days following his attainment of
the normal retirement age. In addition, the indexed retirement benefit will be paid to Mr. Crumhorn each year following his attainment
of the normal retirement age until his death. If Mr. Crumhorn dies prior to receiving the balance of the pre-retirement account,
the entire unpaid balance of the pre-retirement account will be paid to him in a lump sum.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Split Dollar Life Insurance Agreement</I>.
</B>Heritage Bank has entered into a split dollar life insurance agreement with Mr. Crumhorn to retain and reward Mr. Crumhorn,
by dividing the death proceeds of certain life insurance policies owned by Heritage Bank on his life with his designated beneficiary.
Heritage Bank paid the life insurance premiums from its general assets. Under the agreement, Mr. Crumhorn or his assignee has the
right to designate the beneficiary of an amount of death proceeds. Upon Mr. Crumhorn&rsquo;s death, his beneficiary will be entitled
to a benefit equal to 80% of net at-risk portion of the death proceeds. The net at-risk insurance portion is the total proceeds
less the cash value of the policies. In the event Heritage Bank discontinues a policy, Heritage Bank will give Mr. Crumhorn at
least 15 days to purchase the policy at a purchase price equal to the greater of (i) Heritage Bank&rsquo;s share of the cash value
of the policy or (ii) the amount of premiums paid by Heritage Bank on the policy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>401(k) Plan.</I></B> Heritage Bank
maintains the Heritage Bank of St. Tammany 401(k) Plan, a tax-qualified defined contribution plan for eligible employees (the &ldquo;401(k)
Plan&rdquo;). The named executive officers are eligible to participate in the 401(k) Plan just like other eligible employees. An
eligible employee must complete one year of service and attain the age of 21 to participate in the 401(k) Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the 401(k) Plan a participant may
elect to defer, on a pre-tax basis, the maximum amount as permitted by the Internal Revenue Code. For 2017, the salary deferral
contribution limit is $18,000, provided, however, that a participant over age 50 may contribute an additional $6,000 to the 401(k)
Plan for a total of $24,000. In addition to salary deferral contributions, Heritage Bank may make discretionary matching contributions
and discretionary profit sharing contributions to the 401(k) Plan. Currently, Heritage Bank makes a safe-harbor matching contribution
to the 401(k) Plan equal to 100% of a participant&rsquo;s salary deferrals, up to 4% of the participant&rsquo;s compensation. A
participant is always 100% vested in his or her salary deferral contributions and safe-harbor matching contributions. Regular discretionary
matching contributions and other discretionary employer contributions vest based on a participant&rsquo;s years of service with
Heritage Bank, at the rate of 0% after one year of service, 33% after two years of service, 66% after three years of service and
100% after four years of service. Generally, unless the participant elects otherwise, the participant&rsquo;s account balance will
be distributed as a result of the participant&rsquo;s termination of employment. Heritage Bank intends to allow participants in
the 401(k) Plan to use a portion of their account balances under the 401(k) Plan to subscribe for stock in the offering. Expense
recognized in connection with the 401(k) Plan totaled approximately $1,335 for the year ended December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Employee Stock Ownership Plan. </I></B>
In connection with the conversion, Heritage Bank intends to adopt an employee stock ownership plan for eligible employees. The
named executive officers are eligible to participate in the employee stock ownership plan just like other eligible employees. Eligible
employees will begin participation in the employee stock ownership plan on the later of the effective date of the conversion or
upon the first entry date commencing on or after the eligible employee&rsquo;s completion of one year of service and attainment
of age 21.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The employee stock ownership plan trustee
is expected to purchase, on behalf of the employee stock ownership plan, 8.0% of the total number of shares of Heritage NOLA Bancorp
common stock issued in the conversion. We anticipate that the employee stock ownership plan will fund its stock purchase with a
loan from Heritage NOLA Bancorp equal to the aggregate purchase price of the common stock. The loan will be repaid principally
through Heritage Bank&rsquo;s contributions to the employee stock ownership plan and any dividends payable on common stock held
by the employee stock ownership plan over the anticipated 25-year term of the loan. The interest rate for the employee stock ownership
plan loan is expected to equal the Prime Rate, as published in <I>The Wall Street Journal</I>, on the closing date of the offering.
See &ldquo;Pro Forma Data.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The trustee will hold the shares purchased
by the employee stock ownership plan in an unallocated suspense account, and shares will be released from the suspense account
on a pro-rata basis as the trustee repays the loan. The trustee will allocate the shares released among participants on the basis
of each participant&rsquo;s proportional share of compensation relative to all participants. A participant will vest in his or
her account balance based on his or her years of service with Heritage Bank, at the rate of 0% after one year of service, 33% after
two years of service, 66% after three years of service and 100% after four years of service. Participants who were employed by
Heritage Bank immediately prior to the offering will receive credit for vesting purposes for years of service prior to adoption
of the employee stock ownership plan. Participants also will become fully vested automatically 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The employee stock ownership plan will permit
participants to direct the trustee as to how to vote the shares of common stock allocated to their accounts. The trustee will vote
unallocated shares and allocated shares for which participants do not timely provide instructions on any matter in the same ratio
as those shares for which participants provide timely instructions, subject to fulfillment of the trustee&rsquo;s fiduciary responsibilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under applicable accounting requirements,
Heritage Bank will record a compensation expense for the employee stock ownership plan at the fair market value of the shares as
they are committed to be released from the unallocated suspense account to participants&rsquo; accounts, which may be more or less
than the original issue price. The compensation expense resulting from the release of the common stock from the suspense account
and allocation to plan participants will result in a corresponding reduction in the earnings of Heritage NOLA Bancorp.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth for the year
ended December 31, 2016 certain information as to the total remuneration we paid to our directors. Mr. Crumhorn received director
fees of $13,200 for the year ended December 31, 2016, which is included in All Other Compensation in the Summary Compensation Table.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 65%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fees&nbsp;Earned&nbsp;or<BR>
    Paid&nbsp;in&nbsp;Cash<BR> ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">All&nbsp;Other<BR>
    Compensation<BR> ($)(1)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total<BR>
    ($)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 61%; text-align: left">W. Thomas Ballantine, Jr.</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">13,200</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">213</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">13,413</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Salvatore A. Caruso, Jr.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">149</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,349</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Elizabeth M. Eustis</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">193</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,393</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Jason S. Hunt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,319</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Julian J. Rodrique, Jr.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">179</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,379</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Represents the value of term life insurance protection received under split dollar life insurance agreements</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Fees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Beginning in 2017, directors who are officers
of Heritage Bank do not receive board or committee fees. Beginning in 2017, outside directors receive a monthly retainer of $650
for membership on the board of directors and $500 for each regularly scheduled monthly board meeting attended in person, and $200
for each regularly scheduled monthly board meeting attended by telephone.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Additionally, outside directors receive $200 per month for any
special board meetings attended<B>. </B>The Chairman of the Audit Committee receives an additional $250 per month.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Each person who will serve as a director
of Heritage NOLA Bancorp will also serve as a director of Heritage Bank and will initially earn a fee only in his or her capacity
as a board member of Heritage Bank. Upon completion of the conversion, additional director fees may be paid for Heritage NOLA Bancorp
director meetings, although no such determination has been made at this time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Supplemental Retirement Plan </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank has entered into a Director
Supplemental Retirement Plan Director Agreement with each of its directors, including Mr. Crumhorn. Under the agreements, a director
who remains in service on the board of directors until the normal retirement age specified in the agreement (age 70) will be entitled
to receive the balance of a pre-retirement account in 10 equal annual installments commencing 30 days following his or her separation
from service. In addition, the &ldquo;indexed retirement benefit&rdquo; will be paid annually to the director until his or her
death. The &ldquo;pre-retirement account&rdquo; is a liability reserve account for the director, which is increased or decreased
each year prior to the director&rsquo;s termination of service by the &ldquo;indexed retirement benefit.&rdquo; The &ldquo;indexed
retirement benefit&rdquo; for each director for each year equals the excess of the &ldquo;index&rdquo; (the aggregate annual after-tax
income from certain specified insurance policies), if any, over the &ldquo;cost of funds expense.&rdquo; The &ldquo;cost of funds
expense&rdquo; is a floating rate that equals Heritage Bank&rsquo;s cost of funds as reported each year in Heritage Bank&rsquo;s
FDIC Call Report for the September 30 quarter. If a director voluntarily resigns from the board of directors or is not re-elected
to the board of directors prior to the specified normal retirement age (70), the director will be entitled to receive the vested
balance in the pre-retirement account in 10 equal annual installments, commencing 30 days following the director attaining the
normal retirement age. In addition, the indexed retirement benefit will be paid to the director each year following his attainment
of the normal retirement age until his death. If the director dies prior to receiving the balance of the pre-retirement account,
the entire unpaid balance of the pre-retirement account will be paid to his benefit in a lump sum. The director will forfeit all
benefits under the agreement if he or she is discharged from the board of directors for &ldquo;cause&rdquo; (as defined in the
agreement).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Split Dollar Life Insurance Agreements</I>.
</B>Heritage Bank has entered into a split dollar life insurance agreement with each member of the board of directors to retain
and reward the directors, by dividing the death proceeds of certain life insurance policies owned by Heritage Bank on their lives
with their designated beneficiaries. Heritage Bank paid the life insurance premiums from its general assets. Under the agreements,
each director or his or her assignee has the right to designate the beneficiary of an amount of death proceeds. Upon the director&rsquo;s
death, his or her beneficiary will be entitled to a benefit equal to 80% of net at-risk portion of the death proceeds. The net
at-risk insurance portion is the total proceeds less the cash value of the policies. In the event Heritage Bank discontinues a
policy, Heritage Bank will give the director at least 15 days to purchase the policy at a purchase price equal to the greater of
(i) Heritage Bank&rsquo;s share of the cash value of the policy or (ii) the amount of premiums paid by Heritage Bank on the policy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Benefits to be Considered Following Completion of the Stock
Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Following the stock offering, we intend
to adopt a stock-based benefit plan that will provide for grants of stock options and awards of shares of restricted common stock.
In accordance with applicable regulations, we anticipate that the plan will authorize a number of stock options and a number of
shares of restricted common stock, not to exceed 10.0% and 4.0%, respectively, of the shares issued in the offering. These limitations
may not apply if the plan is implemented more than one year after the conversion and offering, subject to any applicable regulatory
approvals.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The stock-based benefit plan will not be
established sooner than six months after the stock offering and, if adopted within one year after the stock offering, the plan
must be approved by a majority of the votes eligible to be cast by our stockholders. If a stock-based benefit plan is established
more than one year after the stock offering, it must be approved by a majority of votes cast by our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Certain additional restrictions would apply
to our stock-based benefit plan if adopted within one year after the stock offering, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>non-employee directors in the aggregate may not receive more than 30% of the options and shares of restricted common stock
authorized under the plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any non-employee director may not receive more than 5% of the options and restricted stock awards authorized under the plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any officer or employee may not receive more than 25% of the options and restricted stock awards authorized under the plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the options and shares of restricted common stock may not vest more rapidly than 20% per year, beginning on the first anniversary
of stockholder approval of the plan; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>accelerated vesting is not permitted except for death, disability or upon a change in control of Heritage NOLA Bancorp or Heritage
Bank.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have not yet determined whether we will
present a stock-based benefit plan for stockholder approval within one year following the completion of the conversion or whether
we will present a plan for stockholder approval more than one year after the completion of the conversion. In the event of changes
in applicable regulations or policies regarding stock-based benefit plans, including any regulations or policies restricting the
size of awards and vesting of benefits as described above, the restrictions described above may not be applicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may obtain the shares needed for our
stock-based benefit plan by issuing additional shares of common stock from authorized but unissued shares or through stock repurchases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"><B><A NAME="pro_17"></A>SUBSCRIPTIONS BY
DIRECTORS AND EXECUTIVE OFFICERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
regarding intended common stock subscriptions by each of the directors and executive officers and their associates, and by all
directors, officers and their associates as a group. However, there can be no assurance that any such person or group will purchase
any specific number of shares of our common stock. In the event the individual maximum purchase limitation is increased, persons
subscribing for the maximum amount may increase their purchase order. Directors and officers will purchase shares of common stock
at the same $10.00 purchase price per share and on the same terms as other purchasers in the offering. This table excludes shares
of common stock to be purchased by the employee stock ownership plan, as well as any stock awards or stock option grants that
may be made no earlier than six months after the completion of the offering. The directors and officers have indicated their intention
to subscribe in the offering for an aggregate of 97,850 shares of common stock, equal to 9.2% of the number of shares
of common stock to be sold in the offering at the minimum of the offering range, assuming shares are available. Purchases by directors,
officers and their associates will be included in determining whether the required minimum number of shares has been subscribed
for in the offering. The shares being acquired by the directors, executive officers and their associates are being acquired for
investment purposes, and not with a view towards resale. Our directors and executive officers will be subject to the same minimum
purchase requirements and purchase limitations as other participants in the offering set forth under &ldquo;The Conversion and
Offering &ndash; Limitations on Stock Purchases.&rdquo; Subscriptions by management through our 401(k) Plan will be counted as
part of the maximum number of shares such individuals may subscribe for in the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name&nbsp;and&nbsp;Title</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Number&nbsp;of</B><BR>
                                         <B>Shares<FONT STYLE="font-family: Times New Roman, Times, Serif"><SUP>(1)</SUP></FONT>&nbsp;</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Aggregate</B><BR>
                                         <B>Purchase</B><BR> <B>Price<FONT STYLE="font-family: Times New Roman, Times, Serif"><SUP>(1)</SUP></FONT>&nbsp;</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent&nbsp;at<BR>
    Minimum&nbsp;of<BR> Offering<BR> Range</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 61%; text-align: left; text-indent: -9pt; padding-left: 9pt">W. David Crumhorn, President, Chief Executive Officer and Director</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">15,350</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">153,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1.4</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">W. Thomas Ballantine, Jr., Director</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Salvatore A. Caruso, Jr.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Elizabeth M. Eustis</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Jason S. Hunt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Julian J. Rodrigue, Jr</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.9</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">Dana Whitaker, Executive Vice President and Chief Credit Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.9</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">Lisa Hughes, Senior Vice President and Chief Financial Officer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">100,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt"><U STYLE="text-decoration: none">*</U></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">All directors and officers as a group (8 persons)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">97,850</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">978,500</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9.2</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left; text-indent: -0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left; text-indent: -0.5in"><I></I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left; text-indent: -0.5in"><I></I></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">*</TD><TD STYLE="text-align: justify">Less than 1.0%</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify">Includes purchases by the named individual&rsquo;s spouse and other relatives of the named individual
living in the same household. Other than as set forth above, the named individuals are not aware of any other purchases by a person
who or entity that would be considered an associate of the named individuals under the plan of conversion.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.5pt; text-align: justify; text-indent: 0in">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_18"></A>THE CONVERSION AND OFFERING</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The board of directors of Heritage Bank
of St. Tammany has approved the plan of conversion. The plan of conversion must also be approved by Heritage Bank of St. Tammany&rsquo;s
members (depositors). A special meeting of members has been called for this purpose. We have filed an application with respect
to the conversion and stock offering with the Office of the Comptroller of the Currency, and have filed a holding company application
with the Federal Reserve Board. The final approvals of the Federal Reserve Board and the Office of the Comptroller of the Currency
are required before we can consummate the conversion and stock offering.&nbsp;Any approval by the Federal Reserve Board or the
Office of the Comptroller of the Currency does not constitute a recommendation or endorsement of the plan of conversion.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">General</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The board of directors of Heritage Bank
of St. Tammany approved the plan of conversion on March 7, 2017. Pursuant to the plan of conversion, Heritage Bank of St. Tammany
will convert from the mutual form of organization to the fully stock form of organization. In connection with the conversion, Heritage
Bank of St. Tammany has organized a new Maryland stock holding company named Heritage NOLA Bancorp, Inc. which will sell shares
of common stock to the public in an initial public stock offering. When the conversion and related stock offering are completed,
all of the capital stock of Heritage Bank of St. Tammany will be owned by Heritage NOLA Bancorp, and all of the common stock of
Heritage NOLA Bancorp will be owned by stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp expects to retain
between $3.9 million and $5.4 million of the net proceeds of the offering, or $6.3 million if the offering range is increased by
15% because of demand for the shares or changes in market conditions. Heritage Bank of St. Tammany will receive a capital contribution
equal to at least 50% of the net proceeds of the offering, plus such additional amounts as may be necessary so that, upon completion
of the offering, Heritage Bank of St. Tammany will have a Tier 1 leverage ratio of at least 10.00%. Based on this formula, we anticipate
that Heritage NOLA Bancorp will invest $4.7 million, $5.7 million, $6.6 million and $7.7 million, respectively, of the net proceeds
at the minimum, midpoint, maximum and adjusted maximum of the offering in Heritage Bank of St. Tammany. The conversion will be
consummated only upon the sale of at least 1,062,500 shares of our common stock offered pursuant to the plan of conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The plan of conversion provides that we
will offer shares of common stock for sale in the subscription offering to Eligible Account Holders, our tax-qualified employee
benefit plans, specifically our employee stock ownership plan, Supplemental Eligible Account Holders and Other Members. If all
shares are not subscribed for in the subscription offering, we may, in our discretion, offer common stock for sale in a community
offering to members of the public, with a preference given to natural persons and trusts of natural persons residing in St. Tammany
Parish, Louisiana. In addition, shares of common stock not purchased in the subscription offering and community offering may be
offered for sale to the general public in a syndicated community offering to be managed by FIG Partners, LLC, acting as our agent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 or syndicated community
offering. The community offering and/or syndicated community offering, if any, may begin at the same time as, during, or after
the subscription offering, and must be completed within 45 days after the completion of the subscription offering unless otherwise
extended by us with the approval of the OCC. See &ldquo; &ndash; Community Offering&rdquo; and &ldquo; &ndash; Syndicated Community
Offering.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We determined the number of shares of common
stock to be offered in the offering based upon an independent valuation of the estimated consolidated pro forma market value of
Heritage NOLA Bancorp, assuming the conversion and stock offering are completed. 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 the shares of common stock to be issued in the offering will be determined at
the completion of the offering. See &ldquo; &ndash; Determination of Share Price and Number of Shares to be Issued&rdquo; for more
information as to the determination of the estimated pro forma market value of the common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following is a brief summary of the
conversion. We recommend reading the plan of conversion in its entirety for more information. A copy of the plan of conversion
is available for inspection at the banking offices of Heritage Bank of St. Tammany and as described in the section of this prospectus
titled &ldquo;Where You Can Find Additional Information.&rdquo; The plan of conversion is also filed as an exhibit to Heritage
Bank of St. Tammany&rsquo;s application to convert from mutual to stock form of which this prospectus is a part, copies of which
may be obtained from the OCC. The plan of conversion is also filed as an exhibit to the registration statement we have filed with
the Securities and Exchange Commission, of which this prospectus is a part, copies of which may be obtained from the Securities
and Exchange Commission or online at the Securities and Exchange Commission&rsquo;s website, <U>www.sec.gov</U>. See &ldquo;Where
You Can Find Additional Information.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Reasons for the Conversion</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>to increase capital to support future growth and profitability;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>to retain and attract qualified personnel by establishing stock-based benefit plans for management and employees;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>to have greater flexibility to structure and finance the opportunistic expansion of our operations; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>to offer our customers and employees an opportunity to purchase our stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the stock holding company structure,
we will have greater flexibility in structuring mergers and acquisitions. Our current mutual structure prevents us from offering
shares of our common stock as consideration for a merger or acquisition. Potential sellers often want stock for at least part of
the acquisition consideration. Our new stock holding company structure will enable us to offer stock or cash consideration, or
a combination thereof, and will therefore enhance our ability to compete with other bidders when acquisition opportunities arise.
We have no current arrangements or agreements to acquire other banks, thrifts, credit unions, financial services companies or branch
offices, and there can be no assurance that we will be able to consummate any acquisitions or establish any new branches. Lastly,
mutual institutions cannot offer stock incentives to attract and retain highly qualified management personnel. While Heritage Bank
of St. Tammany has not required these capital tools and stock incentives in the past, they will be essential to implementing our
business strategy, and management believes that the additional capital raised in the offering will enable us to take advantage
of business opportunities that may not otherwise be available to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2016, Heritage Bank of
St. Tammany was considered &ldquo;well capitalized&rdquo; for regulatory purposes. The proceeds from the stock offering will further
improve our capital position during a period of economic, regulatory and political uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Approvals Required</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The affirmative vote of a majority of the
total eligible votes of members of Heritage Bank of St. Tammany at a special meeting of members is required to approve the plan
of conversion. A special meeting of members to consider and vote upon the plan of conversion has been set for [special meeting
date], 2017. The plan of conversion also must be approved by the OCC. Additionally, the Federal Reserve Board must approve our
holding company application. We cannot consummate the conversion and the stock offering without satisfying the conditions contained
in these approvals.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Effects of Conversion on Depositors, Borrowers and Members</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Continuity.</I></B> While the conversion
is being accomplished, our normal business of accepting deposits and making loans will continue without interruption. Heritage
Bank of St. Tammany will continue to be a federally chartered savings bank and will continue to be regulated by the OCC, while
Heritage NOLA Bancorp will be regulated by the Federal Reserve Board. After the conversion, we will continue to offer existing
services to depositors, borrowers and other customers. The directors serving Heritage Bank of St. Tammany at the time of the conversion
will be the directors of Heritage Bank of St. Tammany and of Heritage NOLA Bancorp after the conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Effect on Deposit Accounts.</I></B>
Pursuant to the plan of conversion, each depositor of Heritage Bank of St. Tammany 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 FDIC to the same extent as before the conversion.
Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Effect on Loans.</I></B> No loan outstanding
from Heritage Bank of St. Tammany will be affected by the conversion, and the amount, interest rate, maturity and security for
each loan will remain as it was contractually fixed prior to the conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Effect on Voting Rights of Members.</I></B>
All of our depositors are members of and have voting rights in Heritage Bank of St. Tammany as to all matters requiring membership
action. Upon completion of the conversion, Heritage Bank of St. Tammany will cease to have members and former members will no longer
have voting rights. Upon completion of the conversion, all voting rights in Heritage Bank of St. Tammany will be vested in Heritage
NOLA Bancorp as the sole stockholder of Heritage Bank of St. Tammany. The stockholders of Heritage NOLA Bancorp will possess exclusive
voting rights with respect to Heritage NOLA Bancorp common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Tax Effects.</I></B> We have received
opinions of counsel and our tax advisors with regard to the federal and state income tax consequences of the conversion to the
effect that the conversion will not be taxable for federal or Louisiana income tax purposes to Heritage Bank of St. Tammany or
its members. See &ldquo; &ndash; Material Income Tax Consequences.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Effect on Liquidation Rights.</I></B>
Each depositor of Heritage Bank of St. Tammany has both a deposit account in Heritage Bank of St. Tammany and a pro rata ownership
interest in the net worth of Heritage Bank of St. Tammany based upon the deposit balance in his or her account. This ownership
interest is tied to the depositor&rsquo;s account and has no tangible market value separate from the deposit account. This interest
may only be realized in the event of a complete liquidation of Heritage Bank of St. Tammany. Any depositor who opens a deposit
account obtains a pro rata ownership interest in Heritage Bank of St. Tammany without any additional payment beyond the amount
of the deposit. A depositor who reduces or closes his or her account receives a portion or all, respectively, of the balance in
the</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">deposit account but nothing for his or her
ownership interest in the net worth of Heritage Bank of St. Tammany, which is lost to the extent that the balance in the account
is reduced or closed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Consequently, depositors in a mutual savings
bank normally have no way of realizing the value of their ownership interest, which has realizable value only in the unlikely event
that the savings association is completely liquidated. If this occurs, the depositors of record at that time, as owners, would
share pro rata in any residual surplus and reserves of Heritage Bank of St. Tammany after other claims, including claims of depositors
to the amounts of their deposits, are paid.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the unlikely event that Heritage Bank
of St. Tammany were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first,
followed by distribution of a &ldquo;liquidation account&rdquo; to depositors as of December 31, 2015 and __________, 2017 who
continue to maintain their deposit accounts as of the date of liquidation, with any assets remaining thereafter distributed to
Heritage NOLA Bancorp as the holder of Heritage Bank of St. Tammany&rsquo; capital stock. Pursuant to the rules and regulations
of the OCC, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured
savings institution would not be considered a liquidation and, in such a transaction, the liquidation account would be assumed
by the surviving institution. See &ldquo; &ndash; Liquidation Rights.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Determination of Share Price and Number of Shares to be
Issued</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The plan of conversion and federal regulations
require that the aggregate purchase price of the common stock sold in the offering be based on the appraised pro forma market value
of the common stock, as determined by an independent valuation. We have retained RP Financial, LC. to prepare an independent valuation
appraisal. For its services in preparing the initial valuation and one update, RP Financial, LC. will receive a fee of $35,000,
and will be reimbursed for its expenses up to $7,500. In the event that RP Financial, LC. is required to update the appraisal more
than one time, it will receive an additional fee of $5,000 for each such update to the valuation appraisal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are not affiliated with RP Financial,
LC., and neither we nor RP Financial, LC. has an economic interest in, or is held in common with, the other. RP Financial, LC.
represents and warrants that it is not aware of any fact or circumstance that would cause it not to be &ldquo;independent&rdquo;
within the meaning of the conversion regulations or the applicable regulatory valuation guidelines or otherwise prohibit or restrict
in anyway RP Financial, LC. from serving in the role of our independent appraiser.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have agreed to indemnify RP Financial,
LC. and its employees and affiliates against specified losses, including any losses in connection with claims under the federal
securities laws, arising out of its services as independent appraiser, except where such liability results from its negligence
or bad faith.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The independent valuation appraisal considered
the pro forma impact of the offering. Consistent with applicable federal appraisal guidelines, the appraisal applied three primary
methodologies: the pro forma price-to-book value approach applied to both reported book value and tangible book value; the pro
forma price-to-earnings approach applied to reported and core earnings; and the pro forma price-to-assets approach. The market
value ratios applied in the remaining two methodologies were based upon the current market valuations of the peer group companies
identified by RP Financial, LC., subject to valuation adjustments applied by RP Financial, LC. to account for differences between
us and our peer group. Because RP Financial, LC. concluded that asset size is not a strong determinant of market value, RP Financial,
LC. did not place significant weight on the pro forma price-to-assets approach in reaching its conclusions. RP Financial, LC. placed
the greatest emphasis on the price-to-book value and price-to-earnings approaches in estimating pro forma market value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The independent valuation was prepared by
RP Financial, LC. in reliance upon the information contained in this prospectus, including our financial statements. RP Financial,
LC. also considered the following factors, among others:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our present and projected operating results and financial condition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>the economic and demographic conditions in our existing market area;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>certain historical, financial and other information relating to us;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>a comparative evaluation of our operating and financial characteristics with those of other similarly situated publicly traded
savings institutions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>the impact of the conversion and the offering on our equity and earnings potential; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>the trading market for securities of comparable institutions and general conditions in the market for such securities.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Included in the independent valuation were
certain assumptions as to our pro forma earnings after the conversion that were utilized in determining the appraised value. These
assumptions included estimated expenses, an assumed after-tax rate of return on the net offering proceeds and purchases in the
open market of 4% of the common stock sold in the offering by the stock-based benefit plan at the $10.00 purchase price. See &ldquo;Pro
Forma Data&rdquo; for additional information concerning these assumptions. The use of different assumptions may yield different
results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The independent valuation states that as
of February 10, 2017, the estimated pro forma market value of Heritage NOLA Bancorp ranged from $10.6 million to $14.4 million,
with a midpoint of $12.5 million. Our board of directors decided to offer the shares of common stock for a price of $10.00 per
share primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The number
of shares offered will be equal to the aggregate offering price of the shares divided by the price per share. Based on the valuation
range and the $10.00 price per share, the minimum of the offering range will be 1,062,500 shares, the midpoint of the offering
range will be 1,250,000 shares and the maximum of the offering range will be 1,437,500 shares, or 1,653,125 shares if the maximum
amount is increased by 15% because of demand for shares or changes in market conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In applying each of the valuation methods,
RP Financial, LC. considered adjustments to our pro forma market value based on a comparison of Heritage NOLA Bancorp with the
peer group. RP Financial, LC. made upward adjustments for: (i) financial condition; and (ii) primary market area. RP Financial,
LC. made downward adjustments for: (i) profitability, growth and viability of earnings; and (ii) liquidity of the shares. No adjustments
were made for: (i) asset growth; (ii) dividends; (iii) marketing of the offering; (iv) management; or (v) the effect of government
regulations and regulatory reform. The upward adjustment applied for financial condition was due to Heritage NOLA Bancorp&rsquo;s
more favorable credit quality and the stronger pro forma capital position. The upward adjustment applied for primary market area
took into consideration St. Tammany Parish&rsquo;s relatively favorable demographic measures and income levels compared to the
counties within the peer group&rsquo;s primary market areas. The downward adjustment applied for profitability, growth and viability
of earnings took into consideration Heritage NOLA Bancorp&rsquo;s less favorable core earnings measures, and lower pro forma returns
as a percent of assets and equity relative to the peer group&rsquo;s measures. The downward adjustment applied for liquidity of
the shares took into consideration Heritage NOLA Bancorp&rsquo;s pro forma market capitalization and shares outstanding which are
expected to be lower than the peer group&rsquo;s market capitalization and shares outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table presents a summary of
selected pricing ratios for the peer group companies and for Heritage NOLA Bancorp (on a pro forma basis) utilized by RP Financial
in its appraisal. These ratios are based on Heritage NOLA Bancorp&rsquo;s book value, tangible book value and core earnings as
of and for the 12 months ended December 31, 2016. The peer group ratios are based on the latest date for which complete financial
data are publicly available and stock prices as of February 10, 2017. Compared to the average pricing of the peer group, our pro
forma pricing ratios at the midpoint of the offering range indicated a discount of 40.2% on a price-to-book value basis and a discount
of 42.2% on a price-to-tangible book value basis and a premium of 1,268.6% on a price-to-earnings basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Price-to-core&nbsp;earnings<BR>
multiple&nbsp;<FONT STYLE="font-family: Times New Roman, Times, Serif"><SUP>(1)</SUP></FONT></B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Price-to-book&nbsp;<BR>
    value&nbsp;ratio</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Price-to-tangible<BR>
    book&nbsp;value&nbsp;ratio</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Heritage NOLA Bancorp (on a pro forma basis, assuming completion of the conversion):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 56%; text-align: left; padding-left: 0.25in">Adjusted Maximum</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">976.42</TD><TD STYLE="width: 1%; text-align: left">x</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">72.46</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">72.46</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in">Maximum</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">487.11</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68.73</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68.73</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in">Midpoint</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">306.71</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64.89</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64.89</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in">Minimum</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">204.33</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60.35</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Valuation of peer group companies, all of which are fully converted (on an historical basis):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in">Average</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22.41</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">108.54</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112.27</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0.25in">Median</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20.38</TD><TD STYLE="text-align: left">x</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">109.85</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">111.74</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -13.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"></P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-left: 0; margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Price-to-earnings multiples calculated by RP Financial,
LC. in the independent appraisal are based on an estimate of &ldquo;core&rdquo; or recurring earnings. These ratios are different
from those presented in &ldquo;Pro Forma Data.&rdquo;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 4.5pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 4.5pt"><B>Peer Group Companies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Company&nbsp;Name</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Ticker&nbsp;Symbol</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Exchange</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Headquarters</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total&nbsp;Assets&nbsp;at<BR>
    September&nbsp;30,<BR> 2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>(in thousands)</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 34%; text-align: left; text-indent: 16.9pt">Equitable Financial Corp.</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 15%; text-align: center">EQFN</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 15%; text-align: center">Nasdaq</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 20%; text-align: center">Grand Island, NE</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD><TD STYLE="width: 10%; text-align: center">228</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 16.9pt">Hamilton Bancorp, Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">HBK</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Towson, MD</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">517</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 16.9pt">Home Federal Bancorp, Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">HFBL</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Shreveport, LA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">390</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 16.9pt">Jacksonville Bancorp, Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">JXSB</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Jacksonville, IL</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">331</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 16.9pt">MSB Financial Corp.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">MSBF</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Millington, NJ</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">434</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 16.9pt">Poage Bankshares, Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">PBSK</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Ashland, KY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">449</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 16.9pt">United Community Bancorp</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">UCBA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Lawrenceburg, IN</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">528</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 16.9pt">Wayne Savings Bancshares, Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">WAYN</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Wooster, OH</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">446</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 16.9pt">Wolverine Bancorp, Inc.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">WBKC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Midland, MI</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">369</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 16.9pt">WVS Financial Corp.</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">WVFC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Nasdaq</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Pittsburgh, PA</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">335</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board of directors reviewed the independent
valuation and, in particular, considered the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>our financial condition and results of operations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>comparison of our financial performance ratios to those of other financial institutions of similar size; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>market conditions generally and, in particular, for financial institutions.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">All of these factors are set forth in the
independent valuation. Our board of directors also reviewed the methodology and the assumptions used by RP Financial, LC. in preparing
the independent valuation and believes that such assumptions were reasonable. The offering range may be amended with</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">the approval of the OCC, if required, as a
result of subsequent developments in our financial condition or market conditions generally. In the event the independent valuation
is updated to amend our pro forma market value to less than $10.6 million or more than $16.5 million, the appraisal will be filed
with the Securities and Exchange Commission by a post-effective amendment to our registration statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>The independent valuation is not intended,
and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. RP
Financial, LC. did not independently verify our financial statements and other information that we provided to them, nor did RP
Financial, LC. independently value our assets or liabilities. The independent valuation considers Heritage Bank of St. Tammany
as a going concern and should not be considered as an indication of the liquidation value of Heritage Bank of St. Tammany. 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 the $10.00 offering price per share.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Following commencement of the subscription
offering, the maximum of the valuation range may be increased by up to 15%, or up to $16.5 million, which would result in a corresponding
increase of up to 15% in the maximum of the offering range to up to 1,653,125 shares, to reflect changes in the market and financial
conditions or demand for the shares. We will not increase the offering range above this level or decrease the minimum of the offering
range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See &ldquo; &ndash;
Limitations on Common Stock Purchases&rdquo; as to the method of distribution and allocation of additional shares that may be issued
in the event of an increase in the offering range to fill unfilled orders in the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 $16.5 million, and
a corresponding increase in the offering range to more than 1,653,125 shares, or a decrease in the minimum of the valuation range
to less than $10.6 million and a corresponding decrease in the offering range to fewer than 1,062,500 shares, then we will promptly
return, with interest at a rate of 0.15% per annum, all funds received in the offering and cancel deposit account withdrawal authorizations.
After consulting with the OCC, we may terminate the plan of conversion. Alternatively, we may establish a new offering range and
commence a resolicitation of subscribers or take other actions as permitted by the OCC in order to complete the offering. In the
event that we conduct a resolicitation, we will notify subscribers of their rights to place a new stock order for a specified period
of time. If a person does not respond, we will cancel his or her stock order and return his or her subscription funds, with interest,
and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. Any resolicitation
following the conclusion of the subscription and community offerings would not exceed 45 days unless further extended with the
approval, to the extent approval is required, of the OCC, for periods of up to 90 days.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">An increase in the number of shares to be
issued in the offering would decrease both a subscriber&rsquo;s ownership interest and our pro forma earnings and stockholders&rsquo;
equity on a per share basis while increasing pro forma earnings and stockholders&rsquo; equity on an aggregate basis. A decrease
in the number of shares to be issued in the offering would increase both a subscriber&rsquo;s ownership interest and our pro forma
earnings and stockholders&rsquo; equity on a per share basis, while decreasing pro forma earnings and stockholders&rsquo; equity
on an aggregate basis. For a presentation of the effects of these changes, see &ldquo;Pro Forma Data.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Copies of the independent valuation appraisal
report of RP Financial, LC. and the detailed memorandum setting forth the method and assumptions used in the appraisal report are
available for inspection at our office and as specified under &ldquo;Where You Can Find Additional Information.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Subscription Offering and Subscription Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 to the minimum, maximum and overall purchase
limitations set forth in the plan of conversion and as described below under &ldquo; &ndash; Limitations on Common Stock Purchases.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Priority 1: Eligible Account Holders.</I></B>
Each depositor with aggregate deposit account balances of $50.00 or more (a &ldquo;Qualifying Deposit&rdquo;) on December 31, 2015
(an &ldquo;Eligible Account Holder&rdquo;) will receive, without payment therefor, nontransferable subscription rights to purchase,
subject to the overall purchase limitations, up to the greater of 5,000 shares ($50,000) of our common stock, 0.10% of the total
number of shares of common stock issued in the offering, or 15 times the number of shares offered multiplied by a fraction of which
the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposits
of all Eligible Account Holders, subject to the overall purchase limitations. See &ldquo; &ndash; Limitations on Common Stock Purchases.&rdquo;
If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each
Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100
shares or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Eligible
Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to
the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an
amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated
(one or more times as necessary) among those Eligible Account Holders whose subscriptions are not fully satisfied until all available
shares have been allocated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To ensure proper allocation of shares of
our common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she
had an ownership interest on December 31, 2015. In the event of oversubscription, failure to list an account, or including incomplete
or incorrect information, could result in fewer shares being allocated than if all information had been disclosed. In the event
of an oversubscription, the subscription rights of Eligible Account Holders who are also our directors or senior officers or their
associates will be subordinated to the subscription rights of other Eligible Account Holders to the extent of such portion of their
subscription rights attributable to their increased deposits during the year preceding December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Priority 2: Tax-Qualified Plans.</I></B>
Our tax-qualified employee benefit plans, specifically our employee stock ownership plan which we are establishing in connection
with the conversion, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up
to 10% of the shares of common stock sold in the offering. Our employee stock ownership plan intends to purchase up to 8% of the
total number of shares of common stock sold in the stock offering. Alternatively, subject to market conditions and receipt of regulatory
approval, the employee stock ownership plan may instead elect to purchase shares of common stock in the open market following the
completion of the offering in order to fill all or a portion of the employee stock ownership plan&rsquo;s intended subscription.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Priority 3: Supplemental Eligible
Account Holders.</I></B> To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions
by Eligible Account Holders and our tax-</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">qualified employee benefit plans, each depositor
with a Qualifying Deposit on ________ who is not an Eligible Account Holder (&ldquo;Supplemental Eligible Account Holder&rdquo;)
will receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of 5,000 shares ($50,000)
of common stock, 0.10% of the total number of shares of common stock issued in the offering, or 15 times the number of shares offered
multiplied by a fraction of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator
is the aggregate Qualifying Deposits of all Supplemental Eligible Account Holders, subject to the overall purchase limitations.
See &ldquo; &ndash; Limitations on Common Stock Purchases.&rdquo; If there are not sufficient shares available to satisfy all subscriptions,
shares will be allocated so as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to
make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she
subscribed. Thereafter, unallocated shares will be allocated to each Supplemental Eligible Account Holder whose subscription remains
unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of
all Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed
for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated (one or more times as necessary)
among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been
allocated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To ensure proper allocation of common stock,
each Supplemental Eligible Account Holder must list on the stock order form all deposit accounts in which he or she had an ownership
interest at _____________, 2017. In the event of oversubscription, failure to list an account, or including incomplete or incorrect
information, could result in fewer shares being allocated than if all information had been disclosed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Priority 4: Other Members.</I></B>
To the extent that there are shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders,
our tax-qualified employee benefit plans, and Supplemental Eligible Account Holders, each depositor on the voting record date of
__________, 2017 who is not an Eligible Account Holder or Supplemental Eligible Account Holder (&ldquo;Other Members&rdquo;) will
receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of 5,000 shares ($50,000)
of common stock or 0.10% of the total number of shares of common stock issued in the offering, subject to the overall purchase
limitations. See &ldquo; &ndash; Limitations on Common Stock Purchases.&rdquo; If there are not sufficient shares available to
satisfy all subscriptions, available shares will be allocated so as to permit each Other Member to purchase a number of shares
sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which
he or she subscribed. Thereafter, unallocated shares will be allocated to each Other Member whose subscription remains unfilled
in the proportion that the amount of his or her subscription bears to the total amount of subscriptions of all Other Members whose
subscriptions remain unfilled.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To ensure proper allocation of common stock,
each Other Member must list on the stock order form all deposit accounts in which he or she had an ownership interest at _____________.
In the event of oversubscription, failure to list an account, or including incomplete or incorrect information, could result in
fewer shares being allocated than if all accounts had been disclosed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Expiration Date</I>.</B> The Subscription
Offering will expire at 2:00 p.m., Central Time, on [expiration date], unless extended by us for up to 45 days or such additional
periods of up to 90 days with the approval of the OCC, if necessary. Subscription rights will expire whether or not each person
eligible to subscribe in the subscription offering can be located. We may decide to extend the expiration date of the subscription
offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the
offering range. Subscription rights that have not been exercised prior to the expiration date will become void.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We will not execute orders in the stock
offering until we have received orders to purchase at least the minimum number of shares of common stock. If we have not received
orders to purchase at least 1,062,500 within 45 days after the [expiration date], and the OCC has not consented to an extension,
the stock offering will be terminated and all funds delivered to purchase shares of common stock in the offering will be returned
promptly to the subscribers with interest at a rate of 0.15% per annum, and all deposit account withdrawal authorizations will
be cancelled. If an extension beyond [extended expiration date] is granted by the OCC, we will resolicit subscribers as described
under &ldquo; &ndash; Procedure for Purchasing Shares &ndash; Expiration Date.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Community Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To the extent that shares of common stock
remain available for purchase after satisfaction of all subscriptions of the Eligible Account Holders, our tax-qualified employee
benefit plans, Supplemental Eligible Account Holders and Other Members, we may offer shares pursuant to the plan of conversion
to the public in a community offering, with a preference given to natural persons and trusts of natural persons residing in St.
Tammany Parish, Louisiana (the &ldquo;Community&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Subscribers in the community offering may
purchase up to 5,000 shares ($50,000) of common stock, subject to the overall purchase limitations. See &ldquo; &ndash; Limitations
on Common Stock Purchases.&rdquo; <B>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.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we do not have sufficient shares of common
stock available to fill the orders of natural persons and trusts of natural persons residing in the Community, we will allocate
the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser
of 100 shares, or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among such
persons whose orders remain unsatisfied on an equal number of shares basis per order. If, instead, we do not have sufficient shares
of common stock available to fill the orders of other members of the public, we will allocate the available shares among those
persons in the manner described above for persons residing in the Community. 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The term &ldquo;residing&rdquo; or &ldquo;resident&rdquo;
as used in this prospectus means any person who occupies a dwelling within the Community, has a present intent to remain within
the Community for a period of time and manifests the genuineness of that intent by establishing an ongoing physical presence within
the Community, together with an indication that this presence within the Community is something other than merely transitory in
nature. We may utilize deposit or loan records or other evidence provided to us to decide whether a person is a resident. In all
cases, however, the determination shall be in our sole discretion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Expiration Date. </I></B>The community
offering may begin at the same time as, during or after the subscription offering. We will not execute orders in the stock offering
until we have received orders to purchase at least the minimum number of shares of common stock. The community offering is expected
to conclude at 2:00 p.m., Central Time on [expiration date], but must terminate no more than 45 days following the expiration of
the subscription offering, unless extended with regulatory approval. We may decide to extend the community offering for any reason
and are not required to give purchasers notice of any such extension unless such period extends beyond [extended expiration date].
If an extension beyond [extended expiration date] is granted by the required regulatory agencies, we will resolicit persons whose</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">orders we accept in the community offering,
giving them an opportunity to confirm, change or cancel their orders. If a person does not respond, we will cancel his or her stock
order and return funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of
shares of common stock. These extensions may not go beyond [final date], which is two years after the special meeting of members.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Syndicated Community Offering</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board of directors may decide to offer
for sale shares of common stock not subscribed for in the subscription and community offerings in a syndicated community offering
in a manner that will achieve a widespread distribution of our shares of common stock to the general public.&nbsp;&nbsp;If a syndicated
community offering is held, FIG Partners, LLC will serve as sole book running manager and will assist us in selling our common
stock on a best efforts basis.&nbsp;&nbsp;In such capacity, FIG Partners, LLC may form a syndicate of other broker-dealers who
are FINRA member firms.&nbsp;&nbsp;Neither FIG Partners, LLC nor any registered broker-dealer will have any obligation to take
or purchase any shares of the common stock in the syndicated community offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the syndicated community offering, any
person may purchase up to 5,000 shares ($50,000) of common stock, subject to the overall purchase limitations. See &ldquo; &ndash;
Limitations on Common Stock Purchases.&rdquo;&nbsp;&nbsp;We retain the right to accept or reject in whole or in part any orders
in the syndicated community offering.&nbsp;&nbsp;Unless the OCC permits otherwise, accepted orders for our common stock in the
syndicated community offering will first be filled up to a maximum of 2% of the shares sold in the offering. Thereafter any remaining
shares will be allocated on an equal number of shares per order basis until all shares have been allocated.&nbsp;&nbsp;Unless the
syndicated community offering begins during the subscription offering or the community offering, the syndicated community offering
will begin as soon as possible after the expiration of the subscription and community offerings. The syndicated community offering
must terminate no more than 45 days following the expiration of the subscription offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The syndicated community offering will be
conducted in accordance with certain Securities and Exchange Commission rules applicable to best efforts &ldquo;min/max&rdquo;
offerings. Orders in the syndicated community offering will be submitted in substantially the same manner as utilized in the subscription
and community offerings. Payments in the syndicated offering, however, must be made in immediately available funds (bank checks,
money orders, Heritage Bank of St. Tammany deposit account withdrawal authorizations or wire transfers). Personal checks will not
be accepted. If the closing of the stock offering does not occur, either as a result of not confirming receipt of at least $10.6
million in gross proceeds (the minimum of the offering range) or the inability to satisfy other closing conditions to the offering,
the funds will be promptly returned with interest at a rate of 0.15% per annum.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The closing of the syndicated community
offering, which will be simultaneous with the closing of the subscription and community offerings, is subject to conditions set
forth in an agency agreement among Heritage Bank of St. Tammany and Heritage NOLA Bancorp on one hand, and FIG Partners, LLC on
the other hand.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Expiration Date.</I></B> The syndicated
community offering may begin concurrently with, during or after the subscription offering, and may terminate at the same time as
the subscription offering, but must terminate no more than 45 days following the expiration of the subscription offering, unless
extended with regulatory approval. The syndicated community offering is expected to conclude at 2:00 p.m., Central Time, on [expiration
date], but must terminate no more than 45 days following the expiration of the subscription offering, unless extended with regulatory
approval. We may decide to extend the syndicated community offering for any reason and are not required to give purchasers notice
of any such extension unless such period extends beyond [extended expiration date]. If an extension beyond</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">[extended expiration date] is granted by the required regulatory
agencies, we will resolicit persons whose orders we accept in the syndicated community offering, giving them an opportunity to
confirm, change or cancel their orders. If a person does not respond, we will cancel his or her stock order and return funds, with
interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. These
extensions may not go beyond [final date], which is two years after the special meeting of members.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If for any reason we cannot conduct a syndicated
community offering of shares of common stock, or in the event that we are unable to find purchasers from the general public to
reach the minimum of the offering range, we will try to make other arrangements for the sale of unsubscribed shares, including
an underwritten public offering, if possible. The OCC and FINRA must approve any such arrangements.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Limitations on Common Stock Purchases</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The plan of conversion includes the following
limitations on the number of shares of common stock that may be purchased in the offering:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>No person or entity, together with any associate or group of persons acting in concert, may purchase more than 20,000 shares
($200,000) of common stock in all categories of the offering combined, except that our tax-qualified employee benefit plans may
purchase in the aggregate up to 10% of the shares of common stock sold in the offering (including shares issued in the event of
an increase in the offering range of up to 15%);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>The maximum number of shares of common stock that may be purchased in all categories of the offering by our senior officers
and directors and their associates, in the aggregate, may not exceed 34% of the shares sold in the offering; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>The minimum purchase by each person purchasing shares in the offering is 25 shares, to the extent those shares are available.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Depending upon market or financial conditions,
with the receipt of any required approvals of the OCC, we may increase the individual or aggregate purchase limitations to an amount
not to exceed 5.0% of the common stock sold in the offering. If a purchase limitation is increased, subscribers in the subscription
offering who ordered the maximum amount of common stock and who indicated a desire on their stock order form to be resolicited,
will be, and, in our sole discretion some other large subscribers may be, given the opportunity to increase their subscriptions
up to the then-applicable limit. The effect of this type of resolicitation will be to increase the number of shares of common stock
owned by subscribers who choose to increase their subscriptions. In the event that a purchase limitation is increased to 5.0% of
the stock sold in the offering, such limitation may be further increased to 9.99%, provided that orders for shares of common stock
exceeding 5.0% of the shares of common stock sold in the offering do not exceed in the aggregate 10.0% of the total shares of the
common stock sold in the offering. Any such requests to purchase additional shares of common stock in the event that a purchase
limitation is so increased will be determined by our board of directors in its sole discretion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the event of an increase in the offering
range of up to 15% of the total number of shares of common stock offered in the offering, shares will be allocated in the following
order of priority in accordance with the plan of conversion:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(i)</FONT></TD><TD>to fill our tax-qualified employee benefit plans&rsquo; subscriptions for up to 10% of the number of shares of common stock
sold in the offering;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(ii)</FONT></TD><TD>in the event that there is an oversubscription at the Eligible Account Holder, Supplemental Eligible Account Holder or Other
Member levels, to fill unfulfilled subscriptions of these subscribers according to their respective priorities; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(iii)</FONT></TD><TD>to fill unfulfilled subscriptions in the community offering, with preference given to natural persons and trusts of natural
persons residing in St. Tammany Parish, Louisiana.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The term &ldquo;associate&rdquo; of a person
means:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(1)</FONT></TD><TD>any corporation or organization, other than Heritage Bank of St. Tammany, Heritage NOLA Bancorp or a majority-owned subsidiary
of these entities, of which the person is a senior officer, partner or 10% or greater beneficial stockholder;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(2)</FONT></TD><TD>any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary
capacity, excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee
or in a fiduciary capacity; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(3)</FONT></TD><TD>any blood or marriage relative of the person, who either resides with the person or who is a director or officer of Heritage
Bank of St. Tammany or Heritage NOLA Bancorp.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The term &ldquo;acting in concert&rdquo;
means:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(1)</FONT></TD><TD>knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not
pursuant to an express agreement; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt">(2)</FONT></TD><TD>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.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In general, a person or company that acts
in concert with another person or company (&ldquo;other party&rdquo;) shall also be deemed to be acting in concert with any person
or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will
not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining
whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated. Persons having
the same address or exercising subscription rights through qualifying accounts registered to the same address generally will be
assumed to be associates of, and acting in concert with, each other. We have the right to determine, in our sole discretion, whether
purchasers are associates or acting in concert.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our directors are not treated as associates
of each other solely because of their membership on the board of directors. Shares of common stock purchased in the offering will
be freely transferable except for shares purchased by our senior officers and directors and except as described below. Any purchases
made by any associate of Heritage Bank of St. Tammany or Heritage NOLA Bancorp for the explicit purpose of meeting the minimum
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 the guidelines of FINRA, members of FINRA 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 shares of our common stock
at the time of conversion and thereafter, see &ldquo; &ndash; Restrictions on Transfer of Subscription Rights and Shares,&rdquo;
&ldquo; &ndash; Other Restrictions&rdquo; and &ldquo;Restrictions on Acquisition of Heritage NOLA Bancorp.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Marketing and Distribution; Compensation</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Offering materials have been initially distributed
to certain persons by mail, with additional copies made available through our Stock Information Center.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To assist in the marketing of our shares
of common stock, we have retained FIG Partners, LLC, which is a broker-dealer registered with FINRA. In its role as financial advisor,
FIG Partners, LLC will:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>provide advice on the financial and securities market implications of the plan of conversion;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>assist in structuring our stock offering, including developing a market strategy for the stock offering;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>review all offering documents, including the prospectus, stock order forms and related offering materials (we are responsible
for the preparation and filing of such documents);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>assist us in analyzing proposals from outside vendors retained in connection with the stock offering, as needed;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>assist us in preparing for and scheduling meetings with potential investors and broker-dealers, as necessary; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>provide general advice and assistance as may be reasonably necessary to promote the successful completion of the stock offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For these services, FIG Partners, LLC has
received a non-refundable management fee of $25,000, and will receive a success fee of $275,000 for the shares of common stock
sold in the subscription and direct community offerings. The $25,000 management fee will be credited against the $275,000 success
fee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The plan of conversion provides that, if
necessary, all shares of common stock not purchased in the subscription offering and direct community offering may be offered for
sale to the general public in a syndicated community offering to be managed by FIG Partners, LLC. In such capacity, FIG Partners,
LLC may form a syndicate of other broker-dealers. Neither FIG Partners, LLC nor any registered broker-dealer will have any obligation
to take or purchase any shares of common stock in the syndicated community offering. FIG Partners, LLC will not purchase any shares
of the common stock in any syndicated community offering; however, FIG Partners, LLC has agreed to use its best efforts in the
sale of shares in any syndicated community offering. If there is a syndicated community offering, FIG Partners, LLC will receive
a transaction fee not to exceed 6.00% of the aggregate dollar amount of the common stock sold in the syndicated community offering.
The success fee described above will be credited against such transaction fee. Of this amount, FIG Partners, LLC will pass on to
selected broker-dealers, who assist in the syndicated community offering, an amount competitive with gross underwriting discounts
charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment.&nbsp;
If all shares of common stock were sold in a syndicated community offering (except for shares purchased by our directors, officers,
employees and their family members and our</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">employee stock ownership plan), the maximum selling agent commissions
would be approximately $529,000, $632,000, $736,000 and $855,000 at the minimum, midpoint, maximum, and adjusted maximum levels
of the offering, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We will indemnify FIG Partners, LLC against
liabilities and expenses (including legal fees) related to or arising out of FIG Partners, LLC&rsquo;s engagement as our financial
advisor and performance of services as our financial advisor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Some of our directors and executive officers
may participate in the solicitation of offers to purchase common stock. These persons will be reimbursed for their reasonable out-of-pocket
expenses incurred in connection with the solicitation. Other regular employees of Heritage Bank of St. Tammany 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 FIG Partners, LLC. Our other employees have been instructed not to solicit offers to
purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the
Securities Exchange Act of 1934, as amended, and sales of common stock will be conducted within the requirements of Rule 3a4-1,
so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers, directors or
employees will be compensated in connection with their participation in the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have also engaged FIG Partners, LLC to
act as our records agent in connection with the stock offering. In its role as records agent, FIG Partners, LLC will, among other
things:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>consolidate deposit accounts, develop a central file and calculate eligible votes;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>design and prepare proxy forms and stock order forms;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>organize and supervise the Stock Information Center;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>tabulate proxies and ballots;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>act as or support the inspector of election at the special meeting of members; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>provide necessary subscription services to distribute, collect and tabulate stock orders in the subscription and community
offerings.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">FIG Partners, LLC will receive fees of
$35,000 for these services. Of the fees for serving as records agent, $5,000 has been paid as of the date of this prospectus. In
the event of any material changes in the regulations or the plan of conversion, or delays requiring duplicate or replacement
processing due to changes to the record dates, FIG Partners, LLC may be entitled to an additional fee not to exceed
$10,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">FIG Partners, LLC also will be reimbursed
for its reasonable expenses in an amount not to exceed $20,000 and for its attorneys&rsquo; fees and expense not
to exceed $75,000 for its role as our financial advisor and records agent. The expense cap, including legal fees, may be
increased an additional $30,000, including in the event of any material delay of the offering which would require an update of
the financial information in tabular form to reflect a period later than set forth in the original filing of the prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Prospectus Delivery</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To ensure that each purchaser in the subscription
and community offerings receives a prospectus at least 48 hours before the expiration of the offering in accordance with Rule 15c2-8
of the Securities Exchange Act of 1934, we may not mail a prospectus any later than five days prior to the expiration date or hand
deliver a prospectus any later than two days prior to that date. We are not obligated to deliver a prospectus or stock order form
by means other than U.S. Mail. Execution of a stock order form will confirm receipt of delivery of a prospectus in accordance with
Rule 15c2-8. Stock order forms will be distributed only if preceded or accompanied by a prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the syndicated community offering, a
prospectus and stock order form in electronic format may be made available on Internet sites or through other online services maintained
by FIG Partners, LLC or one or more other members of the syndicate, or by their respective affiliates. In those cases, prospective
investors may view offering terms online and, depending upon the syndicate member, prospective investors may be allowed to place
orders online. The members of the syndicate may agree with us to allocate a specific number of shares for sale to online brokerage
account holders. Any such allocation for online distributions will be made on the same basis as other allocations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Other than the prospectus in electronic
format, the information on the Internet sites referenced in the preceding paragraph and any information contained in any other
Internet site maintained by any member of the syndicate is not part of this prospectus or the registration statement of which this
prospectus forms a part, has not been approved and/or endorsed by us or by FIG Partners, LLC or any other member of the syndicate
in its capacity as selling agent or syndicate member and should not be relied upon by investors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Procedure for Purchasing Shares</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Expiration Date.</I></B> The offering
will expire at 2:00 p.m., Central Time, on [expiration date], unless we extend it for up to 45 days. This extension may be approved
by us, in our sole discretion, without further approval or additional notice to subscribers in the offering. Any extension of the
subscription and/or community offering beyond [extended expiration date] would require the OCC&rsquo;s approval. If the offering
is extended past [extended expiration date], we will resolicit subscribers. You will have the opportunity to confirm, change or
cancel your order within a specified period of time. If you do not respond during that period, your stock order will be cancelled
and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest
at 0.15% per annum from the date your stock order was processed. No single extension will exceed 90 days. Aggregate extensions
may not go beyond [final date], which is two years after the special meeting of members. 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 0.15% per annum from the date of processing as described above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Use of Stock Order Forms.</I></B>
In order to purchase shares of common stock, you must complete and sign an original stock order form and remit full payment. We
will not be required to accept incomplete stock order forms, unsigned stock order forms, or orders submitted on photocopied or
facsimiled stock order forms. All stock order forms must be <I>received</I>, not postmarked, prior to 2:00 p.m., Central Time,
on [expiration date]. We are not required to accept stock order forms that are not received by that time,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">are 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 permit the correction of incomplete or improperly executed stock
order forms or waive immaterial irregularities. We do not represent, however, that we will do so. You may submit your stock order
form and payment by mail using the stock order reply envelope provided, by overnight delivery to our Stock Information Center at
the indicated address on the stock order form or by hand-delivery to Heritage Bank of St. Tammany&rsquo;s main office, located
at 205 North Columbia Street, Covington, Louisiana. <B>Please do not mail stock order forms to Heritage Bank of St. Tammany.</B>
Once tendered, a stock order form cannot be modified or revoked without our consent or unless the offering is terminated or is
extended beyond [extended expiration date], or the number of shares of common stock to be sold is increased to more than 1,653,125
shares or decreased to fewer than 1,062,500 shares. 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 prior to completion of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you are ordering shares in the subscription
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. Our interpretation of the terms and conditions of the plan of conversion
and of the acceptability of the order forms will be final, subject to the authority of the OCC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 Heritage Bank
of St. Tammany 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 or the Securities Exchange Act of 1934.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Payment for Shares.</I></B> Payment
for all shares of common stock will be required to accompany all completed order forms for the purchase to be valid. Payment for
shares may be made by:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>personal check, bank check or money order, payable to Heritage NOLA Bancorp, Inc.; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD><TD>authorization of withdrawal of available funds (without any early withdrawal penalty) from your deposit account(s) with Heritage
Bank of St. Tammany.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Appropriate means for designating withdrawals
from deposit accounts at Heritage Bank of St. Tammany are provided in the order forms. 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 contract rate until the offering
is completed, at which time the designated withdrawal will be made. Interest will remain in the account. 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 will be canceled at the time of withdrawal without penalty, and the remaining balance will
earn interest at the then current statement savings rate subsequent to the withdrawal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the case of payments made by personal
check, these funds must be available in the account(s). Checks and money orders will be immediately cashed and placed in a segregated
account at Heritage Bank of St. Tammany and will earn interest at a rate of 0.15% per annum from the date payment is processed
until the offering is completed, at which time, a subscriber will be issued a check for interest earned.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Regulations prohibit Heritage Bank of St.
Tammany from knowingly lending funds or extending credit to any person to purchase shares of common stock in the offering. You
may not pay by wire transfer. You may not submit cash or use a check drawn on a Heritage Bank of St. Tammany line of credit. We
will not accept third-party checks (a check written by someone other than you) payable to you and endorsed over to Heritage NOLA
Bancorp. You may not designate on your stock order form a direct withdrawal from a Heritage Bank of St. Tammany retirement account.
See &ldquo; &ndash; Using Retirement Account Funds&rdquo; for information on using such funds. Additionally, you may not designate
on your stock order form a direct withdrawal from Heritage Bank of St. Tammany deposit accounts with check-writing privileges.
Please submit a check instead. If you request direct withdrawal, we reserve the right to interpret that as your authorization to
treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your
checking account(s). 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 the expiration date, in which event purchasers may be given the opportunity to increase,
decrease or rescind their orders for a specified period of time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 at any time prior to 48 hours before the completion of the
offering. This payment may be made by wire transfer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our employee stock ownership plan will not
be required to pay for any shares purchased in the offering until completion of the stock offering, provided there is a loan commitment
from either an unrelated financial institution or Heritage NOLA Bancorp to lend to the employee stock ownership plan the necessary
amount to fund the purchase at the time of the expiration of the subscription offering. 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Using Retirement Account Funds. </I></B>If
you are interested in using your individual retirement account funds to purchase shares of common stock, you must do so through
a self-directed individual retirement account such as a brokerage firm individual retirement account. By regulation, Heritage Bank
of St. Tammany&rsquo;s individual retirement accounts are not self-directed, so they cannot be invested in shares of our common
stock. <B>Therefore, if you wish to use your funds that are currently in a Heritage Bank of St. Tammany individual retirement account,
you may not designate on the stock 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 have to be transferred to a brokerage account. It may take several
weeks to transfer your Heritage Bank of St. Tammany individual retirement account to an independent trustee, so please allow yourself
sufficient time to take this action. </B>There will be no early withdrawal or Internal Revenue Service interest penalties for these
transfers. Depositors interested in using funds in an individual retirement account or any other retirement account to purchase
shares of common stock should contact our Stock Information Center as soon as possible, preferably at least two weeks prior to
the [expiration date] end of the offering period, because processing such transactions takes additional time, and whether such
funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee
that you will be able to use such funds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Delivery of Shares of Common Stock
Purchased in the Offering</I></B><I>.</I> All shares of Heritage NOLA Bancorp common stock sold will be issued in book entry form
and held electronically on the books of our transfer agent. Stock certificates will not be issued. A statement reflecting ownership
of shares of common stock issued in the offering will be mailed by our transfer agent to the persons entitled thereto at the registration
address noted by them on their stock order form as soon as practicable following consummation of the conversion. <B>Until a statement
reflecting ownership of shares of common stock </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>is available and delivered to purchasers,
purchasers may not be able to sell the shares of common stock which they ordered, even though the common stock will have begun
trading. </B>Your ability to sell the shares of common stock before receiving your statement will depend on arrangements you may
make with a brokerage firm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Restrictions on Transfer of Subscription Rights and Shares</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">OCC regulations prohibit any person with
subscription rights, specifically 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. 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
prior to completion of the offering. On the stock order form, you may not add the names of others for joint stock registration
who do not have subscription rights or who qualify only in a lower subscription offering priority than you do. You may add only
those who were eligible to purchase shares of common stock in the subscription offering at your date of eligibility.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We intend to 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.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other Restrictions</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 &ldquo;blue sky&rdquo; regulations, or would violate regulations or policies
of FINRA, 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 stock order if an opinion is not timely furnished. In
addition, we are not required to offer shares of common stock to any person who resides in a foreign country or in a state of the
United States with respect to which any of the following apply: (a) a small number of persons otherwise eligible to subscribe for
shares under the plan of conversion reside in the state; (b) the issuance of subscription rights or the offer or sale of shares
of common stock to such persons would require us, under the securities laws of the state, to register as a broker, dealer, salesman
or agent or to register or otherwise qualify our securities for sale in the state; or (c) registration or qualification would be
impracticable for reasons of cost or otherwise.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">How You Can Obtain Additional Information &ndash; Stock
Information Center</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our banking personnel may not, by law, assist
with investment-related questions about the offering. If you have questions regarding the conversion or offering, please call our
Stock Information Center. The toll-free telephone number is (866) 806-1790. The Stock Information Center is open for telephone
calls Monday through Friday, between 10:00 a.m. and 4:00 p.m., Central Time. The Stock Information Center will be closed on bank
holidays.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Liquidation Rights</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the unlikely event of a complete liquidation
of Heritage Bank of St. Tammany prior to the conversion, all claims of creditors of Heritage Bank of St. Tammany, including those
of depositors of Heritage Bank of St. Tammany (to the extent of their deposit balances), would be paid first. Then, if there were
any assets of Heritage Bank of St. Tammany remaining, members of Heritage Bank of St. Tammany would receive those remaining assets,
pro rata, based upon the deposit balances in their deposit account in Heritage Bank of St. Tammany immediately prior to liquidation.
In the unlikely event that Heritage Bank of St. Tammany were to liquidate after the conversion, all claims of creditors, including
those of depositors, would be paid first, followed by distribution of the &ldquo;liquidation account&rdquo; to certain depositors,
with any assets remaining thereafter distributed to Heritage NOLA Bancorp as the sole holder of Heritage Bank of St. Tammany capital
stock. Pursuant to the rules and regulations of the OCC, a post-conversion merger, consolidation, sale of bulk assets or similar
combination or transaction with another insured savings institution would not be considered a liquidation and, in these types of
transactions, the liquidation account would be assumed by the surviving institution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The plan of conversion provides for the
establishment, upon the completion of the conversion, of a &ldquo;liquidation account&rdquo; for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders in an amount equal to the total equity of Heritage Bank of St. Tammany as of
the date of its latest balance sheet contained in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The purpose of the liquidation account is
to provide Eligible Account Holders and Supplemental Eligible Account Holders who maintain their deposit accounts with Heritage
Bank of St. Tammany after the conversion with a liquidation interest in the unlikely event of the complete liquidation of Heritage
Bank of St. Tammany after the conversion. Each Eligible Account Holder and Supplemental Eligible Account Holder that continues
to maintain his or her deposit account at Heritage Bank of St. Tammany, would be entitled, on a complete liquidation of Heritage
Bank of St. Tammany after the conversion, to an interest in the liquidation account prior to any payment to the stockholders of
Heritage NOLA Bancorp. Each Eligible Account Holder would have an initial interest in the liquidation account for each deposit
account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit
accounts, and certificates of deposit, with a balance of $50 or more held in Heritage Bank of St. Tammany on December 31, 2015.
Each Eligible Account Holder would have a pro rata interest in the total liquidation account for each such deposit account, based
on the proportion that the balance of each such deposit account on December 31, 2015 bears to the balance of all such deposit accounts
in Heritage Bank of St. Tammany on such date. Each Supplemental Eligible Account Holder would have an initial interest in the liquidation
account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts,
money market deposit accounts, and certificates of deposit, with a balance of $50 or more held in Heritage Bank of St. Tammany
on ___________, 2017. Each Supplemental Eligible Account Holder would have a pro rata interest in the total liquidation account
for each such deposit account, based on the proportion that the balance of each such deposit account on ____________, 2017 bears
to the balance of all such deposit accounts in Heritage Bank of St. Tammany on such date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If, however, on any December 31 annual closing
date commencing on or after the effective date of the conversion, the amount in any such deposit account is less than the amount
in the deposit account on December 31, 2015 or ____________, 2017, respectively, or any other annual closing date, then the interest
in the liquidation account relating to such deposit account would be reduced from time to time by the proportion of any such reduction,
and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would
ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">any insured deposit accounts to such depositor.
Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are
satisfied would be distributed to Heritage NOLA Bancorp, as the sole stockholder of Heritage Bank of St. Tammany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Material Income Tax Consequences</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Consummation of the conversion is subject
to the prior receipt of an opinion of counsel or tax advisor with respect to federal and state income taxation that the conversion
will not be a taxable transaction to Heritage Bank of St. Tammany, Heritage NOLA Bancorp, Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members. Unlike private letter rulings, opinions of counsel or tax advisors are not binding
on the Internal Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. In the event
of such disagreement, there can be no assurance that Heritage Bank of St. Tammany or Heritage NOLA Bancorp would prevail in a judicial
proceeding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany and Heritage
NOLA Bancorp have received an opinion of counsel, Luse Gorman, PC, regarding all of the material federal income tax consequences
of the conversion, which includes the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">1.</TD><TD>The conversion of Heritage Bank of St. Tammany to a federally chartered stock savings association will qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">2.</TD><TD>Heritage Bank of St. Tammany will not recognize any gain or loss upon the receipt of money from Heritage NOLA Bancorp in exchange
for shares of common stock of Heritage Bank of St. Tammany.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">3.</TD><TD>The basis and holding period of the assets received by Heritage Bank of St. Tammany, in stock form, from Heritage Bank of St.
Tammany, in mutual form, will be the same as the basis and holding period in such assets immediately before the conversion.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">4.</TD><TD>No gain or loss will be recognized by account holders of Heritage Bank of St. Tammany, including Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members, upon the issuance to them of withdrawable deposit accounts in Heritage
Bank of St. Tammany, in stock form, in the same dollar amount and under the same terms as held at Heritage Bank of St. Tammany,
in mutual form. In addition, Eligible Account Holders and Supplemental Eligible Account Holders will not recognize gain or loss
upon receipt of an interest in a liquidation account in Heritage Bank of St. Tammany in exchange for their ownership interests
in Heritage Bank of St. Tammany.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">5.</TD><TD>The basis of the account holders deposit accounts in Heritage Bank of St. Tammany, in stock form, will be the same as the basis
of their deposit accounts in Heritage Bank of St. Tammany, in mutual form. The basis of the Eligible Account Holders and, Supplemental
Eligible Account Holders interests in the liquidation account will be zero, which is the cost of such interest to such persons.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">6.</TD><TD>It is more likely than not that the nontransferable subscription rights have no value, based on the fact that these rights
are acquired by the recipients without cost, are nontransferable and of short duration, and afford the recipients the right only
to purchase the common stock at a price equal to its estimated fair market value, which will be the same price as the subscription
price for the shares of common stock in the offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: 0in">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 Heritage NOLA Bancorp common stock, provided that the amount to be paid
for Heritage NOLA Bancorp common stock is equal to the fair market value of Heritage NOLA Bancorp common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">7.</TD><TD>It is more likely than not that the basis of the shares of Heritage NOLA Bancorp common stock purchased in the offering will
be the purchase price. The holding period of the Heritage NOLA Bancorp common stock purchased pursuant to the exercise of nontransferable
subscription rights will commence on the date on which the right to acquire such stock was exercised.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">8.</TD><TD>No gain or loss will be recognized by Heritage NOLA Bancorp on the receipt of money in exchange for shares of Heritage NOLA
Bancorp common stock sold in the offering.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the view of RP Financial, LC. (which
is acting as independent appraiser of the value of the shares of Heritage NOLA Bancorp common stock in connection with the conversion),
the subscription rights do not have any value for the reasons set forth above. RP Financial, LC.&rsquo;s view is not binding on
the Internal Revenue Service. If the subscription rights granted to Eligible Account Holders, Supplemental Eligible Account Holders
and Other Members are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible
Account Holders, Supplemental Eligible Account Holders and Other Members who exercise the subscription rights in an amount equal
to their value, and Heritage NOLA Bancorp could recognize gain on a distribution. Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are encouraged to consult with their own tax advisors as to the tax consequences in the event
that subscription rights are deemed to have an ascertainable value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Internal Revenue Service will not issue
private letter rulings with respect to the issue of whether nontransferable rights have value. Unlike private letter rulings, an
opinion of counsel or the view of an independent appraiser is not binding on the Internal Revenue Service and the Internal Revenue
Service could disagree with the conclusions reached therein. Depending on the conclusion or conclusions with which the Internal
Revenue Service disagrees, the Internal Revenue Service may take the position that the transaction is taxable to any one or more
of Heritage Bank of St. Tammany, the members of Heritage Bank of St. Tammany, Heritage NOLA Bancorp, Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members who exercise their subscription rights. In the event of a disagreement,
there can be no assurance that Heritage NOLA Bancorp or Heritage Bank of St. Tammany would prevail in a judicial or administrative
proceeding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The federal tax opinion has been filed with
the Securities and Exchange Commission as an exhibit to Heritage NOLA Bancorp&rsquo;s registration statement. An opinion regarding
the Louisiana state income tax consequences consistent with the federal tax opinion has been issued by Hannis T. Bourgeois, LLP,
tax advisors to Heritage Bank of St. Tammany and Heritage NOLA Bancorp.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Restrictions on Purchase or Transfer of Our Shares after
Conversion</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The shares being acquired by the directors,
executive officers and their associates are being acquired for investment purposes, and not with a view towards resale. All shares
of common stock purchased in the offering by a director or an executive officer of Heritage NOLA Bancorp or Heritage Bank of St.
Tammany generally may not be sold for a period of one year following the closing of the conversion, except in the event of the
death of the director or executive officer. Each statement of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">ownership or certificate for restricted shares
will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer
within this time period of any certificate or ownership of the shares other than as provided above is a violation of the restriction.
Any shares of common stock issued at a later date as a stock dividend, stock split or otherwise with respect to the restricted
stock will be similarly restricted. The directors and executive officers of Heritage NOLA Bancorp also will be restricted by the
insider trading rules promulgated pursuant to the Securities Exchange Act of 1934, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Purchases of shares of our common stock
by any of our directors, executive officers and their associates, during the three-year period following the closing of the conversion
may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written
approval of the OCC. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding
common stock, to purchases of our common stock to fund stock options by one or more stock-based benefit plans or to any of our
tax-qualified employee stock benefit plans or nontax-qualified employee stock benefit plans, including any stock-based benefit
plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal">Federal
conversion regulations prohibit Heritage NOLA Bancorp from repurchasing its shares of common stock during the first year following
the conversion unless compelling business reasons exist for such repurchases, or to fund management recognition plans that have
been ratified by stockholders (with OCC approval) or tax-qualified employee stock benefit plans. </FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_19"></A>RESTRICTIONS ON ACQUISITION OF HERITAGE
NOLA BANCORP</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Although the board of directors of Heritage
NOLA Bancorp is not aware of any effort that might be made to obtain control of Heritage NOLA Bancorp after the conversion, the
board of directors believes that it is appropriate to include certain provisions as part of Heritage NOLA Bancorp&rsquo;s articles
of incorporation and bylaws to protect the interests of Heritage NOLA Bancorp and its stockholders from takeovers which our board
of directors might conclude are not in the best interests of Heritage Bank of St. Tammany, Heritage NOLA Bancorp or Heritage NOLA
Bancorp&rsquo;s stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following discussion is a general summary
of the material provisions of Heritage NOLA Bancorp&rsquo;s articles of incorporation and bylaws, Heritage Bank of St. Tammany&rsquo;s
federal stock charter, Maryland corporation law and certain other regulatory provisions that may be deemed to have an &ldquo;anti-takeover&rdquo;
effect. The following description of certain of these provisions is necessarily general and, with respect to provisions contained
in Heritage NOLA Bancorp&rsquo;s articles of incorporation and bylaws and Heritage Bank of St. Tammany&rsquo; federal stock charter
and bylaws, reference should be made in each case to the document in question, each of which is part of Heritage Bank of St. Tammany&rsquo;
application for conversion filed with the OCC, and except for Heritage Bank of St. Tammany&rsquo;s federal stock charter and bylaws,
Heritage NOLA Bancorp&rsquo;s registration statement filed with the Securities and Exchange Commission. See &ldquo;Where You Can
Find Additional Information.&rdquo;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Heritage NOLA Bancorp&rsquo;s Articles of Incorporation
and Bylaws</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp articles of incorporation
and bylaws contain a number of provisions relating to corporate governance and rights of stockholders that might discourage future
takeover attempts. As a result, stockholders who might desire to participate in such transactions may not have an opportunity to
do so. In addition, these provisions will also render the removal of the board of directors or management of Heritage NOLA Bancorp
more difficult.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Directors</I></B><I>.</I> The board
of directors will be divided into three classes. The members of each class will be elected for a term of three years and only one
class of directors will be elected annually. Thus, it</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">would take at least two annual elections to
replace a majority of our directors. The bylaws establish qualifications for board members, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a prohibition on service as a director by a person who is a director, officer or a 10% shareholder of a competitor of Heritage
Bank of St. Tammany;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a prohibition on service as a director by a person (i) who has been convicted of a crime involving dishonesty or breach of
trust that is punishable by imprisonment for a term exceeding one year under state or federal law, (ii) who is currently charged
in an information, indictment or other complaint with the commission of or participation in such a crime, or (iii) against whom
a financial or securities regulatory agency has, within the past ten years, issued a cease and desist, consent or other formal
order, other than a civil money penalty, which order is subject to public disclosure by such agency;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a prohibition on service as a director by a person who is party to any agreement or understanding that (i) provides such person
with material benefits that are contingent upon Heritage NOLA Bancorp entering into a merger or similar transaction in which Heritage
NOLA Bancorp is not the surviving entity, (ii) materially limits such person&rsquo;s voting discretion with respect to Heritage
NOLA Bancorp&rsquo;s strategic direction, or (iii) materially impairs such person&rsquo;s ability to discharge his or her fiduciary
duties with respect to the fundamental strategic direction of Heritage NOLA Bancorp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a requirement that any person proposed to serve as director (other than the initial directors and other than directors who
are also officers of Heritage NOLA Bancorp or Heritage Bank of St. Tammany) have maintained his or her principal residence within
ten miles of an office of Heritage NOLA Bancorp or Heritage Bank of St. Tammany for a period of at least one year immediately before
his or her nomination or appointment to the Board of Directors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a prohibition on service as a director by a person who has lost more than one election for service as a director of Heritage
NOLA Bancorp; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a prohibition on service by nominees or representatives (as defined in applicable Federal Reserve Board regulations) of another
person who would not be eligible for service or of an entity the partners or controlling persons of which would not be eligible
for service.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Evaluation of Offers. </I></B>The
articles of incorporation of Heritage NOLA Bancorp provide that its board of directors, when evaluating a transaction that would
or may involve a change in control of Heritage NOLA Bancorp (whether by purchases of its securities, merger, consolidation, share
exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection
with the exercise of its business judgment in determining what is in the best interests of Heritage NOLA Bancorp and its stockholders
and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited
to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the economic effect, both immediate and long-term, upon Heritage NOLA Bancorp&rsquo;s stockholders, including stockholders,
if any, who do not participate in the transaction;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, Heritage
NOLA Bancorp and its subsidiaries and on the communities in which Heritage NOLA Bancorp and its subsidiaries operate or are located;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition
of Heritage NOLA Bancorp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>whether a more favorable price could be obtained for Heritage NOLA Bancorp&rsquo;s stock or other securities in the future;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates
as they would affect the employees of Heritage NOLA Bancorp and its subsidiaries;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the future value of the stock or any other securities of Heritage NOLA Bancorp or the other entity to be involved in the proposed
transaction;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any antitrust or other legal and regulatory issues that are raised by the proposal;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the business and historical, current or expected future financial condition or operating results of the other entity to be
involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations
to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved
in the proposed transaction; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the ability of Heritage NOLA Bancorp to fulfill its objectives as a financial institution holding company and on the ability
of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable
statutes and regulations.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If the board of directors determines that
any proposed transaction should be rejected, it may take any lawful action to defeat such transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Restrictions on Calling Special Meetings.</I></B>
The bylaws provide that special meetings of stockholders can be called by only the Chairperson or Vice Chairperson of the Board,
a majority of the total number of directors that Heritage NOLA Bancorp would have if there were no vacancies on the board of directors,
or the Secretary upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at
the meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Prohibition of Cumulative Voting.</I></B>
The articles of incorporation prohibit cumulative voting for the election of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Limitation of Voting Rights.</I></B>
The articles of incorporation provide that in no event will any person who beneficially owns more than 10% of the then-outstanding
shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit. The
10% limit shall not apply if, before the stockholder acquires shares in excess of the 10% limit, the acquisition is approved by
a majority of the directors who are not affiliated with the holder and who were members of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">the Board of Directors prior to the time of
the acquisition (or who were chosen to fill any vacancy of an otherwise unaffiliated director by a majority of the unaffiliated
directors).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Restrictions on Removing Directors
from Office.</I></B> The articles of incorporation provide that directors may be removed only for cause, and only by the affirmative
vote of the holders of a majority of the voting power of all of our then-outstanding capital stock entitled to vote generally in
the election of directors (after giving effect to the limitation on voting rights discussed above in &ldquo; &ndash; Limitation
of Voting Rights&rdquo;), voting together as a single class.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Shareholder Nominations and Proposals.
</I></B>The bylaws provide that any shareholder desiring to make a nomination for the election of directors or a proposal for new
business at an annual meeting of shareholders must submit written notice to Heritage NOLA Bancorp at least 90 days prior and not
earlier than 120 days prior to the anniversary date of the proxy statement relating to the previous year&rsquo;s annual meeting.
However, if less than 90 days&rsquo; prior public disclosure of the date of the meeting is given to shareholders and the date of
the annual meeting is advanced by more than 30 days, or delayed by more than 30 days, from the anniversary date of the preceding
year&rsquo;s annual meeting then shareholders must submit written notice to Heritage NOLA Bancorp no later than 10 days following
the day on which public disclosure of the date of the meeting is first made in a press release, in a document filed with the Securities
and Exchange Commission or on a website maintained by Heritage NOLA Bancorp.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Authorized but Unissued Shares</I>.</B>
After the conversion, Heritage NOLA Bancorp will have authorized but unissued shares of common and preferred stock. See &ldquo;Description
of Capital Stock of Heritage NOLA Bancorp.&rdquo; The articles of incorporation authorize 1,000,000 shares of serial preferred
stock. Heritage NOLA Bancorp is authorized to issue preferred stock from time to time in one or more series subject to applicable
provisions of law, and the board of directors is authorized to fix the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of such shares. In addition, the
articles of incorporation provide that a majority of the total number of directors that Heritage NOLA Bancorp would have if there
were no vacancies on the board of directors may, without action by the stockholders, amend the articles of incorporation to increase
or decrease the aggregate number of shares of stock of any class or series that Heritage NOLA Bancorp has the authority to issue.
In the event of a proposed merger, tender offer or other attempt to gain control of Heritage NOLA Bancorp that the board of directors
does not approve, it would be possible for the board of directors to authorize the issuance of a series of preferred stock with
rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of preferred stock
therefore may be to deter a future attempt to gain control of Heritage NOLA Bancorp. The board of directors has no present plan
or understanding to issue any preferred stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Amendments to Articles of Incorporation
and Bylaws.</I></B> Except as provided under &ldquo; &ndash; Authorized but Unissued Shares,&rdquo; above, regarding the amendment
of the articles of incorporation by the board of directors to increase or decrease the number of shares authorized for issuance,
or as otherwise allowed by law, any amendment to the articles of incorporation must be approved by our board of directors and also
by two-thirds of the outstanding shares of our voting stock (or a majority of the outstanding shares of our voting stock if the
amendment is approved by two-thirds of our board of directors); provided, however, that approval by at least 80% of the outstanding
voting stock is generally required to amend the following provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(i)</TD><TD>The limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares
of common stock;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(ii)</TD><TD>The division of the board of directors into three staggered classes;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(iii)</TD><TD>The ability of the board of directors to fill vacancies on the board;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(iv)</TD><TD>The requirement that at least a majority of the voting power of the stockholders must vote to remove directors, and can only
remove directors for cause;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(v)</TD><TD>The ability of the board of directors to amend and repeal the bylaws and the required stockholder vote to amend or repeal the
bylaws;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(vi)</TD><TD>The ability of the board of directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire
Heritage NOLA Bancorp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(vii)</TD><TD>The authority of the board of directors to provide for the issuance of preferred stock;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(viii)</TD><TD>The validity and effectiveness of any action lawfully authorized by the affirmative vote of the holders of a majority of the
total number of outstanding shares of common stock;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(ix)</TD><TD>The number of stockholders constituting a quorum or required for stockholder consent;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(x)</TD><TD>The provision regarding stockholder proposals and nominations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(xi)</TD><TD>The indemnification of current and former directors and officers, as well as employees and other agents, by Heritage NOLA Bancorp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(xii)</TD><TD>The limitation of liability of officers and directors to Heritage NOLA Bancorp for money damages; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(xiii)</TD><TD>The provision of the articles of incorporation requiring approval of at least 80% of the outstanding voting stock to amend
the provisions of the articles of incorporation set forth in (i) through (xii) of this list and the provisions related to amendment
of the articles of incorporation.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The articles of incorporation also provide
that the bylaws may be amended by the affirmative vote of a majority of the total number of directors that Heritage NOLA Bancorp
would have if there were no vacancies on the board of directors or by the stockholders by the affirmative vote of at least 80%
of the votes entitled to be cast in the election of directors (after giving effect to the limitation on voting rights discussed
above in &ldquo; &ndash; Limitation of Voting Rights&rdquo;).</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Maryland Corporate Law</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under Maryland law, &ldquo;business combinations&rdquo;
between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five
years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, certain transfers of assets,
certain stock issuances and transfers, liquidation plans and reclassifications involving interested stockholders and their affiliates
or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as: (i) any person who beneficially
owns 10% or more of the voting power of a corporation&rsquo;s voting stock after the date on which the corporation had 100 or more
beneficial owners of its stock; or (ii) an affiliate or associate of the corporation at any time after the date on which the corporation
had 100 or more beneficial owners of its stock who, within the two-year period prior to the date in question, was the beneficial
owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation. A person is not an interested
stockholder under the statute if</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">the board of directors approved in advance the transaction by
which the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors
may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined
by the Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">After the five-year prohibition, any business
combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors
of the corporation and approved by the affirmative vote of at least: (i) 80% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation; and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the
corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is
to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not
apply if the corporation&rsquo;s common stockholders receive a minimum price, as defined under Maryland law, for their shares in
the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Heritage Bank of St. Tammany Charter</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The charter of Heritage Bank of St. Tammany
provides that for a period of five years from the closing of the conversion and offering, no person (including a group acting in
concert) other than Heritage NOLA Bancorp may offer directly or indirectly to acquire the beneficial ownership of more than 10%
of any class of equity security of Heritage Bank of St. Tammany. This provision does not apply to any tax-qualified employee benefit
plan of Heritage Bank of St. Tammany or Heritage NOLA Bancorp, or to an underwriter or member of an underwriting or selling group
involving the public sale or resale of securities of Heritage Bank of St. Tammany or any of its subsidiaries, so long as after
the sale or resale, no underwriter or member of the selling group is a beneficial owner, directly or indirectly, of more than 10%
of any class of equity securities of Heritage Bank of St. Tammany. In addition, during this five-year period, all shares owned
over the 10% limit may not be voted on any matter submitted to shareholders for a vote.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Conversion Regulations</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">OCC regulations prohibit any person from
making an offer, announcing an intent to make an offer or participating in any other arrangement to purchase stock or acquiring
stock or subscription rights in a converting institution or its holding company from another person prior to completion of its
conversion. Further, without the prior written approval of the OCC, no person may make an offer or announcement of an offer to
purchase shares or actually acquire shares of a converted institution or its holding company for a period of three years from the
date of the completion of the conversion if, upon the completion of such offer, announcement or acquisition, the person would become
the beneficial owner of more than 10% of the outstanding stock of the institution or its holding company. The OCC has defined &ldquo;person&rdquo;
to include any individual, group acting in concert, corporation, partnership, association, joint stock company, trust, unincorporated
organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities
of an insured institution. However, offers made exclusively to a savings association or its holding company, or an underwriter
or member of a selling group acting on the converting institution&rsquo;s or its holding company&rsquo;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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Change in Control Regulations </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the Change in Bank Control Act, no
person may acquire control of a savings and loan holding company unless the Federal Reserve Board has been given 60 days&rsquo;
prior written notice and has not issued a notice disapproving the proposed acquisition. In addition, Federal Reserve Board regulations
provide that no company may acquire control of a savings and loan holding company without the prior approval of the Federal Reserve
Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Control, as defined under federal law, means
ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner
of the election of a majority of the institution&rsquo;s directors, or a determination by the Federal Reserve Board that the acquirer
has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the
institution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Acquisition of more than 10% of any class
of a savings and loan holding company&rsquo;s voting stock, if the acquirer is also subject to any one of eight &ldquo;control
factors,&rdquo; constitutes a rebuttable determination of control under Federal Reserve Board regulations. Such control factors
include the acquirer being one of the two largest stockholders. The determination of control may be rebutted by submission to the
Federal Reserve Board, prior to the acquisition of stock or the occurrence of any other circumstances giving rise to such determination,
of a statement setting forth facts and circumstances which would support a finding that no control relationship will exist and
containing certain undertakings. The regulations provide that persons or companies that acquire beneficial ownership exceeding
10% or more of any class of a savings and loan holding company&rsquo;s stock who do not intend to participate in or seek to exercise
control over a savings and loan holding company&rsquo;s management or policies may qualify for a safe harbor by filing with the
Federal Reserve Board a certification form that states, among other things, that the holder is not in control of such institution,
is not subject to a rebuttable determination of control and will take no action which would result in a determination or rebuttable
determination of control without prior notice to or approval of the Federal Reserve Board, as applicable. There are also rebuttable
presumptions in the regulations concerning whether a group &ldquo;acting in concert&rdquo; exists, including presumed action in
concert among members of an &ldquo;immediate family.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Federal Reserve Board may prohibit an
acquisition of control if it finds, among other things, that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the acquisition would result in a monopoly or substantially lessen competition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the financial condition of the acquiring person might jeopardize the financial stability of the institution;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors
or the public to permit the acquisition of control by such person; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the acquisition would have an adverse effect on the FDIC&rsquo;s Deposit Insurance Fund.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, a savings and loan holding
company must obtain the approval of the Federal Reserve Board prior to acquiring voting control of more than 5% of any class of
voting stock of another savings association or another savings association holding company.&#9;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_20"></A>DESCRIPTION OF CAPITAL STOCK OF HERITAGE
NOLA BANCORP</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">General</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp is authorized to issue
9,000,000 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.
Heritage NOLA Bancorp currently expects to issue in the offering up to 1,437,500 of common stock. Heritage NOLA Bancorp will not
issue shares of preferred stock in the stock offering. Each share of Heritage NOLA Bancorp common stock will have the same relative
rights as, and will be identical in all respects to, each other share of common stock. Upon payment of the subscription price for
the common stock in accordance with the plan of conversion all of the shares of common stock will be duly authorized, fully paid
and nonassessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The shares of common stock of Heritage NOLA
Bancorp will represent nonwithdrawable capital, will not be an account of an insurable type, and will not be insured by the FDIC
or any other government agency.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Dividends.</I></B> Heritage NOLA Bancorp
can pay dividends on its common stock if, after giving effect to such distribution, (i) it would be able to pay its indebtedness
as the indebtedness comes due in the usual course of business and (ii) its total assets exceed the sum of its liabilities and the
amount needed, if Heritage NOLA Bancorp were to be dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of any holders of capital stock who have a preference in the event of dissolution. The holders of common stock
of Heritage NOLA Bancorp 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 Heritage NOLA Bancorp issues shares of preferred stock, the holders thereof may have
a priority over the holders of the common stock with respect to dividends.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Voting Rights.</I></B> Upon consummation
of the conversion, the holders of common stock of Heritage NOLA Bancorp will have exclusive voting rights in Heritage NOLA Bancorp.
They will elect Heritage NOLA Bancorp&rsquo;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 Heritage NOLA Bancorp&rsquo;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 Heritage NOLA Bancorp issues shares of preferred
stock, holders of the preferred stock may also possess voting rights. Amendments to the articles of incorporation generally require
a two-thirds vote, and certain amendments require an 80% stockholder vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As a federal stock savings association,
corporate powers and control of Heritage Bank of St. Tammany will be vested in its board of directors, who elect the officers of
Heritage Bank of St. Tammany and who fill any vacancies on the board of directors. Voting rights of Heritage Bank of St. Tammany
will be vested exclusively in the owners of the shares of capital stock of Heritage Bank of St. Tammany, which will be Heritage
NOLA Bancorp, and voted at the direction of Heritage NOLA Bancorp&rsquo;s board of directors. Consequently, the holders of the
common stock of Heritage NOLA Bancorp will not have direct control of Heritage Bank of St. Tammany.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Liquidation.</I></B> In the event
of any liquidation, dissolution or winding up of Heritage Bank of St. Tammany, Heritage NOLA Bancorp, as the holder of 100% of
Heritage Bank of St. Tammany&rsquo;s capital</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">stock, would be entitled to receive all assets
of Heritage Bank of St. Tammany available for distribution, after payment or provision for payment of all debts and liabilities
of Heritage Bank of St. Tammany, including all deposit accounts and accrued interest thereon, and after distribution of the balance
in the liquidation account to Eligible Account Holders and Supplemental Eligible Account Holders. In the event of liquidation,
dissolution or winding up of Heritage NOLA Bancorp, the holders of its common stock would be entitled to receive, after payment
or provision for payment of all its debts and liabilities, all of the assets of Heritage NOLA Bancorp 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Preemptive Rights.</I></B> Holders
of the common stock of Heritage NOLA Bancorp will not be entitled to preemptive rights with respect to any shares that may be issued,
unless such preemptive rights are approved by the board of directors. The common stock is not subject to redemption.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">None of the shares of Heritage NOLA Bancorp&rsquo;s
authorized 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_21"></A>TRANSFER AGENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The transfer agent and registrar for Heritage
NOLA Bancorp&rsquo;s common stock will be American Stock Transfer &amp; Trust Company, LLC.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><A NAME="pro_22"></A>EXPERTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The financial statements of Heritage Bank
of St. Tammany as of December 31, 2016 and 2015, and for the years then ended, have been included herein in reliance upon the report
of Hannis T. Bourgeois, LLP, independent registered public accounting firm, which is included herein and upon the authority of
said firm as experts in accounting and auditing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">RP Financial, LC. has consented to the publication
herein of the summary of its report to Heritage NOLA Bancorp setting forth its opinion as to the estimated pro forma market value
of the shares of common stock upon completion of the conversion and offering and its letter with respect to subscription rights.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_23"></A>LEGAL MATTERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Luse Gorman, PC, Washington, D.C., counsel
to Heritage NOLA Bancorp and Heritage Bank of St. Tammany, has issued to Heritage NOLA Bancorp its opinion regarding the legality
of the common stock and the federal income tax consequences of the conversion. Hannis T. Bourgeois, LLP has provided an opinion
to us regarding the Louisiana state income tax consequences of the conversion. Certain legal matters will be passed upon for FIG
Partners, LLC by Vedder Price P.C., Chicago, Illinois.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="pro_24"></A>WHERE YOU CAN FIND ADDITIONAL INFORMATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage NOLA Bancorp 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 at the public reference facilities of the Securities
and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from
the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission telephone number is 1-800-SEC-0330.
In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission,
including Heritage NOLA Bancorp. The statements contained in this prospectus as to the contents of any contract or other document
filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and should be
read in conjunction with, such contract or document.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Heritage Bank of St. Tammany has filed with
the OCC an application with respect to the conversion. This prospectus omits certain information contained in the application filed
by Heritage Bank of St. Tammany. Heritage Bank of St. Tammany&rsquo;s application may be examined at the Southern District Office
of the OCC located at 500 North Akard Street, Suite 1600, Dallas, Texas 75201. A copy of the plan of conversion is available for
your review at Heritage Bank of St. Tammany&rsquo;s offices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with the offering, Heritage
NOLA Bancorp will register its common stock under Section 12(g) of the Securities Exchange Act of 1934 and, upon such registration,
Heritage NOLA Bancorp and the holders of its common stock will become subject to the proxy solicitation rules, reporting requirements
and restrictions on common stock purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic
reporting and certain other requirements of the Securities Exchange Act of 1934. Under the plan of conversion, Heritage NOLA Bancorp
has undertaken that it will not terminate such registration for a period of at least three years following the offering.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in"><B><A NAME="pro_25"></A>INDEX TO FINANCIAL
STATEMENTS OF</B><BR>
<B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="width: 92%">Report of Independent Registered Public Accounting Firm</TD>
    <TD STYLE="width: 8%; text-align: right">F-2</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD>Balance Sheets at December 31, 2016 and 2015</TD>
    <TD STYLE="text-align: right">F-3</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD>Statements of Income for the years ended December 31, 2016 and 2015</TD>
    <TD STYLE="text-align: right">F-4</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD>Statements of Comprehensive Income (Loss) for the years ended December 31, 2016 and 2015</TD>
    <TD STYLE="text-align: right">F-5</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD>Statements of Changes in Equity for the years ended December 31, 2016 and 2015</TD>
    <TD STYLE="text-align: right">F-6</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD>Statements of Cash Flows for the years ended December 31, 2016 and 2015</TD>
    <TD STYLE="text-align: right">F-7</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD>Notes to Financial Statements</TD>
    <TD STYLE="text-align: right">F-9</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">* * *</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Separate financial statements for Heritage
NOLA Bancorp have not been included in this prospectus because Heritage NOLA Bancorp has not engaged in any significant activities,
has no significant assets, and has no contingent liabilities, revenue or expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">All financial statement schedules have been
omitted as the required information either is not applicable or is included in the financial statements or related notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin-top: 0; text-align: center; margin-bottom: 0"><IMG SRC="t1700652_f-2logo.jpg" ALT="">&nbsp;</P>

<P STYLE="margin: 0">&nbsp;</P>

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<P STYLE="margin: 0"></P>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #1D1C21">2322 Tremont
Drive &bull; Baton Rouge, LA </FONT><FONT STYLE="color: #323232">70809</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #1D1C21">178 Del Orleans
</FONT><FONT STYLE="color: #323232">Avenue, </FONT><FONT STYLE="color: #1D1C21">Suite C &bull; Denham Springs</FONT><FONT STYLE="color: #4B4B4B">,
</FONT><FONT STYLE="color: #1D1C21">LA </FONT><FONT STYLE="color: #323232">70726</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #1D1C21">Phone: </FONT><FONT STYLE="color: #323232">225.928.4770
</FONT><FONT STYLE="color: #1D1C21">&bull; Fax: </FONT><FONT STYLE="color: #323232">225.926.0945</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #323232">650 </FONT><FONT STYLE="color: #1D1C21">Poydras
Street, Suite 1200 &bull; New Orleans</FONT><FONT STYLE="color: #4B4B4B">, </FONT><FONT STYLE="color: #1D1C21">LA 70130</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: #1D1C21">Phone</FONT><FONT STYLE="color: #4B4B4B">:
</FONT><FONT STYLE="color: #323232">504.274</FONT><FONT STYLE="color: #4B4B4B">.</FONT><FONT STYLE="color: #1D1C21">0200 &bull;
Fax: </FONT><FONT STYLE="color: #323232">504.274</FONT><FONT STYLE="color: #4B4B4B">.</FONT><FONT STYLE="color: #323232">0201</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: #323232">www.htbcpa.com</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #1D1C21">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: #1D1C21"><B>REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #1D1C21">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #1D1C21">Audit Committee of the Board of Directors</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #1D1C21">Heritage Bank of St. Tammany</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #1D1C21">Covington, Louisiana</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #1D1C21">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #1D1C21">We have audited
the accompanying balance sheets of Heritage Bank of St. Tammany, as of December 31, 2016 and 2015, and the </FONT><FONT STYLE="color: #323232">related
</FONT><FONT STYLE="color: #1D1C21">statements of income, comprehensive income, changes in equity, and cash flows for each of the
years in the two-year period ended on December 31, 2016. Heritage Bank of St. Tammany&rsquo;s management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial statements based on our audits.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1D1C21">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: #1D1C21">We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company&rsquo;s internal
control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion</FONT><FONT STYLE="color: #4B4B4B">.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1D1C21">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1D1C21">In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial position of Heritage Bank of St. Tammany as
of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of years in the two-year period ended
December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1D1C21">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 50%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: #1D1C21">Respectfully submitted,</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;<IMG SRC="t1700652_f-23sig.jpg" ALT=""></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1D1C21">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #1D1C21">New Orleans, Louisiana</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1D1C21">March 8, 2017</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: #1D1C21">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><A NAME="f2"></A><U>BALANCE SHEETS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: center">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: justify">Cash and Due from Banks</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">530</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">468</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Interest Earning Deposits in Banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,484</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,604</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Federal Funds Sold</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total Cash and Cash Equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,014</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,572</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Securities Available for Sale, at Fair Value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,896</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Securities Held to Maturity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">832</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,114</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Federal Home Loan Bank Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">495</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">460</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other Investments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">178</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Loans Receivable, Net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74,659</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,966</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Premises and Equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,892</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Bank Owned Life Insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,949</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Foreclosed Real Estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">93</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">756</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Mortgage Servicing Rights</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">325</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">282</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Accrued Interest Receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">318</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">319</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Prepaid Expenses and Other Assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">209</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">256</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total Assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">98,015</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">96,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: center">LIABILITIES AND EQUITY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Interest Bearing Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">69,901</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">71,264</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Noninterest Bearing Deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,350</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,315</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74,251</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73,579</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Borrowed Funds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,274</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,656</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Advances from Borrowers for Taxes and Insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">275</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">254</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Accrued Expenses and Other Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">755</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">647</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,555</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">87,136</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Retained Earnings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,429</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,271</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Accumulated Other Comprehensive Income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">31</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">55</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Total Equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,460</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,326</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total Liabilities and Equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">98,015</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">96,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">The accompanying notes are an integral part
of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><U><A NAME="f3"></A>STATEMENTS OF INCOME</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Interest Income:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; padding-left: 9pt">First Mortgage Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,808</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,352</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">143</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">194</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Second Mortgages</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Share Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other Interest Earning Assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">93</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total Interest Income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,085</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,658</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Interest Expense:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">833</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">835</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Borrowed Funds</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">160</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">89</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total Interest Expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">993</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">924</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Net Interest Income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,092</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,734</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Provision for Loan Losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">180</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Net Interest Income after Provision for Loan Losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,912</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,714</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Noninterest Income:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Gain on Sale of Loans Originated for Sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">111</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Loan Servicing Income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">163</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Gain (Loss) on Sale of Foreclosed Real Estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(50</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other Income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">90</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">87</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">351</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">403</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Noninterest Expense:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Salaries and Employee Benefits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,592</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,488</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Data Processing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">197</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">186</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Occupancy and Equipment - Other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">182</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">181</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Occupancy and Equipment - Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">193</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">FDIC Insurance and Examination Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">132</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">129</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Director Compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">79</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Expense on Foreclosed Real Estate, Net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Advertising</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">114</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Write-down of Foreclosed Real Estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">416</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">374</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,995</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,841</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Income Before Income Tax Expense (Benefit)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">268</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">276</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Income Tax Expense (Benefit)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">110</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 27pt">Net Income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">158</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The accompanying notes are an integral part of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><A NAME="f4"></A><U>STATEMENTS OF COMPREHENSIVE INCOME (LOSS)</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; font-weight: bold; text-align: left">Net Income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">158</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">277</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Other Comprehensive Income (Loss):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Unrealized Gains (Loss) on Investment Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(35</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(59</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Income Tax Effect</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(24</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(39</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Comprehensive Income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">134</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">238</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The accompanying notes are an integral part of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><U><A NAME="f5"></A>STATEMENTS OF CHANGES IN EQUITY</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Accumulated</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Other</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Retained</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Comprehensive</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Earnings</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Income (Loss)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Equity</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 55%; font-weight: bold">Balance at January 1, 2015</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">8,994</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">94</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">9,088</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net Income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">277</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">277</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other Comprehensive Income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(39</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(39</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Balance December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,271</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,326</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net Income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">158</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">158</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other Comprehensive Loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(24</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(24</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Balance December 31, 2016</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,429</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">31</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,460</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The accompanying notes are an integral part of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><U><A NAME="f6"></A>STATEMENTS OF CASH FLOWS</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Operating Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; padding-left: 0.125in">Net Income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">158</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">277</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Adjustments to Reconcile Net Income to Net Cash
    Provided by Operating Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Provision for Loan Losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">180</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 27pt">Writedowns of Foreclosed Real Estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Provision for Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">193</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 27pt">Deferred Income Tax Expense (Benefit)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(80</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Change in Mortgage Servicing Rights</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(43</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(20</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 27pt">(Accretion) Amortization of:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.5in">Premiums and Discounts on Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.5in">Deferred Loan Origination Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Gain on Sale of Loans Originated for Sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(111</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(85</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 27pt">Gain on Sale of Foreclosed Real Estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(68</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">(Increase) Decrease in Accrued Interest Receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(38</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 27pt">(Increase) Decrease in Bank Owned Life Insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(52</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(55</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">(Increase) Decrease in Prepaid Expenses and Other Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 27pt; padding-bottom: 1pt">Increase (Decrease) in Accrued Expenses and &nbsp;Other Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">108</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">167</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.5in">Net Cash Provided by Operating Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">704</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">496</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Investing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchases of Securities Available For Sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,069</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,375</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Principal Collected on Securities Available for Sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,724</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,546</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Principal Collected on Securities Held to Maturity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">269</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">356</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of Federal Home Loan Bank Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(35</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(168</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Purchase of Other Investments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(178</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Principal Collected on Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,762</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,099</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Loans Originated</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(20,876</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(23,963</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Loans Purchased</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,437</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,689</TD><TD STYLE="text-align: left">)</TD></TR>
</TABLE>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(CONTINUED)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Proceeds from Sales of Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">6,752</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">5,037</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Purchases of Premises and Equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Proceeds from Sales of Foreclosed Real Estate</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">523</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">558</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 34.2pt">Net Cash Used in Investing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,573</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8,601</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash Flows From Financing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Net&nbsp;&nbsp;Increase (Decrease) in Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">672</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">928</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">(Decrease) Increase in Advances from Borrowers for Taxes and Insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(26</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Funds Borrowed</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Repayments of Borrowed Funds</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,782</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,861</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 34.2pt">Net Cash Provided by Financing Activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,311</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,291</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 34.2pt">Net Decrease in Cash and Cash Equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(558</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(814</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Cash and Cash Equivalents - Beginning of Year</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,572</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,386</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Cash and Cash Equivalents - End of Year</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,014</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,572</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Supplemental Disclosure of Non-Cash Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Cash Payments for:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 34.2pt">Interest Paid on Deposits and Borrowed Funds</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">992</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">918</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Non-Cash Investing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in; padding-bottom: 2.5pt">Foreclosed Real Estate Acquired in Settlement of Loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">-</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">717</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">The accompanying notes are an integral part of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><A NAME="f8"></A>NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.95pt"><B>Note A - Summary of Significant Accounting Policies
-</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Nature of Operations</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Heritage Bank of St. Tammany (the
Bank) provides various financial services through its two branches in Slidell and Covington, Louisiana. The primary lending products
are single-family residential loans and construction loans. The primary deposit products are demand and savings accounts, and certificates
of deposit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 0.35pt"><U>Significant
Group Concentrations of Credit Risk</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 0.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 0.35pt">Most of the
Bank's activities are with customers located within St. Tammany Parish, Louisiana. The types of securities that the Bank invests
in are included in Note C. The types of lending that the Bank engages in are included in Note D. The Bank does not have any significant
concentrations to any one industry or customer. Real estate loans related to residential properties represented 85% and 78% of
the total loan portfolio at December 31, 2016 and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: 0.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Fair Value of Financial Instruments</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Fair values of financial instruments
are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of
significant judgment. Changes in assumptions or in market conditions could significantly affect the estimate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Cash and Cash Equivalents</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">For purposes of the statement of
cash flows, cash and cash equivalents, are defined as all highly liquid debt instruments, excluding securities, with original maturities
at purchase of three months or less.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Securities</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Securities are classified in three
categories at the time of purchase and accounted for as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">Securities that the Bank has the
positive intent and ability to hold to maturity are classified as held to maturity and reported at cost, adjusted for amortization
of premiums and accretion of discounts which are recognized in interest income using the interest method.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">Securities that are bought and held
by the Bank primarily for the purpose of selling them in the near future are classified as trading securities and reported at fair
value. Unrealized gains and losses are included in earnings. The Bank had no securities classified as trading as of December 31,
2016 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">Securities classified as available
for sale are those securities that the Bank intends to hold for an indefinite period of time but not necessarily to maturity. Any
decision to sell a security classified as available for sale would be based on various factors including changes in market interest
rates, liquidity needs, changes in yields or alternative investments, and for other reasons. They are reported at fair value. Amortization
of premiums and accretion of discounts are recognized in interest income using the interest method. Unrealized gains and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">losses, net of income tax, are excluded
from earnings and reported as a separate component of equity until realized. Gains and losses on the sale of securities available
for sale are determined using the specific identification method.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Declines in the fair value of individual
held to maturity and available for sale securities below their cost that are other-than-temporary result in write-downs of the
individual securities to their fair value. The related write-downs are included in earnings as realized losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">On a quarterly basis (and more frequently
when economic or market conditions warrant), management evaluates the investment securities portfolio on an individual security
basis for other-than- temporary impairment (OTTI). If a security is in a loss position, management will determine if OTTI exists
and will consider the following. First, if it is probable that the issuer of the security will be unable to pay all amounts due
according to the contractual terms of the debt security, OTTI will be recognized. Second, if management intends to sell the security
and does not expect to recover the loss before the anticipated sale date, OTTI will be recognized. In both instances, OTTI will
be recognized for the affected security equal to the difference between the fair value and amortized cost through a charge to earnings.
Third, if a security does not meet either of the criteria above and is both in a loss position for greater than one year and at
a current loss of 10% or more, management will evaluate its ability and intent to retain its investment for a period of time sufficient
to allow for any anticipated recovery in fair value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Federal Home Loan Bank of Dallas
(FHLB) Stock</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">FHLB stock is redeemable at par
value at the discretion of the FHLB and is used to collateralize FHLB advances. The stock is carried at cost which approximates
fair value. The Bank is a member of the FHLB System which requires the Bank to purchase and maintain stock in the FHLB. The requirement
is generally 0.04% of total assets at the most recent December 31 plus 4.10% of outstanding FHLB advances. The Bank was in compliance
with these requirements at December 31, 2016 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Loans Receivable</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank grants land, residential,
commercial real estate, and consumer loans to customers. A substantial portion of the loan portfolio is represented by real estate
loans primarily in St. Tammany Parish. The ability of the Bank's debtors to honor their contracts is dependent upon the real estate
and general economic conditions in this area.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Loans that management has the intent
and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal
balances adjusted for charge-offs, the allowance for loan losses, and any deferred loan fees or costs on originated loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">For loans amortized at cost, interest
income is accrued based on the unpaid principal balance. Loan origination fees are deferred and amortized as a level yield adjustment
over the respective term of the loan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The accrual of interest on the loans
is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Loans
are typically charged off not later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases,
loans are placed</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">on nonaccrual or charged off at
an earlier date if collection of principal or interest is considered doubtful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">All interest accrued but not collected
for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted
for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when
all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Allowance for Loan Losses</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The allowance for loan losses is
established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged
against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any,
are credited to the allowance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The allowance for loan losses is
evaluated on a regular basis by management and is based upon management's periodic review of the collectability of the loans in
light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's
ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently
subjective as it requires estimates that are susceptible to significant revision as more information becomes available.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The allowance consists of allocated
and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified
as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the
impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on
historical charge-off experience. Other adjustments may be made to the allowance for pools of loans after an assessment of internal
and external influence on credit quality that are not fully reflected in the historical loss or risk rating data.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">A loan is considered impaired when,
based upon current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal
and 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 are considered on a case by case basis, taking
into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons
for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan's
effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Mortgage Servicing Rights</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U STYLE="text-decoration: none">&nbsp;</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Mortgage servicing rights are recognized
separately when rights are acquired through the sale or servicing of financial assets. Under authorization guidance of FASB ASC
860-50, servicing rights resulting from the sale of loans originated by the Bank are initially measured at fair value at the date</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">of transfer. The Bank subsequently
measures each class of servicing asset using the amortization method. Under the amortization method, servicing rights are amortized
in proportion to and over the period of estimated net servicing income. The amortized assets are assessed for impairment or increased
obligation based on fair value at each reporting date. Servicing fee income is recorded for fees earned for servicing loans. The
fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when
earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Foreclosed Real Estate</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U STYLE="text-decoration: none">&nbsp;</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Foreclosed real estate properties
acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated costs
to sell at the date of foreclosure. Loan losses arising from the acquisition of these properties are charged against the allowance
for loan losses. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower
of carrying amount or fair value less estimated costs to sell. Costs relating to development and improvement of property are capitalized,
whereas costs relating to holding property are expensed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Premises and Equipment</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U STYLE="text-decoration: none">&nbsp;</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Premises and equipment are stated
at cost less accumulated depreciation. Depreciation is computed by the straight-line method (book purposes) or accelerated methods
(tax purposes) over the estimated useful lives of the assets. Land is carried at cost. The cost of assets retired or otherwise
disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal and the resulting
gains or losses are included in current operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Income Taxes</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U STYLE="text-decoration: none">&nbsp;</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Current income tax expense reflects
taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or
excess of deductions over revenues. The Bank determines deferred income taxes using the liability (or balance sheet) method. Under
this method, the net deferred tax asset or liability is based on the tax effects of the differences between book and tax bases
of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Deferred income tax expense results
from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than
not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely
than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related
appeals or litigation process, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and
subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon
settlement with the taxing authority that has full knowledge of all relevant information. The determination of whether or not a
tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available
at the reporting date and is subject to management's judgment. Deferred tax assets are reduced by a valuation allowance if, based
on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The income tax accounting guidance
related to accounting for uncertainty in income taxes sets out a consistent framework to determine the appropriate level of tax
reserves to maintain for uncertain tax positions. As of December 31, 2016 and 2015, management is not aware of any uncertain tax
positions that would have a material effect on the Bank's financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><U>Advertising Costs</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">Advertising costs are expensed as incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Compensated Absences</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Employees of the Bank are entitled
to paid vacation, paid sick days and personal days off, depending on length of service and other factors. It is impractical to
estimate the amount of compensation for future absences, and, accordingly, no liability has been recorded in the accompanying financial
statements. The Bank&rsquo;s policy is to recognize the costs of compensated absences when actually paid to employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Estimates</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The use of estimates in the preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Material estimates that are particularly
susceptible to significant change relate to the determination of the allowance for loan losses, valuation of foreclosed real estate,
and the valuation allowance for deferred tax assets. In connection with the determination of the allowance for loan losses and
valuation of foreclosed real estate, management obtains independent appraisals for significant properties. With regard to the valuation
allowance for deferred tax assets, management has developed a tax-planning strategy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">In the ordinary course of business,
the Bank enters into off-balance-sheet financial instruments consisting of commitments to extend credit, including unfunded commitments
under lines of credit. Such financial instruments are recorded in the financial statements when they are funded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Recent Accounting Pronouncements</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">In January 2016, the FASB issued
ASU No. 2016-01, <I>Financial Instruments - Overall (Subtopic 825- 10), Recognition and Measurement of Financial Assets and Financial
Liabilities.</I> The provisions of the update require equity investments to be measured at fair value with changes in fair value
recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair
values at cost minus impairment. The update also simplifies the impairment assessment of equity investments without readily determinable
fair values by requiring a qualitative assessment to identify impairment. It also eliminates the requirement to disclose the fair
value of financial instruments measured at amortized cost for entities that are not public business entities, and eliminates the
requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for
financial instruments measured at amortized cost on the balance sheet. ASU No. 2016-01 requires public business entities to use
the exit price notion when measuring the fair value of financial</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">instruments for disclosure purposes.
It also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value
of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability
at fair value in accordance with the fair value option for financial instruments. The update requires separate presentation of
financial assets and financial liabilities by category and form on the balance sheet or the accompanying notes to the financial
statements. In addition, the update clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax
asset related to available-for-sale securities in combination with the entity&rsquo;s other deferred tax assets. For public business
entities, the amendments in the update are effective for fiscal years beginning after December 15, 2017, including interim periods.
The adoption of this ASU is not expected to have a material impact on the Bank&rsquo;s financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">In February 2016, the FASB issued
ASU 2016-02, <I>Leases (Topic 842), Conforming Amendments Related to Leases</I>. This ASU amends the codification regarding leases
in order to increase transparency and comparability. The ASU requires companies to recognize lease assets and liabilities on the
statement of condition and disclose key information about leasing arrangements. A lessee would recognize a liability to make lease
payments and a right-of-use asset representing its right to use the leased asset for the lease term. For public business entities,
this ASU is effective for annual and interim periods beginning after December 15, 2018. The adoption of this ASU is not expected
to have a material effect on the Bank&rsquo;s financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">In June 2016, the FASB issued ASU
2016-13, <I>Financial Instruments &ndash; Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments</I>.
The amendments introduce an impairment model that is based on expected credit losses (&ldquo;ECL&rdquo;), rather than incurred
losses, to estimate credit losses on certain types of financial instruments (ex. loans and held to maturity securities), including
certain off-balance sheet financial instruments (ex. commitments to extend credit and standby letters of credit that are not unconditionally
cancellable). The ECL should consider historical information, current information, and reasonable and supportable forecasts, including
estimates of prepayments, over the contractual term. An entity must use judgment in determining the relevant information and estimation
methods that are appropriate in its circumstances. Financial instruments with similar risk characteristics may be grouped together
when estimating the ECL. The ASU also amends the current available for sale security impairment model for debt securities whereby
credit losses relating to available for sale debt securities should be recorded through an allowance for credit losses. For public
business entities, this ASU is effective for fiscal years beginning after December 31, 2019. The amendments will be applied through
a modified retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the
first reporting period in which the guidance is effective. The Bank is currently planning for the implementation of this accounting
standard. It is too early to assess the impact this guidance will have on the Bank&rsquo;s financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Reclassifications</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Certain reclassifications have been
made to the 2015 financial information in order to conform to the 2016 financial statement presentation. Such reclassifications
had no effect on previously reported net income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Subsequent Events</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">In preparing the financial statements,
the Bank has evaluated events and transactions for potential recognition or disclosure through March 8, 2017, the date the financial
statements were available to be issued.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.95pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.95pt"><B>Note B &ndash; Commitments and Contingencies -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank is a party to financial
instruments with off-balance-sheet risk to meet the financing needs of its customers. These financial instruments are commitments
to extend credit. The instruments contain various elements of credit and interest rate risk in excess of the amount recognized
in the balance sheets. The Bank's exposure to credit loss, if the other party to the financial instrument for commitments to extend
credit does not perform, is the contractual amount of those instruments. The Bank uses the same credit policies in making commitments
that it does for on-balance-sheet financial instruments. The Bank had loan commitments at December 31, 2016 of $955,000 at an average
fixed rate of 3.885%. The Bank had loan commitments at December 31, 2015 of $520,000 at an average rate of 4.788%. At December
31, 2016 and 2015, the Bank had unfunded commitments under home equity lines of credit of $1,837,000 and $1,278,000 at an effective
variable rate of 4.283% and 4.281%, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank maintained cash accounts
at various financial institutions during 2016 and 2015. The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage
under defined limits. At various times in 2016 and 2015, the Bank had funds on deposit at these institutions which were in excess
of the insured amount. Deposits at the FHLB are not subject to insurance coverage.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Commitments to extend credit are
agreements to lend to a customer if there is no violation of any contract conditions. Commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without
being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each
customer's credit request separately and determines and obtains the amount of collateral needed when credit is extended. Collateral
includes primarily real estate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank was a participant in the
FHLB's Mortgage Partnership Finance (MPF) program. Under the MPF program (discontinued July 31, 2008, for new loans but continues
for existing loans previously sold to FHLB), the Bank is assigned the primary responsibility for managing the credit risk on loans
sold to the FHLB. For managing this credit risk, the Bank receives a monthly credit enhancement fee from the FHLB. If realized
losses, as defined, are incurred on any loan sold to the FHLB, such loss would be absorbed through a credit enhancement (recourse
obligation) provided by the Bank. This recourse obligation to the FHLB amounted to $-0- and $30,000 at December 31, 2016 and 2015,
respectively. There have been no realized losses on any MPF related loans in 2016 and 2015. On December 30, 2016, the Bank re-purchased
the remaining loans in the MPF program.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank has established a federal
funds line of credit agreement with First National Bankers Bank (FNBB) that renews annually on June 30. In 2016 the line was renewed
at $3,000,000 until 2017. The interest rate would be set by FNBB on the day any borrowing occurs. There were no borrowings under
this agreement in either 2016 or 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note C - Investment Securities -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The amortized costs and estimated
fair values of securities at December 31 were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 92%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="14" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>December 31, 2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Amortized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Cost</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Gains</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Losses)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Available for Sale:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; text-indent: 12pt; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">7,126</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">87</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">(38</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">7,175</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Held to Maturity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 12pt; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">832</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">1</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(9</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">824</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 92%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="14" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>December 31, 2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Amortized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Cost</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Gains</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Losses)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Available for Sale:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; text-indent: 12pt; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">6,812</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">126</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">(42</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 10%; text-align: right; border-bottom: Black 2.5pt double">6,896</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Held to Maturity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 12pt; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">1,114</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">2</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">(14</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">1,102</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">There were no securities sold in
2016 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The amortized cost and fair value
of investment securities at December 31, 2016, by contractual maturity are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The
scheduled contractual maturities of securities available for sale and held to maturity at December 31, 2016, were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Amortized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Cost</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Available for Sale:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; text-indent: 12pt">Less than One Year</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">5</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">5</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 12pt">After One Year Through Five Years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 12pt">After Five Years Through Ten Years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,647</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,655</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 12pt">After Ten Years</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,464</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,505</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,126</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,175</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Held to Maturity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: 12pt">After Ten Years</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">832</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">824</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The following table reflects gross
unrealized losses, fair values, and length of time in a continued unrealized loss position for all securities with fair values
below amortized cost at December 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Less Than
    12 Months</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>12 Months
    or Longer</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Unrealized<BR>
    Loss</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Unrealized<BR>
    Loss</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Unrealized<BR>
    Loss</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Available for Sale:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 34%; text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">2,300</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">15</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">1,231</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">23</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">3,531</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">38</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Held to Maturity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">587</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">2</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">218</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">7</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">805</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">9</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Less Than
    12 Months</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>12 Months
    or Longer</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Unrealized<BR>
    Loss</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Unrealized
    <BR>
    Loss</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Unrealized
    <BR>
    Loss</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Available for Sale:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 34%; text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">2,784</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">24</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">800</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">18</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">3,584</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="width: 8%; text-align: right; border-bottom: Black 2.5pt double">42</TD><TD STYLE="width: 1%; text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Held to Maturity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: none; text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 2.5pt">Mortgage-Backed
    Securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">202</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">2</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">307</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">12</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">509</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">$</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">14</TD><TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Management evaluates securities
for OTTI as described in Note A. No declines at December 31, 2016 and 2015, were deemed to be other-than-temporary. The unrealized
losses on the securities available for sale generally result from changes in market interest rates and not credit quality. The
Bank does not intend to sell any such investments before recovery of their amortized cost bases, which may be at maturity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note D - Loans Receivable -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Loans receivable at December 31
are summarized as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Secured by one-to four family residential properties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; padding-left: 0.25in">Owner-occupied</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">46,353</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">43,034</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.25in">Non-owner-occupied</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,237</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,873</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Home Equity Lines of Credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,246</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,091</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Commercial (Nonresidential) Properties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,234</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,024</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,907</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,667</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,475</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,629</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,352</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Commercial Business</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">295</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Consumer Loans</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">285</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">297</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Total Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">76,661</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74,588</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Less:&nbsp;&nbsp;Net Deferred Loan Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(459</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(496</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.625in">Loans in Process</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(851</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,534</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.625in">Allowance for Loan Losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(692</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(592</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">74,659</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">71,966</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Discounts on loans purchased amounted
to $352,000 and $417,000 as December 31, 2016 and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">At December 31, 2016, the Bank did
have not any loans where formal foreclosure procedures had been initiated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Under its current lending status
with the FHLB (Note J), the Bank may be required to deliver qualifying loans and securities to the FHLB in order to collateralize
any outstanding and future advances. The Bank did not deliver any available for sale securities to the FHLB at December 31, 2016
and 2015. The Bank delivered to the FHLB certain loans with unpaid principal balances of $-0- and $4,547,000 at December 31, 2016
and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><U>Loans - Real Estate and Consumer</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Commercial real estate loans are
secured by the subject property and are underwritten based upon standards set forth in policies approved by the Bank's Board of
Directors (Board). Such standards</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">include, among other factors, loan
to value limits, cash flow coverage, and general creditworthiness of the obligors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Residential real estate loans are
underwritten in accordance with policies approved by the Board, including repayment capacity and source, value of the underlying
property, credit history and stability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Construction loans to borrowers
are to finance the construction of owner occupied and leased properties. These loans are categorized as construction loans during
the construction period, later converting to commercial or residential real estate loans after the construction is complete and
amortization of the loan begins. Construction loan funds are disbursed periodically based on the percentage of construction completed.
Management carefully monitors these loans with on-site inspections.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank also makes loans on occasion
for the purchase of land for future development for either commercial or residential use by the borrower.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">Consumer loans are extended for deposit account collateralized
loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The tables below provide an allocation
and rollforward of the allowance for loan losses by loan type as of and for the years ended December 31, 2016 and 2015. The allocation
of a portion of the allowance to one category does not preclude its availability to absorb losses in other categories.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B><U>Allowance for Credit Losses and Recorded Investment in Loans
Receivable</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B><U>For the Year Ended December 31, 2016</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="18" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real Estate</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Land</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>One-to-Four<BR>
    Family</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multi-Family</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial<BR>
    Business</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 8pt">Allowance for Credit Losses:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 20%; text-align: left; padding-left: 0.125in; text-indent: -0.125in"><FONT STYLE="font-size: 8pt">Beginning Balance</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">48</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">85</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">447</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">9</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">3</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">592</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="font-size: 8pt">Charge-offs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(10</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(108</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(118</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="font-size: 8pt">Recoveries</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">38</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">38</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="font-size: 8pt">Provision</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(5</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">26</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">151</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(1</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">9</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">180</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Ending Balance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">43</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">101</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">528</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">8</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">3</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">9</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">692</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">Ending Balance:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Individually
    Evaluated for Impairment</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">2</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">36</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">38</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">Ending Balance:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Collectively
    Evaluated for Impairment</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">43</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">99</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">492</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">8</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">3</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">9</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">654</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 8pt">Loans Receivable:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Ending Balance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">7,234</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,907</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">59,836</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">3,475</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,629</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">285</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">295</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">76,661</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">Ending Balance:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Individually
    Evaluated for Impairment</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">17</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">501</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">518</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">Ending Balance:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Collectively
    Evaluated for Impairment</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">7,234</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">2,890</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">59,335</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">3,475</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">2,629</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">285</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">295</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">76,143</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">(CONTINUED)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B><U>Allowance for Credit Losses and Recorded Investment in Loans
Receivable</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B><U>For the Year Ended December 31, 2015</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="18" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real Estate</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Land</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>One-to-Four
    <BR> Family</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multi-Family</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial
    <BR> Business</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 8pt">Allowance for Credit Losses:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 20%; text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Beginning
    Balance</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">111</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">102</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">431</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">5</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">650</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="font-size: 8pt">Charge-offs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(21</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(58</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(79</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="font-size: 8pt">Recoveries</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="font-size: 8pt">Provision</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(63</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">4</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">73</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">4</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">2</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">20</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Ending Balance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">48</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">85</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">447</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">9</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">3</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">592</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">Ending Balance:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Individually Evaluated
    for Impairment</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">26</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">168</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">194</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">Ending Balance:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Collectively Evaluated
    for Impairment</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">48</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">59</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">279</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">9</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">3</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">398</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 8pt">Loans Receivable:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 16.2pt"><FONT STYLE="font-size: 8pt">Ending Balance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">8,024</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,667</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">56,998</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">4,250</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,352</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">297</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">74,588</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">Ending Balance:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Individually Evaluated
    for Impairment</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">253</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">979</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">1,232</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">Ending Balance:</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">Collectively Evaluated
    for Impairment</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">8,024</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">2,414</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">56,019</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">4,250</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">2,352</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">297</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double"><FONT STYLE="font-size: 8pt">73,356</FONT></TD><TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 13.5pt"><U>Credit quality indicators
as of December 31, 2016 and 2015</U>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 22.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify; text-indent: 0.85pt"><I>Pass</I>
- A pass asset is properly approved, documented, collateralized, and performing. It does not reflect an abnormal amount of risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-indent: 0.85pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify; text-indent: 0.85pt"><I>Special
mention</I> - A special mention asset has potential weaknesses that deserve management's close attention. If left uncorrected,
these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Bank's credit position
at some future date. Special mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant
adverse classification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-indent: 0.85pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify; text-indent: 0.85pt"><I>Substandard</I>
- An asset classified as substandard has a well-defined weakness or weaknesses. A substandard asset is inadequately protected by
the current net worth or paying capacity of the obligor</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify; text-indent: 0.85pt">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify; text-indent: 0.85pt">or pledged
collateral, if any. It is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are
not corrected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-indent: 0.85pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify; text-indent: 0.85pt"><I>Doubtful</I>
- Assets classified as doubtful have all the weaknesses inherent in those classified as substandard. In addition, these weaknesses
make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions,
and values.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify; text-indent: 0.85pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify"><I>Loss</I> - Assets classified
as loss are considered uncollectible or of such little value that the continuance of the loan or other asset on the books of the
Bank is not warranted. Some recovery of funds could be possible in the future, but the amount and probability of this recovery
are not determinable thus providing little justification for the assets to remain on the books.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 13.5pt; text-align: justify">The following tables represent the
Bank's credit exposure by credit quality indicator as of Decem- ber 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B><U>Credit Risk Profile by Internally Assigned Grade</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B><U>as of December 31, 2016</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="18" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real Estate</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Land</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>One-to-Four<BR>
    Family</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multi-Family</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial<BR>
    Business</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 20%"><FONT STYLE="font-size: 8pt">Pass</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">7,050</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">2,852</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">59,183</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">3,475</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">2,629</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">285</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">295</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">75,769</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Special Mention</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">Substandard</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">184</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">55</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">653</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">892</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">Doubtful</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">7,234</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,907</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">59,836</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">3,475</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,629</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">285</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">295</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">76,661</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B><U>Credit Risk Profile by Internally Assigned Grade</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B><U>as of December 31, 2015</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="18" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real Estate</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Land</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>One-to-Four<BR>
    Family</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multi-Family</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial<BR>
    Business</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 20%"><FONT STYLE="font-size: 8pt">Pass</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">7,827</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">2,416</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">56,043</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">4,250</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">2,352</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">297</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">73,185</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">Special Mention</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 8pt">Substandard</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">197</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">251</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">955</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,403</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 8pt">Doubtful</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">8,024</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,667</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">56,998</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">4,250</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">2,352</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">297</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">74,588</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The following tables are an aging
analysis of loans as of December 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><U>Aged Analysis of Past Due Loans Receivable</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><U>as of December 31, 2016</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Over 90</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Greater</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days Past</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>30-89</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Than</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Due and</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>90 Days</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Nonaccrual</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Loans</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Still</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Status</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Current</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Receivable</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Accruing</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 30%; text-indent: -0.1in; padding-left: 16.2pt">Commercial</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">141</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">141</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">7,093</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">7,234</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,870</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,907</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">501</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">57,747</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">59,836</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,475</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,475</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,629</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,629</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">280</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">285</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">295</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">295</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,754</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,754</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">518</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">74,389</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">76,661</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><U>Aged Analysis of Past Due Loans Receivable</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><U>as of December 31, 2015</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Over 90</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Greater</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days Past</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>30-89</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Than</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Due and</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>90 Days</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Nonaccrual</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Loans</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Still</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Status</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Current</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Receivable</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Accruing</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 30%; text-indent: -0.1in; padding-left: 16.2pt">Commercial</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">201</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">201</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">7,823</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">8,024</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">253</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,379</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,667</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,236</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,236</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">979</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,783</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,998</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,352</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,352</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">297</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">297</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,472</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,472</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,232</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">71,884</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">74,588</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">The following tables below present impaired loans disaggregated
by class as of and for the years ended December 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><U>Impaired Loans as of and</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><U>for the Year Ended December 31, 2016</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unpaid</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Interest</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Principal</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Related</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Income</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Allowance</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Recognized</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">With an allowance recorded:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; padding-left: 9pt">Land</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">17</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">20</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">18</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">501</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">686</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">518</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">706</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">38</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">556</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">With no allowance recorded:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Total Impaired Loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">501</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">686</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">518</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">706</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">38</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">556</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.2in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">(CONTINUED)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.2in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.2in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><U>Impaired Loans as of and</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><U>for the Year Ended December 31, 2015</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">(Dollars in thousands)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unpaid</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Interest</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Principal</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Related</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Income</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Allowance</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Recognized</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">With an allowance recorded:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; padding-left: 9pt">Land</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">253</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">296</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">26</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">232</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">979</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,263</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">168</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,034</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,232</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,559</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">194</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,266</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">With no allowance recorded:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Total Impaired Loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real Estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Land</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">253</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">296</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">232</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">979</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,263</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">168</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,034</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Multi-family</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Consumer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Business</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,232</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,559</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">194</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,266</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.2in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The tables below present modifications
disaggregated by class for the years ended December 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">None of the 2016 troubled debt restructurings
defaulted subsequent to the modification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="5" NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt"><B><U>Modifications as
    of December 31, 2016:</U></B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Pre-Modification</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Post-Modification</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Number</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Outstanding</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Outstanding</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>of</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Contracts</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 49%; font-weight: bold; text-decoration: underline; text-align: left">Troubled Debt Restructuring</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Residential - Modified Amortization</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: center">4</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">441</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">290</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">None of the 2015 troubled debt restructurings defaulted
subsequent to the modification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="5" NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt"><B><U>Modifications as
    of December 31, 2015:</U></B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Pre-Modification</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Post-Modification</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Number</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Outstanding</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Outstanding</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>of</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Recorded</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Contracts</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Investment</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left">Troubled Debt Restructuring</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 49%; text-align: left">Land - Interest Rate</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 14%; text-align: center">2</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">554</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">181</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Residential - Modified Amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: center">4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">458</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">294</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: center">6</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,012</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">475</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank's troubled debt restructurings
are generally due to a modification of terms allowing the customer to make interest-only payments for an amount of time, an extension
of the loan term, and/or a reduction in interest rate to obtain a lower payment for the customer. The Bank is not committed to
lend additional funds to debtors whose loans have been modified.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note E - Accrued Interest Receivable -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">Accrued interest receivable at December 31 is summarized
as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left">Securities Available for Sale</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">13</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">5</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Securities Held to Maturity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Interest Bearing Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loans Receivable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">295</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">294</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">318</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">319</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.8pt"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note F - Servicing -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.8pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">In 2016 and 2015, the Bank recognized
a gain of $111,000 and $85,000, respectively, on loans sold to the Federal Home Loan Mortgage Corporation under their seller/servicer
program; gross proceeds were $6,752,000 and $5,037,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Mortgage loans serviced for others
are not included in the accompanying balance sheets. The risks inherent in mortgage servicing assets relate primarily to changes
in prepayments that result from shifts in mortgage interest rates. The unpaid principal balances of mortgage loans serviced for
others were $41,908,000 and $39,386,000 at December 31, 2016 and 2015, respectively. In connection with the foregoing mortgage
loans serviced, custodial escrow balances (net) in the amount of $1,640,000 and $433,000 at December 31, 2016 and 2015, respectively,
were maintained in non-interest bearing accounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 66%; text-align: left">Beginning Balance</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">282</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">262</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Additions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(34</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(45</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">Ending Balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">325</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">282</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note G - Premises and Equipment -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">Major classes of premises and equipment at December 31
are summarized as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Estimated</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Life</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 54%">Land</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 15%; text-align: center">-</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">351</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">351</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Buildings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">25 - 39 Years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,288</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,288</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Furniture and Fixtures</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 1pt">3 - 10 Years</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">666</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">658</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,305</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,297</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less Accumulated Depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,589</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,405</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,716</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,892</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The provision for depreciation charged
to operating expenses was $184,000 and $193,000 for the years ended December 31, 2016 and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note H - Leases &ndash;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank leases a portion of its
Covington and Slidell buildings to third parties under operating leases. These leases contain renewal options. Rental income under
these leases amounted to $50,000 and $52,000 in 2016 and 2015, respectively. At December 31, 2016, the remaining future minimum
receipts under these leases are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 82%; text-align: left; padding-left: 0.125in">2017</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">70</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in">2018</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.125in">2019</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">137</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note I - Deposits -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The aggregate amount of certificates
of deposit with a minimum denomination of greater than $250,000 or more was approximately $4,262,000 and $3,392,000 at December
31, 2016 and 2015, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">At December 31, 2016, the scheduled maturities of certificates
of deposit were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 82%; text-indent: 12pt">3 Months or Less</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">7,460</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: 12pt">3 Months through 12 Months</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,226</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 12pt">1 Year through 3 years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,509</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.125in">Over 3 Years</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,814</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">51,009</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note J - Borrowed Funds -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Borrowed funds at December 31, 2016
and 2015 in the amounts of $13,274,000 and $12,656,000, consisted of advances from the FHLB. These advances were at fixed interest
rates at December 31, 2016, ranging from 0.750% to 2.136%. At December 31, 2016, the scheduled maturities of the advances were
as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 82%; text-align: left; padding-left: 9pt">2017</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">7,050</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">2018</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,950</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">2019</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">980</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">2020</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,577</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt; text-align: left">Thereafter</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,717</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,274</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">At December 31, 2016, the Bank had the capacity to borrow an additional
$26,793,000 from the FHLB.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note K - Income Taxes -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">The provision for income tax for the years ended December
31 is summarized as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left">Current Tax Provisions</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">63</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">79</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Deferred Tax Expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">47</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(80</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Provision (Benefit)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">110</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The provision for income taxes differs
from that computed by applying the federal statutory rate to income before income tax expense primarily due to tax-exempt interest
income and certain non-deductible expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The provision for federal income
taxes differs from that computed by applying federal statutory rates to income before federal income tax expense, as indicated
in the following analysis:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left">Federal Statutory Income Tax at 34%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">91</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">94</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Tax Exempt Income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(18</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Other-Net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">37</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(76</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">110</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">At December 31, the net deferred
tax asset included in prepaid expenses and other assets in the balance sheet consisted of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Deferred Tax Assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left; padding-left: 9pt">Allowance for Loan Losses</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">235</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">201</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net Operating Loss (NOL) carryforward</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Deferred Loan Fees and Costs, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Nondeductible Writedowns on Foreclosed Real Estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">177</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">163</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">454</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">506</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Deferred Tax Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Tax over Book Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">276</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Dividends on FHLB Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Mortgage Servicing Rights</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">110</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">96</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net Unrealized Gains on Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">441</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">464</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Valuation Allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Net Deferred Tax Asset</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">42</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank's tax filings for the years
ended December 31, 2013 through the current date are open to audit under statutes of limitations by the Internal Revenue Service.
Management believes that its tax positions would be sustained if audited. There were no penalties or interest incurred in 2016
or 2015 related to the Bank's tax positions but, if incurred, they would be classified in the statement of income as other expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note L &ndash; Employee Benefit Plans -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank has established a 401(k)
plan that covers substantially all employees. Contributions to the plan by the Bank are discretionary. In general, any such contribution
by the Bank is allocated to each participant in proportion to their compensation for the plan year while a participant. The Bank
contributed $42,000 and $38,000 to the plan in 2016 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank has established a deferred
compensation agreement with certain directors, past directors and officers. The expense incurred for these agreements for the years
ended December 31, 2016 and 2015 amounted to approximately $77,000 and $90,000, respectively. The accrued liability for these agreements
at December 31, 2016 and 2015 amounted to approximately $632,000 and $555,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank has entered into an arrangement
to provide for the cost of split-dollar life insurance policies on the lives of the certain of the Bank's current and former members
of the Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note M - Related Party Transaction -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Certain officers and directors were
deposit and loan customers of the Bank in the ordinary course of business. Deposits and loans of these officers and directors at
December 31 were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; padding-bottom: 2.5pt">Deposits</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 2.5pt double; text-align: right">1,965</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 2.5pt double; text-align: right">760</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline">Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Beginning Loan Balance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,689</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">293</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">New Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,453</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Repayments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(404</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(57</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">Ending Loan Balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,375</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,689</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note N - Legal Contingencies -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Various legal claims arise from
time to time in the normal course of business which, in the opinion of management, will have no material effect on the Bank's financial
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note O - Regulatory Matters -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank is subject to various regulatory
capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (OCC). Failure
to meet minimum regulatory capital requirements can initiate certain mandatory, and possible additional discretionary actions by
regulators that if undertaken, could have a direct material effect on the Bank&rsquo;s financial statements. Under the capital
adequacy guidelines and the regulatory framework for prompt corrective action, the</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Bank must meet specific capital
guidelines involving quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank&rsquo;s capital amounts and classifications are also subject to qualitative judgments by regulators
about components, risk weightings and other factors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Quantitative measures established
by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios as of January 1, 2015, of Total
capital, Tier 1 capital, Common Equity Tier 1 capital to risk-weighted assets (as defined in the regulations), and Leverage capital,
which is Tier 1 capital to adjusted average total assets (as defined). Management believes, as of December 31, 2016 and 2015, that
the Bank met all the capital adequacy requirements to which it is subject.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 27pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">As of December 31, 2016 and 2015,
the most recent notifications from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective
action. To remain categorized as well capitalized, the Bank will have minimum Total capital, Common Equity Tier 1 capital, Tier
1 capital and Leveraged capital ratios as disclosed in the table below. There are no conditions or events since the most recent
notification that management believes have changed the Bank&rsquo;s prompt corrective action category.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank&rsquo;s actual and required
capital amounts and ratios are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>To be Well</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Capitalized Under</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>For Capital</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Prompt Corrective</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Actual</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Adequacy
    Purposes</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Action Provisions</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Ratio</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Ratio %</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Ratio</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>(dollars in thousands)</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify">December 31, 2016:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total Capital to Risk Weighted Assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,096</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">18.59</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,344</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">8.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,430</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">10.00</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 Capital to Risk Weighted Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,418</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,258</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,344</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.00</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Common Equity Tier 1 to Risk Weighted Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,418</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,443</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.50</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,529</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.50</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 Leverage Capital to Adjusted Total Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,418</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.79</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,849</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,811</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.00</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: center">(CONTINUED)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>To be Well</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Capitalized Under</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>For Capital</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Prompt Corrective</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Actual</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Adequacy
    Purposes</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Action Provisions</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Ratio</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Ratio %</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Ratio</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>(dollars in thousands)</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify">December 31, 2015:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total Capital to Risk Weighted Assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">9,821</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">18.16</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,326</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">8.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,407</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">10.00</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 Capital to Risk Weighted Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,229</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.07</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,244</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,326</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.00</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Common Equity Tier 1 to Risk Weighted Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,229</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.07</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,433</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.50</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,515</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.50</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 Leverage Capital to Adjusted Total Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,229</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.82</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,759</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,699</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.00</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Note P - Accumulated Other Comprehensive Income (Loss) -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">The following is a summary of the changes in the balances
of each component of accumulated other comprehensive income (loss) for the years ended December 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Unrealized Gains (Losses) on Securities Available for Sale:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Balance at Beginning of Year</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">55</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">94</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other Comprehensive Income (Loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Before Reclassifications - Net of Tax</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(24</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(39</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Reclassification Adjustments for (Gains) Losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Realized - Net of Tax</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other Comprehensive Income (Loss)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(24</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(39</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Balance at End of Year</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">31</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">55</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: -0.25in"><B>Note Q
- Fair Value of Financial Statements -</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Fair Value Disclosures</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Bank groups its financial assets
and liabilities measured at fair value in three levels. Fair value should be based on the assumptions market participants would
use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those
assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the
use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Level 1 - Includes the most reliable sources,
and includes quoted prices in active markets for identical assets or liabilities.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Level 2 - Includes observable inputs.
Observable inputs include inputs other than quoted prices that are observable for the asset or liability (for example, interest
rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default
rates) as well as inputs that are derived principally from or corroborated by observable market data by correlation or other means
(market-corroborated inputs).</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Level 3 - Includes unobservable inputs
and should be used only when observable inputs are unavailable.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Recurring Basis</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Fair values of investment securities
available for sale and held to maturity were primarily measured using information from a third-party pricing service. This pricing
service provides information by utilizing evaluated pricing models supported with market data information. Standard inputs include
benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data
from market research publications.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The following tables present the
balance of assets and liabilities measured on a recurring basis as of December 31, 2016 and 2015. The Bank did not record any liabilities
at fair value for which measurement of the fair value was made on a recurring basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Quoted Prices</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>in Active</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Markets for</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Other</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Identical</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Observable</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unobservable</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Assets</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Description</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 1)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 2)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 3)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: left; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">7,175</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">7,175</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify">December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Mortgage-Backed Securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,896</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,896</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Nonrecurring Basis</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Company has segregated all financial
assets and liabilities that are measured at fair value on a nonrecurring basis into the most appropriate level within the fair
value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The Company did
not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The fair value of the impaired loans
is measured at the fair value of the collateral for collateral-dependent loans. Impaired loans are Level 2 assets measured using
appraisals from external parties</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">of the collateral less any prior
liens. Repossessed assets are initially recorded at fair value less estimated costs to sell. The fair value of repossessed assets
is based on property appraisals and an analysis of similar properties available. As such, the Bank records repossessed assets as
Level 2.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Quoted Prices</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>in Active</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Markets for</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Other</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Identical</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Observable</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unobservable</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Assets</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 2)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 3)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; text-align: left; padding-left: 9pt">Impaired Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">480</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">480</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Repossessed Assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">93</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">93</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 0.25in">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">573</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">573</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Quoted Prices</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>in Active</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Markets for</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Other</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Identical</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Observable</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unobservable</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Assets</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 2)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 3)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify">December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 40%; text-align: left; padding-left: 9pt">Impaired Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,038</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,038</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Repossessed Assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">756</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">756</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 0.25in">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,794</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,794</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><U>Fair values of financial instruments</U>
- In cases where quoted market prices of financial instruments are not available, fair values are based on estimates using present
value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. The fair values of
certain financial instruments and all non-financial instruments are not required to be disclosed. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used by
the Company in estimating fair values of financial instruments:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">Cash, due from banks, federal funds
sold and interest-earning deposits with banks - The carrying amount is a reasonable estimate of fair value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">Securities - Fair value is based
on quoted market price, if available. If a quoted market price is not</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">available, fair value is estimated
using quoted market prices for similar securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">Loans Receivable - Fair value is
estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">Mortgage Servicing Rights - Fair
value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, based on a valuation
model that calculates the present value of estimated future net servicing income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">Cash Value of Life Insurance - The
carrying amount approximates its fair value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">Deposits - The fair value of demand,
savings, NOW and money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity
time deposits is estimated using the rates currently offered for deposits of similar remaining maturities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify">Borrowings - The carrying amounts
of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings maturing within ninety days
approximate their fair values. Fair values of other borrowings are estimated using discounted cash flow analyses based on current
incremental borrowing rates for similar types of borrowing arrangements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify; text-indent: -31.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify; text-indent: 0pt">Commitments to
extend credit and standby letters of credit - The fair values of commitments to extend credit and standby letters of credit do
not differ significantly from the commitment amount and are therefore omitted from this disclosure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 31.5pt; text-align: justify; text-indent: -31.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The carrying amounts and estimated
fair values of the Company&rsquo;s financial instruments at December&nbsp;31, are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Quoted Prices</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>in Active</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Markets for</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Other</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6" NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Identical</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Observable</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unobservable</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Carrying</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Assets</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD NOWRAP><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>December 31, 2016</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 1)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 2)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 3)</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Financial Assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Cash, Short-Term Investments and Federal Funds Sold</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,014</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,014</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,014</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Securities-Available for Sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Securities-Held to Maturity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">832</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">824</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">824</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Other Equity Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">673</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">673</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">673</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Cash Value of Life Insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Loans-Net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">74,659</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">74,866</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">74,866</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">93,354</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">93,553</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,014</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">75,539</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Financial Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">74,251</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,732</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,732</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Borrowed Funds</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,274</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,209</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,209</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,525</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">88,941</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,209</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">75,732</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt"><A HREF="#TOC">TABLE OF CONTENTS</A></P></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>(Dollars in thousands)</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Quoted Prices</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>in Active</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Markets for</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Other</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="6"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Identical</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Observable</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unobservable</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Carrying</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Assets</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>December 31, 2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 2)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 3)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Financial Assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Cash, Short-Term Investments &nbsp;and Federal Funds Sold</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,572</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,572</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,572</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Securities-Available for Sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,896</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,896</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,896</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Securities-Held to Maturity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,114</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Other Equity Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">460</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Cash Value of Life Insurance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,949</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,949</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,949</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Loans-Net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">71,966</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">73,799</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">73,799</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">90,957</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">92,778</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,572</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,947</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">74,259</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Financial Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">73,579</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,006</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,006</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Borrowed Funds</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,656</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">86,235</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,517</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,511</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">75,006</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: -0.25in"><B>Note R
&ndash; Plan of Conversion and Change in Corporate Form &ndash;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">On March 7, 2017, the Board of
Directors of the Bank adopted a plan of conversion (Plan). The Plan is subject to the approval of the Office of the Comptroller
of the Currency and the Board of Governors of the Federal Reserve System and must be approved by the affirmative vote of at least
a majority of the total votes eligible to be cast by the voting members of the Bank at a special meeting. The Plan sets forth that
the Bank proposes to convert into a stock savings bank structure with the establishment of a stock holding company (Heritage NOLA
Bancorp, Inc.), as parent of the Bank. The Bank will convert to the stock form of ownership, followed by the issuance of all of
the Bank&rsquo;s outstanding stock to Heritage NOLA Bancorp, Inc. Pursuant to the Plan, the total offering value and number of
shares of common stock to be offered and sold will be determined based upon an independent appraiser&rsquo;s valuation. The stock
will be priced at $10.00 per share. In addition, the Bank&rsquo;s Board of Directors will adopt an employee stock ownership plan
(ESOP) which will subscribe for up to 8% of the common stock sold in the offering. Heritage NOLA Bancorp, Inc. is organized as
a corporation under the laws of the State of Louisiana and will own all of the outstanding common stock of the Bank upon completion
of the conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">The costs of issuing the common
stock will be deferred and deducted from the sales proceeds of the offering. If the conversion is unsuccessful, all deferred costs
will be charged to operations. Deferred conversion costs totaled approximately $185,000 at February 28, 2017. The Bank had incurred
no deferred conversion costs as of December&nbsp;31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">At the completion of the conversion
to stock form, the Bank will establish a liquidation account in the amount of retained earnings contained in the final prospectus.
The liquidation account will be</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>HERITAGE BANK OF ST. TAMMANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">NOTES TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">DECEMBER 31, 2016 AND 2015</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">maintained for the benefits of
eligible account holders who maintain deposit accounts in the Bank after conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify">The conversion will be accounted
for as a change in corporate form with the historic basis of the Bank&rsquo;s assets, liabilities and equity unchanged as a result.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>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 Heritage NOLA Bancorp or Heritage Bank of St. Tammany. This prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any
jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is
not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither
the delivery of this prospectus nor any sale hereunder shall under any circumstances create any implication that there has been
no change in the affairs of Heritage NOLA Bancorp or Heritage Bank of St. Tammany since any of the dates as of which information
is furnished herein or since the date hereof.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Up to 1,437,500 shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Subject to Increase to up to 1,653,125
shares)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>Heritage
NOLA Bancorp Logo</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Proposed Holding Company for</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Heritage Bank of St. Tammany)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>COMMON
STOCK</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>par value $0.01 per share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>PROSPECTUS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B></B></FONT>&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="CENTER" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 30%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><FONT STYLE="font-size: 12pt">FIG
Partners, LLC</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>_________________, 2017</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>These securities are not deposits or
accounts and are not federally insured or guaranteed.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Until [expiration date], 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.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 179 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;&nbsp;</B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>PART II:&#9;INFORMATION NOT REQUIRED IN PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 13.</B></TD><TD STYLE="text-align: justify"><B>Other Expenses of Issuance and Distribution</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 72%; text-align: justify">Registrant&rsquo;s Legal Fees and Expenses</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">425,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Registrant&rsquo;s Accounting Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">110,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Marketing Agent Fees and expenses (1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">370,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Records Management Fees and Expenses (1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Appraisal Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Printing, Postage, Mailing and EDGAR Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Filing Fees (Blue Sky, FINRA and SEC)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Transfer Agent Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">Business Plan Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">37,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: center"><FONT STYLE="font-size: 10pt">*</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,200,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: left">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Estimated</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(1)</TD><TD STYLE="text-align: left">Heritage NOLA Bancorp, Inc. has retained FIG Partners, LLC to assist in the sale of common stock on
a best efforts basis.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in"><B>Item 14.</B></TD><TD STYLE="text-align: left"><B>Indemnification of Directors and Officers</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">Articles 10 and 11 of the
Articles of Incorporation of Heritage NOLA Bancorp, Inc. (the &ldquo;Corporation&rdquo;) set forth circumstances under which directors,
officers, employees and agents of the Corporation may be insured or indemnified against liability which they incur in their capacities
as such. References to the MGCL refer to Maryland General Corporation Law:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>ARTICLE 10. Indemnification,
etc. of Directors and Officers.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>A. Indemnification. </B>The
Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request
any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement
of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent
as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B
of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>B. Procedure. </B>If a
claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has
been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period
shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting
or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both
(i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of
conduct has not been met and (ii) a written affirmation by the indemnitee of his good faith belief that the standard of conduct
necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall
be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking
the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable
standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to 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</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">standard of conduct or, in the case of such a
suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification
or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses,
under this Article 10 or otherwise shall be on the Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>C. Non-Exclusivity. </B>The
rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any other right
that any Person may have or hereafter acquire under any statute, these Articles, the Corporation&rsquo;s Bylaws, any agreement,
any vote of stockholders or the Board of Directors, or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>D. Insurance. </B>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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>E. Miscellaneous. </B>The
Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee to the
extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the amounts
otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and
B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director
or officer and shall inure to the benefit of the indemnitee&rsquo;s heirs, executors and administrators.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>F. Limitations Imposed
by Federal Law</B>. Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made by the
Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation,
Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">Any repeal or modification
of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director or officer
or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Article 10
is in force.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in"><B>ARTICLE 11. Limitation
of Liability. </B>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&rsquo;s action, or failure to act, was the result of active and deliberate dishonesty and was material
to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended
to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of
the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 15.</B></TD><TD STYLE="text-align: justify"><B>Recent Sales of Unregistered Securities</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Not Applicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 16.</B></TD><TD STYLE="text-align: justify"><B>Exhibits and Financial Statement Schedules:</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The exhibits and financial
statement schedules filed as part of this registration statement are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><B>(a)</B></TD><TD STYLE="text-align: justify"><B>List of Exhibits</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">1.1</TD><TD STYLE="text-align: justify">Engagement Letter between Heritage Bank of St. Tammany
and FIG Partners, LLC</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">1.2</TD><TD STYLE="text-align: justify">Form of Agency Agreement between Heritage NOLA Bancorp,
Inc., Heritage Bank of St. Tammany and FIG Partners, LLC*</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">2</TD><TD STYLE="text-align: justify">Plan of Conversion of Heritage Bank of St. Tammany</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">3.1</TD><TD STYLE="text-align: justify">Articles of Incorporation of Heritage NOLA Bancorp, Inc.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">3.2</TD><TD STYLE="text-align: justify">Bylaws of Heritage NOLA Bancorp, Inc.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">4</TD><TD STYLE="text-align: justify">Form of Common Stock Certificate of Heritage NOLA Bancorp,
Inc.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">5</TD><TD STYLE="text-align: justify">Opinion of Luse Gorman, PC regarding the legality of the
securities being registered.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">8.1</TD><TD STYLE="text-align: justify">Federal Tax Opinion of Luse Gorman, PC</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">8.2</TD><TD STYLE="text-align: justify">State Tax Opinion of Hannis T. Bourgeois, LLP*</TD>
</TR></TABLE>


<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.1</TD><TD STYLE="text-align: justify">Employment Agreement with W. David Crumhorn.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.2</TD><TD STYLE="text-align: justify">Employment Agreement with Dana Whitaker</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.3</TD><TD STYLE="text-align: justify">Employment Agreement with Lisa Hughes</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.4</TD><TD STYLE="text-align: justify">Salary Continuation Agreement for W. David Crumhorn</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.5</TD><TD STYLE="text-align: justify">Supplemental Retirement Plan for W. David Crumhorn</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.6</TD><TD STYLE="text-align: justify">Split Dollar Life Insurance Agreement with W. David Crumhorn</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.7</TD><TD STYLE="text-align: justify">Director Supplemental Retirement Plan for W. David Crumhorn</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.8</TD><TD STYLE="text-align: justify">Form of Director Supplemental Retirement Plan</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.9</TD><TD STYLE="text-align: justify">Form of Split Dollar Insurance Plan for Directors</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">21</TD><TD STYLE="text-align: justify">Subsidiaries of Heritage NOLA Bancorp, Inc.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">23.1</TD><TD STYLE="text-align: justify">Consent of Luse Gorman, PC (contained in Opinions included
as Exhibits&nbsp;5 and 8.1).</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">23.2</TD><TD STYLE="text-align: justify">Consent of RP Financial, LC.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">23.3</TD><TD STYLE="text-align: justify">Consent of Hannis T. Bourgeois, LLP</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">24</TD><TD STYLE="text-align: justify">Power of Attorney (set forth on signature page).</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.1</TD><TD STYLE="text-align: justify">Appraisal Agreement between Heritage Bank of St. Tammany
and RP Financial, LC.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.2</TD><TD STYLE="text-align: justify">Letter of RP Financial, LC. with respect to Subscription
Rights.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.3</TD><TD STYLE="text-align: justify">Appraisal Report of RP Financial, LC.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.4</TD><TD STYLE="text-align: justify">Marketing Materials</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.5</TD><TD STYLE="text-align: justify">Stock Order and Certification Form.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">*</TD><TD STYLE="text-align: justify">To be filed by amendment.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -36.3pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><B>(b)</B></TD><TD STYLE="text-align: justify"><B>Financial Statement Schedules</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">No financial statement
schedules are filed because the required information is not applicable or is included in the consolidated financial statements
or related notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 17.</B></TD><TD STYLE="text-align: justify"><B>Undertakings</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The undersigned Registrant
hereby undertakes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">(1)&nbsp;&nbsp;&nbsp;To
file, during any period in which it offers or sales are being made, a post-effective amendment to this registration statement:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: left; text-indent: 0.25in"> (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: left; text-indent: 0.25in"> (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</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: left">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 20 percent change in the maximum aggregate offering
price set forth in the &ldquo;Calculation of Registration Fee&rdquo; table in the effective registration statement;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: left; text-indent: 0.25in"> (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.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">(2)&nbsp;&nbsp;&nbsp;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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">(3)&nbsp;&nbsp;&nbsp;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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">(4)&nbsp;&nbsp;&nbsp;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:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">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:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: left; text-indent: 0.25in"> (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (&sect;230.424 of this chapter);</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: left; text-indent: 0.25in"> (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;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: left; text-indent: 0.25in"> (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</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: left; text-indent: 0.25in"> (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">(5)&nbsp;&nbsp;&nbsp;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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">(6)&nbsp;&nbsp;&nbsp;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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">(7)&nbsp;&nbsp;&nbsp;The
undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each
purchaser.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.75in">(8)&nbsp;&nbsp;&nbsp;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</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">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 Covington, State of Louisiana on March 10, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in; text-align: justify"><FONT STYLE="text-transform: uppercase">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 10pt; text-transform: uppercase"><B>HERITAGE NOLA BANCORP, INC.</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 5%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 45%; text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">By:</FONT></TD>
    <TD STYLE="text-align: justify; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">/s/ W. David Crumhorn</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">W. David Crumhorn</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">President and Chief Executive Officer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">(Duly Authorized Representative)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>POWER OF ATTORNEY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">We, the undersigned directors
and officers of Heritage NOLA Bancorp, Inc. (the &ldquo;Company&rdquo;) hereby severally constitute and appoint W. David Crumhorn
as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said W.
David Crumhorn may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, 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 Company&rsquo;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 W. David Crumhorn shall do or cause to be done by
virtue thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 31%; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Signatures</B></FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD STYLE="vertical-align: top; width: 38%; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Title</B></FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 27%; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Date</B></FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-size: 10pt">/s/ W. David Crumhorn</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">President, Chief Executive Officer and </FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">March 10, 2017</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">W. David Crumhorn </FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Director (Principal Executive Officer)</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-size: 10pt">/s/ Lisa Hughes</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font-size: 10pt">Senior Vice President and Chief </FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">March 10, 2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font-size: 10pt">Lisa Hughes</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font-size: 10pt">Financial Officer (Principal Financial and Accounting Officer)</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-size: 10pt">/s/ W. Thomas Ballantine, Jr.</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">March 10, 2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font-size: 10pt">W. Thomas Ballantine, Jr.</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-size: 10pt">/s/ Salvatore A. Caruso, Jr.</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">March 10, 2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font-size: 10pt">Salvatore A. Caruso, Jr.</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: justify"><FONT STYLE="font-size: 10pt">/s/ Elizabeth M. Eustis</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">March 10, 2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font-size: 10pt">Elizabeth M. Eustis</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 31%; border-bottom: Black 1pt solid; padding-left: 1.5in; text-align: justify; text-indent: -1.5in"><FONT STYLE="font-size: 10pt">/s/ Jason S. Hunt</FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 38%; text-align: center"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 27%; text-align: center"><FONT STYLE="font-size: 10pt">March 10, 2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font-size: 10pt">Jason S. Hunt</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; padding-left: 1.5in; text-align: justify; text-indent: -1.5in"><FONT STYLE="font-size: 10pt">/s/ Julian J. Rodrigue, Jr. </FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">March 10, 2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; text-align: justify"><FONT STYLE="font-size: 10pt">Julian J. Rodrigue, Jr.</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>As filed with the Securities and Exchange
Commission on March 10, 2017</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">Registration No. 333-__________</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>EXHIBITS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>TO THE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>REGISTRATION STATEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>ON</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>FORM S-1</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Heritage NOLA Bancorp, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Covington, Louisiana</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>EXHIBIT INDEX</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">1.1</TD><TD STYLE="text-align: justify">Engagement Letter between Heritage Bank of St. Tammany
and FIG Partners, LLC</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">1.2</TD><TD STYLE="text-align: justify">Form of Agency Agreement between Heritage NOLA Bancorp,
Inc., Heritage Bank of St. Tammany and FIG Partners, LLC*</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">2</TD><TD STYLE="text-align: justify">Plan of Conversion of Heritage Bank of St. Tammany</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">3.1</TD><TD STYLE="text-align: justify">Articles of Incorporation of Heritage NOLA Bancorp, Inc.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">3.2</TD><TD STYLE="text-align: justify">Bylaws of Heritage NOLA Bancorp, Inc.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">4</TD><TD STYLE="text-align: justify">Form of Common Stock Certificate of Heritage NOLA Bancorp,
Inc.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">5</TD><TD STYLE="text-align: justify">Opinion of Luse Gorman, PC regarding the legality of the
securities being registered.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">8.1</TD><TD STYLE="text-align: justify">Federal Tax Opinion of Luse Gorman, PC</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">8.2</TD><TD STYLE="text-align: justify">State Tax Opinion of Hannis T. Bourgeois, LLP*</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.1</TD><TD STYLE="text-align: justify">Employment Agreement with W. David Crumhorn.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.2</TD><TD STYLE="text-align: justify">Employment Agreement with Dana Whitaker</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.3</TD><TD STYLE="text-align: justify">Employment Agreement with Lisa Hughes</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.4</TD><TD STYLE="text-align: justify">Salary Continuation Agreement for W. David Crumhorn</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.5</TD><TD STYLE="text-align: justify">Supplemental Retirement Plan for W. David Crumhorn</TD>
</TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.6</TD><TD STYLE="text-align: justify">Split Dollar Life Insurance Agreement with W. David Crumhorn</TD>
</TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.7</TD><TD STYLE="text-align: justify">Director Supplemental Retirement Plan for W. David Crumhorn</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.8</TD><TD STYLE="text-align: justify">Form of Director Supplemental Retirement Plan</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">10.9</TD><TD STYLE="text-align: justify">Form of Split Dollar Insurance Plan for Directors</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">21</TD><TD STYLE="text-align: justify">Subsidiaries of Heritage NOLA Bancorp, Inc.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">23.1</TD><TD STYLE="text-align: justify">Consent of Luse Gorman, PC (contained in Opinions included
as Exhibits&nbsp;5 and 8.1).</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">23.2</TD><TD STYLE="text-align: justify">Consent of RP Financial, LC.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">23.3</TD><TD STYLE="text-align: justify">Consent of Hannis T. Bourgeois, LLP</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">24</TD><TD STYLE="text-align: justify">Power of Attorney (set forth on signature page).</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.1</TD><TD STYLE="text-align: justify">Appraisal Agreement between Heritage Bank of St. Tammany
and RP Financial, LC.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.2</TD><TD STYLE="text-align: justify">Letter of RP Financial, LC. with respect to Subscription
Rights.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.3</TD><TD STYLE="text-align: justify">Appraisal Report of RP Financial, LC.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.4</TD><TD STYLE="text-align: justify">Marketing Materials</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">99.5</TD><TD STYLE="text-align: justify">Stock Order and Certification Form.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in; text-align: left">*</TD><TD STYLE="text-align: justify">To be filed by amendment.</TD>
</TR></TABLE>

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{"company-data": {"conformed-name": "Heritage NOLA Bancorp, Inc.", "cik": "0001700175", "irs-number": "000000000", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-216613", "film-number": "17682646"}, "business-address": {"street1": "205 NORTH COLUMBIA STREET", "city": "COVINGTON", "state": "LA", "zip": "70433", "phone": "985-892-4565"}, "mail-address": {"street1": "205 NORTH COLUMBIA STREET", "city": "COVINGTON", "state": "LA", "zip": "70433"}}
As filed with the Securities and Exchange
Commission on March 10, 2017
Registration No. 333-________
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
Heritage
NOLA Bancorp, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Maryland
6035
82-0688069
(State or Other Jurisdiction of
(Primary Standard Industrial
(I.R.S. Employer
Incorporation or Organization)
Classification Code Number)
Identification Number)
205 North Columbia Street
Covington, Louisiana 70433
(985) 892-4565
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of
Registrant's Principal Executive Offices)
Mr. W. David Crumhorn
President and Chief Executive Officer
205 North Columbia Street, Covington, Louisiana
(985) 892-4565
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of
Agent for Service)
Copies to:
Kip Weissman, Esq.
Steven Lanter, Esq.
Luse Gorman, PC
5335 Wisconsin Avenue, N.W., Suite 780
Washington, D.C. 20015
(202) 274-2000
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:
x
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, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Title
    of each class of
securities to be registered
Amount
    to be
registered
Proposed
    maximum
offering price per share
Proposed
    maximum
aggregate offering price
Amount
    of
registration fee
Common Stock, $0.01 par value per share
1,653,125 shares
$
10.00
$16,531,250 (1)
$
1,916
(1)
Estimated solely for the purpose of calculating the registration
fee.
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
PROSPECTUS
HERITAGE NOLA BANCORP, INC.
(Proposed Holding Company for Heritage
Bank of St. Tammany)
Up to 1,437,500 of Common Stock
(Subject to Increase to up to 1,653,125
shares)
Heritage NOLA Bancorp,
Inc., a Maryland corporation and the proposed holding company for Heritage Bank of St. Tammany, is offering shares of common stock
for sale at $10.00 per share in connection with the conversion of Heritage Bank of St. Tammany from the mutual to the stock form
of organization. There is currently no established market for our common stock. We expect that our common stock will be quoted
on the OTC Pink Marketplace (OTCPK) operated by OTC Markets Group upon conclusion of the stock offering. Following completion of
the conversion, if we meet the Nasdaq listing requirements, we will use our best efforts to seek approval to list the common stock
on the Nasdaq Capital Market. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups
Act of 2012.
We are offering up to
1,437,500 shares of common stock for sale at a price of $10.00 per share on a best efforts basis. We may sell up to 1,653,125 shares
of common stock because of demand for the shares of common stock or changes in market conditions, without resoliciting subscribers.
We must sell a minimum of 1,062,500 shares in order to complete the offering.
We are offering the shares
of common stock in a "subscription offering" to eligible depositors of Heritage Bank of St. Tammany. Shares of common
stock not purchased in the subscription offering may be offered for sale to the public in a "community offering," with
a preference given to natural persons and trusts of natural persons residing in St. Tammany Parish, Louisiana. We also may offer
for sale shares of common stock not purchased in the subscription offering or community offering to the general public through
a "syndicated community offering" managed by FIG Partners, LLC.
The minimum number of
shares of common stock you may order is 25 shares. Generally, the maximum number of shares of common stock that can be ordered
by any person in the offering is 5,000 shares ($50,000), and no person, together with an associate or group of persons acting in
concert, may purchase more than 20,000 shares ($200,000) in the offering.
The offering is expected
to expire at 2:00 p.m., Central Time, on [expiration date]. We may extend this expiration date without notice to you until [extended
expiration date]. The Office of the Comptroller of the Currency may approve a later date, which may not be beyond [final date].
Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [extended expiration date], or the
number of shares of common stock to be sold is increased to more than 1,653,125 shares or decreased to fewer than 1,062,500 shares.
If the offering is extended past [extended expiration date], we will resolicit subscribers. You will have the opportunity to confirm,
change or cancel your order within a specified period of time. If you do not respond during that period, your stock order will
be cancelled and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly
with interest at 0.15% per annum. If the number of shares to be sold is increased to more than 1,653,125 shares or decreased to
fewer than 1,062,500 shares, all funds submitted for the purchase of shares of common stock in the offering will be returned promptly
with interest at 0.15% per annum. All subscribers will be resolicited and given an opportunity to place a new order within a specified
period of time. Funds received in the subscription and the community offerings and, if applicable, the syndicated community offering
will be held in a segregated account at Heritage Bank of St. Tammany and will earn interest at 0.15% per annum until completion
or termination of the offering.
FIG Partners, LLC will
assist us in selling our shares of common stock on a best efforts basis in the offering. FIG Partners, LLC is not required to purchase
any of the shares of common stock that are being offered for sale.
OFFERING SUMMARY
Price: $10.00 per Share
Minimum
Midpoint
Maximum
Adjusted
Maximum
Number of shares
1,062,500
1,250,000
1,437,500
1,653,125
Gross offering proceeds
$
10,625,000
$
12,500,000
$
14,375,000
$
16,531,250
Estimated offering expenses, excluding selling agent commissions
$
890,000
$
890,000
$
890,000
$
890,000
Selling agent commissions
(1) (2)
$
310,000
$
310,000
$
310,000
$
310,000
Estimated net proceeds
$
9,425,000
$
11,300,000
$
13,175,000
$
15,331,250
Estimated net proceeds per share
$
8.87
$
9.04
$
9.17
$
9.27
(1)
See "The Conversion and Offering – Marketing and Distribution; Compensation"
for information regarding compensation to be received by FIG Partners, LLC in this offering.
(2)
Assumes
                                         that all shares are sold in the subscription and community offerings, and excludes reimbursable
                                         expenses and records agent fees, which are included in estimated offering expenses.
                                         If all shares of common stock were sold in a syndicated community offering, the maximum
                                         selling agent commissions would be 6.0% of the aggregate offering dollar amount of all
                                         shares sold in the syndicated community offering (net of shares purchased by our directors
                                         and executive officers and shares purchased by our employee stock ownership plan), or
                                         approximately $529,000, $632,000, $736,000 and $855,000 at the minimum, midpoint, maximum,
                                         and adjusted maximum levels of the offering, respectively.
This investment involves
a degree of risk, including the possible loss of principal.
Please read "Risk
Factors" beginning on page 15.
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These securities are not deposits
or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. None
of the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Board of Governors of the Federal
Reserve System or any state securities regulator has approved or disapproved of these securities or determined if this prospectus
is accurate or complete. Any representation to the contrary is a criminal offense.
________________________________
FIG
Partners, LLC
________________________________
For assistance, please contact
the Stock Information Center, toll-free, at (866) 806-1790.
The date of this prospectus is _________,
2017.
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[INSERT MAP]
Table of Contents
TABLE OF CONTENTS
Page
SUMMARY
1
RISK FACTORS
15
SELECTED FINANCIAL AND OTHER DATA OF HERITAGE BANK OF ST. TAMMANY
29
FORWARD-LOOKING STATEMENTS
31
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING
34
OUR DIVIDEND POLICY
36
MARKET FOR THE COMMON STOCK
36
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE
38
CAPITALIZATION
39
PRO FORMA DATA
40
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
44
BUSINESS OF HERITAGE NOLA BANCORP
56
BUSINESS OF HERITAGE BANK OF ST. TAMMANY
56
REGULATION AND SUPERVISION
82
TAXATION
92
MANAGEMENT
93
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS
103
THE CONVERSION AND OFFERING
104
RESTRICTIONS ON ACQUISITION OF HERITAGE NOLA BANCORP
126
DESCRIPTION OF CAPITAL STOCK OF HERITAGE NOLA BANCORP
133
TRANSFER AGENT
134
EXPERTS
134
LEGAL MATTERS
134
WHERE YOU CAN FIND ADDITIONAL INFORMATION
135
INDEX TO FINANCIAL STATEMENTS OF HERITAGE BANK OF ST. TAMMANY
F-1
i
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SUMMARY
The following summary explains the significant
and important material aspects of Heritage Bank of St. Tammany's mutual-to-stock conversion and the related offering of Heritage
NOLA Bancorp, Inc. common stock. It may not contain all of the information that is important to you. For additional information
before making an investment decision, you should read this entire document carefully, including the financial statements and the
notes to the financial statements, and the section entitled "Risk Factors."
In this prospectus, the terms "we,"
"our," and "us" refer to Heritage NOLA Bancorp, Inc. and Heritage Bank of St. Tammany, unless the context
indicates another meaning. In addition, we sometimes refer to Heritage NOLA Bancorp, Inc. as "Heritage NOLA Bancorp,"
and to Heritage Bank of St. Tammany as "Heritage Bank" or the "Bank."
Heritage Bank of
St. Tammany
Heritage Bank of St. Tammany is a federal
mutual savings association that was founded in 1924. We have operated continuously in Covington, Louisiana since our founding,
and prior to 2014, operated under the name St. Tammany Homestead Savings and Loan Association. We conduct our business from our
main office in Covington, Louisiana, and our branch office in Slidell, Louisiana, both of which are located in St. Tammany Parish,
within the greater metropolitan area of New Orleans. Covington is the Parish Seat of St. Tammany Parish, which is located on the
north shore of Lake Pontchartrain which separates St. Tammany Parish from New Orleans. Our primary market area is St. Tammany Parish.
To a lesser extent, we also originate loans in the greater New Orleans metropolitan area and the parishes contiguous to St. Tammany
Parish.
Our business consists primarily of taking
deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family
residential real estate loans, including non-owner-occupied properties and home equity lines of credit, and commercial real estate.
We also originate land, construction and multifamily loans, and to a much lesser extent, consumer and commercial business loans.
At December 31, 2016, $57.6 million, or 75.1% of our total loan portfolio, was comprised of one- to four-family residential real
estate loans, $11.2 million of which were non-owner-occupied loans. While we originate conforming one- to four-family residential
real estate loans that we sell to Freddie Mac, historically we have also originated a substantial amount of non-conforming loans
that we retain in our portfolio. Following completion of the conversion and stock offering, we intend to consider hiring an experienced
commercial lender and increase our emphasis on the origination of commercial real estate loans.
In 2016, we began purchasing loans to healthcare
professionals from the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals. Consistent with our
business plan to grow our loan portfolio while managing our interest rate risk, subject to market conditions, we may significantly
increase our holdings of these types of commercial business loans in the future.
We offer a variety of deposit accounts,
including noninterest-bearing demand accounts, savings accounts, NOW accounts and certificates of deposit. We utilize advances
from the FHLB-Dallas for asset/liability management purposes. At December 31, 2016, we had $13.3 million in advances outstanding
with the FHLB-Dallas.
In recent years we have accepted jumbo certificates
of deposit through National CD Rateline, an online service. Pursuant to our business strategy, we are seeking to increase our core
deposits by
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aggressively marketing and pricing these deposit products and
by growing our commercial lending relationships, and reduce our reliance on certificates of deposit as a funding source.
For the years ended December 31, 2016 and
2015, we had net income of $158,000 and $277,000, respectively. The decrease in net income resulted primarily from increases in
provision for loan losses and income tax expense in 2016 versus 2015, offset in part by higher net interest income in 2016 resulting
from an increase in our average loan balances in 2016 versus 2015. See "Management Discussion and Analysis of Financial Condition
and Results of Operation – Comparison of Operating Results for the Years Ended December 31, 2016 and 2015."
Heritage Bank of St. Tammany is subject
to comprehensive regulation and examination by its primary federal regulator, the Office of the Comptroller of the Currency ("OCC").
Our executive and administrative office
is located at 205 North Columbia Street, Covington, Louisiana 70433, and our telephone number at this address is (985) 892-4565.
Our website address is
www.heritagebank.org.
Information on our website is not incorporated into this prospectus and should
not be considered part of this prospectus.
Heritage NOLA Bancorp,
Inc.
The shares being offered will be issued
by Heritage NOLA Bancorp, Inc., a newly formed Maryland corporation that will own all of the outstanding shares of common stock
of Heritage Bank of St. Tammany upon completion of the Bank's mutual-to-stock conversion. Heritage NOLA Bancorp was incorporated
in February 2017 and has not engaged in any business to date. Upon completion of the conversion, Heritage NOLA Bancorp will register
as a savings and loan holding company and will be subject to comprehensive regulation and examination by the Board of Governors
of the Federal Reserve System, which we refer to as the Federal Reserve Board.
Heritage NOLA Bancorp's executive
and administrative office is located at 205 North Columbia Street, Covington, Louisiana 70433, and its telephone number at this
address is (985) 892-4565.
The Conversion and Our Organizational Structure
Pursuant to the terms of the plan of conversion,
Heritage Bank of St. Tammany will convert from a mutual (meaning no stockholders) savings bank to a stock savings bank. As part
of the conversion, Heritage NOLA Bancorp, the newly formed proposed holding company for Heritage Bank of St. Tammany, will offer
for sale shares of its common stock in a subscription offering, and, if necessary, a community offering and a syndicated community
offering. Upon the completion of the conversion and stock offering, Heritage NOLA Bancorp will be 100% owned by stockholders and
Heritage Bank of St. Tammany will be a wholly owned subsidiary of Heritage NOLA Bancorp. A full description of the conversion begins
on page 104 of this prospectus under the heading "The Conversion and Offering."
Business Strategy
Our principal objective is to build long-term
value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking
needs of our customers by emphasizing personalized and efficient customer service. We are a very small financial institution, and
we believe that managing prudent yet consistent asset growth in order to increase revenue is critical to our long-term success.
We intend to operate as a well-capitalized and profitable community bank dedicated to providing exceptional personal service to
our individual and business customers. We believe that we have a competitive advantage in the markets we serve because of our knowledge
of the local marketplace and
2
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our long-standing history of providing superior, relationship-based
customer service. Highlights of our current business strategy include:
·
Continuing to focus on one- to four-family residential real estate lending, including our practice of originating for retention
in our portfolio, nonconforming long-term loans.
·
Increasing commercial real estate lending and commercial business lending.
·
Maintaining our strong asset quality through conservative loan underwriting.
·
Attracting and retaining customers in our market area and build our "core" deposits consisting of demand, NOW and
savings accounts.
·
Remaining a community-oriented institution and relying
on high quality service to maintain
and build a loyal local customer base.
·
Expanding our banking franchise as opportunities arise through de novo branching and/or branch acquisitions.
These strategies are intended to guide our
investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and
the offering, subject to changes necessitated by future market conditions and other factors. See "Business of Heritage Bank
of St. Tammany" and "Management's Discussion and Analysis of Financial Condition and Results of Operations –
Business Strategy" for a further discussion of our business strategy.
Reasons for the Conversion and Offering
Consistent with our business strategy, our
primary reasons for converting and raising additional capital through the offering are:
·
to increase capital to support future growth and profitability;
·
to retain and attract qualified personnel by establishing stock-based benefit plans for management and employees;
·
to have greater flexibility to structure and finance the opportunistic expansion of our operations; and
·
to offer our customers and employees an opportunity to purchase our stock.
As of December 31, 2016, Heritage Bank of
St. Tammany was considered "well capitalized" for regulatory purposes. As a result of the conversion, the proceeds
from the stock offering will further improve our capital position during a period of significant economic, regulatory and political
uncertainty.
See "The Conversion and Offering"
for a more complete discussion of our reasons for conducting the conversion and offering.
Terms of the Offering
We are offering between 1,062,500 shares
and 1,437,500 shares of common stock to eligible depositors of Heritage Bank of St. Tammany and to our tax-qualified employee benefit
plans in a
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subscription offering. To the extent shares remain available,
we may offer shares for sale in a community offering, with a preference given to natural persons and trusts of natural persons
residing in St. Tammany Parish, Louisiana. We may also offer for sale shares of common stock not purchased in the subscription
offering or the community offering to the general public in a syndicated community offering. The number of shares of common stock
to be sold may be increased to up to 1,653,125 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 offered is increased to more than 1,653,125 shares or decreased
to fewer than 1,062,500 shares, or the offering is extended beyond [extended expiration date], subscribers will not have the opportunity
to change or cancel their stock orders once submitted. If the offering is extended past [extended expiration date], we will resolicit
subscribers. You will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do
not respond during that period of time, your stock order will be cancelled and your deposit account withdrawal authorizations will
be cancelled or your funds submitted will be returned promptly with interest at 0.15% per annum. If the number of shares to be
sold is increased to more than 1,653,125 shares or decreased to fewer than 1,062,500 shares, all subscribers' stock orders
will be cancelled, their deposit account withdrawal authorizations will be cancelled and funds delivered for the purchase of shares
of common stock in the offering will be returned promptly with interest at 0.15% per annum. We will give these subscribers an opportunity
to place new orders for a specified period of time.
The purchase price of each share of common
stock to be offered for sale in the offering is $10.00. All investors will pay the same purchase price per share. Investors will
not be charged a commission to purchase shares of common stock in the offering. FIG Partners, LLC, our marketing agent in the offering,
will use its best efforts to assist us in selling shares of our common stock but is not obligated to purchase any shares of common
stock in the offering.
Important Risks in Owning Heritage NOLA Bancorp's
Common Stock
Before you purchase shares of our common
stock, you should read the "Risk Factors" section beginning on page 15 of this prospectus.
How We Determined the Offering Range and the $10.00 per
Share Stock Price
The amount of common stock we are offering
for sale is based on an independent appraisal of the estimated market value of Heritage NOLA Bancorp, assuming the conversion and
offering are completed. RP Financial, LC., our independent appraiser, has estimated that, as of February 10, 2017, this market
value was $12.5 million. Based on regulations of the OCC, this market value forms the midpoint of a valuation range with a minimum
of $10.6 million and a maximum of $14.4 million. Based on this valuation and a $10.00 per share price, the number of shares of
common stock being offered for sale by us will range from 1,062,500 shares to 1,437,500 shares. We may sell up to 1,653,125 shares
of common stock because of demand for the shares or changes in market conditions without resoliciting subscribers. The $10.00 per
share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions.
The appraisal is based in part on Heritage
Bank of St. Tammany's financial condition and results of operations, the pro forma effect of the additional capital raised
by the sale of shares of common stock in the offering and an analysis of a peer group of ten publicly traded thrift holding companies
with assets between $228 million and $528 million as of September 30, 2016 that RP Financial, LC. ("RP Financial")
considers comparable to Heritage NOLA Bancorp. See "The Conversion and Offering – Determination of Share Price and
Number of Shares to be Issued."
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The following table presents a summary of
selected pricing ratios for the peer group companies and for Heritage NOLA Bancorp (on a pro forma basis) utilized by RP Financial
in its appraisal. These ratios are based on Heritage NOLA Bancorp's book value, tangible book value and core earnings as
of and for the 12 months ended December 31, 2016. The peer group ratios are based on the latest date for which complete financial
data are publicly available and stock prices as of February 10, 2017. Compared to the average pricing of the peer group, our pro
forma pricing ratios at the midpoint of the offering range indicated a discount of 40.2% on a price-to-book value basis and a discount
of 42.2% on a price-to-tangible book value basis and a premium of 1,268.6% on a price-to-earnings basis.
Price-to-core earnings
multiple
(1)
Price-to-book
value ratio
Price-to-tangible
book value ratio
Heritage NOLA Bancorp (on a pro forma basis, assuming completion of the conversion):
Adjusted Maximum
976.42
x
72.46
%
72.46
%
Maximum
487.11
x
68.73
%
68.73
%
Midpoint
306.71
x
64.89
%
64.89
%
Minimum
204.33
x
60.35
%
60.35
%
Valuation of peer group companies, all of which are fully converted (on an historical basis):
Average
22.41
x
108.54
%
112.27
%
Median
20.38
x
109.85
%
111.74
%
(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
from those presented in "Pro Forma Data."
The independent appraisal does not indicate
trading market value. Do not assume or expect that our valuation as indicated in the appraisal means that after the conversion
and 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 utilized 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 – Determination
of Share Price and Number of Shares to be Issued."
Stock price performance is affected by
many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount
of proceeds a company raises in its offering; and numerous factors relating to the specific company, including the experience
and ability of management, historical and anticipated operating results, the nature and quality of the company's assets,
and the company's market area.
Our stock price may trade below $10.00
per share, as the stock prices of certain mutual-to-stock conversions have decreased below the initial offering price. If you purchase
shares of common stock, you may not be able to sell them at or above $10.00 per share. Before you make an
5
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investment decision, we urge you to carefully
read this prospectus, including, but not limited to, the section entitled "Risk Factors" beginning on page 15.
How We Intend to Use the Proceeds From the Stock Offering
Heritage Bank of St. Tammany will receive
a capital contribution equal to at least 50% of the net proceeds of the offering, plus such additional amounts as may be necessary
so that, upon completion of the offering, Heritage Bank of St. Tammany will have a Tier 1 leverage ratio of at least 10.0%. Based
on this formula, we anticipate that Heritage NOLA Bancorp will invest, at the minimum, midpoint, maximum and adjusted maximum of
the offering range, approximately $4.7 million, $5.7 million, $6.6 million and $7.7 million, respectively, of the net proceeds
from the stock offering in Heritage Bank of St. Tammany. Of the remaining funds, we intend that Heritage NOLA Bancorp will loan
funds to our employee stock ownership plan to fund the plan's purchase of shares of common stock in the stock offering, and
retain the remainder of the net proceeds from the offering. Assuming we sell 1,250,000 shares of common stock in the stock offering
and have net proceeds of $11.3 million, based on the above formula, we anticipate that Heritage NOLA Bancorp will invest $5.7 million
in Heritage Bank of St. Tammany, loan $1.0 million to our employee stock ownership plan to fund its purchase of shares of common
stock, and retain the remaining $4.7 million of the net proceeds.
Heritage NOLA Bancorp may use the remaining
funds that it retains to repurchase shares of common stock (subject to compliance with regulatory requirements), to pay cash dividends,
for investments, or for other general corporate purposes. Heritage Bank of St. Tammany intends to the net proceeds it receives
from us to fund new loans, enhance existing products and services, invest in securities, expand its banking franchise by establishing
or acquiring a new branch or acquiring another financial institution as opportunities arise, or for general corporate purposes.
For more information on the proposed use
of the proceeds from the offering, see "How We Intend to Use the Proceeds from the Offering."
Persons Who May Order Shares of Common Stock in the Offering
We are offering the shares of common stock
in a subscription offering in the following descending order of priority:
(i)
First, to depositors with accounts at Heritage Bank of St. Tammany with aggregate balances of at least $50 at the close of
business on December 31, 2015.
(ii)
Second, to our tax-qualified employee benefit plans (including Heritage Bank of St. Tammany's employee stock ownership
plan), which 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. We expect our employee stock ownership plan to purchase up to 8% of the shares
of common stock sold in the offering.
(iii)
Third, to depositors with accounts at Heritage Bank of St. Tammany with aggregate balances of at least $50 at the close of
business on [_______].
(iv)
Fourth, to depositors of Heritage Bank of St. Tammany at the close of business on [voting record date].
Shares of common stock not purchased in
the subscription offering may be offered for sale in a community offering, with a preference given to natural persons and trusts
of natural persons residing in
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St. Tammany Parish, Louisiana. The community
offering may begin concurrently with, during or after the subscription offering. We also may offer for sale shares of common stock
not purchased in the subscription offering or the community offering to the general public through a syndicated community offering,
which will be managed by FIG Partners, LLC. We have the right to accept or reject, in our sole discretion, orders received in the
community offering or syndicated community offering. Any determination to accept or reject stock orders in the community offering
or the 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, we may not be able to fully or partially fill your order. Shares will be allocated first to categories in the
subscription offering. A detailed description of the subscription offering, the community offering and the syndicated community
offering, as well as a discussion regarding allocation procedures, can be found in the section of this prospectus entitled "The
Conversion and Offering."
Limits on How Much Common Stock You May Purchase
The minimum number of shares of common stock
that may be purchased is 25.
Generally, no individual, or individuals
through a single account held jointly, may purchase more than the greater of: (i) 5,000 shares ($50,000) of common stock; (ii)
0.10% of the total number of shares of common stock issued in the offering, or (iii) 15 times the number of shares offered multiplied
by a fraction of which the numerator is the depositor's total deposit balance (as of the eligibility record date or supplemental
eligibility record date, as applicable) and the denominator is the aggregate of all deposits (as of the eligibility record date
or supplemental eligibility record date, as applicable), subject to the overall purchase limitations. If any of the following purchase
shares of common stock, their purchases, in all categories of the offering combined, when combined with your purchases, cannot
exceed 20,000 shares ($200,000) of common stock:
·
your spouse or relatives of you or your spouse who reside with you;
·
most companies, trusts or other entities in which you are a trustee, have a substantial beneficial interest or hold a senior
position; or
·
other persons who may be your associates or persons acting in concert with you.
Unless we determine otherwise, persons having
the same address and persons exercising subscription rights through qualifying accounts registered to the same address will be
subject to the overall purchase limitation of 20,000 shares ($200,000). See the detailed descriptions of "acting in concert"
and "associate" in the section of this prospectus headed "The Conversion and Offering – Limitations on
Common Stock Purchases."
Subject to OCC approval, we may increase
or decrease the purchase limitations at any time. See the detailed description of the purchase limitations in the section of this
prospectus headed "The Conversion and Offering – Limitations on Common Stock Purchases."
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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:
·
personal check, bank check or money order made payable directly to Heritage NOLA Bancorp, Inc.; or
·
authorizing us to withdraw available funds (without any early withdrawal penalty) from your account(s) maintained with Heritage
Bank of St. Tammany, other than checking accounts or individual retirement accounts (IRAs).
Please do not submit cash or wire transfers.
For orders paid for by check or money order, the funds must be available in the account. Heritage Bank of St. Tammany is not permitted
to lend funds to anyone for the purpose of purchasing shares of common stock in the offering. Additionally, you may not use a Heritage
Bank of St. Tammany line of credit check or any type of third-party check to pay for shares of common stock.
On the stock order
form, you may not designate withdrawal from Heritage Bank of St. Tammany accounts with check-writing privileges; instead, please
submit a check.
If you request that we directly withdraw the funds 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 we will immediately withdraw the amount from your checking account. Funds received in the subscription and community offerings
and, if applicable, the syndicated community offering will be held in a segregated account at Heritage Bank of St. Tammany and
will earn interest at 0.15% per annum until completion or termination of the offering. You may not authorize direct withdrawal
from a Heritage Bank of St. Tammany retirement account. See "– Using Retirement Account Funds to Purchase Shares of
Common Stock in the Subscription and Community Offerings."
Withdrawals from certificates of deposit
at Heritage Bank of St. Tammany for the purpose of purchasing common stock in the offering may be made without incurring an early
withdrawal penalty. All funds authorized for withdrawal from deposit accounts with Heritage Bank of St. Tammany must be in the
deposit accounts at the time the stock order form is received. A hold will be placed on those funds when your stock order form
is received, making the designated funds unavailable to you. However, funds will not be withdrawn from the accounts until the offering
is completed and will continue to earn interest at the applicable deposit account rate until the completion of the offering. If
a withdrawal results in a certificate of deposit account with a balance less than the applicable minimum balance requirement, the
certificate will be canceled at the time of withdrawal without penalty, and the remaining balance will earn interest at Heritage
Bank of St. Tammany' current statement savings rate thereafter.
You may subscribe for shares of common stock
in the offering by delivering a signed and completed original stock order form, together with full payment payable to Heritage
NOLA Bancorp, Inc. or authorization to withdraw funds from one or more of your Heritage Bank of St. Tammany deposit accounts, provided
that the stock order form is
received
(not postmarked) before 2:00 p.m., Central Time, on [expiration date]. You may submit
your stock order form and payment by mail using the stock order reply envelope provided, by overnight delivery to our Stock Information
Center at the address noted on the stock order form or by hand-delivery to Heritage Bank of St. Tammany's main office, located
at 205 North Columbia Street, Covington, Louisiana.
Please do not mail stock order forms to Heritage Bank of St. Tammany.
Once submitted, your order will be irrevocable unless the offering is terminated or is extended beyond [extended expiration date],
or the number of shares of common stock to be sold is increased to more than 1,653,125 shares or decreased to fewer than 1,062,500
shares. We are not required to accept incomplete stock order forms, unsigned stock order forms, or copies or facsimiles of stock
order forms.
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For a complete description of how to purchase
shares in the stock offering, see "The Conversion and Offering – Procedure for Purchasing Shares."
Using Retirement Account Funds to Purchase
Shares of Common Stock in the Subscription and Community Offerings
You may be able to subscribe for shares
of common stock using funds in your individual retirement account ("IRA"), or other retirement account. If you wish
to use some or all of the funds in your IRA or other retirement account held at Heritage Bank of St. Tammany, the applicable funds
must be transferred to a self-directed account maintained by an independent custodian or trustee, such as a brokerage firm,
before
you place your stock order. If you do not have such an account, you will need to establish one. 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
held at Heritage Bank of St. Tammany or elsewhere. Whether you may use such funds for the purchase of shares in the stock offering
may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.
For a complete description of how to use
IRA funds to purchase shares in the stock offering, see "The Conversion and Offering – Procedure for Purchasing Shares
– Using Retirement Account Funds."
You May Not Sell or Transfer Your Subscription Rights
Federal regulations prohibit you from transferring
your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that
you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription
rights. We intend to take legal action against anyone who we believe has sold or transferred his or her subscription rights. In
addition, we intend to advise the appropriate federal agencies of any person who we believe has sold or transferred his or her
subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription
rights. On the stock order form, you may not add the names of others for joint stock registration who do not have subscription
rights or who qualify only in a lower subscription offering priority than you do. You may add only those who were eligible to purchase
shares of common stock in the subscription offering at your date of eligibility. In addition, the stock order form requires that
you list all qualifying accounts, giving all names on each account and the account number at the applicable eligibility date. Failure
to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share
allocation if there is an oversubscription.
Purchases by Executive Officers and Directors
We expect our directors and executive officers,
together with their associates, to subscribe for 97,850 shares ($978,500) of common stock in the offering, representing
9.2% of shares to be sold at the minimum of the offering range. However, there can be no assurance that any individual
director or executive officer, or the directors and executive officers as a group, will purchase any specific number of shares
of our common stock. 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. Our directors and executive officers will be subject to the same minimum purchase requirements
and purchase limitations as other participants in the offering set forth under "– Limits on How Much Stock You May
Purchase."
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Purchases by our directors, executive officers
and their associates will be included in determining whether the required minimum number of shares has been subscribed for in the
offering. Any purchases made by our directors or executive officers, or their associates, for the explicit purpose of meeting the
minimum 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.
For more information on the proposed purchases
of shares of common stock by our directors and executive officers, see "Subscriptions by Directors and Executive Officers."
Deadline for Orders of Shares of Common Stock in the Subscription
and Community Offerings
The deadline for submitting orders for shares
of common stock in the subscription and community offerings is 2:00 p.m., Central Time, on [expiration date], unless we extend
the subscription offering and/or the community offering. 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.
Orders
received after 2:00 p.m., Central Time, on [expiration date] will be rejected unless the offering is extended.
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 2:00 p.m., Central Time, on [expiration date], whether or not we have been able to locate each person entitled
to subscription rights.
For a complete description of the deadline
for purchasing shares in the stock offering, see "The Conversion and Offering – Procedure for Purchasing Shares –
Expiration Date."
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
1,062,500 shares of common stock, we may take additional steps in order to issue the minimum number of shares of common stock in
the offering range. Specifically, we may:
·
increase the purchase limitations; and/or
·
seek regulatory approval to extend the offering beyond [extended expiration date].
If we extend the offering past [extended
expiration date], we will resolicit subscribers and you will have the opportunity to confirm, change or cancel your order within
a specified period of time. If you do not respond during that period of time, your stock order will be cancelled and your deposit
account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest at 0.15% per
annum from the date the stock order was processed.
If one or more purchase limitations are
increased we will not resolicit all subscribers, however, subscribers in the subscription offering who ordered the maximum amount
and who indicated a desire to be resolicited on the stock order form will be and, in our sole discretion, some other large subscribers
may be, given the opportunity to increase their subscriptions up to the newly applicable limit. We may increase the individual
or aggregate purchase limitations to an amount not to exceed 5.0% of the common stock sold in the offering, see "The Conversion
and Offering – Limitations on Common Stock Purchases."
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Conditions to Completion of the Conversion
The board of directors of Heritage Bank
of St. Tammany has approved the plan of conversion. In addition, the OCC has conditionally approved the plan of conversion and
the Federal Reserve Board has conditionally approved our holding company application. We cannot complete the conversion unless:
·
The plan of conversion is approved by a majority of votes eligible to be cast by members of Heritage Bank of St. Tammany (depositors
of Heritage Bank of St. Tammany). A special meeting of members to consider and vote upon the plan of conversion has been scheduled
for [special meeting date];
·
We have received orders for at least the minimum number of shares of common stock offered; and
·
We receive the final approval required from the OCC to complete the conversion and offering and the final approval from the
Federal Reserve Board on the holding company application.
Any approval by the OCC or the Federal Reserve
Board does not constitute a recommendation or endorsement of the plan of conversion.
Our Dividend Policy
Following completion of the stock offering,
our board of directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements.
However, no decision has been made with respect to the amount, if any, and timing of any dividend payments. The payment and amount
of any dividend payments will depend upon a number of factors, including the following: regulatory capital requirements; our financial
condition and results of operations; our other uses of funds for the long-term value of stockholders; tax considerations; statutory
and regulatory limitations; and general economic conditions. See "Our Dividend Policy" in this prospectus for additional
information regarding our dividend policy.
Market for Common Stock
We anticipate that the common stock sold
in the offering will be quoted on the OTC Pink Marketplace (OTCPK) operated by OTC Markets Group. FIG Partners, LLC currently intends
to make a market in the shares of our common stock, but is under no obligation to do so. See "Market for the Common Stock."
Following completion of the conversion, if we meet the Nasdaq listing requirements, we will use our best efforts to seek approval
to list our common stock on the Nasdaq Capital Market.
Delivery of Shares of Stock
All shares of common stock of Heritage NOLA
Bancorp sold in the subscription offering and community offering will be issued in book entry form and held electronically on the
books of our transfer agent. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock
sold in the offering will be mailed by our transfer agent to the persons entitled thereto at the address noted by them on their
stock order form as soon as practicable following consummation of the conversion. Shares of common stock sold in the syndicated
community offering may be delivered electronically through the services of The Depository Trust Company. We expect trading in the
stock to begin on the business day of or on the business day immediately following the completion of the conversion and stock offering.
It is possible that until a statement reflecting ownership of shares of common stock is available and delivered to purchasers,
purchasers might not be able to sell the shares of common
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stock that they ordered, even though the
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.
Possible Change in the Offering Range
RP Financial will update its appraisal before
we complete the 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 1,653,125 shares in the offering without further notice to you. If
our pro forma market value at that time is either below $10.6 million or above $16.5 million, then, after consulting with the OCC,
we may:
·
terminate the stock offering, cancel deposit account withdrawal authorizations and promptly return all funds received in the
offering with interest at 0.15% per annum;
·
set a new offering range; or
·
take such other actions as may be permitted by the OCC, the Federal Reserve Board, the Financial Industry Regulatory Authority
("FINRA") and the Securities and Exchange Commission.
If we set a new offering range, we will
promptly return funds, with interest at 0.15% per annum for funds received in the offering, cancel deposit account withdrawal authorizations
and commence a resolicitation. In connection with the resolicitation, we will notify subscribers of their right to place a new
stock order for a specified period of time.
Possible Termination of the Offering
We may terminate the offering at any time
prior to the special meeting of members of Heritage Bank of St. Tammany that is being called to vote on the conversion, and at
any time after member approval with the concurrence of the OCC. If we terminate the offering, we will promptly return funds, as
described above.
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 for the benefit of all of our employees being established in connection with the conversion
and stock offering, to purchase up to 8% of the shares of common stock that we sell in the offering. If we receive orders for more
shares of common stock than the maximum of the offering range, the employee stock ownership plan will have first priority to purchase
shares over this maximum, up to a total of 8% of the shares of common stock that we sell in the offering. This would reduce the
number of shares available for allocation to eligible depositors. For further information, see "Management – Benefit
Plans and Agreements – Employee Stock Ownership Plan."
Purchases by the employee stock ownership
plan in the offering will be included in determining whether the required minimum number of shares have been sold in the offering.
Subject to market conditions and receipt of regulatory approval, the employee stock ownership plan may instead elect to purchase
shares of common stock in the open market following the completion of the offering in order to fill all or a portion of the employee
stock ownership plan's intended subscription.
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We also intend to implement a stock-based
benefit plan no earlier than six months after completion of the conversion. Stockholder approval of this plan will be required,
and the stock-based benefit plan cannot be implemented until at least six months after the completion of the conversion pursuant
to applicable OCC regulations. If adopted within 12 months following the completion of the conversion, and provided that upon completion
of the offering Heritage Bank of St. Tammany has at least a 10% tangible capital to assets ratio, the OCC conversion regulations
would allow for the stock-based benefit plan to reserve a number of shares of common stock equal to not more than 4% of the shares
sold in the offering, or up to 57,500 shares of common stock at the maximum of the offering range, for restricted stock awards
to key employees and directors, at no cost to the recipients. If adopted within 12 months following the completion of the conversion,
the stock-based benefit plan will also reserve a number of shares equal to not more than 10% of the shares of common stock sold
in the offering, or up to 143,750 shares of common stock at the maximum of the offering range, for the exercise of stock options
granted to key employees and directors. If the stock-based benefit plan is adopted after one year from the date of the completion
of the conversion, the 4% and 10% limitations described above will no longer apply, and we may adopt a stock-based benefit plan
encompassing more than 201,250 shares of our common stock assuming the maximum of the offering range. We have not yet determined
whether we will present this plan for stockholder approval within 12 months following the completion of the conversion or whether
we will present this plan for stockholder approval more than 12 months after the completion of the conversion.
The following table summarizes the number
of shares of common stock and aggregate dollar value of grants (valuing each share granted at the offering price of $10.00) that
would be available under a stock-based benefit plan if such plan is adopted within one year following the completion of the conversion
and the offering and Heritage Bank of St. Tammany has at least a 10% tangible capital to assets ratio at that time. The table shows
the dilution to stockholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in
the open market. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership
plan for allocation to all employees. A portion of the stock grants shown in the table below may be made to non-management employees.
Number of Shares to be Granted or Purchased (1)
Dilution
Resulting
Value of Grants (2)
At
Minimum
of
    Offering
Range
At
Maximum
of
    Offering
Range
As
    a
Percentage
of Common
Stock to be
Issued
From
Issuance of
Shares for
Stock Benefit
Plans
At
Minimum
of
Offering
Range
At
Maximum
of
Offering
Range
Employee
    stock ownership plan
85,000
115,000
8.00
%
n/a
(3)
$
850,000
$
1,150,000
Stock awards
42,500
57,500
4.00
3.85
%
425,000
575,000
Stock
    options
106,250
143,750
10.00
9.09
%
291,125
393,875
Total
233,750
316,250
22.00
%
12.28
%
$
1,566,125
$
2,118,875
(1)
The stock-based benefit plan may award a greater number of options and shares, respectively, if the plan is adopted more than
12 months after the completion of the conversion.
(2)
The actual value of restricted stock grants will be determined based on their fair value as of the date grants are made. For
purposes of this table, fair value is assumed to be the same as the offering price of $10.00 per share. The fair value of stock
options has been estimated at $2.74 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date
share price and option exercise price of $10.00; dividend yield of 0%; an expected option life of 10 years; a risk-free interest
rate of 2.45%; and a volatility rate of 12.57%. The actual expense of stock options granted under a stock-based benefit plan will
be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions
used in the option pricing model ultimately adopted, which may or may not be the Black-Scholes model.
(3)
Represents the dilution of stock ownership interest. No dilution is reflected for the employee stock ownership plan because
these shares are assumed to be purchased in the offering.
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Tax Consequences
Heritage Bank of St. Tammany and Heritage
NOLA Bancorp have received an opinion of counsel, Luse Gorman, PC, regarding the material federal income tax consequences of the
conversion, including an opinion that it is more likely than not that the fair market value of the nontransferable subscription
rights to purchase the common stock will be zero and, accordingly, no gain or loss will be recognized by depositors upon the distribution
to them of the nontransferable subscription rights to purchase the common stock and no taxable income will be realized by depositors
as a result of the exercise of the nontransferable subscription rights. Heritage Bank of St. Tammany and Heritage NOLA Bancorp
have also received an opinion of Hannis T. Bourgeois, LLP regarding the material Louisiana state 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 Heritage
Bank of St. Tammany, Heritage NOLA Bancorp or persons eligible to subscribe in the subscription offering. See the section of this
prospectus entitled "Taxation" for additional information regarding taxes.
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 questions regarding the conversion or offering, please call our
Stock Information Center. The toll-free telephone number is (866) 806-1790. The Stock Information Center is open for telephone
calls Monday through Friday between 10:00 a.m. and 4:00 p.m., Central Time. The Stock Information Center will be closed on 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.
Risks Related to Our Business
Our commercial real estate lending activities may expose
us to increased lending risks.
We intend
to continue to originate and purchase commercial real estate loans for portfolio, as well as participate in larger commercial real
estate loans. Such lending activities generally are considered to involve a higher degree of risk than one- to four-family residential
real estate lending due to a variety of factors, including generally larger loan balances, shorter terms to maturity and loan terms
which often do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity.
As a result, we may need to increase our provision for loan losses in future periods to address possible loan losses in our commercial
real estate loan portfolio.
A portion of our one- to four-family residential real estate
loans is comprised of non-owner-occupied properties which increases the credit risk on this portion of our loan portfolio.
The housing
stock in our primary market area is comprised in part of single-family rental properties as well as two- to four-unit properties.  At
December 31, 2016, of the $57.6 million of one- to four-family residential real estate loans in our portfolio, $11.2 million, or
14.7% of this amount, was comprised of non-owner-occupied properties.  Our non-owner-occupied residential loans are secured
primarily by single-family properties, and to a much lesser extent, by two- to four-unit properties.  We believe that
there is a greater credit risk inherent in non-owner-occupied properties than in owner-occupied properties since, similar to commercial
real estate and multifamily loans, the repayment of these loans may depend, in part, on the successful management of the property
and/or the borrower's ability to lease the units of the property.  In addition, the physical condition of non-owner-occupied
properties may be below that of owner-occupied properties due to lesser property maintenance standards, which has a negative impact
on the value of the collateral properties.  Furthermore, some of our non-owner-occupied borrowers have more than one
loan outstanding with us, which may expose us to a greater risk of loss compared to residential borrowers with only one loan.  A
downturn in the real estate market or the local economy could adversely affect the value of properties securing these loans or
the revenues derived from these properties which could affect the borrower's ability to repay the loan.
We utilize wholesale certificates of
deposit which are interest-rate sensitive and which increase our interest rate risk sensitivity.
In recent
years, we have accepted wholesale certificates of deposits through National CD Rateline, an on-line service, and directly from
other federally insured institutions. At December 31, 2016, $11.9 million, or 16.0% of our total deposits, consisted of these wholesale
certificates of deposit. Our reliance on certificates of deposit to fund our operations may result in a higher cost of funds than
would otherwise be the case if we had a higher percentage of noninterest-bearing demand deposits, savings deposits and NOW accounts.
Additionally, wholesale certificates of deposit are generally considered rate-sensitive instruments which contribute to our interest
rate risk sensitivity.
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Future changes in interest rates could reduce our profits
and asset values.
Future changes in interest rates could impact
our financial condition and results of operations.
Net income is the amount by which net interest
income and noninterest income exceeds noninterest expense and the provision for loan losses. Net interest income makes up a majority
of our income and is based on the difference between:
·
interest income earned on interest-earning assets, such as loans and securities; and
·
interest expense paid on interest-bearing liabilities, such as deposits and borrowings.
We are vulnerable to changes in interest
rates including the shape of the yield curve because of a mismatch between the terms to repricing of our assets and liabilities.
We maintain in our portfolio a substantial amount of long-term, fixed-rate one- to four-family residential real estate loans. The
retention of these loans makes us extremely sensitive to a decrease in the value of our equity in a rising interest rate environment.
We utilize a computer simulation model to
provide an analysis of estimated changes in net interest income ("NII") and in the economic value of equity ("EVE")
in various interest rate scenarios. At December 31, 2016, our "rate shock" analysis indicated that our NII would decrease
$101,000, or 3.5%, to $2.8 million, and our EVE would decrease $1.6 million, or 17.3%, in the event of an immediate 200 basis point
increase in interest rates. 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.
Additionally, increases in interest rates
may decrease loan demand and/or make it more difficult for borrowers to repay adjustable-rate loans. Conversely, a reduction in
interest rates can result in increased prepayments of loans and mortgage-backed and related securities, as borrowers refinance
their debt in order to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able
to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities.
Finally, a significant increase in interest
rates could make it more difficult to attract the funding needed to support our operations.
A portion of our loan portfolio consists of loan participations.
Loan participations may have a higher risk of loss than loans we originate because we are not the lead lender and we have limited
control over credit management.
A portion
of our loan portfolio consists of loan participations purchased from other banks. Historically, our loan participations have been
secured by commercial properties. Although we underwrite these loan participations consistent with our general underwriting criteria,
loan participations may have a higher risk of loss than loans we originate because we rely on the lead lender to manage the performance
of the loan. Moreover, our decision regarding the classification of a loan participation and loan loss provisions associated with
a loan participation is made in part based upon information provided by the lead lender. A lead lender also may not monitor a participation
loan in the same manner as we would for loans that we originate. At December 31, 2016, our loan participations totaled $2.4
million, or 3.0% of our loan portfolio. We intend to continue to purchase loan participations following completion of the stock
offering. If the underwriting, administration or performance of these participation loans is not adequate, our non-performing loans
may increase and our earnings may decrease.
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Our small size makes it more difficult for us to compete
and to achieve significant profitability.
Our small asset size makes it more difficult
to compete with other financial institutions which are generally larger and can more easily afford to invest in the marketing and
technologies needed to attract and retain customers. Because our principal source of income is the net interest income we earn
on our loans after deducting interest paid on deposits and other sources of funds, our ability to generate the revenues needed
to cover our expenses and finance such investments is limited by the size of our loan portfolio. Accordingly, we are not always
able to offer new products and services as quickly as our competitors. Our lower earnings also make it more difficult to offer
competitive salaries and benefits. In addition, our smaller customer base makes it difficult to generate meaningful noninterest
income from such activities as securities and insurance brokerage. Finally, as a smaller institution, we are disproportionately
affected by the continually increasing costs of compliance with new banking and other regulations.
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.
Our future success will be largely due to
the efforts of our senior management team, including W. David Crumhorn, our President and Chief Executive Officer, Dana Whitaker,
our Executive Vice President and Chief Credit Officer and Lisa Hughes, our Senior Vice President and Chief Financial Officer, who
have each been employed by Heritage Bank 25, 28 and 10 years, respectively. Because we are a small community savings bank with
a small management team, each member of our senior management team has more responsibility than his or her counterpart typically
would have at a larger institution with more employees, and we have fewer management-level personnel who are in a position to assume
the responsibilities of our senior management team. The loss of services of either of these individuals may have a material adverse
effect on our ability to implement our business plan.
If our allowance for loan losses is not sufficient to cover
actual loan losses, our earnings could decrease.
We make various assumptions and judgments
about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate
and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan
losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions are
incorrect, our allowance for loan losses may not be sufficient to cover probable incurred losses in our loan portfolio, resulting
in additions to our allowance for loan losses. Additions to the allowance for loan losses are established through the provision
for losses on loans which is charged against income.
Material
additions to our allowance could materially decrease our net income. In addition, bank regulators periodically review our allowance
for loan losses and, based on judgments different than management's, we may determine to increase our provision for loan
losses or recognize further loan charge-offs as a result of these regulatory reviews. Any material increase in our allowance for
loan losses or loan charge-offs may adversely affect our financial condition and results of operations.
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If our nonperforming assets increase, our earnings will
be adversely affected.
At December 31, 2016, our nonperforming
assets, which consist of nonaccruing loans and foreclosed assets, were $611,000, or 0.62% of total assets. Our nonperforming assets
adversely affect our net income in various ways, including:
·
we forego the interest income that we would otherwise recognize were the assets accruing;
·
we must provide for probable loan losses through a current period charge to the provision for loan losses;
·
noninterest expense increases when we write down the value of properties in our real estate owned portfolio to reflect changing
market values or recognize other-than-temporary impairment on nonperforming securities;
·
there are legal fees associated with the resolution of problem assets, as well as carrying costs, such as taxes, insurance,
and maintenance fees related to our real estate owned; and
·
the resolution of nonperforming assets requires the active involvement of management, which can distract them from more profitable
activity.
If additional borrowers become delinquent
and do not pay their loans and we are unable to successfully manage our nonperforming assets, our losses and troubled assets could
increase significantly, which could have a material adverse effect on our financial condition and results of operations.
If our real estate owned is not properly
valued or if our allowance for loan losses is insufficient, our earnings could be reduced.
We obtain updated valuations in the form
of appraisals when a loan has been foreclosed and the property taken in as real estate owned and at certain other times during
the holding period of the asset. Our net book value ("NBV") in the loan at the time of foreclosure and thereafter is
compared to the updated fair value of the foreclosed property less estimated selling costs (fair value). A charge-off is recorded
for any excess in the asset's NBV over its fair value less estimated selling costs. If our valuation process is incorrect,
or if property values decline, the fair value of our real estate owned may not be sufficient to recover our carrying value in such
assets, resulting in the need for additional charge-offs. Significant charge-offs to our real estate owned could have a material
adverse effect on our financial condition and results of operations. In addition, bank regulators periodically review our real
estate owned and may require us to recognize further charge-offs. Any increase in our charge-offs may have a material adverse effect
on our financial condition and results of operations.
Strong competition within our market areas may limit our
growth and profitability.
Competition in the banking and financial
services industry is intense. In our market area, we compete with commercial banks, savings institutions, mortgage brokerage firms,
credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally
and elsewhere. Some of our competitors have greater name recognition and market presence that benefit them in attracting business,
and offer certain services that we do not or cannot provide. In addition, larger competitors may be able to price loans and deposits
more aggressively than we do, which could affect our ability to grow and remain profitable on a long-term basis. Our ability to
achieve significant profitability depends upon our ability to successfully compete in our market area. If we must
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raise interest rates paid on deposits or lower interest rates
charged on our loans, our net interest margin and profitability could be adversely affected. For additional information see "Business
of Heritage Bank of St. Tammany – Market Area" and "Business of Heritage Bank of St. Tammany – Competition."
The financial services industry could become
even more competitive as a result of new legislative, regulatory and technological changes and continued consolidation. Banks,
securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually
any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant
banking. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally
provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints
and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale
and, as a result, may offer a broader range of products and services as well as better pricing for those products and services
than we can.
We have become subject to more stringent capital requirements,
which may adversely impact our return on equity, require us to raise additional capital, or constrain us from paying dividends
or repurchasing shares.
In July 2013, the federal banking agencies
approved a new rule that has substantially amended regulatory risk-based capital rules. The final rule implements the regulatory
capital reforms from the Basel Committee on Banking Supervision ("Basel III") and changes required by the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").
The final rule includes new minimum risk-based
capital and leverage ratios, which were effective for us on January 1, 2015, and refines the definition of what constitutes "capital"
for purposes of calculating these ratios. The new minimum capital requirements are: (i) a new common equity Tier 1 capital ratio
of 4.5%; (ii) a Tier 1 to risk-based assets capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged
from prior rules); and (iv) a Tier 1 leverage ratio of 4%. The final rule also requires unrealized gains and losses on certain
"available-for-sale" securities holdings to be included for purposes of calculating regulatory capital requirements
unless a one-time opt-out is exercised. We have elected to exercise our one-time option to opt-out of the requirement under the
final rule to include certain "available-for-sale" securities holdings for purposes of calculating our regulatory capital
requirements. The final rule also establishes a "capital conservation buffer" of 2.5%, and, when fully phased in, will
result in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 to risk-based assets capital
ratio of 8.5%, and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement were phased in beginning
in January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019. 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 buffer amount. These limitations will establish a maximum percentage of eligible retained income that can
be utilized for such actions.
We have analyzed the effects of these new
capital requirements, and we believe that, upon completion of the offering, we would meet all of these new requirements, including
the full 2.5% capital conservation buffer.
The application of more stringent capital
requirements could, among other things, result in lower returns on equity, require the raising of additional capital, and result
in regulatory actions if we were to be unable to comply with such requirements. Furthermore, the imposition of liquidity requirements
in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure
our business models, and/or increase our holdings of liquid assets. Implementation of
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changes to asset risk weightings for risk-based capital calculations,
items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management
modifying its business strategy, and could limit our ability to make distributions, including paying out dividends or buying back
shares. Specifically, our ability to pay dividends will be limited if we do not have the capital conservation buffer required by
the new capital rules, which may further limit our ability to pay dividends to shareholders. See "Supervision and Regulation
– Federal Banking Regulation – Capital Requirements."
Risks associated with system failures, interruptions, or
breaches of security could negatively affect our earnings.
Information technology systems are critical
to our business. We use various technology systems to manage our customer relationships, general ledger, securities, deposits,
and loans. However, while our policies and procedures are designed to prevent or limit the impact of system failures, interruptions,
and security breaches, they may not be adequate. In addition any compromise of our systems could deter customers from using our
products and services. Although we rely on security systems to provide security and authentication necessary to effect the secure
transmission of data, these precautions may not protect our systems from compromises or breaches of security.
In addition, we outsource a majority of
our data processing to certain third-party providers. If these third-party providers encounter difficulties, or if we have difficulty
communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations
could be adversely affected. Threats to information security also exist in the processing of customer information through various
other vendors and their personnel.
The occurrence of any system failures, interruption,
or breach of security could damage our reputation and result in a loss of customers and business, subject us to additional regulatory
scrutiny or expose us to litigation and possible financial liability. Any of these events could have a material adverse effect
on our financial condition and results of operations.
We are a community bank and our ability to maintain our reputation
is critical to the success of our business and the failure to do so may materially adversely affect our performance.
We are a community bank, and our reputation
is one of the most valuable components of our business. A key 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. This is done, in part, by recruiting, hiring and retaining employees
who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and
caring about our customers and associates. If our reputation is negatively affected, by the actions of our employees, or by our
inability to conduct our operations in a manner that is appealing to current or prospective customers, our business and, therefore,
our operating results may be materially adversely affected.
Changes to federal programs that subsidize flood insurance
could result in increased premiums for owners of flood insurance which could result in increased loan defaults.
The National Flood Insurance Program (NFIP)
enables property owners in participating communities to purchase insurance, administered by the government, against losses from
flooding, and requires flood insurance for all loans or lines of credit that are secured by existing buildings, manufactured homes,
or buildings under construction, that are located in a designated Special Flood Hazard Area, including a large portion of our primary
market area. This insurance is designed to provide
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an insurance alternative to disaster assistance to meet the
escalating costs of repairing damage to buildings and their contents caused by floods.
In 2012, in response to the insolvency of
the NFIP, The Biggert-Waters Flood Insurance Reform Act of 2012 was introduced to allow flood insurance premiums to rise to reflect
the true risk of living in high-flood areas, by reducing the government subsidies provided by the NFIP. In recent years, there
has been ongoing legislative discussions about reducing governmental subsidies for flood insurance, which could result in much
larger flood insurance premiums to be paid by owners of the insurance. Increases in flood insurance premiums could result in certain
borrowers no longer being able to meet their monthly loan payments and could therefore result in increased loan defaults.
We could be adversely affected by a failure in our internal
controls.
A failure in our internal controls could
have a significant negative impact not only on our earnings, but also on the perception that customers, regulators and investors
may have of us. We continue to devote a significant amount of effort, time and resources to strengthen our controls and ensuring
compliance with complex accounting standards and banking regulations.
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 this offering,
we will become a public reporting company. We expect that the obligations of being a public company, including the substantial
public reporting obligations, will require significant expenditures and place additional demands on our management team. We have
made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems
to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy
our obligations as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the
effectiveness of our internal control over financial reporting, starting with the second annual report that we would expect to
file with the Securities Exchange Commission. Any failure to achieve and maintain an effective internal control environment could
have a material adverse effect on our business and stock price. In addition, we may need to hire additional compliance, accounting
and financial staff with appropriate public company experience and technical knowledge, and we may not be able to do so in a timely
fashion. As a result, we may need to rely on outside consultants to provide these services for us until qualified personnel are
hired. These obligations will increase our operating expenses and could divert our management's attention from our operations.
We operate in a highly regulated environment and may be adversely
affected by changes in laws and regulations.
We are subject to extensive regulation,
supervision, and examination by the Federal Reserve Board, the OCC and, to a lesser extent, the Federal Deposit Insurance Corporation
(the "FDIC"). Such regulators govern the activities in which we may engage, primarily for the protection of depositors.
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including
the imposition of restrictions on the operation of a financial institution, the classification of assets by a financial institution,
and the adequacy of a financial institution's allowance for loan losses. Any change in such regulation and oversight, whether
in the form of regulatory policy, regulations, or legislation, could have a material impact on us and our operations. Because our
business is highly regulated, the laws, rules and applicable regulations are subject to regular modification and change. Laws,
rules and regulations may be adopted in the future that could make compliance more
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difficult or expensive or otherwise adversely affect our business,
financial condition or prospects. See "Regulation and Supervision" for a discussion of the regulations to which we
are subject.
Changes in accounting standards could affect reported earnings.
The bodies responsible for establishing
accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory
bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our consolidated 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.
Future legislative or regulatory actions responding to perceived
financial and market problems could impair our rights against borrowers.
There have been proposals made by members
of Congress and others that would reduce the amount distressed borrowers are otherwise contractually obligated to pay under their
mortgage loans and limit an institution's ability to foreclose on mortgage collateral. If proposals such as these, or other
proposals limiting our rights as a creditor, are implemented, we could experience increased credit losses or increased expense
in pursuing our remedies as a creditor.
Risks Related to the Offering
The future price of our common stock may be less than the
purchase price in the stock offering.
If you purchase shares of common stock in
the stock offering, you may not be able to sell them at or above the purchase price in the stock offering. The purchase price in
the offering is based upon an independent third-party appraisal of the pro forma market value of Heritage Bank of St. Tammany,
pursuant to federal banking regulations and subject to review and approval by the OCC. The appraisal is not intended, and should
not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. Our aggregate
pro forma market value as reflected in the final independent appraisal may exceed the market price of our shares of common stock
after the completion of the offering, which may result in our stock trading below the initial offering price of $10.00 per share.
After the shares of our common stock begin
trading, the trading price of the common stock will be determined by the marketplace, and will be influenced by many factors outside
of our control, including prevailing interest rates, investor perceptions, securities analyst research reports and general industry,
geopolitical and economic conditions. Publicly traded stocks, including stocks of financial institutions, often experience substantial
market price volatility. These market fluctuations might not be related to the operating performance of particular companies whose
shares are traded.
There will be a limited trading market in our common stock,
which could hinder your ability to sell our common stock and may lower the market price of the stock.
We have never issued stock and, therefore,
there is no current trading market for the shares of common stock. Moreover, our public "float," which is the total
number of our outstanding shares less the shares held by our employee stock ownership plan and our directors and executive officers
and is used as a measurement of shares available for trading, will be limited. The limited trading market could also result in
a wider spread between the "bid" and "ask" prices for the stock, which could make it more difficult to
sell a large number of shares at one time and could mean a sale of a large number of shares at one time could depress the market
price.
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Upon completion of the conversion, we expect
the common stock will also be quoted on the OTC Pink Marketplace (OTCPK). Following completion of the conversion, if we meet
the Nasdaq listing requirements, we will use our best efforts to seek approval to trade on the Nasdaq Capital Market.
You may not be able to sell your shares of common stock until
you have received ownership statements, which may affect your ability to sell your common stock immediately following the offering.
Statements of ownership for the shares of
common stock purchased in the offering may not be delivered for several days after the completion of the offering and the commencement
of trading in the common stock. Your ability to sell the shares of common stock before receiving your ownership statement will
depend on arrangements you may make with a brokerage firm, and you may not be able to sell your shares of common stock until you
have received these statements.
Our stock-based benefit plans will increase our costs,
which will reduce our income.
We anticipate that our employee stock ownership
plan will purchase up to 8.0% of the total shares of common stock sold in the stock offering, with funds borrowed from Heritage
NOLA Bancorp. The cost of acquiring the shares of common stock for the employee stock ownership plan will be between $850,000 at
the minimum of the offering range and $1.3 million at the adjusted maximum of the offering range. We will record annual employee
stock ownership plan expense in an amount equal to the fair value of shares of common stock committed to be released to employees.
If shares of common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will
increase.
We also intend to adopt a stock-based benefit
plan after the stock offering that would award participants (at no cost to them) shares of our common stock and/or options to purchase
shares of our common stock. The number of shares reserved for awards of restricted stock or grants of stock options under any initial
stock-based benefit plan may not exceed 4% and 10%, respectively, of the total shares sold in the offering, if these plans are
adopted within 12 months after the completion of the conversion. We may reserve shares of common stock for stock awards and stock
options in excess of these amounts, provided the stock-based benefit plan is adopted more than one year following the stock offering.
Assuming the market price of the common
stock is $10.00 per share; the options are granted with an exercise price of $10.00 per share; the dividend yield on the stock
is 0%; the expected option life is ten years; the risk free interest rate is 2.45% (based on the ten-year Treasury rate) and the
volatility rate on the shares of common stock is 12.57% (based on an index of publicly traded thrift institutions), the estimated
grant-date fair value of the options using a Black-Scholes option pricing analysis is $2.74 per option granted. Assuming this value
is amortized over a five-year vesting period, the corresponding annual pre-tax expense associated with the stock options in the
first year after the offering would be $91,000 at the adjusted maximum of the offering range. In addition, assuming that all shares
of restricted stock are awarded at a price of $10.00 per share, and that the awards vest over a five-year period, the corresponding
annual pre-tax expense associated with restricted stock awarded under the stock-based benefit plan would be $132,000 at the adjusted
maximum of the offering range in the first year after the offering. Moreover, if we grant shares of common stock or options in
excess of these amounts, such grants would increase our costs further.
The fair value of the shares of restricted
stock on the date granted under the stock-based benefit plan will be expensed by us over the vesting period of the shares. If the
shares of restricted stock to be granted under the plan are repurchased in the open market (rather than issued directly from authorized
but unissued shares by Heritage NOLA Bancorp) and cost the same as the purchase price in the stock
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offering, the reduction to stockholders'
equity due to the stock-based benefit plan would be between $425,000 at the minimum of the offering range and $661,000 at the adjusted
maximum of the offering range. To the extent we repurchase shares of common stock in the open market to fund the grants of shares
under the plan, and the price of such shares exceeds the offering price of $10.00 per share, the reduction to stockholders'
equity would exceed the range described above. Conversely, to the extent the price of such shares is below the offering price of
$10.00 per share, the reduction to stockholders' equity would be less than the range described above.
The implementation of a stock-based benefit plan will dilute
your ownership interest.
We intend to adopt a stock-based benefit
plan, which will allow participants to be awarded shares of common stock (at no cost to them) and/or options to purchase shares
of our common stock, following the stock offering. If this stock-based benefit plan is funded from the issuance of authorized but
unissued shares of common stock, stockholders would experience a reduction in ownership interest totaling 12.28%. Although the
implementation of the stock-based benefit plan will 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.
We have not determined whether we will adopt a stock-based
benefit plan more than one year following the stock offering. Stock-based benefit plans adopted more than one year following the
stock offering may exceed regulatory restrictions on the size of stock-based benefit plans adopted within one year, which would
increase our costs and the dilution to other shareholders.
If we adopt a stock-based benefit plan within
one year following the completion of the stock offering, then we may grant shares of common stock or stock options under our stock-based
benefit plan for up to 4% and 10%, respectively, of our total outstanding shares. The amount of stock awards and stock options
available for grant under the stock-based benefit plan may exceed these amounts, provided the stock-based benefit plans are adopted
more than one year following the stock offering. Although the implementation of the stock-based benefit plan will be subject to
stockholder approval, the determination as to the timing of the implementation of such a plan will be at the discretion of our
board of directors. 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 costs, which will 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 will dilute your ownership interest."
We have entered into employment agreements with our executive
officers, which may increase our compensation costs upon the occurrence of certain events or increase the cost of acquiring us.
We have entered into employment agreements
with our President and Chief Executive Officer, our Executive Vice President and Chief Credit Officer and our Senior Vice President
and Chief Financial Officer. In the event of termination of employment other than for cause, or in the event of certain types
of termination following a change in control, as set forth in the employment agreements, assuming each of the agreements has
three years remaining, the agreements will provide for cash severance benefits that would cost us up to $1.3 million
based on the three executives' current total compensation. The cost of these severance payments would increase the cost
of acquiring us. For additional information see "Management – Executive Officer Compensation."
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We have broad discretion in using the proceeds of the stock
offering. Our failure to effectively deploy the net proceeds of the offering may have an adverse effect on our financial performance
and the value of our common stock.
We intend to invest between $4.7 million
and $6.6 million of the net proceeds of the offering (or $7.7 million at the adjusted maximum of the offering range) in Heritage
Bank of St. Tammany. We also expect to use a portion of the net proceeds we retain to fund a loan for the purchase of shares of
common stock in the offering by the employee stock ownership plan. We may use the remaining net proceeds to invest in short-term
and other investments, repurchase shares of common stock, pay dividends, or for other general corporate purposes. Heritage Bank
of St. Tammany may use the remaining net proceeds it receives to fund new loans, enhance existing products and services, invest
in securities, expand its banking franchise by establishing or acquiring a new branch or acquiring another financial institution
as opportunities arise, or for other general corporate purposes. However, with the exception of 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 significant
flexibility in determining the amount of the net proceeds we apply to different uses and the timing of such applications. Also,
certain of these uses, such as opening new branches or acquiring other financial institutions, paying dividends and repurchasing
common stock, may require the approval of the OCC or the Federal Reserve Board. We have not established a timetable for investing
the net proceeds, and, accordingly, we may not invest the net proceeds at the time that is most beneficial to Heritage NOLA Bancorp,
Heritage Bank of St. Tammany or the shareholders. For additional information see "How We Intend To Use The Proceeds From
The Offering."
Certain provisions of our articles of incorporation and
bylaws, and state and federal law could prevent or impede the ability of stockholders to obtain representation on our board of
directors, and may discourage hostile acquisitions of control of Heritage NOLA Bancorp, Inc., which could negatively affect our
stock value.
Certain provisions in our articles of incorporation
and bylaws may discourage attempts to acquire Heritage NOLA Bancorp, pursue a proxy contest for control of Heritage NOLA Bancorp,
assume control of Heritage NOLA Bancorp by a holder of a large block of common stock, and remove Heritage NOLA Bancorp's
management, all of which shareholders might think are in their best interests. These provisions include:
·
restrictive requirements regarding eligibility for service on the board of directors, including a requirement that non-employee
directors, other than the Company's initial directors, maintain their primary residence within 10 miles of one of the Bank's
offices for at least one year prior to their initial appointment or election to the board, a prohibition on service by persons
who are or have been the subject of certain legal or regulatory proceedings, a prohibition on service by persons who are party
to agreements that may affect their voting discretion, a prohibition on service by persons who have lost more than one campaign
for election, and a prohibition on service by nominees or representatives (as defined in applicable Federal Reserve Board regulations)
of another person who would not be eligible for service or of an entity the partners or controlling persons of which would not
be eligible for service;
·
the election of directors to staggered terms of three years;
·
provisions requiring advance notice of shareholder proposals and director nominations;
·
a limitation on the right to vote more than 10% of the outstanding shares of common stock;
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·
a prohibition on cumulative voting;
·
a requirement that the calling of a special meeting by shareholders requires the request of a majority of all votes entitled
to be cast at the special meeting;
·
a requirement that directors may only be removed for cause and by a majority of the votes entitled to be cast;
·
the board of directors' ability to cause Heritage NOLA Bancorp to issue preferred stock; and
·
the requirement of the vote of 80% of the votes entitled to be cast in order to amend certain provisions of the articles of
incorporation, including those set forth above.
For further information, see "Restrictions
on Acquisition of Heritage NOLA Bancorp – Heritage NOLA Bancorp's Articles of Incorporation and Bylaws."
Federal regulations prohibit, for three
years following the completion of a mutual-to-stock conversion, the offer to acquire or the acquisition of more than 10% of any
class of equity security of Heritage Bank of St. Tammany or Heritage NOLA Bancorp without the prior approval of the Federal Reserve
Board. In addition, the business corporation law of Maryland, the State where Heritage NOLA Bancorp is incorporated, provides for
certain restrictions on acquisition of Heritage NOLA Bancorp. See "Restrictions on Acquisitions of Heritage NOLA Bancorp
– Maryland Corporate Law;" " – Heritage Bank of St. Tammany' Charter" and " – Change
in Control Regulations."
A significant percentage of our common stock will be held
or controlled by our directors and executive officers and benefit plans.
Our board of directors and executive officers
intend to purchase in the aggregate approximately 9.2% and 6.8% of our common stock at the minimum and maximum of
the offering range, respectively. These purchases, together with the purchase by the employee stock ownership plan of 8.0% of
the aggregate shares sold in the offering, as well as the potential acquisition of common stock through the proposed equity incentive
and stock award plan will result in ownership by insiders of Heritage NOLA Bancorp and Heritage Bank of St. Tammany of approximately
31.2% of the total shares issued in the offering at the minimum and approximately 28.8% of the total shares issued
in the offering at the maximum of the offering range. The ownership by executive officers, directors and our stock plans could
result in actions being taken that are not in accordance with other shareholders' wishes, and could prevent any action requiring
a supermajority vote under our articles of incorporation and bylaws (including the amendment of certain protective provisions
of our articles and bylaws discussed immediately above).
Our stock value may be negatively affected by federal regulations
that restrict takeovers.
For three years following the stock offering,
OCC regulations prohibit any person from acquiring or offering to acquire more than 10% of our common stock without the prior written
approval of the OCC, or successor regulator. See "Restrictions on Acquisition of Heritage NOLA Bancorp" for a discussion
of applicable OCC regulations regarding acquisitions. Certain prospective investors may choose to purchase shares of a company
if they believe that the company will be acquired, thereby potentially increasing its stock value. Because federal regulations
will restrict any such acquisition of us
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or Heritage Bank of St. Tammany for at least
three years after the completion of the conversion, these regulations may negatively affect our stock value.
We are an emerging growth company within the meaning of the
Securities Act, and if we decide to take advantage of certain exemptions from various reporting requirements applicable to emerging
growth companies, our common stock could be less attractive to investors.
We are an "emerging growth company,"
as defined in Section 2(a) of the Securities Act of 1933 (the "Securities Act"), as modified by the Jumpstart Our Business
Startups Act of 2012 ( the "JOBS Act"). We are eligible to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to,
reduced disclosure about our executive compensation and omission of compensation discussion and analysis, and an exemption from
the requirement of holding a non-binding advisory vote on executive compensation. In addition, we will not be subject to certain
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, including the additional level of review of our internal control
over financial reporting as may occur when outside auditors attest as to our internal control over financial reporting. As a result,
our stockholders may not have access to certain information they may deem important. Taking advantage of any of these exemptions
may adversely affect the value and trading price of our common stock.
We could remain an "emerging growth
company" for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual
gross revenues exceed $1.0 billion, (b) the date that we become a "large accelerated filer" as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended, which would occur if the market value of our common stock that is
held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or
(c) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.
We have elected to delay the adoption of new and revised
accounting pronouncements, which means that our financial statements may not be comparable to those of other public companies.
As 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.
We may take other actions to meet the minimum required sales
of shares if we cannot find enough purchasers in the community.
If we are not able to reach the minimum
of the offering range, we may do any of the following: increase the maximum purchase limitations and allow all maximum purchase
subscribers to increase their orders to the new maximum purchase limitations; terminate the offering and promptly return all funds;
set a new offering range, notify all subscribers of the opportunity to confirm, cancel or change their orders; or take such other
actions as may be permitted, to the extent such permission is required, by the Federal Reserve Board.
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The distribution of subscription rights could have adverse
income tax consequences and the cost basis of the stock to purchasers with subscription rights could be less than the purchase
price.
If the subscription rights granted to certain
current or former depositors or certain borrowers of Heritage Bank of St. Tammany are deemed to have an ascertainable value, receipt
of such rights may be taxable in an amount equal to such value. Whether subscription rights are considered to have ascertainable
value is an inherently factual determination. Additionally, if the subscription rights were deemed to have an ascertainable value,
it is possible that the cost basis of the stock to any purchaser who used subscription rights could be reduced by an amount equal
to the value ascribed to the subscription rights. We have received an opinion of counsel, Luse Gorman, PC, that it is more likely
than not that such rights have no value and that it is more likely than not that the basis of the common stock to its stockholders
will be the purchase price thereof; however, such opinion is not binding on the Internal Revenue Service.
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SELECTED FINANCIAL AND OTHER DATA
OF HERITAGE BANK OF ST. TAMMANY
The following tables set forth selected
consolidated historical financial and other data of Heritage Bank of St. Tammany for the periods and at the dates indicated. The
information at and for the years ended December 31, 2016 and 2015 is derived in part from, and should be read together with, the
audited financial statements and notes thereto of Heritage Bank of St. Tammany beginning at page F-1 of this prospectus. The following
information is only a summary, and should be read in conjunction with our financial statements and notes beginning on page F-1
of this prospectus.
At
    December 31,
2016
2015
(In thousands)
Selected Financial Condition Data:
Total assets
$
98,015
$
96,462
Cash and cash equivalents
8,014
8,572
Securities available for sale
7,175
6,896
Securities held to maturity
832
1,114
Loans, net
74,659
71,966
Premises and equipment, net
3,716
3,892
Cash surrender value of life insurance
2,001
1,949
Other assets
1,618
2,073
Deposits
74,251
73,579
Borrowings
13,274
12,656
Total equity
9,460
9,326
For
    the Years Ended
December 31,
2016
2015
(In thousands)
Selected Operations Data:
Interest income
$
4,085
$
3,658
Interest expense
993
924
Net interest income
3,092
2,734
Provision for loan losses
180
20
Net interest income after provision for loan losses
2,912
2,714
Noninterest income
351
403
Noninterest expense
2,995
2,841
Income before income tax expense
268
276
Income tax expense (benefit)
110
(1
)
Net income
$
158
$
277
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At or For the Years Ended
December 31,
2016
2015
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on average assets
0.16
%
0.30
%
Return on average equity
1.66
%
2.99
%
Interest rate spread (1)
3.36
%
3.20
%
Net interest margin (2)
3.45
%
3.28
%
Efficiency ratio (3)
86.99
%
90.57
%
Non-interest expense to average total assets
3.08
%
3.11
%
Average interest-earning assets to average
    interest-bearing liabilities
107.59
%
106.33
%
Average equity to average total assets
9.79
%
10.14
%
Asset Quality Ratios:
Non-performing assets to total assets
0.62
%
2.06
%
Non-performing loans to total loans
0.68
%
1.65
%
Allowance for loan losses to non-performing loans
133.59
%
48.05
%
Allowance for loan losses to total loans
0.90
%
0.79
%
Capital Ratios:
Total capital (to risk-weighted assets)
18.59
%
18.16
%
Common equity Tier 1 capital (to risk-weighted assets)
17.35
%
17.07
%
Tier 1 capital (to risk-weighted assets)
17.35
%
17.07
%
Tier 1 capital (to avg assets) (Tier1 Leverage Ratio)
9.79
%
9.82
%
Other Data:
Number of full service offices
2
2
(1)
Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing
liabilities for the year.
(2)
The net interest margin represents net interest income as a percent of average interest-earning assets for the year.
(3)
The efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
30
Table of Contents
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking
statements, which can be identified by the use of words such as "estimate," "project," "believe,"
"intend," "anticipate," "assume," "plan," "seek," "expect,"
"will," "may," "should," "indicate," "would," "believe,"
"contemplate," "continue," "target" and words of similar meaning. These forward-looking statements
include, but are not limited to:
·
statements of our goals, intentions and expectations;
·
statements regarding our business plans, prospects, growth and operating strategies;
·
statements regarding the asset quality of our loan and investment portfolios; and
·
estimates of our risks and future costs and benefits.
These forward-looking statements are based
on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties
and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions
with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any
obligation to update any forward-looking statements after the date of this prospectus.
The following factors, among others, could
cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
·
our ability to manage our operations under the economic conditions in our market area;
·
adverse changes in the financial industry, securities, credit and national and local real estate markets (including real estate
values);
·
significant increases in our loan losses, including as a result of our inability to resolve classified and non-performing assets
or reduce risks associated with our loans, and management's assumptions in determining the adequacy of the allowance for
loan losses;
·
credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our
allowance for loan losses and provision for loan losses;
·
the use of estimates in determining fair value of certain of our assets, which may prove to be incorrect and result in significant
declines in valuations;
·
competition among depository and other financial institutions;
·
our success in increasing our one- to four-family residential real estate lending and commercial real estate lending;
·
our ability to attract and maintain deposits and to grow our core deposits, and our success in introducing new financial products;
·
our ability to maintain our asset quality even as we continue to grow our commercial real estate and commercial business loan
portfolios;
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Table of Contents
·
changes in interest rates generally, including changes in the relative differences between short term and long term interest
rates and in deposit interest rates, that may affect our net interest margin and funding sources;
·
fluctuations in the demand for loans;
·
changes in consumer spending, borrowing and savings habits;
·
declines in the yield on our assets resulting from the current low interest rate environment;
·
risks related to a high concentration of loans secured by real estate located in our market area;
·
the results of examinations by our regulators, including the possibility that our regulators may, among other things, require
us to increase our allowance for loan losses, write down assets, change our regulatory capital position, limit our ability to borrow
funds or maintain or increase deposits, or prohibit us from paying dividends, which could adversely affect our dividends and earnings;
·
changes in the level of government support of housing finance;
·
our ability to enter new markets successfully and capitalize on growth opportunities;
·
changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank Act and the
JOBS Act, which could result in, among other things, increased deposit insurance premiums and assessments, capital requirements,
regulatory fees and compliance costs, particularly the new capital regulations, and the resources we have available to address
such changes;
·
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards
Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;
·
changes in our compensation and benefit plans, and our ability to retain key members of our senior management team and to address
staffing needs in response to product demand or to implement our strategic plans;
·
loan delinquencies and changes in the underlying cash flows of our borrowers;
·
our ability to control costs and expenses, particularly those associated with operating as a publicly traded company;
·
the failure or security breaches of computer systems on which we depend;
·
the ability of key third-party service providers to perform their obligations to us;
·
changes in the financial condition or future prospects of issuers of securities that we own; and
·
other economic, competitive, governmental, regulatory and operational factors affecting our operations, pricing, products and
services described elsewhere in this prospectus.
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Table of Contents
Because of these and a wide variety of other
uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.
Please see "Risk Factors" beginning on page 15.
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Table of Contents
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 $9.4 million and $13.2 million, or $15.3 million if the offering range is increased by 15%.
We intend to distribute the net proceeds
as follows:
Based
    Upon the Sale at $10.00 Per Share of
1,062,500
    shares
1,250,000
    shares
1,437,500
    shares
1,653,125
    shares (1)
Amount
Percent
of Net
Proceeds
Amount
Percent
of Net
Proceeds
Amount
Percent
of Net
Proceeds
Amount
Percent
of Net
Proceeds
(Dollars in thousands)
Offering proceeds
$
10,625
$
12,500
$
14,375
$
16,531
Less offering expenses
(1,200
)
(1,200
)
(1,200
)
(1,200
)
Net offering proceeds (2)
$
9,425
100.0
%
$
11,300
100.0
%
$
13,175
100.0
%
$
15,331
100.0
%
Distribution of net proceeds:
To Heritage Bank of St. Tammany
$
4,713
50.0
%
$
5,650
50.0
%
$
6,588
50.0
%
$
7,666
50.0
%
To fund loan to employee stock ownership plan
$
850
9.0
%
$
1,000
8.8
%
$
1,150
8.7
%
$
1,323
8.6
%
Retained by Heritage NOLA Bancorp
$
3,862
41.0
%
$
4,650
41.2
%
$
5,438
41.2
%
$
6,342
41.4
%
(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)
Assumes that all shares of common stock are sold in the subscription and community offerings.
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 result in
a reduction of Heritage Bank of St. Tammany'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 a syndicated community offering were
used to sell shares of common stock not purchased in the subscription and community offerings.
Heritage NOLA Bancorp intends to fund a
loan to the employee stock ownership plan to purchase shares of common stock in the stock offering. Heritage NOLA Bancorp may also
use the proceeds it retains from the offering:
·
to invest in short-term and other securities consistent with our investment policy;
·
to pay cash dividends to our stockholders;
·
to repurchase shares of our common stock subject to compliance with applicable regulatory requirements; and
·
for other general corporate purposes.
With the exception of the funding of the
loan to the employee stock ownership plan, Heritage NOLA Bancorp has not quantified its plans for use of the offering proceeds
for each of the foregoing purposes. Initially, we intend to invest a substantial portion of the net proceeds in investment grade
securities, including securities issued by U.S. Government agencies and mortgage-backed securities issued by U.S. Government agencies
and U.S. Government-sponsored enterprises.
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Table of Contents
See "Our Dividend Policy" for
a discussion of our expected dividend policy following the completion of the conversion. Under applicable 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 management recognition plans (which would
require notification to the Federal Reserve Board) or tax-qualified employee stock benefit plans.
Heritage Bank of St. Tammany will receive
a capital contribution equal to at least 50% of the net proceeds of the offering, plus such additional amounts as may be necessary
so that, upon completion of the offering, Heritage Bank of St. Tammany will have a Tier 1 leverage ratio of at least 10.00%. Based
on this formula, we anticipate that Heritage NOLA Bancorp will invest $4.7 million, $5.7 million, $6.6 million and $7.7 million,
respectively, of the net proceeds at the minimum, midpoint, maximum and adjusted maximum of the offering in Heritage Bank of St.
Tammany.
Heritage Bank of St. Tammany and may use
the remaining net proceeds it receives from the stock offering:
·
to fund new loans, including one- to four-family residential real estate loans, including non-owner-occupied loans and home
equity lines of credit, commercial real estate loans and commercial business loans;
·
to enhance existing products and services and to support the development of new products and services;
·
to invest in securities issued by U.S. Government agencies and mortgage-backed securities issued by U.S. Government agencies
and U.S. Government-sponsored enterprises, municipal securities and other securities in accordance with our investment policy;
·
to expand our retail banking franchise by establishing or acquiring a new branch or acquiring another financial institution
as opportunities arise, although we do not currently have any understandings or agreements to establish or acquire any new branch
offices or other financial institution; and
·
for other general corporate purposes.
Heritage Bank of St. Tammany has not quantified
its plans for use of the offering proceeds for each of the foregoing purposes. Initially, a substantial portion of the net proceeds
will be invested in securities issued by U.S. Government agencies and mortgage-backed securities issued by U.S. Government agencies
and U.S. Government-sponsored enterprises. The use of the proceeds outlined above may change based on many factors, including,
but not limited to, changes in interest rates, equity markets, laws and regulations affecting the financial services industry,
our relative position in the financial services industry, the attractiveness of opportunities to expand our operations through
establishing or acquiring new branches, our ability to receive regulatory approval for any such expansion activities, and overall
market conditions.
We expect our return on equity to decrease,
until we are able to reinvest effectively the additional capital raised in the stock offering. See "Risk Factors –
Risks Related to the Offering – We have broad discretion in using the proceeds of the stock offering. Our failure to effectively
deploy the net proceeds of the offering may have an adverse effect on our financial performance and the value of our common stock."
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Table of Contents
OUR DIVIDEND POLICY
Following completion of the stock offering,
our board of directors will have the authority to declare dividends on our shares of common stock, subject to statutory and regulatory
requirements. However, no decision has been made with respect to the payment of dividends. In determining whether to pay a cash
dividend and the amount of such cash dividend, the board of directors is expected to take into account a number of factors, including
capital requirements, our financial condition and results of operations, other uses of funds for the long-term value of stockholders,
tax considerations, statutory and regulatory limitations and general economic conditions. No assurances can be given that any dividends
will be paid or that, if paid, will not be reduced or eliminated in the future. Special cash dividends, stock dividends or returns
of capital, to the extent permitted by regulations and policies of the Federal Reserve Board and the Office of the Comptroller
of the Currency, may be paid in addition to, or in lieu of, regular cash dividends.
We expect to file a consolidated federal
tax return with Heritage Bank of St. Tammany. Accordingly, it is anticipated that any cash distributions that we make to our stockholders
would be treated as cash dividends and not as a non-taxable return of capital for federal and state tax purposes. Additionally,
pursuant to regulations of the Federal Reserve Board, during the three-year period following the stock offering, we will not take
any action to declare an extraordinary dividend to stockholders that would be treated by recipients as a tax-free return of capital
for federal income tax purposes.
Pursuant to our articles of incorporation,
we are authorized to issue preferred stock. If we issue preferred stock, the holders thereof may have a priority over the holders
of our shares of common stock with respect to the payment of dividends. For a further discussion concerning the payment of dividends
on our shares of common stock, see "Description of Capital Stock of Heritage NOLA Bancorp – Common Stock." Dividends
we can declare and pay will depend, in part, upon receipt of dividends from Heritage Bank of St. Tammany, because initially we
will have no source of income other than dividends from Heritage Bank of St. Tammany and earnings from the investment of the net
proceeds from the sale of shares of common stock retained by Heritage NOLA Bancorp and interest payments received in connection
with the loan to the employee stock ownership plan. Regulations of the OCC impose limitations on "capital distributions"
by savings institutions. See "Regulation and Supervision – Federal Banking Regulation – Capital Distributions."
Any payment of dividends by Heritage Bank
of St. Tammany to us that would be deemed to be drawn out of Heritage Bank of St. Tammany' bad debt reserves, if any, would
require a payment of taxes at the then-current tax rate by Heritage Bank of St. Tammany on the amount of earnings deemed to be
removed from the reserves for such distribution. Heritage Bank of St. Tammany does not intend to make any distribution to us that
would create such a federal tax liability. See "Taxation."
MARKET FOR THE COMMON STOCK
Heritage NOLA Bancorp is a newly formed
company and has never issued capital stock. Heritage Bank of St. Tammany, as a mutual institution, has never issued capital stock.
Heritage NOLA Bancorp expects that that its common stock will be quoted on the OTC Pink Marketplace (OTCPK) operated by OTC Markets
Group. Following completion of the offering, if we satisfy the Nasdaq listing requirements, we will use our best efforts to seek
approval to list the common stock on the Nasdaq Capital Market. FIG Partners, LLC. has advised us that it intends to make a market
in our common stock following the conversion and stock offering, but it is under no obligation to do so.
36
Table of Contents
The development of an active trading market
depends on the existence of willing buyers and sellers, the presence of which is not within our control, or that of any market
maker. The number of active buyers and sellers of the shares of common stock at any particular time may be limited. Furthermore,
we cannot assure you that, if you purchase shares of common stock, you will be able to sell them at or above $10.00 per share.
Purchasers of common stock in this stock offering should have long-term investment intent and should recognize that there will
be a limited trading market in the common stock. This may make it difficult to sell the common stock after the stock offering and
may have an adverse impact on the price at which the common stock can be sold.
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Table of Contents
HISTORICAL AND PRO FORMA REGULATORY
CAPITAL COMPLIANCE
At December 31, 2016, Heritage Bank of St.
Tammany 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 Heritage Bank of St. Tammany at December 31, and the pro
forma equity capital and regulatory capital of Heritage Bank of St. Tammany after giving effect to the sale of shares of common
stock at $10.00 per share. The table assumes the receipt by Heritage Bank of St. Tammany of $4.7 million, $5.7 million, $6.6 million
and $7.7 million, respectively at the minimum, midpoint, maximum and adjusted maximum of the offering range. See "How We
Intend to Use the Proceeds from the Offering."
Heritage Bank of St.
Tammany Historical at
Pro Forma at December 31, 2016, Based Upon the Sale in the Offering of (1)
December 31, 2016
1,062,500 shares
1,250,000 shares
1,437,500 shares
1,653,125 shares (2)
Amount
Percent of
Assets (3)
Amount
Percent of
Assets (3)
Amount
Percent of
Assets (3)
Amount
Percent of
Assets (3)
Amount
Percent of
Assets (3)
(Dollars in thousands)
Equity
$
9,460
9.65
%
$
12,898
12.56
%
$
13,610
13.13
%
$
14,323
13.69
%
$
15,142
14.33
%
Tier 1 leverage capital
$
9,418
9.79
%
$
12,856
12.74
%
$
13,568
13.32
%
$
14,281
13.89
%
$
15,100
14.54
%
Tier 1 leverage capital requirement
4,811
5.00
5,046
5.00
5,093
5.00
5,140
5.00
5,194
5.00
Excess
$
4,607
4.79
%
$
7,810
7.74
%
$
8,475
8.32
%
$
9,141
8.89
%
$
9,906
9.54
%
Tier 1 risk-based
capital (4)
$
9,418
17.35
%
$
12,856
23.27
%
$
13,568
24.48
%
$
14,281
25.68
%
$
15,100
27.05
%
Risk-based requirement
4,344
8.00
4,419
8.00
4,434
8.00
4,449
8.00
4,466
8.00
Excess
$
5,074
9.35
%
$
8,437
15.27
%
$
9,134
16.48
%
$
9,832
17.68
%
$
10,634
19.05
%
Total risk-based
capital (4)
$
10,096
18.59
%
$
13,534
24.50
%
$
14,246
25.70
%
$
14,959
26.90
%
$
15,778
28.26
%
Risk-based requirement
5,430
10.00
5,524
10.00
5,543
10.00
5,562
10.00
5,583
10.00
Excess
$
4,666
8.59
%
$
8,010
14.50
%
$
8,703
15.70
%
$
9,397
16.90
%
$
10,195
18.26
%
Common equity Tier 1 risk-based capital (4)
$
9,418
17.35
%
$
12,856
23.27
%
$
13,568
24.48
%
$
14,281
25.68
%
$
15,100
27.05
%
Risk-based requirement
3,529
6.50
3,591
6.50
3,603
6.50
3,615
6.50
3,629
6.50
Excess
$
5,889
10.85
%
$
9,265
16.77
%
$
9,965
17.98
%
$
10,666
19.18
%
$
11,471
20.55
%
Reconciliation of capital infused into Heritage Bank of St. Tammany:
Proceeds to Heritage Bank of St. Tammany
$
4,713
$
5,650
$
6,588
$
7,666
Less:  Common stock acquired by employee stock ownership plan
(850
)
(1,000
)
(1,150
)
(1,323
)
Less:  Common stock acquired by stock-based incentive plan
(425
)
(500
)
(575
)
(661
)
Pro forma increase
$
3,438
$
4,150
$
4,863
$
5,682
(1)
Pro forma capital levels assume that the employee stock ownership plan purchases 8% of the shares of common stock sold in the
stock offering with funds we lend and that our stock-based equity plan purchases 4% of the shares sold in the offering for restricted
stock awards. Pro forma capital calculated under generally accepted accounting principles ("GAAP") and regulatory capital
have been reduced by the amount required to fund these plans. See "Management" for a discussion of the employee stock
ownership plan.
(2)
As adjusted to give effect to an increase in the number of shares which could occur due to a 15% increase in the offering range
to reflect demand for the shares or changes in market conditions following the commencement of the offering.
(3)
Tier 1 leverage capital levels are shown as a percentage of total adjusted assets. Risk-based capital levels are shown as a
percentage of risk-weighted assets.
(4)
Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.
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Table of Contents
CAPITALIZATION
The following table presents the historical
consolidated capitalization of Heritage Bank of St. Tammany at December 31, 2016 and the pro forma consolidated capitalization
of Heritage NOLA Bancorp after giving effect to the conversion and offering, based upon the assumptions set forth in the "Pro
Forma Data" section.
Heritage
    Bank
of St. Tammany
Pro
                                         Forma at December 31, 2016
Based
                                         upon the Sale in the Offering at $10.00 per Share of
at
    December 31,
2016
1,062,500
Shares
1,250,000
Shares
1,437,500
Shares
1,653,125
Shares (1)
(Dollars in thousands,
    except per share amounts)
Deposits (2)
$
74,251
$
74,251
$
74,251
$
74,251
$
74,251
Borrowings
13,274
13,274
13,274
13,274
13,274
Total deposits and borrowings
$
87,525
$
87,525
$
87,525
$
87,525
$
87,525
Stockholders' equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized (post-conversion)
$
—
$
—
$
—
$
—
$
—
Common stock, $0.01 par value, 9,000,000 shares
    authorized (post-conversion); shares to be issued as reflected (3)
—
11
13
14
17
Additional paid-in capital (4)
—
9,414
11,287
13,161
15,315
Retained earnings (5)
9,429
9,429
9,429
9,429
9,429
Accumulated other comprehensive income
31
31
31
31
31
Less:
Common stock held by employee stock ownership plan (7)
—
(850
)
(1,000
)
(1,150
)
(1,323
)
Common stock to be acquired by stock-based benefit plan (8)
—
(425
)
(500
)
(575
)
(661
)
Total stockholders' equity
$
9,460
$
17,610
$
19,261
$
20,910
$
22,808
Pro forma shares outstanding
1,062,500
1,250,000
1,437,500
1,653,125
Total stockholders' equity as a percentage of total assets (2)
9.65
%
16.59
%
17.86
%
19.10
%
20.48
%
Tangible equity as a percentage of tangible assets (2)
9.65
%
16.59
%
17.86
%
19.10
%
20.48
%
(1)
As adjusted to give effect to an increase in the number of shares of common stock that could occur due to a 15% increase in
the offering range to reflect demand for shares or changes in market conditions following the commencement of the subscription
and community offerings.
(2)
Does not reflect withdrawals from deposit accounts for the purchase of shares of common stock in the conversion and offering.
These withdrawals would reduce pro forma deposits and assets by the amount of the withdrawals.
(3)
No effect has been given to the issuance of additional shares of Heritage NOLA Bancorp common stock pursuant to the exercise
of options under a stock-based benefit plan. If the plan is implemented within the first year after the closing of the offering,
an amount up to 10% of the shares of Heritage NOLA Bancorp common stock sold in the offering will be reserved for issuance upon
the exercise of options under the plan.
(4)
On a pro forma basis, common stock and additional paid-in capital have been revised to reflect the number of shares of Heritage
NOLA Bancorp common stock to be outstanding.
(5)
The retained earnings of Heritage Bank of St. Tammany will be substantially restricted after the conversion. See "The
Conversion and Offering – Liquidation Rights" and "Regulation and Supervision."
(6)
Assumes that 8% of the shares sold in the offering will be acquired by the employee stock ownership plan financed by a loan
from Heritage NOLA Bancorp. The loan will be repaid principally from Heritage Bank of St. Tammany' contributions to the employee
stock ownership plan. Since Heritage NOLA Bancorp will finance the employee stock ownership plan debt, this debt will be eliminated
through consolidation and no liability will be reflected on Heritage NOLA Bancorp's consolidated financial statements. Accordingly,
the amount of shares of common stock acquired by the employee stock ownership plan is shown in this table as a reduction of total
stockholders' equity.
(7)
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 a stock-based benefit plan in open market purchases by Heritage NOLA Bancorp. The dollar amount of common stock to
be purchased is based on the $10.00 per share subscription 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 subscription price in the offering.
As Heritage NOLA Bancorp accrues compensation expense to reflect the vesting of shares pursuant to the stock-based benefit plan,
the credit to equity will be offset by a charge to noninterest expense. Implementation of the stock-based benefit plans will require
stockholder approval.
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Table of Contents
PRO FORMA DATA
The following tables summarize historical
data of Heritage Bank of St. Tammany and pro forma data of Heritage NOLA Bancorp at and for the year ended December 31, 2016. This
information is based on assumptions set forth below and in the table, 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 in the tables are based
upon the following assumptions:
·
all shares of common stock will be sold in the subscription offering;
·
our employee stock ownership plan will purchase 8% of the shares of common stock sold in the stock offering with a loan from
Heritage NOLA Bancorp. The loan will be repaid in substantially equal payments of principal and interest (at the prime interest
rate, adjusted annually) over a period of 25 years; and
·
expenses of the stock offering, including fees and expenses to be paid to FIG Partners, LLC, will be $1.2 million.
Pro forma earnings on net proceeds have
been calculated assuming the stock has been sold at the beginning of the period and the net proceeds have been invested at a yield
of 1.93% for the year ended December 31, 2016. This represents the five-year U.S. Treasury Note rate as of December 31, 2016, 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 generally required by regulations of the OCC. The pro forma after-tax yield on the net proceeds
from the offering is assumed to be 1.27% for the year ended December 31, 2016, based on an effective tax rate of 34%.
We calculated historical and pro forma per
share amounts by dividing historical and pro forma amounts of consolidated net income and stockholders' equity by the indicated
number of shares of common stock. We adjusted the earnings figures to give effect to the shares of common stock purchased by the
employee stock ownership plan. We computed per share amounts for each period as if the shares of common stock were outstanding
at the beginning of each period, but we did not adjust per share historical or pro forma stockholders' equity to reflect
the earnings on the estimated net proceeds.
The pro forma tables give effect to the
implementation of a stock-based benefit plan. Subject to the receipt of stockholder approval, we have assumed that the stock-based
benefit plan will acquire for restricted stock awards a number of shares of common stock equal to 4% of our outstanding shares
of common stock at the same price for which they were sold in the stock offering. We assume that shares of common stock are granted
under the plan in awards that vest over a five-year period.
We have also assumed that the stock-based
benefit plan will grant options to acquire shares of common stock equal to 10% of our outstanding shares of common stock. In preparing
the tables below, we assumed that stockholder approval was obtained, that the exercise price of the stock options and the market
price of the stock at the date of grant were $10.00 per share and that the stock options 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 $2.74 for each option. In
addition to the terms of the options described above, the Black-Scholes option pricing model assumed an estimated volatility rate
of 12.57% for the shares of common stock, no dividend yield, an expected option life of 10 years and a risk-free interest rate
of
40
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2.45%. Finally, we assumed that 25% of the
stock options were non-qualified options granted to directors, resulting in a tax benefit (at an assumed tax rate of 34%) for a
deduction equal to the grant date fair value of the options.
We may reserve shares for the exercise of
stock options and the grant of stock awards under a stock-based benefit plan in excess of 10% and 4%, respectively, of our total
outstanding shares if the stock-based benefit plan is adopted more than one year following the stock offering. In addition, we
may grant options and award shares that vest more rapidly than over a five-year period if the stock-based benefit plan is adopted
more than one year following the stock offering.
As discussed under "How We Intend
to Use the Proceeds from the Offering," we intend to contribute at the minimum, midpoint, maximum and adjusted maximum of
the offering range approximately $4.7 million, $5.7 million, $6.6 million and $7.7 million, respectively, of the net proceeds from
the stock offering to Heritage Bank of St. Tammany, and we will retain the remainder of the net proceeds from the stock offering.
We will use portions of the proceeds we retain for the purpose of making a loan to the employee stock ownership plan and retain
the rest of the proceeds for future use.
The pro forma table does not give effect
to: (i) withdrawals from deposit accounts for the purpose of purchasing shares of common stock in the stock offering; (ii) our
results of operations after the stock offering; or (iii) changes in the market price of the shares of common stock after the stock
offering.
The following pro forma information may
not represent the financial effects of the stock offering at the date on which the stock offering actually occurs and you should
not use the table to indicate future results of operations. Pro forma stockholders' equity represents the difference between
the stated amount of our assets and liabilities, computed in accordance with GAAP. We did not increase or decrease stockholders'
equity to reflect the difference between the carrying value of loans and other assets and their market value. Pro forma stockholders'
equity is not intended to represent the fair market value of the shares of common stock and may be different than the amounts that
would be available for distribution to stockholders if we liquidated. Pro forma stockholders' equity does not give effect
to the impact of intangible assets, bad debt reserve or the liquidation account we will establish in the conversion in the unlikely
event we are liquidated.
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Table of Contents
At or for the year ended December 31, 2016
Based upon the Sale at $10.00 Per Share of
1,062,500
Shares
1,250,000
Shares
1,437,500
Shares
1,653,125
Shares (1)
(Dollars in thousands, except per share amounts)
Gross proceeds of offering
$
10,625
$
12,500
$
14,375
$
16,531
Less: Expenses
(1,200
)
(1,200
)
(1,200
)
(1,200
)
Estimated net proceeds
9,425
11,300
13,175
15,331
Less: Common stock acquired by ESOP (2)
(850
)
(1,000
)
(1,150
)
(1,323
)
Less: Common stock acquired by stock-based benefit plans (3)(4)
(425
)
(500
)
(575
)
(661
)
Estimated net proceeds
$
8,150
$
9,800
$
11,450
$
13,347
For the year ended December 31, 2016
Consolidated net income:
Historical
$
158
$
158
$
158
$
158
Pro forma adjustments:
Income on adjusted net proceeds
104
125
146
170
State share/franchise tax
(111
)
(120
)
(129
)
(139
)
Employee stock ownership plan (2)
(22
)
(26
)
(30
)
(35
)
Stock awards (3)
(56
)
(66
)
(76
)
(87
)
Stock options (4)
(53
)
(63
)
(72
)
(83
)
Pro forma net income (loss)
$
20
$
8
$
(3
)
$
(16
)
Income per share:
Historical
$
0.15
$
0.13
$
0.12
$
0.10
Pro forma adjustments:
Income on adjusted net proceeds
0.11
0.11
0.11
0.11
State share/franchise tax
(0.11
)
(0.10
)
(0.10
)
(0.09
)
Employee stock ownership plan (2)
(0.02
)
(0.02
)
(0.02
)
(0.02
)
Stock awards (3)
(0.06
)
(0.06
)
(0.06
)
(0.06
)
Stock options (4)
(0.05
)
(0.05
)
(0.05
)
(0.05
)
Pro forma earnings (loss) per share
$
0.02
$
0.01
$
0.00
$
(0.01
)
Offering price to pro forma net earnings per share
500
x
1,000
x
n/m
n/m
Number of shares used in earnings per share calculations
980,900
1,154,000
1,327,100
1,526,165
At December 31, 2016
Stockholders' equity:
Historical
$
9,460
$
9,460
$
9,460
$
9,460
Estimated net proceeds
9,425
11,300
13,175
15,331
Less: Common stock acquired by ESOP (2)
(850
)
(1,000
)
(1,150
)
(1,323
)
Less: Common stock acquired by stock-based benefit plans (3)(4)
(425
)
(500
)
(575
)
(661
)
Pro forma stockholders' equity (5)
$
17,610
$
19,260
$
20,910
$
22,807
Stockholders' equity per share:
Historical
$
8.90
$
7.57
$
6.58
$
5.72
Estimated net proceeds
8.87
9.04
9.17
9.27
Less: Common stock acquired by ESOP (2)
(0.80
)
(0.80
)
(0.80
)
(0.80
)
Less: Common stock acquired by stock-based benefit plans (3)(4)
(0.40
)
(0.40
)
(0.40
)
(0.40
)
Pro forma stockholders' equity per share (5)
$
16.57
$
15.41
$
14.55
$
13.79
Pro forma price to book value
60.35
%
64.89
%
68.73
%
72.52
%
Number of shares outstanding for pro forma book value per share calculations
1,062,500
1,250,000
1,437,500
1,653,125
(Footnotes begin on following page)
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Table of Contents
(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)
Assumes that 8% of shares of common stock sold in the offering will be purchased by the employee stock ownership plan ("ESOP").
For purposes of this table, the funds used to acquire these shares are assumed to have been borrowed by the ESOP from Heritage
NOLA Bancorp. Heritage Bank of St. Tammany intends to make annual contributions to the ESOP in an amount at least equal to the
required principal and interest payments on the debt. Heritage Bank of St. Tammany' total annual payments on the employee
stock ownership plan debt are based upon 25 equal annual installments of principal and interest. Financial Accounting Standards
Board Accounting Standards Codification 718-40, "Employers' Accounting for Employee Stock Ownership Plans" ("ASC
718-40") requires that an employer record compensation expense in an amount equal to the fair value of the shares committed
to be released to employees. The pro forma adjustments assume that the ESOP shares are allocated in equal annual installments based
on the number of loan repayment installments assumed to be paid by Heritage Bank of St. Tammany, the fair value of the common stock
remains equal to the subscription price and the employee stock ownership plan expense reflects an effective tax rate of 34%. The
unallocated ESOP shares are reflected as a reduction of stockholders' equity. No reinvestment is assumed on proceeds contributed
to fund the ESOP. The pro forma net income further assumes that 3,400, 4,000, 4,600 and 5,290 were committed to be released during
the year ended December 31, 2016, respectively, at the minimum, midpoint, maximum, and adjusted maximum of the offering range,
respectively, and in accordance with ASC 718-40, only the ESOP shares committed to be released during the period were considered
outstanding for purposes of income per share calculations.
(3)
If approved by Heritage NOLA Bancorp's stockholders, a stock-based benefit plan may purchase an aggregate number of shares
of common stock equal to 4% of the shares to be sold in the offering (or possibly a greater number of shares if the plan is implemented
more than one year after completion of the conversion or a lesser number if Heritage Bank of St. Tammany has a tier 1 leverage
ratio of less than 10.00% within one year of the completion of the conversion). Stockholder approval of the stock-based benefit
plan, and purchases by the plan may not occur earlier than six months after the completion of the conversion. The shares may be
acquired directly from Heritage NOLA Bancorp or through open market purchases. The funds to be used by the stock-based benefit
plans to purchase the shares will be provided by Heritage NOLA Bancorp. The table assumes that (i) the stock-based benefit
plan acquires the shares through open market purchases at $10.00 per share, (ii) 20% of the amount contributed to the stock-based
benefit plan is amortized as an expense during the year, and (iii) the stock-based benefit plan expense reflects an effective
tax rate of 34%. Assuming stockholder approval of the stock-based benefit plan 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 3.85%.
(4)
If approved by Heritage NOLA Bancorp's stockholders, a stock-based benefit plan may grant options to acquire an aggregate
number of shares of common stock equal to 10% of the shares to be sold in the offering (or possibly a greater number of shares
if the plan is implemented more than one year after completion of the conversion). Stockholder approval of the stock-based benefit
plan may not occur earlier than six months after the completion of the conversion. In calculating the pro forma effect of the stock
options to be granted under a stock-based benefit plan, it is assumed that the exercise price of the stock options and the trading
price of the common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the
Black-Scholes option pricing model was $2.74 for each option, and the aggregate grant-date fair value of the stock options was
amortized to expense on a straight-line basis over a five-year vesting period of the options. The actual expense of the stock options
to be granted under the stock-based benefit plan will be determined by the grant-date fair value of the options, which will depend
on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted. Under the above
assumptions, the adoption of the stock-based benefit plan will result in no additional shares under the treasury stock method for
purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will
be equal to the $10.00 price per share. If a portion of the shares to satisfy the exercise of options under the stock-based benefit
plans is obtained from the issuance of authorized but unissued shares, our net income per share and stockholders' equity
per share would decrease. Assuming stockholder approval of the stock-based benefit plan and that shares of common stock used to
fund stock options (equal to 10% of the 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 9.09%.
(5)
The retained earnings of Heritage Bank of St. Tammany will be substantially restricted after the conversion. See "Our
Dividend Policy," "The Conversion and Offering – Liquidation Rights" and "Regulation and Supervision."
The number of shares used to calculate pro forma stockholders' equity per share is equal to the total number of shares to
be outstanding upon completion of the offering.
43
Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion and analysis reflects our
financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition
and results of operations. The information in this section has been derived from the audited financial statements, which appear
beginning on page F-1 of this prospectus. You should read the information in this section in conjunction with the business and
financial information regarding Heritage Bank of St. Tammany provided in this prospectus.
Overview
Our business consists primarily of taking
deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family
residential real estate loans, including non-owner-occupied properties and home equity lines of credit, and commercial real estate.
We also originate land, construction and multifamily loans, and to a much lesser extent, we originate consumer loans and purchase
commercial business loans. At December 31, 2016, $57.6 million, or 75.1% of our total loan portfolio, was comprised of one- to
four-family residential real estate loans, $11.2 million of which were non-owner-occupied loans. While we originate conforming
one- to four-family residential real estate loans that we sell to Freddie Mac, historically we have also originated a substantial
amount of non-conforming loans that we retain in our portfolio. Following completion of the conversion and stock offering, we intend
to consider hiring an experienced commercial lender and increase our emphasis on the origination of commercial real estate loans.
In 2016, we began purchasing loans from
the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals. Consistent with our business plan to
grow our loan portfolio while managing our interest rate risk, subject to market conditions, we may significantly increase our
holdings of these types of commercial business loans in the future.
We offer a variety of deposit accounts,
including noninterest-bearing demand accounts, savings accounts, NOW accounts and certificates of deposit. We utilize advances
from the FHLB-Dallas for asset/liability management purposes. At December 31, 2016, we had $13.3 million in advances outstanding
with the FHLB-Dallas.
In recent years we have accepted jumbo certificates
of deposit through National CD Rateline, an on-line service. Pursuant to our business strategy, we are seeking to increase our
core deposits by aggressively marketing and pricing these deposit products and by growing our commercial lending relationships,
while reducing our reliance on certificates of deposit as a funding source.
Our current business strategy includes continuing
our disciplined underwriting practices to maintain our strong asset quality, continuing our emphasis on originating one- to four-family
residential real estate loans, increasing our emphasis on the origination of commercial real estate loans and the purchase of commercial
business loans to healthcare professionals, and enhancing core earnings by increasing lower-cost transaction and savings accounts.
Heritage Bank of St. Tammany is subject
to comprehensive regulation and examination by its primary federal regulator, the OCC.
Our executive and administrative office
is located at 205 North Columbia Street, Covington, Louisiana 70433, and our telephone number at this address is (985) 892-4565.
Our website address is
44
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www.heritagebank.org. Information on our website
is not incorporated into this prospectus and should not be considered part of this prospectus.
Business Strategy
Our principal objective is to build long-term
value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking
needs of our customers by emphasizing personalized and efficient customer service. Highlights of our current business strategy
include:
·
Continuing to focus on one- to four-family residential real estate lending, including our practice of originating for
retention in our portfolio, nonconforming long-term loans.
We have been, and will continue to be, primarily a one- to four-family
residential real estate lender for borrowers in our market area. As of December 31, 2016, $57.6 million, or 75.1%, of our total
loan portfolio, consisted of one- to four-family residential real estate loans, including $11.2 million, or 14.7% of non-owner-occupied
loans, and at that date an additional $2.2 million, or 2.9%, of our total loan portfolio, consisted of home equity lines of credit.
While we intend to increase our focus on the origination and purchase of commercial real estate lending and the purchase of commercial
business lending in an effort to increase yield, we expect that one- to four-family residential real estate lending will remain
our primary lending activity.
·
Increasing commercial real estate lending and commercial business lending.
In order to increase the yield on
our loan portfolio and reduce the term to maturity of our loan portfolio, we intend to increase our emphasis on the origination
and purchase of commercial real estate lending and the purchase of commercial business loans, while maintaining conservative underwriting
standards. As part of this strategy we intend to consider hiring additional lending personnel, including an experienced commercial
real estate lender. The additional capital raised in the offering will increase our commercial lending capacity by increasing our
loans to one borrower limit and we believe enable us to originate more loans. Additionally, we intend to increase our holdings
of loans to healthcare professionals to increase our commercial business portfolio.
·
Maintaining our strong asset quality through conservative loan underwriting.
As we seek to diversify our loan
portfolio, we intend to maintain strict, quality-oriented loan underwriting and credit monitoring processes. In recent years, management
and the board of directors have focused on improving the Bank's asset quality by implementing such policies and procedures.
At December 31, 2016, nonperforming assets totaled $611,000, or 0.62%of total assets, down from $2.0 million, or 2.06% of total
assets at December 31, 2015.
·
Attracting and retaining customers in our market area and increasing our "core" deposits consisting of demand,
NOW and savings accounts.
We also intend to increase our core deposits, including noninterest-bearing transaction accounts,
and decrease our dependence on certificates of deposit.
·
Remaining a community-oriented institution and relying
on high quality service
to maintain and build a loyal local customer base
. We were established in 1924 and have been operating continuously
in and around Covington, Louisiana since that time. Through the goodwill we have developed over years of providing timely, efficient
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banking services,
we believe we have been able to attract a solid base of local retail customers on which to continue to build our banking business.
·
Expanding our banking franchise as opportunities arise through de novo branching and/or branch acquisitions.
We currently operate from our two full-service banking offices. We believe there are branch expansion opportunities in our primary
market area. We intend to evaluate branch expansion opportunities, including through establishing a
de novo
branch and/or
branch acquisitions as such opportunities arise. However, we currently have no understandings or agreements with respect to establishing
a new branch or acquiring a branch.
These strategies are intended to guide our
investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and
the offering, subject to changes necessitated by future market conditions, regulatory restrictions and other factors.
Anticipated Increase in Noninterest Expense
Following the completion of the conversion,
our noninterest expense is expected to increase because of the increased costs associated with operating as a public company, and
the increased compensation expenses associated with the purchase of shares of common stock by our employee stock ownership plan
and the possible implementation of a stock-based benefit plan, if approved by our stockholders, no earlier than six months after
the completion of the conversion. For further information, see "Summary – Benefits to Management and Potential Dilution
to Stockholders Resulting from the Conversion;" "Risk Factors – Risks Related to the Offering – Our stock-based
benefit plan will increase our costs, which will reduce our income;" and "Management – Benefit Plans and Agreements."
Critical Accounting Policies
The discussion and analysis of the financial
condition and results of operations are based on our financial statements, which are prepared in conformity with generally accepted
accounting principles used in the United States of America. The preparation of these financial statements requires management to
make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities,
and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting
policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed
to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions,
resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of
operations.
The JOBS Act contains provisions that, among
other things, reduce certain reporting requirements for qualifying public companies. As an "emerging growth company"
we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are
made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly,
our financial statements may not be comparable to companies that comply with such new or revised accounting standards.
The following represent our critical accounting
policies:
Allowance for Loan Losses.
The
allowance for loan losses is the estimated amount considered necessary to cover inherent, but unconfirmed, credit losses in the
loan portfolio at the balance sheet date.
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The allowance is established through the provision for loan
losses which is charged against income. In determining the allowance for loan losses, management makes significant estimates and
has identified this policy as one of our most critical accounting policies.
Management performs a quarterly evaluation
of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not
limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying
collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation
is inherently subjective as it requires material estimates that may be susceptible to significant change.
The analysis has two components, specific
and general allowances. The specific percentage allowance is for unconfirmed losses related to loans that are determined to be
impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans,
the fair value of the collateral, adjusted for market conditions and selling expenses. If the fair value of the loan is less than
the loan's carrying value, a charge is recorded for the difference. The general allowance, which is for loans reviewed collectively,
is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze
historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis
establishes historical loss percentages and qualitative factors that are applied to the loan groups to determine the amount of
the allowance for loan losses necessary for loans that are reviewed collectively. The qualitative component is critical in determining
the allowance for loan losses as certain trends may indicate the need for changes to the allowance for loan losses based on factors
beyond the historical loss history. Not incorporating a qualitative component could misstate the allowance for loan losses. Actual
loan losses may be significantly more than the allowances we have established which could result in a material negative effect
on our financial results.
Fair Value Measurements.
The
fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale. The Bank estimates the fair value of a financial instrument
and any related asset impairment using a variety of valuation methods. Where financial instruments are actively traded and have
quoted market prices, quoted market prices are used for fair value. When the financial instruments are not actively traded, other
observable market inputs, such as quoted prices of securities with similar characteristics, may be used, if available, to determine
fair value. When observable market prices do not exist, the Bank estimates fair value. These estimates are subjective in nature
and imprecision in estimating these factors can impact the amount of gain or loss recorded. A more detailed description of the
fair values measured at each level of the fair value hierarchy and the methodology utilized by the Bank can be found in Note 13
of the Financial Statements "– Disclosures About Fair Value of Assets and Liabilities."
Mortgage Servicing Rights.
We
sell all of our conforming conventional one- to four-family residential real estate loans on a servicing-retained basis to Freddie
Mac. When we acquire mortgage servicing rights through the origination of mortgage loans and sale of those loans with servicing
rights retained, we allocate a portion of the total cost of the mortgage loans to the mortgage servicing rights based on their
relative fair value. At December 31, 2016, we were servicing loans sold to others totaling $40.0 million. We amortize capitalized
mortgage servicing rights as a reduction of servicing fee income in proportion to, and over the period of, estimated net servicing
income by use of a method that approximates the level-yield method. We periodically evaluate capitalized mortgage servicing rights
for impairment using a model that takes into account several variables including expected prepayment speeds and prevailing interest
rates. If we identify impairment, we charge the amount of the impairment to earnings by establishing a valuation allowance against
the capitalized mortgage servicing rights asset. The primary risk of material changes to the value of the servicing rights resides
in the potential volatility in the
47
Table of Contents
economic assumptions used, particularly the prepayment speed.
We monitor this risk and adjust the valuation allowance as necessary to adequately record any probable impairment in the portfolio.
Management believes the estimation of these variables makes this a critical accounting policy. For purposes of measuring impairment,
the mortgage servicing rights are stratified based on financial asset type and interest rates. In general, the value of mortgage
servicing rights increases as interest rates rise and decreases as interest rates fall. This is because the estimated life and
estimated income from a loan increase as interest rates rise and decrease as interest rates fall.
Comparison of Financial Condition at December 31, 2016
and December 31, 2015
Total Assets.
Total assets
increased $1.5 million, or 1.6%, to $98.0 million at December 31, 2016 from $96.5 million at December 31, 2015. The increase resulted
primarily from an increase in net loans of $2.7 million, offset in part by a decrease of $663,000 in foreclosed real estate and
a decrease of $558,000 in cash and cash equivalents.
Cash and Cash Equivalents.
Cash and cash equivalents decreased $558,000, or 6.5%, to $8.0 million at December 31, 2016 from $8.6 million at December 31, 2015.
The decrease was due to the deployment of these funds into loan originations.
Net Loans.
Net loans
increased $2.7 million, or 3.8%, to $74.7 million at December 31, 2016 from $72.0 million at December 31, 2015. During the year
ended December 31, 2016, we originated $20.8 million of loans, $15.4 million of which were one- to four-family residential real
estate loans, $3.1 million of which were construction loans and the remaining $2.3 million were land, consumer and commercial real
estate loans. During 2016, one- to four-family residential real estate loans increased $2.8 million, or 5.0%, to $59.8 million
at December 31, 2016, from $57.0 million at December 31, 2015, commercial real estate loans decreased $790,000, or 9.9%, to $7.2
million at December 31, 2016 from $8.0 million at December 31, 2015 and construction loans decreased $775,000, or 18.2%, to $3.5
million at December 31, 2016 from $4.3 million at December 31, 2015. Increases in loan balances reflect our strategy to prudently
grow our loan portfolio.
In 2016, we sold $6.6 million of loans,
all of which were one- to four-family residential real estate loans, on both a servicing-retained and servicing-released basis.
Management intends to continue this sales activity in future periods to generate gain on sale revenue and servicing fee income.
Securities.
The balance
of our securities available-for-sale and held-to-maturity, which consist entirely of government-sponsored mortgage-backed securities,
remained unchanged at $8.0 million at December 31, 2016 and December 31, 2015.
Premises and Equipment.
Premises
and equipment decreased $176,000, or 4.5%, to $3.7 million at December 31, 2016 from $3.9 million at December 31, 2015. The decrease
resulted from the recognition of depreciation of $184,000.
Bank-Owned Life Insurance.
At
December 31, 2016, our investment in bank owned life insurance was $2.0 million, an increase of $52,000, from $1.9 million at December
31, 2015. We invest in bank-owned life insurance to provide us with a funding offset for our benefit plan obligations. Bank owned
life insurance also generally provides us noninterest income that is non-taxable.
Deposits.
Deposits increased
$672,000, or 1.0%, to $74.3 million at December 31, 2016 from $73.6 million at December 31, 2015. Checking accounts increased $1.3
million, or 28.9%, to $5.8 million at December 31, 2016 from $4.5 million at December 31, 2015 and time deposits decreased $1.3
million, or 2.4%, to $51.0 million at December 31, 2016 from $52.3 million at December 31, 2015. The decrease
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in time deposits was due in part to maturities of certificates
of deposit owned by other financial institutions that were not renewed. The growth in the balance of checking accounts and the
decrease in the balance of certificates of deposit reflect management's effort to change the deposit mix and increase core
deposits.
Borrowings.
Borrowings, consisting
entirely of Federal Home Loan Bank advances, totaled $13.3 million at December 31, 2016 compared to $12.7 million at December 31,
2015. The increase in borrowings was attributable to management utilizing advances as a funding source for loan originations and
purchases, as opposed to utilizing certificates of deposits. At December 31, 2016, the aggregate cost of outstanding advances from
the Federal Home Loan Bank was 1.29%, compared to 1.55% for our certificates of deposit and 1.19% for the Bank's cost of
deposits at that date.
Total Equity.
Total
equity increased $134,000, or 1.4%, to $9.5 million at December 31, 2016 from $9.3 million at December 31, 2015. The increase resulted
from net income of $158,000 during the year ended December 31, 2016.
Comparison of Operating Results for the Years Ended December
31, 2016 and December 31, 2015
General.
We had net
income of $158,000 for the year ended December 31, 2016, compared to net income of $277,000 for the year ended December 31, 2015,
a decrease of $119,000, or 43.0%. The decrease in net income resulted from an increase in the provision for loan losses of $160,000,
a decrease of $52,000 in noninterest income, a $154,000 increase in noninterest expense and a $111,000 increase in income tax expense,
offset, in part, by a $198,000 increase in net interest income. Income tax expense increased as a result of an adjustment of prior
year's deferred tax balances and a charge-off of a small tax receivable balance. The increase in interest income resulted
primarily from the increase in the balance of our loan portfolio in 2016, including the purchase of $5.0 million of one-to four-family
residential real estate loans in November of 2015 that significantly affected our interest income in 2016.
Interest Income.
Interest
income increased $426,000, or 11.6%, to $4.1 million for the year ended December 31, 2016 from $3.7 million for the year ended
December 31, 2015. This increase was primarily attributable to a $462,000 increase in interest on loans receivable, offset in part
by a $51,000 decrease in interest on investment securities due to a decrease in the average balance of investment securities year
to year. The average balance of loans increased $9.0 million, or 14.1%, to $72.7 million for the year ended December 31, 2016 from
$63.7 million for the year ended December 31, 2015 while the average yield on loans decreased two basis points to 5.30% during
2016 from 5.32% during 2015. The average balance of investment securities decreased $2.2 million, or 22.7%, to $7.5 million at
December 31, 2016 from $9.7 million for the year ended December 21, 2015 and the average yield on investment securities decreased
nine basis points to 1.90% for 2016 from 1.99% for 2015.
Interest Expense.
Total
interest expense increased $69,000, or 7.5%, to $993,000 for the year ended December 31, 2016 from $924,000 for the year ended
December 31, 2015. The increase was primarily due to an increase of $71,000, or 79.8%, in the interest expense on FHLB advances.
The average balance of interest-bearing deposits remained stable, increasing $100,000, or 0.1%, to $70.9 million for the year ended
December 31, 2016 from $70.8 million for the year ended December 31, 2015. The average cost of interest-bearing deposits was unchanged
at 1.18% for both 2016 and 2015. The average balance of FHLBs advances increased $4.6 million, or 60.0%, to $12.3 million for the
year ended December 31, 2016 compared to $7.7 million for the year ended December 31, 2015, while the average cost of these advances
increased 12 basis points to 1.30% from 1.18%. The increase in the average balance of FHLB advances is due to management utilizing
advances as a funding source for loan originations and purchases.
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Table of Contents
Net Interest Income.
Net interest income increased $358,000, or 13.1%, to $3.1 million for the year ended December 31, 2016 from $2.7 million for the
year ended December 31, 2015. Average net interest-earning assets increased $1.4 million year to year
.
This increase
was due primarily to an increase in the average balance of loans year to year. Our interest rate spread increased to 3.36% for
the year ended December 31, 2016 from 3.20% for the year ended December 31, 2015, and our net interest margin increased to 3.45%
for the year ended December 31, 2016 from 3.28% for the year ended December 31, 2015. The increase in interest rate spread and
net interest margin was primarily a result of the yield on other interest-earning assets, primarily interest-earning deposits in
banks, increasing 23 basis points to 1.00% for 2016 from 0.77% for 2015 reflecting higher market interest rates in 2016, and the
increase in interest income caused by the increase in our loan balances.
Provision for Loan Losses.
We
recorded a provision for loan losses of $180,000 for the year ended December 31, 2016, compared to a $20,000 provision for the
year ended December 31, 2015. The increase in the provision for loan losses in 2016 compared to 2015 resulted from our analysis
of the factors described in "Critical Accounting Policies – Allowance for Loan Losses". The allowance for loan
losses was $692,000, or 0.90% of total loans, at December 31, 2016, compared to $592,000, or 0.79% of total loans, at December
31, 2015. Classified (substandard, doubtful and loss) loans decreased to $892,000 at December 31, 2016 from $1.4 million at December
31, 2015. Total non-performing loans decreased to $518,000 at December 31, 2016 from $1.2 million at December 31, 2015. Net charge-offs
for 2016 were $80,000, an increase of $2,000 over 2015. At December 31, 2016, $305,000, or 59.0%, of the non-performing loans were
contractually current.
Noninterest Income
.
Noninterest
income decreased $52,000, or 12.9%, to $351,000 for the year ended December 31, 2016 from $403,000 for the year ended December
31, 2015. The decrease was primarily due to a decrease in gains (losses) on the sale of foreclosed assets of $119,000 as there
was a net loss of ($51,000) in 2016 on these types of transactions compared to a net gain of $68,000 during 2015, partially offset
by an increase in loan-servicing income of $37,000 to $200,000 during 2016 from $163,000 in 2015.
Noninterest Expense.
Noninterest
expense increased $153,000, or 5.4%, to $3.0 million for 2016 from $2.8 million for 2015. The increase was due primarily to an
increase of $103,000, or 6.9%, in salaries and employee benefits, to $1.6 million in 2016 from $1.5 million in 2015. The increase
resulted from an increase in full-time equivalent employees during 2016, normal salary increases and an increase in the 401(k)
contributions.
Data processing expense increased $11,000,
or 5.9%, in 2016 to $197,000 from $186,000 in 2015 resulting from added products and services. Write-downs on foreclosed real estate
increased $35,000, or 63.6%, to $90,000 from $55,000 in 2015. Other noninterest expense increased $42,000, or 11.2%, to $416,000
in 2016 from $374,000 in 2015 primarily due to increased costs related to consulting and advisory fees.
Upon consummation of the conversion and
stock offering, we expect noninterest expense to increase because of costs associated with operating as a public company and increased
compensation costs related to possible implementation of a stock-based benefit plan, if approved by our stockholders.
Income Tax Expense (Benefit).
Income tax expense increased $111,000 to an expense of $110,000 for 2016 from a benefit of ($1,000) in 2015, resulting
from an adjustment of prior year's deferred tax balances and a charge-off of a small tax receivable balance.
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Average balances and yields
.
The following table sets forth average balance sheets, average yields and costs, and certain
other information at and for the years indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not
material. All average balances are daily average balances. Nonaccrual loans were included in the computation of average balances,
but have been reflected in the table as loans carrying a zero yield. 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.
At
December
31,
For
                                         the Year Ended December 31,
2016
2016
2015
Yield/
                                         Cost
Average
Outstanding
Balance
Interest
Yield/
                                         Rate
(1)
Average
Outstanding
Balance
Interest
Yield/
                                         Rate
(1)
Interest-earning assets:
Loans, net
4.84
%
$
72,667
$
3,849
5.30
%
$
63,704
$
3,387
5.32
%
Investment securities
1.97
7,523
143
1.90
9,740
194
1.99
Other
    interest-earning assets
1.23
9,315
93
1.00
9,979
77
0.77
Total interest-earning assets
4.28
89,505
4,085
4.56
83,423
3,658
4.38
Noninterest-earning assets
7,650
7,844
Total assets
$
97,155
$
91,267
Interest-bearing liabilities:
Interest-bearing demand
0.17
%
$
3,102
7
0.23
$
2,492
6
0.24
Savings accounts
0.22
16,244
40
0.25
15,967
57
0.36
Certificates of deposit
1.55
51,538
786
1.53
52,326
772
1.48
Total interest-bearing deposits
1.19
70,884
833
1.18
70,785
835
1.18
Borrowings
1.29
12,305
160
1.30
7,672
89
1.18
Total interest-bearing
    liabilities
1.20
83,189
993
1.20
78,457
924
1.18
Other
    non-interest bearing liabilities
4,452
3,558
Total liabilities
87,641
82,015
Equity
9,514
9,252
Total
    liabilities and equity
$
97,155
$
91,267
Net interest income
$
3,092
$
2,734
Net interest rate spread
(1)
3.08
%
3.36
%
3.20
%
Net interest-earning assets
(2)
$
6,316
$
4,966
Net interest margin
(3)
3.45
%
3.28
%
Average
    of interest-earning assets to interest-bearing liabilities
107.59
%
106.33
%
(1)
Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average
interest-bearing liabilities.
(2)
Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3)
Net interest margin represents net interest income divided by total interest-earning assets.
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Table of Contents
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 net 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.
Years
                                         Ended December 31,
2016
                                         vs. 2015
Increase
    (Decrease) Due to
Total
Volume
Rate
Increase
(Decrease)
(In thousands)
Interest-earning assets:
Loans
$
477
$
(15
)
$
462
Investment securities
(44
)
(7
)
(51
)
Other interest-earning assets
(5
)
21
16
Total interest-earning assets
428
(1
)
427
Interest-bearing liabilities:
Interest-bearing demand
1
―
1
Savings accounts
1
(18
)
(17
)
Certificates of deposit
(12
)
26
14
Total deposits
(10
)
8
(2
)
Borrowings
54
17
71
Total interest-bearing liabilities
44
25
69
Change in net interest income
$
384
$
(26
)
$
358
Management of Market Risk
General
.
Our most significant
form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive
to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure
of our financial condition and results of operations to changes in market interest rates. Our Asset/Liability Committee 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.
Our asset/liability management strategy
attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques
we use to manage interest rate risk are:
·
originating and purchasing commercial real estate loans, and, to a lesser extent, originating construction, multifamily and
land loans and purchasing commercial business loans, all of which tend to have shorter terms and higher interest rates than one-
to four-family residential real estate loans, and which generate customer relationships that can generate noninterest-bearing checking
accounts which are less interest rate sensitive;
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Table of Contents
·
selling substantially all of our conforming, conventional longer-term, fixed-rate one- to four-family residential real estate
loans and retaining the non-conforming and shorter-term, fixed-rate and adjustable-rate one- to four-family residential real estate
loans that we originate, subject to market conditions and periodic review of our asset/liability management needs;
·
reducing our dependence on certificates of deposit to support lending and investment activities and increasing our reliance
on core deposits, including checking accounts and savings accounts, which are less interest rate sensitive than certificates of
deposit; and
·
lengthening the weighted average maturity of our liabilities through longer-term funding sources such as fixed-rate advances
from the FHLB-Dallas with terms to maturity of seven to 10 years.
Our board of directors is responsible for
the review and oversight of our executive management team and other essential operational staff which are responsible for our asset/liability
analysis. These officers act as an asset/liability committee and are charged with developing and implementing an asset/liability
management plan, and generally meet monthly to review pricing and liquidity needs and assess our interest rate risk. 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 do not engage in hedging activities,
such as engaging in futures, options or swap transactions, 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.
Economic Value of Equity and Changes
in Net Interest Income.
We monitor interest rate risk through the use of a simulation model that estimates the amounts
by which the fair value of our assets and liabilities (our economic value of equity or "EVE") would change in the event
of a range of assumed changes in market interest rates. The quarterly reports developed in the simulation model assist us in identifying,
measuring, monitoring and controlling interest rate risk to ensure compliance within our policy guidelines.
The tables below set forth, as of December
31, 2016, the estimated changes in our EVE that would result from the designated instantaneous changes in market interest rates.
Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative
levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.
December 31, 2016
Change
                                         in
Interest
Rates
Estimated
Estimated
                                         Increase
(Decrease)
                                         in EVE
(basis points) (1)
EVE (2)
Amount
Percent
(Dollars in thousands)
+300
$
7,067
$
(2,393
)
(25.3
)%
+200
7,826
(1,634
)
(17.3
)
+100
8,621
(839
)
(8.9
)
―
9,460
―
―
(100)
10,184
724
7.7
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(1)
Assumes an instantaneous uniform change in interest rates at all maturities.
(2)
EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts
The tables above indicate that at December
31, 2016, in the event of a 100 basis point decrease in interest rates, we would have experienced a 7.7% increase in EVE. In the
event of a 200 basis point increase in interest rates at December 31, 2016, we would have experienced a 17.3% decrease in EVE.
In addition to modeling changes to our EVE,
we also analyze estimated changes to net interest income ("NII") for a prospective twelve-month period under the interest
rate scenarios set forth above. The following tables set forth our NII model as of December 31, 2016.
Change in Interest Rates
(Basis Points)
Estimated Net Interest
Income
(1)
Increase (Decrease)
in Estimated Net
Interest Income
+300
$
2,771
(5.2
)%
+200
2,823
(3.5
)%
+100
2,874
(1.7
)%
—
2,924
—
–100
3,004
2.7
%
(1)
The calculated changes assume an immediate shock of the static yield curve.
Certain shortcomings are inherent in the
methodology used in the above interest rate risk measurement. Modeling changes in EVE and NII require making certain assumptions
that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard,
the EVE and NII 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 EVE and NII 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 on EVE and NII and
will differ from actual results.
EVE and NII calculations also may not reflect
the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans,
deposits and borrowings.
Liquidity and Capital Resources
Liquidity describes our ability to meet
the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and
deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are
deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, and proceeds from maturities
of securities. We also have the ability to borrow from the FHLB-Dallas. At December 31, 2016, we had $13.3 million outstanding
in advances from the FHLB-Dallas, and had the capacity to borrow approximately an additional $26.8 million from the FHLB-Dallas
and an additional $3.0 million on a line of credit with First National Bankers' Bank, Baton Rouge, Louisiana at this date.
While maturities and scheduled amortization
of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including
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Table of Contents
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 $704,000 and $496,000 for the years ended December 31, 2016 and 2015, respectively. Net cash used in investing activities,
which consists primarily of net change in loans receivable, net change in investment securities and proceeds from the sale of loans,
was ($2.6 million) and ($8.6 million) for the years ended December 31, 2016 and 2015, respectively. Net cash provided by financing
activities, consisting primarily of the activity in deposit accounts and Federal Home Loan Bank advances, was $1.3 million and
$7.3 million for the years ended December 31, 2016 and 2015, respectively, resulting from our strategy of borrowing at lower interest
rates to fund loan originations.
We are committed to maintaining a strong
liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet
our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant
portion of maturing time deposits will be retained. We also anticipate continued participation in the National CD Rateline, an
on-line source of certificates of deposit, and continued use of FHLB-Dallas advances.
At December 31, 2016, we exceeded all of
our regulatory capital requirements with a Tier 1 leverage capital level of $9.4 million, or 9.79% of adjusted total assets, which
is above the well-capitalized required level of $3.8 million, or 4.0%; and total risk-based capital of $10.1 million, or 18.59%
of risk-weighted assets, which is above the well-capitalized required level of $4.3 million, or 8.0%. At December 31, 2015, we
exceeded all of our regulatory capital requirements with a Tier 1 leverage capital level of $9.2 million, or 9.82% of adjusted
total assets, which is above the well-capitalized required level of $3.8 million, or 4.0%; and total risk-based capital of $9.8
million, or 18.16% of risk-weighted assets, which is above the well-capitalized required level of $4.3 million, or 8.0%. Accordingly,
Heritage Bank of St Tammany was categorized as well capitalized at December 31, 2016 and 2015. Management is not aware of any conditions
or events since the most recent notification that would change our category.
Off-Balance Sheet Arrangements.
At
December 31, 2016, we had outstanding commitments to originate loans of $995,000 and lines of credit of $1.8 million. We anticipate
we will have sufficient funds available to meet our current loan originations commitments. Certificates of deposit that are scheduled
to mature in less than one year from December 21, 2016 total $23.7 million. Management expects that a substantial portion of the
maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize
FHLB-Dallas advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest
expense.
Recent Accounting Pronouncements
For a discussion of the impact of recent
accounting pronouncements, see Note A of the notes to our financial statements beginning on page F-1 of this prospectus.
Impact of Inflation and Changing Prices
The financial statements and related data
presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America
which require the measurement of financial position and operating results in terms of historical dollars without considering changes
in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our
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Table of Contents
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 HERITAGE NOLA BANCORP
Heritage NOLA Bancorp was incorporated in
the State of Maryland on February 13, 2017, and has not engaged in any business to date. Upon completion of the conversion, Heritage
NOLA Bancorp will own all of the issued and outstanding stock of Heritage Bank of St. Tammany. We intend to contribute at least
50% of the net proceeds from the stock offering to Heritage Bank of St. Tammany, plus such additional amounts as may be necessary
so that, upon completion of the offering, Heritage Bank of St. Tammany will have a Tier 1 leverage ratio of at least 10.0%. Heritage
NOLA Bancorp will retain the remainder of the net proceeds from the stock offering and use a portion of the retained net proceeds
to make a loan to the employee stock ownership plan. At a later date, we may use the net proceeds to repurchase shares of common
stock, subject to our planned growth, capital needs and regulatory limitations. We will invest our initial capital as discussed
in "How We Intend to Use the Proceeds from the Offering."
After the conversion and the offering are
complete, Heritage NOLA Bancorp, as the holding company of Heritage Bank of St. Tammany, will be authorized to pursue other business
activities permitted by applicable laws and regulations. See "Regulation and Supervision – Holding Company Regulation"
for a discussion of the activities that are permitted for savings and loan holding companies. We may also borrow funds for reinvestment
in Heritage Bank of St. Tammany.
Following the offering, our cash flow will
depend on earnings from the investment of the net proceeds from the offering that we retain, and any dividends we receive from
Heritage Bank of St. Tammany. Heritage Bank of St. Tammany is subject to regulatory limitations on the amount of dividends that
it may pay. See "Regulation and Supervision – Federal Banking Regulation – Capital Distributions." Initially,
Heritage NOLA Bancorp will neither own nor lease any property, but will instead pay a fee to Heritage Bank of St. Tammany for the
use of its premises, equipment and furniture. At the present time, we intend to employ only persons who are officers of Heritage
Bank of St. Tammany to serve as officers of Heritage NOLA Bancorp. We will, however, use the support staff of Heritage Bank of
St. Tammany from time to time. We will pay a fee to Heritage Bank of St. Tammany for the time devoted to Heritage NOLA Bancorp
by employees of Heritage Bank of St. Tammany; however, these persons will not be separately compensated by Heritage NOLA Bancorp.
Heritage NOLA Bancorp may hire additional employees, as appropriate, to the extent it expands its business in the future.
BUSINESS OF HERITAGE BANK OF ST. TAMMANY
General
We conduct our business from our main office
in Covington, Louisiana, and our branch office in Slidell, Louisiana, both of which are located in St. Tammany Parish, within the
metropolitan area of New Orleans. Covington is the Parish Seat of St. Tammany Parish, which is located on the north shore of Lake
Pontchartrain which separates St. Tammany Parish from New Orleans. Our primary market area is St. Tammany Parish. To a lesser extent,
we also originate loans in the greater New Orleans metropolitan area and the parishes contiguous to St. Tammany Parish.
Our business consists primarily of taking
deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family
residential real estate
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Table of Contents
loans, including non-owner-occupied properties and home equity
lines of credit, and commercial real estate. We also originate land, construction and multifamily loans, and to a much lesser extent,
consumer and commercial business loans. At December 31, 2016, $57.6 million, or 75.1% of our total loan portfolio, was comprised
of one- to four-family residential real estate loans, $11.2 million of which were non-owner-occupied loans. While we originate
conforming one- to four-family residential real estate loans that we sell to Freddie Mac, historically we have also originated
a substantial amount of non-conforming loans that we retain in our portfolio. Following completion of the conversion and stock
offering, we intend to consider hiring an experienced commercial lender and intend to increase our emphasis on the origination
of commercial real estate loans.
In 2016, we began purchasing loans from
the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals. Consistent with our business plan to
grow our loan portfolio while managing our interest rate risk, subject to market conditions, we may significantly increase our
holdings of these types of commercial business loans in the future.
We offer a variety of deposit accounts,
including noninterest-bearing demand deposit accounts, savings accounts, NOW accounts and certificates of deposit. We utilize advances
from the FHLB-Dallas for asset/liability management purposes. At December 31, 2016, we had $13.3 million in advances outstanding
with the FHLB-Dallas.
In recent years we have accepted wholesale
certificates of deposit through National CD Rateline, an on-line service, and directly from other federally insured institutions.
Pursuant to our business strategy, we are seeking to increase our core deposits, which we define as demand deposit, NOW and statement
savings accounts, by aggressively marketing and pricing these deposit products and by growing our commercial lending relationships,
and reduce our reliance on wholesale certificates of deposit as a funding source.
Heritage Bank of St. Tammany is subject
to comprehensive regulation and examination by its primary federal regulator, the Office of the Comptroller of the Currency ("OCC").
Our executive and administrative office
is located at 205 North Columbia Street, Covington, Louisiana 70433, and our telephone number at this address is (985) 892-4565.
Our website address is
www.heritagebank.org
. Information on our website is not incorporated into this prospectus and should
not be considered part of this prospectus.
Market Area
We conduct our business from our main office
in Covington, Louisiana, and our branch office in Slidell, Louisiana, both of which are located in St. Tammany Parish, within the
greater metropolitan area of New Orleans. Covington is the Parish Seat of St. Tammany Parish, which is located on the north shore
of Lake Pontchartrain which separates St. Tammany Parish from New Orleans. Our primary market area is St. Tammany Parish, and to
a lesser extent, the parishes contiguous to St. Tammany Parish. Our business is dependent on the local economy in southeastern
Louisiana which includes the petrochemical industry, port activity along the Mississippi River, healthcare and tourism. Service
jobs, primarily in healthcare, education and construction and development, represent the largest employment sector in St. Tammany
Parish.
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According to the United States census, the
estimated July 2015 population of St. Tammany Parish was 250,000, representing an increase of 7.0% from the 2010 census population
of 234,000. During this same time period, the New Orleans City population is estimated to have grown by 13.3%, the Louisiana population
grew by an estimated 3.0% and the United States population grew by an estimated 4.1%. From 2011 through 2015, the median household
income for St. Tammany Parish was $62,000, compared to median household incomes of $54,000 and $45,000 for the State of Louisiana
and for the United States, respectively.
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 commercial banks, savings institutions,
mortgage banking firms, consumer finance companies and credit unions and, with respect to deposits, from money market funds, brokerage
firms, mutual funds and insurance companies. As of June 30, 2016, based on the most recent available FDIC data, there were 26 FDIC-insured
financial institutions with offices in St. Tammany Parish, of which we ranked 12th, with a market share of deposits of 1.4%. We
do not have a significant market share of either deposits or residential lending in any other parish in Louisiana.
Lending Activities
General.
Our principal lending
activity is originating one- to four-family residential real estate loans, including non-owner-occupied loans and home equity lines
of credit, and commercial real estate. We also originate land, construction and multifamily loans, and to a much lesser extent,
we originate consumer loans and, beginning in 2016, have purchased commercial business loans.
Historically a significant amount of the
loans that we have originated are non-conforming loans, and we have retained these loans in our portfolio. Generally, we sell most
of the conforming conventional, fixed-rate one- to four-family residential real estate loans that we originate to Freddie Mac on
a servicing-retained basis. In 2016 and 2015, approximately 50% and 68% of the owner-occupied, one-to four-family residential real
estate loans that we originated, respectively, did not conform to Freddie Mac guidelines and we retained these loans in our portfolio.
While commercial real estate loans have
not historically comprised a significant portion of our total loan portfolio, we intend to increase our emphasis on the origination
of these types of loans. Upon completion of the conversion and stock offering, the proceeds from the stock offering will increase
our capital levels and will correspondingly increase our loans to one borrower limit. We believe that increasing our loans to one
borrower limit will allow us to compete more effectively for commercial real estate loans subject to our conservative underwriting
standards. After completion of the conversion, we will consider hiring an experienced commercial loan officer. We have also purchased
participations in commercial real estate loans from other institutions that are secured by properties within our market area of
St. Tammany Parish and in the parishes contiguous to St. Tammany Parish, and we intend to continue to purchase these types of participations.
In 2016, we began purchasing loans from
the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals. Consistent with our business plan to
grow our loan portfolio while managing our interest rate risk, subject to market conditions, we may significantly increase our
holdings of these types of commercial business loans in the future.
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However, we expect that one- to four-family
residential real estate lending will continue to be the primary emphasis of our lending operations in the future.
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,
2016
2015
Amount
Percent
Amount
Percent
(Dollars in thousands)
Real estate:
One- to four-family residential:
Owner-occupied
$
46,353
60.5
%
$
43,034
57.7
%
Non-owner-occupied
11,237
14.7
11,873
15.9
Home equity lines of credit
2,246
2.9
2,091
2.8
Commercial real estate
7,234
9.4
8,024
10.8
Land
2,907
3.8
2,667
3.6
Construction
3,475
4.5
4,250
5.7
Multifamily
2,629
3.4
2,352
3.1
Consumer
285
0.4
297
0.4
Commercial business
295
0.4
―
―
Total loans receivable
76,661
100.0
%
74,588
100.0
%
Deferred loan costs (fees)
(459
)
(496
)
Loans in process
(851
)
(1,534
)
Allowance for loan losses
(692
)
(592
)
Total loans receivable, net
$
74,659
$
71,966
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Loan Portfolio Maturities.
The
following table summarizes the scheduled repayments of our loan portfolio at December 31, 2016. Demand loans, loans having no stated
repayment schedule or maturity, and overdraft loans are reported as being due in the year ending December 31, 2017. Maturities
are based on the final contractual payment date and do not reflect the impact of prepayments and scheduled principal amortization.
One- to four-
family
residential
real estate
Commercial
real estate
Land
Construction
Multifamily
Consumer
Commercial
business
Total
Due During the Years
Ending December 31,
2017
$
325
$
817
$
―
$
―
$
―
$
27
$
―
$
1,169
2018
78
32
17
―
―
55
―
182
2019
76
182
136
―
―
16
―
410
2020 to 2021
849
81
629
―
1,013
145
―
2,717
2022 to 2026
4,149
4,167
1,271
―
218
42
295
10,142
2027 to 2031
28,967
1,425
854
1,569
―
―
―
32,815
2032 and beyond
25,392
530
―
1,906
1,398
―
―
29,226
Total
$
59,836
$
7,234
$
2,907
$
3,475
$
2,629
$
285
$
295
$
76,661
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The following table sets forth the scheduled
repayments of fixed- and adjustable-rate loans at December 31, 2016 that are contractually due after December 31, 2017.
Due
    After December 31, 2017
Fixed
Adjustable
Total
(In thousands)
Real estate:
One- to four-family residential:
Owner-occupied
$
42,625
$
3,405
$
46,030
Non-owner-occupied
10,647
588
11,235
Home equity lines of credit
―
2,246
2,246
Commercial real estate
5,850
567
6,417
Land
1,804
1,103
2,907
Construction
3,475
―
3,475
Multifamily
2,629
―
2,629
Consumer
39
219
258
Commercial business
295
―
295
Total
$
67,364
$
8,128
$
75,492
Loan Approval Procedures and Authority
.
Our lending is subject to written, non-discriminatory underwriting standards and origination procedures. Decisions on loan applications
are made on the basis of detailed applications submitted by the prospective borrower and property valuations. Our policies require
that for all real estate loans that we originate with a principal balance of greater than $100,000, property valuations must be
performed by outside independent state-licensed appraisers approved by our board of directors. The loan applications are designed
primarily to determine the borrower's ability to repay the requested loan, and the more significant items on the application
are verified through use of credit reports, financial statements and tax returns. We will also evaluate a guarantor when a guarantee
is provided as part of the loan.
Pursuant to applicable law, the aggregate
amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of
Heritage Bank of St. Tammany's unimpaired capital and surplus (25% if the amount in excess of 15% is secured by "readily
marketable collateral" or 30% for certain residential development loans). At December 31, 2016, our largest credit relationship
consisted of one loan which totaled $1.4 million and was secured by a 58-unit multifamily property. Our second largest relationship
at this date was to a director of Heritage Bank and consisted of two loans totaling $1.3 million and was secured by commercial
real estate consisting of a warehouse and office space and a one- to four-family residential real estate. At December 31, 2016,
these loans were performing in accordance with their repayment terms.
We have a loan committee comprised of the
Chairman of the Board, the Chief Credit Officer and three outside directors. A majority of our loan committee must approve any
loan which we will retain in our portfolio. Any loan originated for sale must be approved by at least two members of the loan committee.
Loans which are secured by certificates of deposits or savings accounts may be approved by any officer of the Bank up to 90% of
the amount of the collateralized account.
Generally, we require fire and extended
coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property,
depending on the type of loan. In addition, we require flood insurance (where appropriate) and may require escrow for property
taxes and insurance on our one- to four-family residential loans.
One- to Four-Family Residential Real
Estate Lending
.
At December 31, 2016, $46.4 million, or 60.5% of our total loans, was secured by owner-occupied, one- to
four-family residential real estate. At this date, we had an additional $11.2 million, or 14.7% of our total loan portfolio, secured
by non-owner-occupied, one- to four-family residential real estate loans. We originate both fixed- and adjustable-
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rate one- to four-family residential real
estate loans, and at December 31, 2016, these types of loans were comprised of 93.1% fixed-rate loans, and 6.9% adjustable-rate
loans.
We generally limit the loan-to-value ratios
of our owner-occupied, one- to four-family residential real estate loans to 89% of the purchase price or appraised value, whichever
is lower, and to 80% of the lower of the purchase price or appraised value, for non-owner-occupied, one- to four-family residential
real estate loans. In addition, we may make one- to four-family residential real estate loans with loan-to-value ratios above 89%
of the purchase price or appraised value, whichever is less, where the borrower obtains private mortgage insurance.
We originate one- to four-family residential
real estate loans for retention in our portfolio as well as for sale in the secondary market. Loans originated for sale are underwritten
according to Freddie Mac guidelines, typically with terms of up to 30 years. We generally retain the servicing on loans we sell
to Freddie Mac. Additionally, we originate a substantial amount of non-conforming, one- to four-family residential real estate
loans that we retain in our portfolio. These loans might be nonconforming as a result of the loan to value of the appraised property
securing the loan, or the debt to income ratio or the credit score of the borrower, or other nonconforming aspects of the credit.
Fixed rate loans that we retain in our portfolio have a maximum fixed-rate term of 30 years.
At December 31, 2016, the majority of our
one- to four-family residential real estate loans, including $11.2 million of non-owner occupied loans, were secured by properties
located in our market area. On a limited basis we have purchased one- to four-family residential real estate loans from outside
of our market area.
Our adjustable-rate, one- to four-family
residential real estate loans generally have fixed rates of interest for initial terms of three and five years, and adjust thereafter
every three and five years, respectively, at a margin, which in recent years has been between 3.00% and 4.00%, depending on the
amortization schedule, over the Federal Cost of Funds Index. Our adjustable-rate loans with a three-year fixed rate have had a
maximum lifetime adjustment of 5% above the initial rate of the loan, and the maximum amount by which the interest rate may be
increased is generally 2% per adjustment period. Our adjustable-rate loans with a five-year fixed rate have had a maximum lifetime
adjustment of 6% above the initial rate of the loan, and the maximum amount by which the interest rate may be increased is generally
3% per adjustment period  Our adjustable-rate loans carry terms to maturity of up to 30 years.
We originate fixed-rate and adjustable-rate
non-owner-occupied, one- to four-family residential real estate loans. Our fixed-rate loans have terms of up to 15 years. Our adjustable-rate
loans have terms and amortization schedules of up to 20 years, and have balloon payments after five, seven or 10 years.
Although adjustable-rate one- to four-family
residential real estate loans may reduce our vulnerability to changes in market interest rates because they periodically reprice,
as interest rates increase, the required payments due from the borrower also increase (subject to rate caps), 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 the maximum periodic and lifetime rate adjustments permitted by our loan documents. As a result, the effectiveness of adjustable-rate
one- to four-family residential real estate loans in compensating for changes in market interest rates may be limited during periods
of rapidly rising interest rates.
We do not offer "interest only"
mortgage loans on permanent 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). We also do not offer one- to four-family residential real estate
loans that provide for
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negative amortization of principal, such as
"Option ARM" loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal
balance during the life of the loan. We generally do not offer "subprime loans" on one- to four- family residential
real estate loans (
i.e.
, loans to borrowers with weakened credit histories typically characterized by payment delinquencies,
previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores
or high debt-burden ratios), or "Alt-A" (
i.e.
, loans to borrowers with better credit scores who borrow with
alternative documentation such as little or no verification of income).
Home Equity Lines of Credit.
We offer home equity lines of credit on owner-occupied homes, which are secured by first or second mortgages on residences. We
generally offer these loans with a maximum total loan-to-value ratio (including senior liens on the collateral property) of up
to 89%. Our home equity lines of credit are interest-only revolving lines of credit with a draw period of up to 10 years. Generally
the rates on our home equity lines of credit are tied to the prevailing Prime Rate as published in
The Wall Street Journal
.
Our home equity lines of credit require additional underwriting criteria, including that the loan must be in the borrower's
personal name and generally that the borrower must have a deposit relationship with the Bank. At December 31, 2016, we had $2.2
million of home equity lines of credit, representing 2.9% of our total loan portfolio. At December 31, 2016, we had one home equity
line of credit that was 60 days or more delinquent.
The majority of our home equity lines of
credit are secured by properties in which we hold or service the first mortgage. However, home equity lines of credit may have
greater risk than one- to four family residential real estate loans secured by first mortgages. Our interest is generally subordinated
to the interest of the institution holding the first mortgage. Even where we hold the first mortgage, we face the risk that the
value of the collateral may not be sufficient to compensate us for the amount of the unpaid loan and costs of foreclosure and we
may be unsuccessful in recovering the remaining balance from those customers.
Commercial Real Estate Lending
.
In addition to one- to four-family residential real estate lending, we also originate and purchase, and intend to increase
our emphasis on the origination and purchase of, commercial real estate loans. At December 31, 2016, $7.2 million, or 9.4% of our
total loan portfolio, was comprised of commercial real estate loans.
Our commercial real estate loans are fixed-rate
loans with three to 10 year balloon payments, with amortization schedules of not more than 20 years. The maximum loan-to-value
ratio of our commercial real estate loans made on improved property is generally 80% of the lower of the purchase price or appraised
value of the property securing the loan, and is 75% on land development and vacant lots. Our commercial real estate loans are typically
secured by retail, service or other commercial properties.
Pursuant to our growth plan, after completion
of the conversion, we intend to consider hiring an experienced commercial lender and we intend to increase our originations and
purchases of commercial real estate loans. Set forth below is information regarding our commercial real estate loans at December
31, 2016.
Type
    of Loan
Number
    of Loans
Balance
(Dollars in thousands)
General commercial
7
$
1,895
Oil & Gas
3
689
Service/Professional
8
1,710
Office/Retail- Non-Owner Occupied
13
2,123
Miscellaneous
3
817
Total
34
$
7,234
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At December 31, 2016, our largest outstanding
commercial real estate loans had a balance of $831,000 and was secured by a commercial office building. This loan was performing
in accordance with its original repayment terms at December 31, 2016.
We consider a number of factors in originating
commercial real estate loans. We evaluate the qualifications and financial condition of the borrower, including project-level and
global cash flows, credit history, and management expertise, as well as the value and condition of the property securing the loan.
When evaluating the qualifications of the borrower, we first consider the financial resources of the borrower, then value of the
property, the borrower's experience in owning or managing similar property and the borrower's payment history with
us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating
income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the
mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service). We generally require
a debt service ratio of at least 1.20 times.
Commercial real estate loans entail greater
credit risks compared to one- to four-family residential real estate loans because they typically involve larger loan balances
concentrated with single borrowers or groups of related borrowers. In addition, the payment of loans secured by income-producing
properties typically depends on the successful operation of the property, as repayment of the loan generally is dependent, in large
part, on sufficient income from the property to cover operating expenses and debt service. Changes in economic conditions that
are not in the control of the borrower or lender could affect the value of the collateral for the loan or the future cash flow
of the property. Additionally, any decline in real estate values may be more pronounced for commercial real estate than residential
properties. There may be additional risk on commercial rentals, where the borrower is not the occupant of the collateral property.
If we foreclose on a commercial real estate loan, our holding period for the collateral is typically longer than for one- to four-family
residential real estate loans because there are fewer potential purchasers of the collateral. Further, our commercial real estate
loans generally have relatively large balances to single borrowers or related groups of borrowers. Accordingly, if any of our judgments
regarding the collectability of our commercial real estate loans prove incorrect, the resulting charge-offs may be larger on a
per loan basis than those incurred with respect to one- to four-family residential loans.
Multifamily Real Estate Loans.
At
December 31, 2016, multifamily real estate loans were comprised of three lending relationships and totaled $2.6 million, or 3.4%
of our total loan portfolio.
We originate a variety of fixed- and adjustable-rate
multifamily real estate loans with balloon and amortization terms up to 20 years. Multifamily real estate loan amounts generally
do not exceed 80% of the property's appraised value at the time the loan is originated. Aggregate debt service ratios, including
the guarantor's cash flow and the borrower's other projects, have a guideline minimum income to debt service ratio
of 1.20x. We require multifamily real estate loan borrowers with loan relationships in excess of $150,000 to submit annual financial
statements and/or rent rolls on the subject property. We may request such information for smaller loans on a case-by-case basis.
These properties may also be subject to annual inspections with pictures as evidence appropriate maintenance is being performed.
At December 31, 2016, our largest multifamily
real estate loan totaled $1.4 million and was a participation that we purchased that is secured by a 58-unit property located in
our market area. At December 31, 2016, this loan was performing in accordance with its terms.
Construction and Land Lending
.
At December 31, 2016, we had $3.5 million, or 4.5% of our total loan portfolio, in construction loans, all of which were secured
by owner-occupied, single-family residences, except for one loan with a principal balance of $100,000 which was secured by a single-
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family residence being built on speculation. At this date we
had an additional $2.9 million, or 3.8% of our total loan portfolio, in land loans. We offer loans for the construction of owner-occupied
residential properties as well as non-owner occupied residential and commercial properties. At December 31, 2016, our largest construction
loan was a $575,000 loan secured by an owner-occupied, one- to four-family residential real estate loan. This loan was performing
in accordance with its original repayment terms at December 31, 2016.
Our residential construction loans generally
have initial terms of 12 months (subject to extension), during which the borrower pays interest only. Upon completion of construction,
these loans convert to conventional amortizing mortgage loans. We do not extend credit if construction has already commenced, except
in unique circumstances and upon the approval of the President and Chief Executive Officer or the loan committee and if title insurance
is obtained. Our residential construction loans have rates and terms comparable to residential real estate loans that we originate.
The maximum loan-to-value ratio of our residential construction loans is generally 85% of the lesser of the appraised value of
the completed property or the total cost of the construction project. Residential construction loans are generally underwritten
pursuant to the same guidelines used for originating permanent residential mortgage loans.
Raw land loans have terms of not more than
15 years. The maximum loan-to-value of these loans is 65% of the lesser of the appraised value or the purchase price of the property.
Construction and land lending generally
involves greater credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction or
loan depends largely 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 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 and land loans also
expose us to the risk that improvements will not be completed on time in accordance with specifications and projected costs. In
addition, the ultimate sale or rental of the property may not occur as anticipated. Land loans pose additional risk because the
property generally does not produce income and may be relatively illiquid.
Commercial Business Lending
.
In 2016, we began purchasing loans from the Bankers Healthcare Group, a nationally recognized lender to healthcare professionals.
At December 31, 2016, we had $295,000 of commercial business loans, all of which were loans to healthcare professionals secured
by personal guarantees from the borrower, purchased from Bankers Healthcare Group, representing 0.4% of our total loan portfolio.
Consistent with our business plan to grow our loan portfolio while managing our interest rate risk, subject to market conditions,
we may increase our holdings of these types of commercial business loans such that the aggregate outstanding balance of these loans
would equal our regulatory loans to one borrower limitation.
Consumer Lending.
At December
31, 2016, we had $285,000, or 0.4% of our loan portfolio, in consumer loans. Our consumer loans are interest-only loans and have
either a variable or fixed-rate of interest for a term of up to five years, depending on the type of collateral and the creditworthiness
of the borrower. Our consumer loans are primarily secured by savings accounts or certificates of deposit.
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Loan Originations, Participations, Purchases
and Sales
We originate real estate and other loans
through employee marketing and advertising efforts, our existing customer base, walk-in customers and referrals from customers.
Since 2015 we have hired two residential real estate lenders. Consistent with our growth strategy, after consummation of the conversion,
we intend to consider hiring an experienced commercial lender and increase our emphasis on the origination and purchase of commercial
real estate loans. Additionally, we intend to increase our holdings of loans to healthcare professionals through the Bankers Healthcare
Group.
We originate one-to four-family residential
real estate loans that conform to Freddie Mac guidelines for sale into the secondary market. In 2016 and 2015, we originated for
sale and sold $6.6 million and $5.0 million, respectively, of one- to four-family residential real estate loans.
On occasion, we have purchased one- to four-family
residential real estate loans in order to supplement our loan originations of this type of lending. In 2016, we repurchased $3.1
million of one- to four-family residential real estate loans that we were servicing from the Federal Home Loan Bank's Mortgage
Partnership Finance Program, and in 2015 we purchased $5.7 million of one- to four-family residential real estate loans. In each
case, these loans were seasoned loans.
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The following table sets forth our loan
origination, purchase, sale and principal repayment activity during the periods indicated.
Years
    Ended December 31,
2016
2015
Total loans, at beginning of period
$
74,588
$
61,632
Loans originated:
Real estate:
One- to four-family residential:
Owner-occupied
13,162
15,613
Non-owner-occupied
939
843
Home equity lines of credit
1,263
958
Commercial real estate
1,220
2,003
Land
942
322
Construction
3,111
3,815
Multifamily
―
232
Consumer
239
177
Commercial business
―
―
Total loans originated
$
20,876
$
23,963
Loans purchased:
Real estate:
One- to four-family residential:
Owner-occupied
1,742
5,689
Non-owner-occupied
―
―
Home equity lines of credit
―
―
Commercial real estate
―
―
Land
―
―
Construction
―
―
Multifamily
1,400
―
Consumer
―
―
Commercial business
295
―
Total loans purchased
3,437
5,689
Loans sold:
Real estate:
One- to four-family residential:
Owner-occupied
6,641
4,952
Non-owner-occupied
―
―
Home equity lines of credit
―
―
Commercial real estate
―
―
Land
―
―
Construction
―
―
Multifamily
―
―
Consumer
―
―
Commercial business
―
―
Total loans sold
6,641
4,952
Other:
Principal repayments, etc
15,599
11,744
Net loan activity
2,073
12,956
Total loans, including loans held for sale, at end of period
$
76,661
$
74,588
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Delinquencies, Classified Assets and Nonperforming
Assets
Delinquency Procedures.
When
a borrower fails to make a required monthly payment on a residential real estate loan, after 60 days the delinquent loan is reported
to the board of directors and is placed on a watch list. After 90 days delinquent the loan is transferred to the appropriate collections
or risk management personnel. Our policies provide that a late notice be sent when a loan is 15 days past due, and continuing with
late notices sent after 30, 60 and 90 days. In addition, we may call the borrower when the loan is 30 days past due, and we attempt
to cooperate with the borrower to determine the reason for nonpayment and to work with the borrower to establish a repayment schedule
that will cure the delinquency. Once the loan is considered in default, generally at 90 days past due, a letter is generally sent
to the borrower explaining that the entire balance of the loan is due and payable, the loan is placed on non-accrual status, and
additional efforts are made to contact the borrower. If the borrower does not respond, we generally initiate foreclosure proceedings
when the loan is 120 days past due. If the loan is reinstated, foreclosure proceedings will be discontinued and the borrower will
be permitted to continue to make payments. In certain instances, we may modify the loan or grant a limited exemption from loan
payments to allow the borrower to reorganize his or her financial affairs.
When we acquire real estate as a result
of foreclosure or by deed in lieu of foreclosure, the real estate is classified as other real estate owned until it is sold. The
real estate is recorded at estimated fair value at the date of acquisition less estimated costs to sell, and any write-down resulting
from the acquisition is charged to the allowance for loan losses. Subsequent decreases in the value of the property are charged
to operations. After acquisition, all costs in maintaining the property are expensed as incurred. Costs relating to the development
and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.
Delinquent commercial real estate, multifamily,
construction and land loans are handled in a similar fashion. Our procedures for repossession and sale of consumer collateral are
subject to various requirements under applicable laws, including consumer protection laws. In addition, we may determine that foreclosure
and sale of such collateral would not be cost-effective for us.
Troubled Debt Restructurings.
We
occasionally modify loans to extend the term or make other concessions to help a borrower stay current on his or her loan and to
avoid foreclosure.  We consider modifications only after analyzing the borrower's current repayment capacity, evaluating
the strength of any guarantors based on documented current financial information, and assessing the current value of any collateral
pledged. We generally do not forgive principal or interest on loans, but may do so if it is in our best interest and increases
the likelihood that we can collect the remaining principal balance. We may modify the terms of loans to lower interest rates (which
may be at below market rates), to provide for fixed interest rates on loans where fixed rates are otherwise not available, to provide
for longer amortization schedules, or to provide for interest-only terms. These modifications are made only when there is a reasonable
and attainable workout plan that has been agreed to by the borrower and that is in our best interests. At December 31, 2016, we
had four loans, all of which were one- to four-family residential real estate loans, which were classified as troubled debt restructuring.
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Delinquent Loans
. The following
table sets forth our loan delinquencies by type and amount at the dates indicated.
Loans
    Delinquent For
30-89
    Days
90
    Days and Over
Total
Number
Amount
Number
Amount
Number
Amount
(Dollars in thousands)
At December 31, 2016
Real estate:
One- to four-family residential:
Owner-occupied
11
$
1,438
―
$
―
11
$
1,438
Non-owner-occupied
―
―
1
100
1
100
Home equity lines of credit
6
150
―
―
6
150
Commercial real estate
1
141
―
―
1
141
Land
1
20
1
17
2
37
Construction
―
―
―
―
―
―
Multifamily
―
―
―
―
―
―
Consumer
3
5
―
―
3
5
Commercial business
―
―
―
―
―
―
Total
22
$
1,754
2
$
117
24
$
1,871
At December 31, 2015
Real estate:
One- to four-family residential:
Owner-occupied
12
$
1,223
2
$
143
14
$
1,366
Non-owner-occupied
1
108
3
233
4
341
Home equity lines of credit
―
―
―
―
―
―
Commercial real estate
1
201
―
―
1
201
Land
2
58
―
―
2
58
Construction
―
―
―
―
―
―
Multifamily
―
―
―
―
―
―
Consumer
5
23
―
―
5
23
Commercial business
―
―
―
―
―
―
Total
21
$
1,613
5
$
376
26
1,989
Classified Assets
. Federal
regulations provide that loans and other assets of lesser quality should be classified as "substandard," "doubtful"
or "loss." An asset is considered "substandard" if it is inadequately protected by the current net worth
and paying capacity of the obligor or of the collateral pledged, if any. "Substandard" assets include those characterized
by the "distinct possibility" that the insured institution will sustain "some loss" if the deficiencies
are not corrected. Assets classified as "doubtful" have all of the weaknesses inherent in those classified "substandard,"
with the added characteristic that the weaknesses present make "collection or liquidation in full," on the basis of
currently existing facts, conditions, and values, "highly questionable and improbable." Assets classified as "loss"
are those considered "uncollectible" and of such little value that their continuance as assets without the establishment
of a specific allowance for loan losses is not warranted. Assets that do not currently expose the insured institution to sufficient
risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as "special
mention." At December 31, 2016, we had no loans designated as "special mention."
When an insured institution classifies problem
assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover
losses that were both probable and reasonable to estimate. General allowances represent allowances which have been established
to cover accrued losses associated with lending activities that were both probable and reasonable to estimate, but which, unlike
specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets
as "loss," it is required either to establish a specific allowance for losses equal to 100% of that portion of the
asset so classified or to charge-off such amount. An institution's determination as to the classification of its assets and
the
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amount of its valuation allowances is subject
to review by the regulatory authorities, which may require the establishment of additional general or specific allowances.
In connection with the filing of our periodic
regulatory reports and 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. If a problem loan deteriorates
in asset quality, the classification is changed to "special mention," "substandard," "doubtful"
or "loss" depending on the circumstances and the evaluation. Generally, loans 90 days or more past due are placed on
nonaccrual status and classified "substandard."
The following table sets forth our amounts
of classified assets as of the dates indicated. Amounts shown at December 31, 2016 and 2015 include approximately $518,000 and
$1.2 million of nonperforming loans, respectively. The related specific valuation allowance in the allowance for loan losses for
such nonperforming loans was $38,000 and $194,000 at December 31, 2016 and 2015, respectively.
At
    December 31,
2016
2015
(Dollars in thousands)
Substandard assets
$
892
$
1,403
Doubtful assets
―
―
Loss assets
―
―
Total classified assets
$
892
$
1,403
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Nonperforming Assets.
The
table below sets forth the amounts and categories of our non-performing assets at the dates indicated.
At
    December 31,
2016
2015
(Dollars
    in thousands)
Non-accrual loans:
Real estate:
One-
    to four-family residential:
Owner-occupied
$
96
$
238
Non-owner-occupied
405
718
Home
    equity lines of credit
―
23
Commercial
    real estate
―
―
Land
17
253
Construction
―
―
Multifamily
―
―
Consumer
―
―
Commercial
    business
―
―
Total
518
1,232
Accruing
    loans 90 days or more past due:
Real estate:
One-
    to four-family residential:
Owner-occupied
―
―
Non-owner-occupied
―
―
Home
    equity lines of credit
―
―
Commercial
    real estate
―
―
Land
―
―
Construction
―
―
Multifamily
―
―
Consumer
―
―
Commercial
    business
―
―
Total
    accruing loans 90 days or more past due
―
―
Total
    non-performing loans
518
1,232
Real
estate owned
93
756
Total
    non-performing assets
$
611
$
1,988
Accruing
    troubled debt restructurings:
Real estate:
One-
    to four-family residential:
Owner-occupied
$
―
$
―
Non-owner-occupied
20
―
Home
    equity lines of credit
―
―
Commercial
    real estate
―
―
Land
―
―
Construction
―
―
Multifamily
―
―
Consumer
―
―
Commercial
    business
Total
$
20
$
―
Ratios:
Total
    non-performing loans to total loans
0.68
%
1.65
%
Total
    non-performing assets to total assets
0.62
%
2.06
%
Total
    non-performing loans and TDRs to total loans
0.70
%
1.65
%
Total
    non-performing assets and TDRs to total assets
0.64
%
2.06
%
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For the year ended December 31, 2016, gross
interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms was
$56,000. No interest income was recognized on such loans for the year ended December 31, 2016.
Other Loans of Concern.
At
December 31, 2016 and 2015, there were $374,000 and $197,000, respectively, of other loans, all of which were classified as substandard,
that are not already disclosed in the nonperforming assets and troubled debt restructurings table above where there is information
about possible credit problems of borrowers that caused management to have serious doubts about the ability of the borrowers to
comply with present loan repayment terms and that may result in disclosure of such loans in the future.
Allowance for Loan Losses
Analysis and Determination of the
Allowance for Loan Losses
. Our allowance for loan losses is the amount considered necessary to reflect probable incurred
losses in our loan portfolio. We evaluate the need to establish allowances against losses on loans on a quarterly basis. When additional
allowances are necessary, a provision for loan losses is charged to earnings.
Our methodology for assessing the appropriateness
of the allowance for loan losses consists of two key elements: (1) specific allowances for identified impaired loans; and (2) a
general valuation allowance on the remainder of the loan portfolio. Although we determine the amount of each element of the allowance
separately, the entire allowance for loan losses is available for the entire portfolio.
We identify loans that may need to be charged
off as a loss by reviewing all delinquent loans, classified loans, and other loans about which management may have concerns about
collectability. For individually reviewed loans, the borrower's inability to make payments under the terms of the loan as
well as the shortfall in collateral value could result in our charging off the loan or the portion of the loan that was impaired.
Among other factors, we consider current
general economic conditions, including current housing price depreciation, in determining the appropriateness of the allowance
for loan losses for our residential real estate portfolio. We use evidence obtained from our own loan portfolio as well as published
housing data on our local markets from third party sources we believe to be reliable as a basis for assumptions about the impact
of housing depreciation.
Substantially all of our loans are secured
by collateral. Loans 90 days past due and other classified loans are evaluated for impairment and general or specific allowances
are established. Typically for a nonperforming real estate loan in the process of collection, the value of the underlying collateral
is estimated using either the original independent appraisal if it is less than 12 months old, adjusted for current economic conditions
and other factors, or a new independent appraisal, and related general or specific allowances for loan losses are adjusted on a
quarterly basis. If a nonperforming real estate loan is in the process of foreclosure and/or there are serious doubts about further
collectability of principal or interest, and there is uncertainty about the value of the underlying collateral, we will order a
new independent appraisal if it has not already been obtained. Any shortfall would result in immediately charging off the portion
of the loan that was impaired.
Specific Allowances for Identified
Problem Loans
. We establish a specific allowance when loans are determined to be impaired. Loss is measured by determining
the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral less estimated
selling expenses. Factors in identifying a specific problem loan include: (1) the strength of the customer's personal or
business cash flows; (2) the availability of other sources of repayment; (3) the amount due or
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past due; (4) the type and value of collateral;
(5) the strength of our collateral position; (6) the estimated cost to sell the collateral; and (7) the borrower's effort
to cure the delinquency. In addition, for loans secured by real estate, we consider the extent of any past due and unpaid property
taxes applicable to the property serving as collateral on the mortgage.
General Valuation Allowance on the
Remainder of the Loan Portfolio
. We establish a general allowance for loans that are not classified as impaired to recognize
the inherent losses associated with lending activities, but which, unlike specific allowances, has not been allocated to particular
problem assets. This general valuation allowance is determined by segregating the loans by loan category and assigning allowance
percentages based on our historical loss experience, delinquency trends and management's evaluation of the collectability
of the loan portfolio. The allowance may be adjusted for significant factors that, in management's judgment, affect the collectability
of the portfolio as of the evaluation date. These significant factors may include changes in lending policies and procedures, changes
in existing general economic and business conditions affecting our primary market area, credit quality trends, collateral value,
loan volumes and concentrations, seasoning of the loan portfolio, recent loss experience in particular segments of the portfolio,
duration of the current business cycle and bank regulatory examination results. The applied loss factors are re-evaluated quarterly
to ensure their relevance in the current real estate environment.
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The following table sets forth activity
in our allowance for loan losses for the years indicated.
At
    or For the Years Ended
December 31,
2016
2015
(Dollars in thousands)
Balance at beginning of year
$
592
$
650
Charge-offs:
Real estate:
One- to four-family residential:
Owner-occupied
108
54
Non-owner-occupied
―
4
Home equity lines of credit
―
―
Commercial real estate
―
―
Land
10
21
Construction
―
―
Multifamily
―
―
Consumer
―
―
Commercial business
―
―
Total charge-offs
118
79
Recoveries:
Real estate:
One- to four-family residential:
Owner-occupied
13
1
Non-owner-occupied
25
―
Home equity lines of credit
―
―
Commercial real estate
―
―
Land
―
―
Construction
―
―
Multifamily
―
―
Consumer
―
―
Commercial business
―
―
Total recoveries
38
1
Net charge-offs
80
78
Provision for loan losses
180
20
Balance at end of year
$
692
$
592
Ratios:
Net charge-offs to average loans outstanding
0.11
%
0.12
%
Allowance for loan losses to non-performing loans at end of year
133.59
%
48.05
%
Allowance for loan losses to total loans at end of year
0.90
%
0.79
%
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Allocation of Allowance for Loan Losses.
The following table sets forth the allowance for loan losses allocated by loan category, the total loan balances by category,
and the percent of loans in each category to total loans 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. At the dates indicated, we had no unallocated allowance for loan losses.
At
    December 31,
2016
2015
Amount
Percent
    of
Allowance to
Total
Allowance
Percent
    of
Loans in
Category to
Total Loans
Amount
Percent
    of
Allowance to
Total
Allowance
Percent
    of
Loans in
Category to
Total Loans
(Dollars in thousands)
Real estate:
One- to four-family residential
$
528
76.3
%
78.0
%
$
447
75.5
%
76.4
%
Commercial real estate
43
6.2
9.5
48
8.1
10.8
Land
101
14.6
3.8
85
14.4
3.6
Construction
8
1.2
4.5
9
1.5
5.7
Multifamily
3
0.4
3.4
3
0.5
3.2
Consumer
―
―
0.4
―
―
0.4
Commercial business
9
1.3
0.4
―
―
―
Total allowance for loan losses
$
692
100.0
%
100.0
%
$
591
100.0
%
100.0
%
At December 31, 2016, our allowance for
loan losses represented 0.90% of total loans and 133.6% of nonperforming loans, and at December 31, 2015, our allowance for loan
losses represented 0.82% of total loans and 48.1% of nonperforming loans. There were $80,000 and $78,000 in net loan charge-offs
during the years ended December 31, 2016 and 2015, respectively.
Although we believe that we use the best
information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary
and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making
the determinations. Because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance
for loan losses may not be adequate and management may determine that increases in the allowance are necessary if the quality of
any portion of our loan portfolio deteriorates as a result. Furthermore, as an integral part of its examination process, the OCC
will periodically review our allowance for loan losses. The OCC may have judgments different than management's, and we may
determine to increase our allowance as a result of these regulatory reviews. Any material increase in the allowance for loan losses
may adversely affect our financial condition and results of operations.
Investment Activities
General.
Our investment policy
is established by the board of directors. The objectives of the policy are to: (i) ensure adequate liquidity for loan demand and
deposit fluctuations, and to allow us to alter our liquidity position to meet both day-to-day and long-term changes in assets and
liabilities; (ii) manage interest rate risk in accordance with our interest rate risk policy; (iii) provide collateral for pledging
requirements; (iv) maximize return on our investments; and (v) maintain a balance of high quality diversified investments to minimize
risk.
Our executive officers meet monthly to assess
our asset/liability risk profile and this group is responsible for implementing our investment policy, subject to the board of
director's approval of the investment strategies and monitoring of the investment performance. The Chief Financial Officer
has the
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Table of Contents
overall responsibility for managing the investment
portfolio and executing transactions. The board of directors regularly reviews our investment strategies and the market value of
our investment portfolio.
We account for investment and mortgage-backed
securities in accordance with Accounting Standards Codification Topic 320, "Investments - Debt and Equity Securities."
Accounting Standards Codification 320 requires that investments be categorized as held-to-maturity, trading, or available-for-sale.
Our decision to classify certain of our securities as available-for-sale is based on our need to meet daily liquidity needs and
to take advantage of profits that may occur from time to time.
Federally chartered savings institutions
have authority to invest in various types of assets, including government-sponsored enterprise obligations, securities of various
federal agencies, residential mortgage-backed securities, certain certificates of deposit of insured financial institutions, overnight
and short-term loans to other banks, corporate debt instruments, debt instruments of municipalities and Fannie Mae and Freddie
Mac equity securities. At December 31, 2016 and 2015, our investment portfolio consisted of mortgage-backed securities.
Mortgage-Backed Securities
.
At December 31, 2016, we had mortgage-backed securities with a carrying value of $8.0 million, which constituted 100.0% of our
securities portfolio. Mortgage-backed securities are securities issued in the secondary market that are collateralized by pools
of mortgages. Certain types of mortgage-backed securities are commonly referred to as "pass-through" certificates because
the principal and interest of the underlying loans is "passed through" to investors, net of certain costs, including
servicing and guarantee fees. Mortgage-backed securities typically are collateralized by pools of one- to four-family or multifamily
mortgages, although we invest primarily in mortgage-backed securities backed by one- to four-family mortgages. The issuers of such
securities pool and resell the participation interests in the form of securities to investors such as Heritage Bank of St. Tammany.
The interest rate of the security is lower than the interest rates of the underlying loans to allow for payment of servicing and
guaranty fees. All of our mortgage-backed securities are either backed by Ginnie Mae, a United States Government agency, or government-sponsored
enterprises, such as Fannie Mae and Freddie Mac.
Residential mortgage-backed securities issued
by United States Government agencies and government-sponsored enterprises are more liquid than individual mortgage loans because
there is an active trading market for such securities. In addition, residential mortgage-backed securities may be used to collateralize
our borrowings. Investments in residential mortgage-backed securities involve a risk that actual payments will be greater or less
than the prepayment rate estimated at the time of purchase, which may require adjustments to the amortization of any premium or
accretion of any discount relating to such interests, thereby affecting the net yield on our securities. Current prepayment speeds
determine whether prepayment estimates require modification that could cause amortization or accretion adjustments.
Other Securities
. We hold
common stock of the FHLB-Dallas in connection with our borrowing activities. The FHLB-Dallas common stock is carried at cost and
classified as restricted equity securities. It is not practicable to determine the fair value of FHLB-Dallas stock due to restrictions
placed on its transferability. We may be required to purchase additional FHLB-Dallas stock if we increase borrowings in the future.
We also hold stock in First National Bankers Bank, (FNBB), a correspondent bank, as well as in our data service provider, Financial
Institutions Service Corporation.
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Table of Contents
The following table sets forth the amortized
cost and fair value of our investment securities portfolio, at the dates indicated.
At
    December 31,
2016
2015
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
(In thousands)
Available for sale:
Mortgage-backed securities
$
7,126
$
7,175
$
6,812
$
6,896
Held to maturity:
Mortgage-backed securities
832
824
1,114
1,102
Total investment securities
$
7,958
$
7,999
$
7,926
$
7,998
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Table of Contents
Portfolio Maturities and Yields.
The
composition and maturities of the investment securities portfolio at December 31, 2016 are summarized in the following table. Maturities
are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur.
One Year or Less
More than One Year
through Five Years
More than Five Years
through Ten Years
More than Ten Years
Total Securities
Amortized
Cost
Weighted
Average
Yield
Amortized
Cost
Weighted
Average
Yield
Amortized
Cost
Weighted
Average
Yield
Amortized
Cost
Weighted
Average
Yield
Amortized
Cost
Fair
Value
Weighted
Average
Yield
(Dollars in thousands)
Securities available for sale:
Mortgage-backed securities
$
5
1.93
%
10
2.06
%
1,647
2.32
%
5,464
1.89
%
7,126
7,175
1.99
%
Securities held to-to-maturity:
Mortgage-backed securities
―
―
%
―
―
%
―
―
%
832
1.81
%
832
824
1.81
%
Total securities
$
5
1.93
%
$
10
2.06
%
$
1,647
2.32
%
$
6,296
1.88
%
$
7,958
$
7,999
1.97
%
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Sources of Funds
General.
Deposits, scheduled
amortization and prepayments of loan principal, amortization payments from mortgage-backed securities, proceeds from loan sales,
maturities and calls of securities and funds provided by operations are our primary sources of funds for use in lending, investing
and for other general purposes. We also use borrowings, primarily FHLB-Dallas advances, to supplement cash flow needs, lengthen
the maturities of liabilities for interest rate risk purposes and to manage the cost of funds.
Deposits.
We offer deposit
products having a range of interest rates and terms. We currently offer noninterest-bearing demand accounts, savings accounts,
NOW accounts and certificates of deposit. In recent years we have accepted jumbo certificates of deposit through National CD Rateline,
an on-line service. Pursuant to our business strategy, we are seeking to increase our core deposits by aggressively marketing and
pricing these deposit products and by growing our commercial lending relationships, and reduce our reliance on certificates of
deposit as a funding source.
The flow of deposits is influenced significantly
by general economic conditions, changes in market and other prevailing interest rates and competition. Our deposits are primarily
obtained from areas surrounding our offices.
The following table sets forth the distribution
of our average total deposit accounts, by account type, for the years indicated.
For the Years Ended December 31,
2016
2015
Average
Balance
Percent
Weighted
Average
Rate
Average
Balance
Percent
Weighted
Average
Rate
(Dollars in thousands)
Deposit type:
Statement savings
$
16,244
21.9
%
0.25
%
$
15,967
21.9
%
0.36
%
Non-interest bearing demand
3,162
4.3
―
2,215
3.0
―
NOW
3,102
4.2
0.23
2,492
3.4
0.24
Certificates of deposit
51,538
69.6
1.53
52,326
71.7
1.48
Total deposits
$
74,046
100.0
%
1.13
%
$
73,000
100.0
%
1.15
%
As of December 31, 2016, the aggregate amount
of our outstanding certificates of deposit in amounts greater than or equal to $100,000 was approximately $29.0 million. The following
table sets forth the maturity of those certificates as of December 31, 2016.
At
December
                                         31, 2016
(In thousands)
Three months or less
$
3,817
Over three months through six months
2,613
Over six months through one year
5,141
Over one year to three years
9,569
Over three years
8,271
Total
$
29,411
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The following table sets forth all our certificates
of deposit classified by interest rate as of the dates indicated.
At
    December 31,
2016
2015
(In thousands)
Interest Rate:
Less than 1.00%
$
3,633
$
17,822
1.00% - 1.99%
35,441
22,064
2.00% - 2.99%
8,142
7,807
3.00% - 3.99%
3,694
4,497
4.00% - 4.99%
―
―
5.00% - 5.99%
99
99
Total
$
51,009
$
52,289
The following table sets forth the amount
and maturities of all our certificates of deposit by interest rate at December 31, 2016.
At December 31, 2016
Period to Maturity (1)
Less Than
or Equal to
One Year
Over One
Year to
Two Years
Over Two
Years to
Three Years
Over Three
Years
Total
Percentage
of Total
Certificate
Accounts
(Dollars in thousands)
Interest Rate:
Less
    than or equal to1.00%
$
3,621
$
―
$
―
$
12
$
3,633
7.1
%
1.00% - 1.99%
18,201
10,124
5,073
2,043
35,441
69.5
2.00% - 2.99%
2
256
56
7,828
8,142
16.0
3.00% - 3.99%
1,750
―
―
1,944
3,694
7.2
4.00% - 4.99%
―
―
―
―
―
―
5.00%
    - 5.99%
99
―
―
―
99
0.2
Total
$
23,673
$
10,380
$
5,129
$
11,827
$
51,009
100.00
%
(1)
Includes $13,000 of certificates of deposit held within individual retirement accounts which have no stated maturity.
Borrowings.
We may obtain
advances from the FHLB-Dallas upon the security of our capital stock in the FHLB-Dallas and our one- to four-family residential
real estate portfolio. We utilize these advances for asset/liability management purposes and for additional funding for our operations.
Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities.
To the extent such borrowings have different terms to reprice than our deposits, they can change our interest rate risk profile.
At December 31, 2016, we had $13.3 million in outstanding advances from the FHLB-Dallas. At December 31, 2016, based on available
collateral and our ownership of FHLB-Dallas stock, and based upon our internal policy, we had access to additional FHLB-Dallas
advances of up to $26.8 million.
In addition, Heritage Bank of St. Tammany
has the ability to borrow up to $3.0 million on a line of credit with First National Bankers' Bank. At December 31, 2016,
there was no balance on this line of credit.
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The following table sets forth information
concerning balances and interest rates on our borrowings at and for the periods shown:
At
                                         or For the Years Ended
December
                                         31,
2016
2015
(Dollars in thousands)
FHLB:
Balance at end of period
$
13,273
$
12,657
Average balance during period
12,305
7,672
Maximum outstanding at any month end
13,365
12,657
Weighted average interest rate at end of period
1.29
%
1.33
%
Average interest rate during period
1.30
%
1.18
%
Properties
At December 31, 2016, the net book value
of our properties was $3.6 million. We own our two full-service offices located at 205 North Columbia Street, Covington, Louisiana
and 200 Gause Boulevard, Slidell, Louisiana, and believe that our current facilities are adequate to meet our present and foreseeable
needs, other than modest and customary repair and replacement needs.
Subsidiary Activities
Upon completion of the conversion, Heritage
Bank of St. Tammany will become the wholly owned subsidiary of Heritage NOLA Bancorp. Heritage Bank of St. Tammany has no subsidiaries.
Legal Proceedings
We are not involved in any pending legal
proceedings other than routine legal proceedings occurring in the ordinary course of business. At December 31, 2016, we were not
involved in any legal proceedings the outcome of which would be material to our financial condition or results of operations.
Expense and Tax Allocation Agreements
Heritage Bank of St. Tammany will enter
into an agreement with Heritage NOLA Bancorp to provide it with certain administrative support services, whereby Heritage Bank
of St. Tammany will be compensated at not less than the fair market value of the services provided. In addition, Heritage Bank
of St. Tammany and Heritage NOLA Bancorp will enter into an agreement to establish a method for allocating and for reimbursing
the payment of their consolidated tax liability.
Employees
As of December 31, 2016 we had 21 full-time
equivalent employees. Our employees are not represented by any collective bargaining group. Management believes that we have a
good working relationship with our employees.
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REGULATION AND SUPERVISION
General
As a federal savings association, Heritage
Bank of St. Tammany is subject to examination and regulation by the OCC, and is also subject to examination by the FDIC. This regulation
and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily
for the protection of the FDIC's deposit insurance fund and depositors, and not for the protection of security holders. Heritage
Bank of St. Tammany also is a member of and owns stock in the FHLB-Dallas, which is one of the 11 regional banks in the Federal
Home Loan Bank System.
Under this system of regulation, the regulatory
authorities have extensive discretion in connection with their supervisory, enforcement, rulemaking and examination activities
and policies, including rules or policies that: establish minimum capital levels; restrict the timing and amount of dividend payments;
govern the classification of assets; determine the adequacy of loan loss reserves for regulatory purposes; and establish the timing
and amounts of assessments and fees. Moreover, as part of their examination authority, the banking regulators assign numerical
ratings to banks and savings institutions relating to capital, asset quality, management, liquidity, earnings and other factors.
These ratings are inherently subjective and the receipt of a less than satisfactory rating in one or more categories may result
in enforcement action by the banking regulators against a financial institution. A less than satisfactory rating may also prevent
a financial institution, such as Heritage Bank of St. Tammany or its holding company, from obtaining necessary regulatory approvals
to access the capital markets, pay dividends, acquire other financial institutions or establish new branches.
In addition, we must comply with significant
anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and fair lending
laws and regulations. Government agencies have the authority to impose monetary penalties and other sanctions on institutions that
fail to comply with these laws and regulations, which could significantly affect our business activities, including our ability
to acquire other financial institutions or expand our branch network.
As a savings and loan holding company following
the conversion, Heritage NOLA Bancorp will be required to comply with the rules and regulations of the Federal Reserve Board. It
will be required to file certain reports with the Federal Reserve Board and will be subject to examination by the enforcement authority
of the Federal Reserve Board. Heritage NOLA Bancorp will also be subject to the rules and regulations of the Securities and Exchange
Commission under the federal securities laws.
Any change in applicable laws or regulations,
whether by the OCC, the FDIC, the Federal Reserve Board or Congress, could have a material adverse impact on the operations and
financial performance of Heritage NOLA Bancorp and Heritage Bank of St. Tammany.
Set forth below is a brief description of
material regulatory requirements that are or will be applicable to Heritage Bank of St. Tammany and Heritage NOLA Bancorp. The
description is limited to certain material aspects of the statutes and regulations addressed, and is not intended to be a complete
description of such statutes and regulations and their effects on Heritage Bank of St. Tammany and Heritage NOLA Bancorp.
Federal Banking Regulation
Business Activities.
A federal
savings association derives its lending and investment powers from the Home Owners' Loan Act, as amended, and applicable
federal regulations. Under these laws and regulations, Heritage Bank of St. Tammany may invest in mortgage loans secured by residential
and
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commercial real estate, commercial business and consumer loans,
certain types of debt securities and certain other assets, subject to applicable limits. Heritage Bank of St. Tammany may also
establish subsidiaries that may engage in certain activities not otherwise permissible for Heritage Bank of St. Tammany, including
real estate investment and securities and insurance brokerage.
Capital Requirements
. Federal
regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1
capital to risk-weighted assets ratio of 4.5%, a Tier 1 capital to risk-weighted assets ratio of 6.0%, a total capital to risk-weighted
assets of 8.0%, and a 4.0% Tier 1 capital to adjusted average total assets leverage ratio. These capital requirements were effective
January 1, 2015 and are the result of a final rule implementing recommendations of the Basel Committee on Banking Supervision and
certain requirements of the Dodd-Frank Act.
In determining the amount of risk-weighted
assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (
e.g.
,
recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations
based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed
to present greater risk. Common equity Tier 1 capital is generally defined as common stockholders' equity and retained
earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital
includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated
subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital.
Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative
preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated
debt. Also included in Tier 2 capital is the allowance for loan 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, up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. In assessing
an institution's capital adequacy, the OCC takes into consideration not only these numeric factors, but qualitative factors
as well, and has the authority to establish higher capital requirements for individual institutions when deemed necessary.
In addition to establishing the minimum
regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management
if the institution does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital
to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation
buffer requirement was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully
implemented at 2.5% of risk-weighted assets on January 1, 2019.
At December 31, 2016, Heritage Bank of St.
Tammany' capital exceeded all applicable requirements.
Loans-to-One Borrower.
Generally,
a federal savings association may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of
unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan
is secured by readily marketable collateral, which generally does not include real estate. As of December 31, 2016, Heritage Bank
of St. Tammany was in compliance with the loans-to-one borrower limitations.
Qualified Thrift Lender Test.
As a federal savings association, Heritage Bank of St. Tammany must satisfy the qualified thrift lender, or "QTL,"
test. Under the QTL test, Heritage Bank of St.
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Tammany must maintain at least 65% of its "portfolio assets"
in "qualified thrift investments" (primarily residential mortgages and related investments, including mortgage-backed
securities) in at least nine months of the most recent 12-month period. "Portfolio assets" generally means total assets
of a savings association, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets,
and the value of property used in the conduct of the savings association's business.
Heritage Bank of St. Tammany also may satisfy
the QTL test by qualifying as a "domestic building and loan association" as defined in the Internal Revenue Code of
1986, as amended. This test generally requires a savings association to have at least 75% of its deposits held by the public and
earn at least 25% of its income from loans and U.S. government obligations. Alternatively, a savings association can satisfy this
test by maintaining at least 60% of its assets in cash, real estate loans and U.S. Government or state obligations.
A savings association that fails the qualified
thrift lender test must operate under specified restrictions set forth in the Home Owners' Loan Act. The Dodd-Frank Act made
noncompliance with the QTL test subject to agency enforcement action for a violation of law. At December 31, 2016, Heritage Bank
of St. Tammany satisfied the QTL test.
Capital Distributions.
Federal
regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and
other transactions charged to the savings association's capital account. A federal savings association must file an application
with the OCC for approval of a capital distribution if:
·
the total capital distributions for the applicable calendar year exceed the sum of the savings association's net income
for that year to date plus the savings association's retained net income for the preceding two years;
·
the savings association would not be at least adequately capitalized following the distribution;
·
the distribution would violate any applicable statute, regulation, agreement or regulatory condition; or
·
the savings association is not eligible for expedited treatment of its filings, generally due to an unsatisfactory CAMELS rating
or being subject to a cease and desist order or formal written agreement that requires action to improve the institution's
financial condition.
Even if an application is not otherwise
required, every savings association that is a subsidiary of a savings and loan holding company, such as Heritage Bank of St. Tammany,
must still file a notice with the Federal Reserve Board at least 30 days before the board of directors declares a dividend or approves
a capital distribution.
A notice or application related to a capital
distribution may be disapproved if:
·
the federal savings association would be undercapitalized following the distribution;
·
the proposed capital distribution raises safety and soundness concerns; or
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·
the capital distribution would violate a prohibition contained in any statute, regulation or agreement.
In addition, the Federal Deposit Insurance
Act provides that an insured depository institution may not make any capital distribution if, after making such distribution, the
institution would fail to meet any applicable regulatory capital requirement. A federal savings association also may not make a
capital distribution that would reduce its regulatory capital below the amount required for the liquidation account established
in connection with its conversion to stock form.
Community Reinvestment Act and Fair
Lending Laws.
All federal savings associations have a responsibility under the Community Reinvestment Act and related regulations
to help meet the credit needs of their communities, including low- and moderate-income borrowers. In connection with its examination
of a federal savings association, the OCC is required to assess the federal savings association's record of compliance with
the Community Reinvestment Act. A savings association's failure to comply with the provisions of the Community Reinvestment
Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on
its activities. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in
their lending practices on the basis of characteristics specified in those statutes. The failure to comply with the Equal Credit
Opportunity Act and the Fair Housing Act could result in enforcement actions by the OCC, as well as other federal regulatory agencies
and the Department of Justice.
The Community Reinvestment Act requires
all institutions insured by the Federal Deposit Insurance Corporation to publicly disclose their rating. Heritage Bank of St. Tammany
received a "satisfactory" Community Reinvestment Act rating in its most recent federal examination.
Transactions with Related Parties.
A federal savings association's authority to engage in transactions with its affiliates is limited by Sections 23A and 23B
of the Federal Reserve Act and federal regulation. An affiliate is generally a company that controls, or is under common control
with, an insured depository institution such as Heritage Bank of St. Tammany. Heritage NOLA Bancorp will be an affiliate of Heritage
Bank of St. Tammany because of its control of Heritage Bank of St. Tammany. In general, transactions between an insured depository
institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations
prohibit a savings association from lending to any of its affiliates that are engaged in activities that are not permissible for
bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with
affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets and be on terms
that are as favorable to the institution as comparable transactions with non-affiliates.
Heritage Bank of St. Tammany' authority
to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons,
is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal
Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders:
·
be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent
than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk
of repayment or present other unfavorable features; and
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·
not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits
are based, in part, on the amount of Heritage Bank of St. Tammany's capital.
In addition, extensions of credit in excess
of certain limits must be approved by Heritage Bank of St. Tammany' board of directors. Extensions of credit to executive
officers are subject to additional limits based on the type of extension involved.
Enforcement.
The OCC has primary
enforcement responsibility over federal savings associations and has authority to bring enforcement action against all "institution-affiliated
parties," including directors, officers, shareholders, attorneys, appraisers and accountants who knowingly or recklessly
participate in wrongful action likely to have an adverse effect on a federal savings association. Formal enforcement action by
the OCC may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of
the institution and the appointment of a receiver or conservator. Civil penalties cover a wide range of violations and actions,
and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million
per day. The FDIC also has the authority to terminate deposit insurance or recommend to the OCC that enforcement action be taken
with respect to a particular savings association. If such action is not taken, the FDIC has authority to take the action under
specified circumstances.
Standards for Safety and Soundness.
Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions.
These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit
underwriting, interest rate risk exposure, asset growth, compensation and other operational and managerial standards as the agency
deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to
identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking
agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution
to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards,
the appropriate federal banking agency may require the institution to implement an acceptable compliance plan. Failure to implement
such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil
money penalties.
Interstate Banking and Branching.
Federal law permits well capitalized and well managed holding companies to acquire banks in any state, subject to Federal
Reserve Board approval, certain concentration limits and other specified conditions. Interstate mergers of banks are also authorized,
subject to regulatory approval and other specified conditions. In addition, among other things, recent amendments made by the Dodd-Frank
Act permit banks to establish
de novo
branches on an interstate basis provided that branching is authorized by the law of
the host state for the banks chartered by that state.
Prompt Corrective Action.
Federal
law requires, among other things, that federal bank regulators take "prompt corrective action" with respect to institutions
that do not meet minimum capital requirements. For this purpose, the law establishes five capital categories: well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. The applicable OCC regulations
were amended to incorporate the previously mentioned increased regulatory capital standards that were effective January 1, 2015.
Under the amended regulations, an institution is deemed to be "well capitalized" if it has a total risk-based capital
ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common
equity Tier 1 ratio of 6.5% or greater. An institution is "adequately capitalized" if it has a total risk-based capital
ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater
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and a common equity Tier 1 ratio of 4.5% or greater. An institution
is "undercapitalized" if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio
of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed
to be "significantly undercapitalized" if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based
capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution
is considered to be "critically undercapitalized" if it has a ratio of tangible equity (as defined in the regulations)
to total assets that is equal to or less than 2.0%.
At each successive lower capital category,
an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions
on interest rates paid on deposits, restrictions or prohibitions on payment of dividends, and restrictions on the acceptance of
brokered deposits. 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, and the holding company must guarantee
the performance of that plan. Based upon its capital levels, 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 appropriate federal banking agency,
after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants
such treatment. An "undercapitalized" bank's compliance with a capital restoration plan is required to 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 additional restrictions, including
but not limited to an order by the Federal Reserve Board to sell sufficient voting stock to become adequately capitalized, requirements
to reduce total assets, cease receipt of deposits from correspondent banks or dismiss directors or officers, and restrictions on
interest rates paid on deposits, compensation of executive officers and 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 obtains such status.
At December 31, 2016, Heritage Bank of St.
Tammany met the criteria for being considered "well capitalized."
Insurance of Deposit Accounts.
The
Deposit Insurance Fund of the FDIC insures deposits at FDIC-insured financial institutions such as Heritage Bank of St. Tammany.
Deposit accounts in Heritage Bank of St. Tammany are insured by the FDIC generally up to a maximum of $250,000 per separately insured
depositor. The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund.
Under the FDIC's risk-based assessment
system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels
and certain other risk factors. Rates are based on each institution's risk category and certain specified risk adjustments.
Institutions deemed to be less risky pay lower rates while institutions deemed riskier pay higher rates. Assessment rates (inclusive
of possible adjustments) currently range from 2.5 to 45 basis points of each institution's total assets less tangible capital.
The FDIC may increase or decrease the scale uniformly, except that no adjustment can deviate more than two basis points from the
base scale without notice and comment rulemaking. The FDIC's current system represents a change, required by the Dodd-Frank
Act, from its prior practice of basing the assessment on an institution's deposits.
The Dodd-Frank Act increased the minimum
target Deposit Insurance Fund ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC must
seek to achieve the
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1.35% ratio by September 30, 2020. Insured institutions
with assets of $10 billion or more are supposed to fund the increase. The Dodd-Frank Act eliminated the 1.5% maximum fund ratio,
instead leaving it to the discretion of the FDIC, which has exercised that discretion by establishing a long range fund ratio of
2%.
The FDIC has authority to increase insurance
assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of Heritage
Bank of St. Tammany. We cannot predict what assessment rates will be in the future.
Insurance of deposits may be terminated
by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not
know of any practice, condition or violation that may lead to termination of our deposit insurance.
In addition to the FDIC assessments, the
Financing Corporation ("FICO") is authorized to impose and collect, with the approval of the FDIC, assessments for
anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the former Federal
Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended
December 31, 2016, the annualized FICO assessment was equal to 0.60 basis points of total assets less tangible capital.
Privacy Regulations.
Federal
regulations generally require that Heritage Bank of St. Tammany disclose its privacy policy, including identifying with whom it
shares a customer's "non-public personal information," to customers at the time of establishing the customer
relationship and annually thereafter. In addition, Heritage Bank of St. Tammany is required to provide its customers with the ability
to "opt-out" of having their personal information shared with unaffiliated third parties and not to disclose account
numbers or access codes to non-affiliated third parties for marketing purposes. Heritage Bank of St. Tammany currently has a privacy
protection policy in place and believes that such policy is in compliance with the regulations.
USA Patriot Act.
Heritage
Bank of St. Tammany is subject to the USA PATRIOT Act, which gives federal agencies additional powers to address terrorist threats
through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money
laundering requirements. The USA PATRIOT Act contains provisions intended to encourage information sharing among bank regulatory
agencies and law enforcement bodies and imposes affirmative obligations on financial institutions, such as enhanced recordkeeping
and customer identification requirements.
Prohibitions Against Tying Arrangements
.
Federal savings associations are prohibited, subject to some exceptions, from extending credit to or offering any other service,
or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some
additional service from the institution or its affiliates or not obtain services of a competitor of the institution.
Other Regulations
Interest and other charges collected or
contracted for by Heritage Bank of St. Tammany 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:
·
Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public
officials to determine whether a financial
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institution is fulfilling its obligation
to help meet the housing needs of the community it serves;
·
Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending
credit;
·
Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; and
·
Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such federal
and state laws.
The deposit operations of Heritage Bank
of St. Tammany also are subject to, among others, the:
·
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;
·
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
·
Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from
deposit accounts and customers' rights and liabilities arising from the use of automated teller machines and other electronic
banking services.
Federal Reserve System
The Federal Reserve Board regulations require
depository institutions to maintain noninterest-earning reserves against their transaction accounts (primarily NOW and regular
checking accounts). The Federal Reserve Board regulations generally require that reserves be maintained against aggregate transaction
accounts as follows: for that portion of transaction accounts aggregating $103.6 million or less (which may be adjusted by the
Federal Reserve Board) the reserve requirement is 3.0% and the amounts greater than $103.6 million require a 10.0% reserve (which
may be adjusted annually by the Federal Reserve Board between 8.0% and 14.0%). The first $14.5 million of otherwise reservable
balances (which may be adjusted by the Federal Reserve Board) are exempted from the reserve requirements. Heritage Bank of St.
Tammany is in compliance with these requirements.
Federal Home Loan Bank System
Heritage Bank of St. Tammany is a member
of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank provides
a central credit facility primarily for member institutions. Members of the Federal Home Loan Bank are required to acquire and
hold shares of capital stock in the Federal Home Loan Bank. Heritage Bank of St. Tammany was in compliance with this requirement
at December 31, 2016. Based on redemption provisions of the FHLB-Dallas, the stock has no quoted market value and is carried at
cost. Heritage Bank of St. Tammany reviews for impairment, based on the ultimate recoverability, the cost basis of the FHLB-Dallas.
As of December 31, 2016, no impairment has been recognized.
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Holding Company Regulation
Heritage NOLA Bancorp will be a unitary
savings and loan holding company subject to regulation and supervision by the Federal Reserve Board. The Federal Reserve Board
will have enforcement authority over Heritage NOLA Bancorp and its non-savings institution subsidiaries. Among other things, this
authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a risk to Heritage Bank
of St. Tammany.
As a savings and loan holding company, Heritage
NOLA Bancorp's activities will be limited to those activities permissible by law for financial holding companies (if Heritage
NOLA Bancorp makes an election to be treated as a financial holding company and meets the other requirements to be a financial
holding company) or multiple savings and loan holding companies. A financial holding company may engage in activities that are
financial in nature, incidental to financial activities or complementary to a financial activity. Such activities include lending
and other activities permitted for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, insurance and
underwriting equity securities. Multiple savings and loan holding companies are authorized to engage in activities specified by
federal regulation, including activities permitted for bank holding companies under Section 4(c)(8) of the Bank Holding Company
Act.
Federal law prohibits a savings and loan
holding company, directly or indirectly, or through one or more subsidiaries, from acquiring more than 5% of another savings institution
or savings and loan holding company without prior written approval of the Federal Reserve Board, and from acquiring or retaining
control of any depository institution not insured by the FDIC. In evaluating applications by holding companies to acquire savings
institutions, the Federal Reserve Board must consider such things as the financial and managerial resources and future prospects
of the company and institution involved, the effect of the acquisition on and the risk to the federal deposit insurance fund, the
convenience and needs of the community and competitive factors. A savings and loan holding company may not acquire a savings institution
in another state and hold the target institution as a separate subsidiary unless it is a supervisory acquisition under Section
13(k) of the Federal Deposit Insurance Act or the law of the state in which the target is located authorizes such acquisitions
by out-of-state companies.
Savings and loan holding companies historically
have not been subject to consolidated regulatory capital requirements. The Dodd-Frank Act requires the Federal Reserve Board to
establish minimum consolidated capital requirements for all depository institution holding companies that are as stringent as those
required for the insured depository subsidiaries. However, legislation was enacted in December 2014 that required the Federal Reserve
Board to amend its "Small Bank Holding Company" exemption from consolidated holding company capital requirements to
generally extend its applicability to bank and savings and loan holding companies of up to $1 billion in assets. Regulations implementing
this amendment were effective May 15, 2015. Consequently, savings and loan holding companies of under $1 billion in consolidated
assets remain exempt from consolidated regulatory capital requirements, unless the Federal Reserve determines otherwise in particular
cases.
The Dodd-Frank Act extended the "source
of strength" doctrine to savings and loan holding companies. The Federal Reserve Board has promulgated regulations implementing
the "source of strength" policy that require holding companies to act as a source of strength to their subsidiary depository
institutions by providing capital, liquidity and other support in times of financial stress.
The Federal Reserve Board has issued a policy
statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies and savings
and loan holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only
if the prospective rate of earnings retention by the holding company appears consistent with the
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organization's capital needs, asset quality and overall
financial condition. Regulatory guidance provides for prior regulatory consultation with respect to capital distributions in certain
circumstances such as where the company's net income for the past four quarters, net of dividends previously paid over that
period, is insufficient to fully fund the dividend or the company's overall rate of earnings retention is inconsistent with
the company's capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted
if a subsidiary bank becomes undercapitalized. The policy statement also states that a holding company should inform the Federal
Reserve Board supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the holding company
is experiencing financial weaknesses or if the repurchase or redemption would result in a net reduction, 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. These regulatory policies may affect the ability of Heritage NOLA Bancorp to pay dividends, repurchase shares of common
stock or otherwise engage in capital distributions.
In order for Heritage NOLA Bancorp to be
regulated as savings and loan holding company by the Federal Reserve Board, rather than as a bank holding company, Heritage Bank
of St. Tammany must qualify as a "qualified thrift lender" under federal regulations or satisfy the "domestic
building and loan association" test under the Internal Revenue Code. Under the qualified thrift lender test, a savings institution
is required to maintain at least 65% of its "portfolio assets" (total assets less: (i) specified liquid assets
up to 20% of total assets; (ii) intangible assets, including goodwill; and (iii) the value of property used to conduct
business) in certain "qualified thrift investments" (primarily residential mortgages and related investments, including
certain mortgage-backed and related securities) in at least nine out of each 12 month period. At December 31, 2016, Heritage Bank
of St. Tammany maintained 81.6% of its portfolio assets in qualified thrift investments and was in compliance with the qualified
thrift lender requirement.
Federal Securities Laws
Heritage NOLA Bancorp common stock will
be registered with the Securities and Exchange Commission after the conversion and stock offering. Heritage NOLA Bancorp 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 Heritage NOLA Bancorp's public offering does not cover the resale of those shares.
Shares of common stock purchased by persons who are not affiliates of Heritage NOLA Bancorp may be resold without registration.
Shares purchased by an affiliate of Heritage NOLA Bancorp will be subject to the resale restrictions of Rule 144 under the Securities
Act of 1933. If Heritage NOLA Bancorp meets the current public information requirements of Rule 144 under the Securities Act of
1933, each affiliate of Heritage NOLA Bancorp that complies with the other conditions of Rule 144, including those that require
the affiliate's sale to be aggregated with those of other persons, would be able to sell in the public market, without registration,
a number of shares not to exceed, in any three-month period, the greater of 1% of the outstanding shares of Heritage NOLA Bancorp,
or the average weekly volume of trading in the shares during the preceding four calendar weeks. In the future, Heritage NOLA Bancorp
may permit affiliates to have their shares registered for sale under the Securities Act of 1933.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 is intended
to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded
companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities
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laws. We have policies, procedures and systems
designed to comply with these regulations, and we review and document such policies, procedures and systems to ensure continued
compliance with these regulations.
Change in Control Regulations
Under the Change in Bank Control Act, no
person may acquire control of a savings and loan holding company such as Heritage NOLA Bancorp unless the Federal Reserve Board
has been given 60 days prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration
certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition.
Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of
any class of voting stock, control in any manner of the election of a majority of the institution's directors, or a determination
by the regulator that the acquiror has the power, directly or indirectly, to exercise a controlling influence over the management
or policies of the institution. Acquisition of more than 10% of any class of a savings and loan holding company's voting
stock constitutes a rebuttable determination of control under the regulations under certain circumstances including where, as will
be the case with Heritage NOLA Bancorp, the issuer has registered securities under Section 12 of the Securities Exchange Act of
1934.
In addition, federal regulations provide
that no company may acquire control of a savings and loan holding company without the prior approval of the Federal Reserve Board.
Any company that acquires such control becomes a "savings and loan holding company" subject to registration, examination
and regulation by the Federal Reserve Board.
TAXATION
Federal Taxation
General.
Heritage NOLA Bancorp
and Heritage Bank of St. Tammany are subject to federal income taxation in the same general manner as other corporations, with
some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income
tax matters and is not a comprehensive description of the tax rules applicable to Heritage NOLA Bancorp and Heritage Bank of St.
Tammany.
Method of Accounting.
For
federal income tax purposes, Heritage Bank of St. Tammany currently reports its income and expenses on the cash method of accounting
and uses a tax year ending December 31 for filing its federal income tax returns. The Small Business Protection Act of 1996 eliminated
the use of the reserve method of accounting for bad debt reserves by savings institutions, effective for taxable years beginning
after 1995.
Minimum Tax.
The Internal
Revenue Code of 1986, as amended, 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. Net operating losses can, in general, offset no more than 90% of alternative minimum taxable income. Certain payments of
alternative minimum tax may be used as credits against regular tax liabilities in future years. At December 31, 2016, Heritage
Bank of St. Tammany had no minimum tax credit carryforward.
Net Operating Loss Carryovers.
Generally, a financial institution may carry back net operating losses to the preceding two taxable years and forward to the succeeding
20 taxable years. At December
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31, 2016, Heritage Bank of St. Tammany had
$0 of federal net operating loss carryforwards and no Louisiana state net operating loss carryforwards available for future use.
Capital Loss Carryovers.
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 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, 2016, Heritage Bank of St. Tammany had no
capital loss carryover.
Corporate Dividends.
We may
generally exclude from our income 100% of dividends received from Heritage Bank of St. Tammany as a member of the same affiliated
group of corporations.
Audit of Tax Returns.
Heritage
Bank of St. Tammany' federal income tax returns have not been audited in the most recent five-year period.
State Taxation
Heritage NOLA Bancorp will be subject to
the Louisiana Corporation Income Tax based on our Louisiana taxable income. The Corporation Income Tax applies at graduated rates
from 4% upon the first $25,000 of Louisiana taxable income to 8% on all Louisiana taxable income in excess of $200,000. For these
purposes, "Louisiana taxable income" means net income which is earned by us within or derived from sources within the
State of Louisiana, after adjustments permitted under Louisiana law, including a federal income tax deduction. In addition, Heritage
Bank will be subject to the Louisiana Shares Tax which is imposed on the assessed value of Heritage Bank of St. Tammany's
capital. The formula for deriving the assessed value is to apply the applicable rate to the sum of:
(1)
20% of our capitalized earnings, plus
(2)
80% of our taxable stockholders' equity, minus
(3)
50% of our real and personal property assessment.
Various items may also be subtracted in
calculating a company's capitalized earnings. We believe that the Louisiana Shares Tax will result in a significant additional
tax liability following the conversion on an annual basis. See "Unaudited Pro Forma Data."
As a Maryland business corporation, Heritage
NOLA Bancorp will be required to file an annual report with and pay personal property taxes to the State of Maryland.
MANAGEMENT
Shared Management Structure
The directors of Heritage NOLA Bancorp are
the same persons who are the directors of Heritage Bank of St. Tammany. In addition, each executive officer of Heritage NOLA Bancorp
is also an executive officer of Heritage Bank of St. Tammany. We expect that Heritage NOLA Bancorp and Heritage Bank of St. Tammany
will continue to have common executive officers and directors until there is a business reason to establish separate management
structures.
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Executive Officers of Heritage NOLA Bancorp and Heritage
Bank of St. Tammany
The following table sets forth information
regarding the executive officers of Heritage NOLA Bancorp and Heritage Bank of St. Tammany. Age information is as of December 31,
2016. The executive officers of Heritage NOLA Bancorp and Heritage Bank of St. Tammany are elected annually.
Name
Age
Position
W. David Crumhorn
63
President and Chief Executive Officer
Dana Whitaker
47
Executive Vice President and Chief Credit Officer
Lisa Hughes
55
Senior Vice President and Chief Financial Officer
Directors of Heritage NOLA Bancorp and Heritage Bank of
St. Tammany
Heritage NOLA Bancorp has six directors.
Directors serve three-year staggered terms so that approximately one-third of the directors are elected at each annual meeting.
Directors of Heritage Bank of St. Tammany will be elected by Heritage NOLA Bancorp as its sole stockholder. The following table
states our directors' names, their ages as of December 31, 2016, the years when they began serving as directors of Heritage
Bank of St. Tammany and when their current terms expire.
Name
(1)
Position(s) Held With
Heritage Bank of St. Tammany
Age
Director
Since
Current Term
Expires
W. David Crumhorn
Chairman of the Board, President and Chief Executive Offer
63
1993
2020
W. Thomas Ballantine, Jr.
Director
72
2012
2018
Salvatore A. Caruso, Jr.
Director
49
2012
2018
Elizabeth M. Eustis
Director
58
2010
2019
Jason S. Hunt
Director
41
2013
2019
Julian J. Rodrigue, Jr.
Director
62
1997
2020
(1)
The mailing address for each person listed is 205 North Columbia Street, Covington, Louisiana 70433.
Board Independence
Heritage NOLA Bancorp has determined to
adopt the standards for "independence" for purposes of board and committee service set forth in the listing standards
of the Nasdaq Stock Market. The board of directors has determined that each of our directors, with the exception director W. David
Crumhorn, is "independent" as defined in the listing standards of the Nasdaq Stock Market. Mr. Crumhorn is not independent
because he is an executive officer of Heritage Bank of St. Tammany.
To our knowledge, there were no other transactions
between Heritage Bank of St. Tammany and any director or entity controlled by any director, which would interfere with the directors'
exercise of independent judgment in carrying out his responsibilities as a director.
The Business Background of Our Directors
and Executive Officers
The business experience for the past five
years of each of our directors and executive officers is set forth below. With respect to directors, the biographies also contain
information regarding the person's experience, qualifications, attributes or skills that caused the Nominating Committee
and the board of directors to determine that the person should serve as a director. Each director is also a director of
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Heritage Bank of St. Tammany. Unless otherwise
indicated, directors and executive officers have held their positions for the past five years.
Directors
W. David Crumhorn
is our President
and Chief Executive Officer, positions he has held since 1994. Mr. Crumhorn has been employed with the Bank since 1992 and has
over 40 years of experience in the banking profession. Mr. Crumhorn's experience provides the board with a perspective on
the day-to-day operations of Heritage Bank, and assists the board in assessing the trends and developments in the financial institutions
industry on a local and national basis. Additionally, Mr. Crumhorn has extensive ties to the communities that support our business
generation.
W. Thomas Ballantine, Jr.
is
retired. Prior to his retirement in 2007, Mr. Ballantine was President and Chief Operating Officer of Newpark Resources, a publicly
traded oil services company headquartered in New Orleans, Louisiana. Mr. Ballantine has over 40 years of managerial and business
experience. This experience provides the board with broad knowledge of corporate responsibilities and oversight of management.
Salvatore A. Caruso, Jr.
is
Director of Business Development, Marketing and Strategic Planning for Slidell Memorial Hospital, located in Slidell, Louisiana.
Mr. Caruso's experience leading fundraising and business development and municipal government relations provides the board
of directors with insight into the growth efforts being made in Heritage Bank's market area.
Elizabeth M. Eustis
is a commercial
real estate agent and, since 2010, has held the position of Director of Commercial Real Estate for Keller Williams Realty, located
in Mandeville, Louisiana. Ms. Eustis previously was a residential real estate agent. Ms. Eustis extensive knowledge of both the
residential and commercial real estate markets in our market area provide the board with insight and expertise with respect to
the Bank's lending operations.
Jason S. Hunt
is the Chief
Executive Officer and co-founder of Hunt Telecommunications, LLC, Louisiana's largest privately owned telecom and data provider
that specializes in fiber optics, cloud-based computing, internet and next generation telecommunication services. Mr. Hunt's
business experience as a business owner provides the board with valuable business and leadership skills and financial acumen.
Julian J. Rodrigue, Jr.
is
an attorney at the law firm Rodrigue & Rodrigue. Mr. Rodrigue has practiced law in Covington, Louisiana for over 30
years with a specialty in real estate law. Mr. Rodrigue's knowledge of real estate law provides the board with valuable
business acumen and knowledge of the real estate market in Heritage Bank's market area.
Executive Officers who are not Directors
Dana Whitaker
is our Executive
Vice President and Chief Credit Officer, positions she has held since 2009. Ms. Whitaker has been employed by Heritage Bank since
1989 and has held positions of increased responsibility during her tenure at the Bank.
Lisa Hughes
is our Senior
Vice President and Chief Financial Officer, positions she has held since 2010. She began her employment with Heritage Bank in 2007
and has over 30 years of experience in community banking.
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Transactions With Certain Related Persons
Federal law 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 Heritage Bank of St. Tammany, to their executive officers and
directors in compliance with federal banking regulations. At December 31, 2016, all of our loans to directors and executive officers
were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable loans with persons not related to Heritage Bank of St. Tammany, and did not involve
more than the normal risk of collectability or present other unfavorable features. These loans were performing according to their
original terms at December 31, 2016, and were made in compliance with federal banking regulations.
Executive Compensation
Summary Compensation Table.
The
table below summarizes the total compensation paid to or earned by our President and Chief Executive Officer, and our two other
most highly compensated executive officers for the year ended December 31, 2016. Each individual listed in the table below is referred
to as a "named executive officer."
Summary Compensation Table
Name and principal
position
Year
Salary
($)(1)
Bonus
($)(2)
All other
Compensation
($)(3)
Total
($)
W. David Crumhorn, President and Chief Executive Officer
2016
160,000
25,000
26,459
211,459
Dana Whitaker, Chief Credit Officer
2016
100,000
14,000
7,360
121,360
Lisa Hughes, Chief Financial Officer
2016
87,000
9,000
5,580
101,580
(1)
The 2017 annual base salaries for Mr. Crumhorn and Mss. Whitaker and Hughes are $173,200, $100,000 and $87,000, respectively.
(2)
Represents discretionary cash bonuses, which were paid during the year ending December 31, 2016.
(3)
A break-down of the various elements of compensation in this column is set forth in the following table:
All Other Compensation
Name
401(k)
    Match
($)
Director
    Fees
($) (i)
Life
    Insurance
($)
Sick
    Pay
($) (ii)
Total
    All Other
Compensation
($)
W. David Crumhorn
8,100
13,200
851
4,308
26,459
Dana Whitaker
4,668
—
—
2,692
7,360
Lisa Hughes
3,907
—
—
1,673
5,580
(i)
Represents the value of term life insurance protection received under Mr. Crumhorn's split dollar life insurance agreement.
(ii)
Represents the value of unused sick days paid to the named executive officer.
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Benefit Plans and Agreements
Employment Agreements.
Heritage Bank has entered into employment
agreements with each of Mr. Crumhorn and Mss. Whitaker and Hughes. Our continued success depends to a significant degree on the
skills and competence of our executive officers and the employment agreements are intended to ensure that we maintain a
stable management base following the conversion and offering.
Each of the employment agreements has a
fixed term of three years, expiring February 16, 2020. Ninety days prior to the expiration of the term of each agreement, the board
of directors will make a determination whether or not to renew the agreement for an additional three years or some other period
of time as mutually agreed by the parties. In addition to base salary, the agreements provide for, among other things, participation
in bonus programs and other benefit plans and arrangements applicable to executive employees. The current base salaries for Mr.
Crumhorn and Mss. Whitaker and Hughes are $173,200, $100,000 and $87,000, respectively. We may terminate the employment of the
executives for cause at any time, in which event they would have no right to receive compensation or other benefits for any period
after their termination of employment.
Certain events resulting in an executive's
termination or resignation will entitle the executive to payments of severance benefits following the termination of employment.
In the event of an executive's involuntary termination for reasons other than for cause or in the event the executive resigns
during the term of the agreement following (a) the failure to appoint the executive to the executive's position set
forth in the agreement or to re-nominate the executive to the board of directors (in the case of Mr. Crumhorn), (b) a material
change in function, duties or responsibilities resulting in a reduction of the responsibility, scope, or importance of the executive's
position, (c) a relocation by more than 50 miles, (d) a material reduction in the benefits or perquisites paid to the executive
unless the reduction is part of a reduction that is generally applicable to employees of Heritage Bank, (e) a liquidation or dissolution
of the holding company of Heritage Bank (other than one that does not affect the status of the executive) or (f) a material breach
of the employment agreement by Heritage Bank, then the executive would become entitled to a severance payment in the form of a
cash lump sum equal to the base salary and bonus or incentive award the executive would have earned for the remaining unexpired
term of the employment agreement. In addition, the executive would become entitled, at no expense to him or her, to the continuation
of life insurance and non-taxable medical and dental coverage for the remaining unexpired term of the employment agreement, or
if the coverage is not permitted by applicable law or if providing the benefits would subject Heritage Bank to penalties, the executive
will receive a cash lump sum payment equal to the value of the benefits.
In the event of a change in control of Heritage
Bank or Heritage NOLA Bancorp followed by the executive's involuntary termination other than for cause or upon the executive's
resignation for one of the reasons set forth above thereafter, the executive would become entitled to a severance payment in the
form of a cash lump sum equal to three times the executive's "base amount," as that term is defined for purposes
of Internal Revenue Code Section 280G (
i.e.
, the average annual taxable income paid to him or her for the five taxable years
preceding the taxable year in which the change in control occurs). In addition, the executive would become entitled, at no expense
to the executive, to the continuation of life insurance and non-taxable medical and dental coverage for thirty-six (36) months
following his or her termination of employment, or if the coverage is not permitted by applicable law or if providing the benefits
would subject Heritage Bank to penalties, the executive will receive a cash lump sum payment equal to the value of the benefits.
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In the event of the executive's death,
the executive's estate or beneficiaries will be paid the executive's base salary through the end of the month in which
the death occurs and the executive's dependents will be entitled to continued non-taxable medical, dental and other insurance
for one year following the executive's death.
Upon termination of the executive's
employment (other than following a change in control), the executive will be subject to certain restrictions on the executive's
ability to compete or to solicit business or employees of Heritage Bank for a period of one year following his termination of employment.
Salary Continuation Agreement
.
Heritage Bank has entered into a salary continuation agreement with Mr. Crumhorn, effective as of January 1, 2017. The salary continuation
agreement is a non-qualified retirement plan intended to provide supplemental retirement benefits to Mr. Crumhorn.
Under the salary continuation agreement,
Heritage Bank will pay Mr. Crumhorn a normal retirement benefit of $21,560 per year for 10 years commencing the first day of the
second month following the date Mr. Crumhorn attains his normal retirement age of 72 under the agreement. If Mr. Crumhorn separates
from service prior to attaining age 72, Heritage Bank will provide him with a benefit equal to the accrued benefit (
i.e.
,
the amount accrued to date toward the normal retirement benefit), paid in annual installments over 10 years, commencing the first
day of the second month following the date he attains age 72. If Mr. Crumhorn dies prior to a separation from service and prior
to attaining his normal retirement age, his beneficiary will be paid the accrued benefit as of the time of his death, in a lump
sum on the first day of the second month following the date of his death. If he dies after attaining his normal retirement age
but prior to the commencement of benefit payments or prior to the completion of the 10 annual payments, his beneficiary will receive
the benefits Mr. Crumhorn would have received had he survived and will receive those benefits at the same time Mr. Crumhorn would
have received them. Mr. Crumhorn will not receive any benefit under the plan if his separation from service is for cause (as defined
in the agreement). Following a change in control of Heritage Bank or Heritage NOLA Bancorp, and his separation of service within
two years of the change in control, Mr. Crumhorn is entitled to the present value of the normal retirement benefit (regardless
of his age at the time of the change in control), payable in a lump sum on the first day of the second month following his separation
from service.
Executive Supplemental Retirement
Plan.
Heritage Bank has entered into an Executive Supplemental Retirement Plan with Mr. Crumhorn. Under the agreement,
if Mr. Crumhorn remains in service as an employee of Heritage Bank until the normal retirement age specified in the agreement (age
65), he will be entitled to receive the balance of a pre-retirement account in 10 equal annual installments commencing 30 days
following his separation from service. In addition, the "indexed retirement benefit" will be paid annually to Mr. Crumhorn
until his death. The "pre-retirement account" is a liability reserve account for Mr. Crumhorn, which is increased or
decreased each year prior to his termination of service by the "indexed retirement benefit." The "indexed retirement
benefit" equals the excess of the "index" (the aggregate annual after-tax income from certain specified insurance
policies), if any, over the "cost of funds expense." The "cost of funds expense" is a floating rate that
equals Heritage Bank's cost of funds as reported each year in Heritage Bank's FDIC Call Report for the September 30
quarter. If Mr. Crumhorn voluntarily resigns prior to the specified normal retirement age (age 65), he will be entitled to receive
the vested balance in the pre-retirement account in 10 equal annual installments, commencing 30 days following his attainment of
the normal retirement age. In addition, the indexed retirement benefit will be paid to Mr. Crumhorn each year following his attainment
of the normal retirement age until his death. If Mr. Crumhorn dies prior to receiving the balance of the pre-retirement account,
the entire unpaid balance of the pre-retirement account will be paid to him in a lump sum.
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Split Dollar Life Insurance Agreement
.
Heritage Bank has entered into a split dollar life insurance agreement with Mr. Crumhorn to retain and reward Mr. Crumhorn,
by dividing the death proceeds of certain life insurance policies owned by Heritage Bank on his life with his designated beneficiary.
Heritage Bank paid the life insurance premiums from its general assets. Under the agreement, Mr. Crumhorn or his assignee has the
right to designate the beneficiary of an amount of death proceeds. Upon Mr. Crumhorn's death, his beneficiary will be entitled
to a benefit equal to 80% of net at-risk portion of the death proceeds. The net at-risk insurance portion is the total proceeds
less the cash value of the policies. In the event Heritage Bank discontinues a policy, Heritage Bank will give Mr. Crumhorn at
least 15 days to purchase the policy at a purchase price equal to the greater of (i) Heritage Bank's share of the cash value
of the policy or (ii) the amount of premiums paid by Heritage Bank on the policy.
401(k) Plan.
Heritage Bank
maintains the Heritage Bank of St. Tammany 401(k) Plan, a tax-qualified defined contribution plan for eligible employees (the "401(k)
Plan"). The named executive officers are eligible to participate in the 401(k) Plan just like other eligible employees. An
eligible employee must complete one year of service and attain the age of 21 to participate in the 401(k) Plan.
Under the 401(k) Plan a participant may
elect to defer, on a pre-tax basis, the maximum amount as permitted by the Internal Revenue Code. For 2017, the salary deferral
contribution limit is $18,000, provided, however, that a participant over age 50 may contribute an additional $6,000 to the 401(k)
Plan for a total of $24,000. In addition to salary deferral contributions, Heritage Bank may make discretionary matching contributions
and discretionary profit sharing contributions to the 401(k) Plan. Currently, Heritage Bank makes a safe-harbor matching contribution
to the 401(k) Plan equal to 100% of a participant's salary deferrals, up to 4% of the participant's compensation. A
participant is always 100% vested in his or her salary deferral contributions and safe-harbor matching contributions. Regular discretionary
matching contributions and other discretionary employer contributions vest based on a participant's years of service with
Heritage Bank, at the rate of 0% after one year of service, 33% after two years of service, 66% after three years of service and
100% after four years of service. Generally, unless the participant elects otherwise, the participant's account balance will
be distributed as a result of the participant's termination of employment. Heritage Bank intends to allow participants in
the 401(k) Plan to use a portion of their account balances under the 401(k) Plan to subscribe for stock in the offering. Expense
recognized in connection with the 401(k) Plan totaled approximately $1,335 for the year ended December 31, 2016.
Employee Stock Ownership Plan.
In connection with the conversion, Heritage Bank intends to adopt an employee stock ownership plan for eligible employees. The
named executive officers are eligible to participate in the employee stock ownership plan just like other eligible employees. Eligible
employees will begin participation in the employee stock ownership plan on the later of the effective date of the conversion or
upon the first entry date commencing on or after the eligible employee's completion of one year of service and attainment
of age 21.
The employee stock ownership plan trustee
is expected to purchase, on behalf of the employee stock ownership plan, 8.0% of the total number of shares of Heritage NOLA Bancorp
common stock issued in the conversion. We anticipate that the employee stock ownership plan will fund its stock purchase with a
loan from Heritage NOLA Bancorp equal to the aggregate purchase price of the common stock. The loan will be repaid principally
through Heritage Bank's contributions to the employee stock ownership plan and any dividends payable on common stock held
by the employee stock ownership plan over the anticipated 25-year term of the loan. The interest rate for the employee stock ownership
plan loan is expected to equal the Prime Rate, as published in
The Wall Street Journal
, on the closing date of the offering.
See "Pro Forma Data."
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The trustee will hold the shares purchased
by the employee stock ownership plan in an unallocated suspense account, and shares will be released from the suspense account
on a pro-rata basis as the trustee repays the loan. The trustee will allocate the shares released among participants on the basis
of each participant's proportional share of compensation relative to all participants. A participant will vest in his or
her account balance based on his or her years of service with Heritage Bank, at the rate of 0% after one year of service, 33% after
two years of service, 66% after three years of service and 100% after four years of service. Participants who were employed by
Heritage Bank immediately prior to the offering will receive credit for vesting purposes for years of service prior to adoption
of the employee stock ownership plan. Participants also will become fully vested automatically 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.
The employee stock ownership plan will permit
participants to direct the trustee as to how to vote the shares of common stock allocated to their accounts. The trustee will vote
unallocated shares and allocated shares for which participants do not timely provide instructions on any matter in the same ratio
as those shares for which participants provide timely instructions, subject to fulfillment of the trustee's fiduciary responsibilities.
Under applicable accounting requirements,
Heritage Bank will record a compensation expense for the employee stock ownership plan at the fair market value of the shares as
they are committed to be released from the unallocated suspense account to participants' accounts, which may be more or less
than the original issue price. The compensation expense resulting from the release of the common stock from the suspense account
and allocation to plan participants will result in a corresponding reduction in the earnings of Heritage NOLA Bancorp.
Director Compensation
The following table sets forth for the year
ended December 31, 2016 certain information as to the total remuneration we paid to our directors. Mr. Crumhorn received director
fees of $13,200 for the year ended December 31, 2016, which is included in All Other Compensation in the Summary Compensation Table.
Name
Fees Earned or
Paid in Cash
($)
All Other
Compensation
($)(1)
Total
($)
W. Thomas Ballantine, Jr.
13,200
213
13,413
Salvatore A. Caruso, Jr.
13,200
149
13,349
Elizabeth M. Eustis
13,200
193
13,393
Jason S. Hunt
13,200
119
13,319
Julian J. Rodrique, Jr.
13,200
179
13,379
(1)
Represents the value of term life insurance protection received under split dollar life insurance agreements
Director Fees
Beginning in 2017, directors who are officers
of Heritage Bank do not receive board or committee fees. Beginning in 2017, outside directors receive a monthly retainer of $650
for membership on the board of directors and $500 for each regularly scheduled monthly board meeting attended in person, and $200
for each regularly scheduled monthly board meeting attended by telephone.
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Additionally, outside directors receive $200 per month for any
special board meetings attended
.
The Chairman of the Audit Committee receives an additional $250 per month.
Each person who will serve as a director
of Heritage NOLA Bancorp will also serve as a director of Heritage Bank and will initially earn a fee only in his or her capacity
as a board member of Heritage Bank. Upon completion of the conversion, additional director fees may be paid for Heritage NOLA Bancorp
director meetings, although no such determination has been made at this time.
Director Supplemental Retirement Plan
Heritage Bank has entered into a Director
Supplemental Retirement Plan Director Agreement with each of its directors, including Mr. Crumhorn. Under the agreements, a director
who remains in service on the board of directors until the normal retirement age specified in the agreement (age 70) will be entitled
to receive the balance of a pre-retirement account in 10 equal annual installments commencing 30 days following his or her separation
from service. In addition, the "indexed retirement benefit" will be paid annually to the director until his or her
death. The "pre-retirement account" is a liability reserve account for the director, which is increased or decreased
each year prior to the director's termination of service by the "indexed retirement benefit." The "indexed
retirement benefit" for each director for each year equals the excess of the "index" (the aggregate annual after-tax
income from certain specified insurance policies), if any, over the "cost of funds expense." The "cost of funds
expense" is a floating rate that equals Heritage Bank's cost of funds as reported each year in Heritage Bank's
FDIC Call Report for the September 30 quarter. If a director voluntarily resigns from the board of directors or is not re-elected
to the board of directors prior to the specified normal retirement age (70), the director will be entitled to receive the vested
balance in the pre-retirement account in 10 equal annual installments, commencing 30 days following the director attaining the
normal retirement age. In addition, the indexed retirement benefit will be paid to the director each year following his attainment
of the normal retirement age until his death. If the director dies prior to receiving the balance of the pre-retirement account,
the entire unpaid balance of the pre-retirement account will be paid to his benefit in a lump sum. The director will forfeit all
benefits under the agreement if he or she is discharged from the board of directors for "cause" (as defined in the
agreement).
Split Dollar Life Insurance Agreements
.
Heritage Bank has entered into a split dollar life insurance agreement with each member of the board of directors to retain
and reward the directors, by dividing the death proceeds of certain life insurance policies owned by Heritage Bank on their lives
with their designated beneficiaries. Heritage Bank paid the life insurance premiums from its general assets. Under the agreements,
each director or his or her assignee has the right to designate the beneficiary of an amount of death proceeds. Upon the director's
death, his or her beneficiary will be entitled to a benefit equal to 80% of net at-risk portion of the death proceeds. The net
at-risk insurance portion is the total proceeds less the cash value of the policies. In the event Heritage Bank discontinues a
policy, Heritage Bank will give the director at least 15 days to purchase the policy at a purchase price equal to the greater of
(i) Heritage Bank's share of the cash value of the policy or (ii) the amount of premiums paid by Heritage Bank on the policy.
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Benefits to be Considered Following Completion of the Stock
Offering
Following the stock offering, we intend
to adopt a stock-based benefit plan that will provide for grants of stock options and awards of shares of restricted common stock.
In accordance with applicable regulations, we anticipate that the plan will authorize a number of stock options and a number of
shares of restricted common stock, not to exceed 10.0% and 4.0%, respectively, of the shares issued in the offering. These limitations
may not apply if the plan is implemented more than one year after the conversion and offering, subject to any applicable regulatory
approvals.
The stock-based benefit plan will not be
established sooner than six months after the stock offering and, if adopted within one year after the stock offering, the plan
must be approved by a majority of the votes eligible to be cast by our stockholders. If a stock-based benefit plan is established
more than one year after the stock offering, it must be approved by a majority of votes cast by our stockholders.
Certain additional restrictions would apply
to our stock-based benefit plan if adopted within one year after the stock offering, including:
·
non-employee directors in the aggregate may not receive more than 30% of the options and shares of restricted common stock
authorized under the plan;
·
any non-employee director may not receive more than 5% of the options and restricted stock awards authorized under the plan;
·
any officer or employee may not receive more than 25% of the options and restricted stock awards authorized under the plan;
·
the options and shares of restricted common stock may not vest more rapidly than 20% per year, beginning on the first anniversary
of stockholder approval of the plan; and
·
accelerated vesting is not permitted except for death, disability or upon a change in control of Heritage NOLA Bancorp or Heritage
Bank.
We have not yet determined whether we will
present a stock-based benefit plan for stockholder approval within one year following the completion of the conversion or whether
we will present a plan for stockholder approval more than one year after the completion of the conversion. In the event of changes
in applicable regulations or policies regarding stock-based benefit plans, including any regulations or policies restricting the
size of awards and vesting of benefits as described above, the restrictions described above may not be applicable.
We may obtain the shares needed for our
stock-based benefit plan by issuing additional shares of common stock from authorized but unissued shares or through stock repurchases.
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SUBSCRIPTIONS BY
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information
regarding intended common stock subscriptions by each of the directors and executive officers and their associates, and by all
directors, officers and their associates as a group. However, there can be no assurance that any such person or group will purchase
any specific number of shares of our common stock. In the event the individual maximum purchase limitation is increased, persons
subscribing for the maximum amount may increase their purchase order. Directors and officers will purchase shares of common stock
at the same $10.00 purchase price per share and on the same terms as other purchasers in the offering. This table excludes shares
of common stock to be purchased by the employee stock ownership plan, as well as any stock awards or stock option grants that
may be made no earlier than six months after the completion of the offering. The directors and officers have indicated their intention
to subscribe in the offering for an aggregate of 97,850 shares of common stock, equal to 9.2% of the number of shares
of common stock to be sold in the offering at the minimum of the offering range, assuming shares are available. Purchases by directors,
officers and their associates will be included in determining whether the required minimum number of shares has been subscribed
for in the offering. The shares being acquired by the directors, executive officers and their associates are being acquired for
investment purposes, and not with a view towards resale. Our directors and executive officers will be subject to the same minimum
purchase requirements and purchase limitations as other participants in the offering set forth under "The Conversion and
Offering – Limitations on Stock Purchases." Subscriptions by management through our 401(k) Plan will be counted as
part of the maximum number of shares such individuals may subscribe for in the offering.
Name and Title
Number of
Shares
(1)
Aggregate
Purchase
Price
(1)
Percent at
Minimum of
Offering
Range
W. David Crumhorn, President, Chief Executive Officer and Director
15,350
$
153,500
1.4
%
W. Thomas Ballantine, Jr., Director
12,500
125,000
1.2
Salvatore A. Caruso, Jr.
5,000
50,000
*
Elizabeth M. Eustis
10,000
100,000
*
Jason S. Hunt
5,000
50,000
*
Julian J. Rodrigue, Jr
20,000
200,000
1.9
Dana Whitaker, Executive Vice President and Chief Credit Officer
20,000
200,000
1.9
Lisa Hughes, Senior Vice President and Chief Financial Officer
10,000
100,000
*
All directors and officers as a group (8 persons)
97,850
$
978,500
9.2
%
*
Less than 1.0%
(1)
Includes purchases by the named individual's spouse and other relatives of the named individual
living in the same household. Other than as set forth above, the named individuals are not aware of any other purchases by a person
who or entity that would be considered an associate of the named individuals under the plan of conversion.
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THE CONVERSION AND OFFERING
The board of directors of Heritage Bank
of St. Tammany has approved the plan of conversion. The plan of conversion must also be approved by Heritage Bank of St. Tammany's
members (depositors). A special meeting of members has been called for this purpose. We have filed an application with respect
to the conversion and stock offering with the Office of the Comptroller of the Currency, and have filed a holding company application
with the Federal Reserve Board. The final approvals of the Federal Reserve Board and the Office of the Comptroller of the Currency
are required before we can consummate the conversion and stock offering. Any approval by the Federal Reserve Board or the
Office of the Comptroller of the Currency does not constitute a recommendation or endorsement of the plan of conversion.
General
The board of directors of Heritage Bank
of St. Tammany approved the plan of conversion on March 7, 2017. Pursuant to the plan of conversion, Heritage Bank of St. Tammany
will convert from the mutual form of organization to the fully stock form of organization. In connection with the conversion, Heritage
Bank of St. Tammany has organized a new Maryland stock holding company named Heritage NOLA Bancorp, Inc. which will sell shares
of common stock to the public in an initial public stock offering. When the conversion and related stock offering are completed,
all of the capital stock of Heritage Bank of St. Tammany will be owned by Heritage NOLA Bancorp, and all of the common stock of
Heritage NOLA Bancorp will be owned by stockholders.
Heritage NOLA Bancorp expects to retain
between $3.9 million and $5.4 million of the net proceeds of the offering, or $6.3 million if the offering range is increased by
15% because of demand for the shares or changes in market conditions. Heritage Bank of St. Tammany will receive a capital contribution
equal to at least 50% of the net proceeds of the offering, plus such additional amounts as may be necessary so that, upon completion
of the offering, Heritage Bank of St. Tammany will have a Tier 1 leverage ratio of at least 10.00%. Based on this formula, we anticipate
that Heritage NOLA Bancorp will invest $4.7 million, $5.7 million, $6.6 million and $7.7 million, respectively, of the net proceeds
at the minimum, midpoint, maximum and adjusted maximum of the offering in Heritage Bank of St. Tammany. The conversion will be
consummated only upon the sale of at least 1,062,500 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, specifically our employee stock ownership plan, Supplemental Eligible Account Holders and Other Members. If all
shares are not subscribed for in the subscription offering, we may, in our discretion, offer common stock for sale in a community
offering to members of the public, with a preference given to natural persons and trusts of natural persons residing in St. Tammany
Parish, Louisiana. In addition, shares of common stock not purchased in the subscription offering and community offering may be
offered for sale to the general public in a syndicated community offering to be managed by FIG Partners, LLC, acting as our agent.
We have the right to accept or reject, in
whole or in part, any orders to purchase shares of the common stock received in the community offering or syndicated community
offering. The community offering and/or syndicated community offering, if any, may begin at the same time as, during, or after
the subscription offering, and must be completed within 45 days after the completion of the subscription offering unless otherwise
extended by us with the approval of the OCC. See " – Community Offering" and " – Syndicated Community
Offering."
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We determined the number of shares of common
stock to be offered in the offering based upon an independent valuation of the estimated consolidated pro forma market value of
Heritage NOLA Bancorp, assuming the conversion and stock offering are completed. 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 the shares of common stock to be issued in the offering will be determined at
the completion of the offering. See " – Determination of Share Price and Number of Shares to be Issued" for more
information as to the determination of the estimated pro forma market value of the common stock.
The following is a brief summary of the
conversion. We recommend reading the plan of conversion in its entirety for more information. A copy of the plan of conversion
is available for inspection at the banking offices of Heritage Bank of St. Tammany and as described in the section of this prospectus
titled "Where You Can Find Additional Information." The plan of conversion is also filed as an exhibit to Heritage
Bank of St. Tammany's application to convert from mutual to stock form of which this prospectus is a part, copies of which
may be obtained from the OCC. The plan of conversion is also filed as an exhibit to the registration statement we have filed with
the Securities and Exchange Commission, of which this prospectus is a part, copies of which may be obtained from the Securities
and Exchange Commission or online at the Securities and Exchange Commission's website,
www.sec.gov
. See "Where
You Can Find Additional Information."
Reasons for the Conversion
·
to increase capital to support future growth and profitability;
·
to retain and attract qualified personnel by establishing stock-based benefit plans for management and employees;
·
to have greater flexibility to structure and finance the opportunistic expansion of our operations; and
·
to offer our customers and employees an opportunity to purchase our stock.
In the stock holding company structure,
we will have greater flexibility in structuring mergers and acquisitions. Our current mutual structure prevents us from offering
shares of our common stock as consideration for a merger or acquisition. Potential sellers often want stock for at least part of
the acquisition consideration. Our new stock holding company structure will enable us to offer stock or cash consideration, or
a combination thereof, and will therefore enhance our ability to compete with other bidders when acquisition opportunities arise.
We have no current arrangements or agreements to acquire other banks, thrifts, credit unions, financial services companies or branch
offices, and there can be no assurance that we will be able to consummate any acquisitions or establish any new branches. Lastly,
mutual institutions cannot offer stock incentives to attract and retain highly qualified management personnel. While Heritage Bank
of St. Tammany has not required these capital tools and stock incentives in the past, they will be essential to implementing our
business strategy, and management believes that the additional capital raised in the offering will enable us to take advantage
of business opportunities that may not otherwise be available to us.
As of December 31, 2016, Heritage Bank of
St. Tammany was considered "well capitalized" for regulatory purposes. The proceeds from the stock offering will further
improve our capital position during a period of economic, regulatory and political uncertainty.
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Approvals Required
The affirmative vote of a majority of the
total eligible votes of members of Heritage Bank of St. Tammany at a special meeting of members is required to approve the plan
of conversion. A special meeting of members to consider and vote upon the plan of conversion has been set for [special meeting
date], 2017. The plan of conversion also must be approved by the OCC. Additionally, the Federal Reserve Board must approve our
holding company application. We cannot consummate the conversion and the stock offering without satisfying the conditions contained
in these approvals.
Effects of Conversion on Depositors, Borrowers and Members
Continuity.
While the conversion
is being accomplished, our normal business of accepting deposits and making loans will continue without interruption. Heritage
Bank of St. Tammany will continue to be a federally chartered savings bank and will continue to be regulated by the OCC, while
Heritage NOLA Bancorp will be regulated by the Federal Reserve Board. After the conversion, we will continue to offer existing
services to depositors, borrowers and other customers. The directors serving Heritage Bank of St. Tammany at the time of the conversion
will be the directors of Heritage Bank of St. Tammany and of Heritage NOLA Bancorp after the conversion.
Effect on Deposit Accounts.
Pursuant to the plan of conversion, each depositor of Heritage Bank of St. Tammany 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 FDIC to the same extent as before the conversion.
Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.
Effect on Loans.
No loan outstanding
from Heritage Bank of St. Tammany will be affected by the conversion, and the amount, interest rate, maturity and security for
each loan will remain as it was contractually fixed prior to the conversion.
Effect on Voting Rights of Members.
All of our depositors are members of and have voting rights in Heritage Bank of St. Tammany as to all matters requiring membership
action. Upon completion of the conversion, Heritage Bank of St. Tammany will cease to have members and former members will no longer
have voting rights. Upon completion of the conversion, all voting rights in Heritage Bank of St. Tammany will be vested in Heritage
NOLA Bancorp as the sole stockholder of Heritage Bank of St. Tammany. The stockholders of Heritage NOLA Bancorp will possess exclusive
voting rights with respect to Heritage NOLA Bancorp common stock.
Tax Effects.
We have received
opinions of counsel and our tax advisors with regard to the federal and state income tax consequences of the conversion to the
effect that the conversion will not be taxable for federal or Louisiana income tax purposes to Heritage Bank of St. Tammany or
its members. See " – Material Income Tax Consequences."
Effect on Liquidation Rights.
Each depositor of Heritage Bank of St. Tammany has both a deposit account in Heritage Bank of St. Tammany and a pro rata ownership
interest in the net worth of Heritage Bank of St. Tammany 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 interest
may only be realized in the event of a complete liquidation of Heritage Bank of St. Tammany. Any depositor who opens a deposit
account obtains a pro rata ownership interest in Heritage Bank of St. Tammany without any additional payment beyond the amount
of the deposit. A depositor who reduces or closes his or her account receives a portion or all, respectively, of the balance in
the
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deposit account but nothing for his or her
ownership interest in the net worth of Heritage Bank of St. Tammany, which is lost to the extent that the balance in the account
is reduced or closed.
Consequently, depositors in a mutual savings
bank normally have no way of realizing the value of their ownership interest, which has realizable value only in the unlikely event
that the savings association is completely liquidated. If this occurs, the depositors of record at that time, as owners, would
share pro rata in any residual surplus and reserves of Heritage Bank of St. Tammany after other claims, including claims of depositors
to the amounts of their deposits, are paid.
In the unlikely event that Heritage Bank
of St. Tammany were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first,
followed by distribution of a "liquidation account" to depositors as of December 31, 2015 and __________, 2017 who
continue to maintain their deposit accounts as of the date of liquidation, with any assets remaining thereafter distributed to
Heritage NOLA Bancorp as the holder of Heritage Bank of St. Tammany' capital stock. Pursuant to the rules and regulations
of the OCC, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured
savings institution would not be considered a liquidation and, in such a transaction, the liquidation account would be assumed
by the surviving institution. See " – Liquidation Rights."
Determination of Share Price and Number of Shares to be
Issued
The plan of conversion and federal regulations
require that the aggregate purchase price of the common stock sold in the offering be based on the appraised pro forma market value
of the common stock, as determined by an independent valuation. We have retained RP Financial, LC. to prepare an independent valuation
appraisal. For its services in preparing the initial valuation and one update, RP Financial, LC. will receive a fee of $35,000,
and will be reimbursed for its expenses up to $7,500. In the event that RP Financial, LC. is required to update the appraisal more
than one time, it will receive an additional fee of $5,000 for each such update to the valuation appraisal.
We are not affiliated with RP Financial,
LC., and neither we nor RP Financial, LC. has an economic interest in, or is held in common with, the other. RP Financial, LC.
represents and warrants that it is not aware of any fact or circumstance that would cause it not to be "independent"
within the meaning of the conversion regulations or the applicable regulatory valuation guidelines or otherwise prohibit or restrict
in anyway RP Financial, LC. from serving in the role of our independent appraiser.
We have agreed to indemnify RP Financial,
LC. and its employees and affiliates against specified losses, including any losses in connection with claims under the federal
securities laws, arising out of its services as independent appraiser, except where such liability results from its negligence
or bad faith.
The independent valuation appraisal considered
the pro forma impact of the offering. Consistent with applicable federal appraisal guidelines, the appraisal applied three primary
methodologies: the pro forma price-to-book value approach applied to both reported book value and tangible book value; the pro
forma price-to-earnings approach applied to reported and core earnings; and the pro forma price-to-assets approach. The market
value ratios applied in the remaining two methodologies were based upon the current market valuations of the peer group companies
identified by RP Financial, LC., subject to valuation adjustments applied by RP Financial, LC. to account for differences between
us and our peer group. Because RP Financial, LC. concluded that asset size is not a strong determinant of market value, RP Financial,
LC. did not place significant weight on the pro forma price-to-assets approach in reaching its conclusions. RP Financial, LC. placed
the greatest emphasis on the price-to-book value and price-to-earnings approaches in estimating pro forma market value.
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The independent valuation was prepared by
RP Financial, LC. in reliance upon the information contained in this prospectus, including our financial statements. RP Financial,
LC. also considered the following factors, among others:
·
our present and projected operating results and financial condition;
·
the economic and demographic conditions in our existing market area;
·
certain historical, financial and other information relating to us;
·
a comparative evaluation of our operating and financial characteristics with those of other similarly situated publicly traded
savings institutions;
·
the impact of the conversion and the offering on our equity and earnings potential; and
·
the trading market for securities of comparable institutions and general conditions in the market for such securities.
Included in the independent valuation were
certain assumptions as to our pro forma earnings after the conversion that were utilized in determining the appraised value. These
assumptions included estimated expenses, an assumed after-tax rate of return on the net offering proceeds and purchases in the
open market of 4% of the common stock sold in the offering by the stock-based benefit plan at the $10.00 purchase price. See "Pro
Forma Data" for additional information concerning these assumptions. The use of different assumptions may yield different
results.
The independent valuation states that as
of February 10, 2017, the estimated pro forma market value of Heritage NOLA Bancorp ranged from $10.6 million to $14.4 million,
with a midpoint of $12.5 million. Our board of directors decided to offer the shares of common stock for a price of $10.00 per
share primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The number
of shares offered will be equal to the aggregate offering price of the shares divided by the price per share. Based on the valuation
range and the $10.00 price per share, the minimum of the offering range will be 1,062,500 shares, the midpoint of the offering
range will be 1,250,000 shares and the maximum of the offering range will be 1,437,500 shares, or 1,653,125 shares if the maximum
amount is increased by 15% because of demand for shares or changes in market conditions.
In applying each of the valuation methods,
RP Financial, LC. considered adjustments to our pro forma market value based on a comparison of Heritage NOLA Bancorp with the
peer group. RP Financial, LC. made upward adjustments for: (i) financial condition; and (ii) primary market area. RP Financial,
LC. made downward adjustments for: (i) profitability, growth and viability of earnings; and (ii) liquidity of the shares. No adjustments
were made for: (i) asset growth; (ii) dividends; (iii) marketing of the offering; (iv) management; or (v) the effect of government
regulations and regulatory reform. The upward adjustment applied for financial condition was due to Heritage NOLA Bancorp's
more favorable credit quality and the stronger pro forma capital position. The upward adjustment applied for primary market area
took into consideration St. Tammany Parish's relatively favorable demographic measures and income levels compared to the
counties within the peer group's primary market areas. The downward adjustment applied for profitability, growth and viability
of earnings took into consideration Heritage NOLA Bancorp's less favorable core earnings measures, and lower pro forma returns
as a percent of assets and equity relative to the peer group's measures. The downward adjustment applied for liquidity of
the shares took into consideration Heritage NOLA Bancorp's pro forma market capitalization and shares outstanding which are
expected to be lower than the peer group's market capitalization and shares outstanding.
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The following table presents a summary of
selected pricing ratios for the peer group companies and for Heritage NOLA Bancorp (on a pro forma basis) utilized by RP Financial
in its appraisal. These ratios are based on Heritage NOLA Bancorp's book value, tangible book value and core earnings as
of and for the 12 months ended December 31, 2016. The peer group ratios are based on the latest date for which complete financial
data are publicly available and stock prices as of February 10, 2017. Compared to the average pricing of the peer group, our pro
forma pricing ratios at the midpoint of the offering range indicated a discount of 40.2% on a price-to-book value basis and a discount
of 42.2% on a price-to-tangible book value basis and a premium of 1,268.6% on a price-to-earnings basis.
Price-to-core earnings
multiple
(1)
Price-to-book
value ratio
Price-to-tangible
book value ratio
Heritage NOLA Bancorp (on a pro forma basis, assuming completion of the conversion):
Adjusted Maximum
976.42
x
72.46
%
72.46
%
Maximum
487.11
x
68.73
%
68.73
%
Midpoint
306.71
x
64.89
%
64.89
%
Minimum
204.33
x
60.35
%
60.35
%
Valuation of peer group companies, all of which are fully converted (on an historical basis):
Average
22.41
x
108.54
%
112.27
%
Median
20.38
x
109.85
%
111.74
%
(1)
Price-to-earnings multiples calculated by RP Financial,
LC. in the independent appraisal are based on an estimate of "core" or recurring earnings. These ratios are different
from those presented in "Pro Forma Data."
Peer Group Companies
Company Name
Ticker Symbol
Exchange
Headquarters
Total Assets at
September 30,
2016
(in thousands)
Equitable Financial Corp.
EQFN
Nasdaq
Grand Island, NE
228
Hamilton Bancorp, Inc.
HBK
Nasdaq
Towson, MD
517
Home Federal Bancorp, Inc.
HFBL
Nasdaq
Shreveport, LA
390
Jacksonville Bancorp, Inc.
JXSB
Nasdaq
Jacksonville, IL
331
MSB Financial Corp.
MSBF
Nasdaq
Millington, NJ
434
Poage Bankshares, Inc.
PBSK
Nasdaq
Ashland, KY
449
United Community Bancorp
UCBA
Nasdaq
Lawrenceburg, IN
528
Wayne Savings Bancshares, Inc.
WAYN
Nasdaq
Wooster, OH
446
Wolverine Bancorp, Inc.
WBKC
Nasdaq
Midland, MI
369
WVS Financial Corp.
WVFC
Nasdaq
Pittsburgh, PA
335
Our board of directors reviewed the independent
valuation and, in particular, considered the following:
·
our financial condition and results of operations;
·
comparison of our financial performance ratios to those of other financial institutions of similar size; and
·
market conditions generally and, in particular, for financial institutions.
All of these factors are set forth in the
independent valuation. Our board of directors also reviewed the methodology and the assumptions used by RP Financial, LC. in preparing
the independent valuation and believes that such assumptions were reasonable. The offering range may be amended with
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the approval of the OCC, if required, as a
result of subsequent developments in our financial condition or market conditions generally. In the event the independent valuation
is updated to amend our pro forma market value to less than $10.6 million or more than $16.5 million, the appraisal will be filed
with the Securities and Exchange Commission by a post-effective amendment to our registration statement.
The independent valuation is not intended,
and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. RP
Financial, LC. did not independently verify our financial statements and other information that we provided to them, nor did RP
Financial, LC. independently value our assets or liabilities. The independent valuation considers Heritage Bank of St. Tammany
as a going concern and should not be considered as an indication of the liquidation value of Heritage Bank of St. Tammany. 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 the $10.00 offering price per share.
Following commencement of the subscription
offering, the maximum of the valuation range may be increased by up to 15%, or up to $16.5 million, which would result in a corresponding
increase of up to 15% in the maximum of the offering range to up to 1,653,125 shares, to reflect changes in the market and financial
conditions or demand for the shares. We will not increase the offering range above this level or decrease the minimum of the offering
range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See " –
Limitations on Common Stock Purchases" as to the method of distribution and allocation of additional shares that may be issued
in the event of an increase in the offering range to fill unfilled orders in the offering.
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 $16.5 million, and
a corresponding increase in the offering range to more than 1,653,125 shares, or a decrease in the minimum of the valuation range
to less than $10.6 million and a corresponding decrease in the offering range to fewer than 1,062,500 shares, then we will promptly
return, with interest at a rate of 0.15% per annum, all funds received in the offering and cancel deposit account withdrawal authorizations.
After consulting with the OCC, we may terminate the plan of conversion. Alternatively, we may establish a new offering range and
commence a resolicitation of subscribers or take other actions as permitted by the OCC in order to complete the offering. In the
event that we conduct a resolicitation, we will notify subscribers of their rights to place a new stock order for a specified period
of time. If a person does not respond, we will cancel his or her stock order and return his or her subscription funds, with interest,
and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. Any resolicitation
following the conclusion of the subscription and community offerings would not exceed 45 days unless further extended with the
approval, to the extent approval is required, of the OCC, for periods of up to 90 days.
An increase in the number of shares to be
issued in the offering would decrease both a subscriber's ownership interest and our pro forma earnings and stockholders'
equity on a per share basis while increasing pro forma earnings and stockholders' equity on an aggregate basis. A decrease
in the number of shares to be issued in the offering would increase both a subscriber's ownership interest and our pro forma
earnings and stockholders' equity on a per share basis, while decreasing pro forma earnings and stockholders' equity
on an aggregate basis. For a presentation of the effects of these changes, see "Pro Forma Data."
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Copies of the independent valuation appraisal
report of RP Financial, LC. and the detailed memorandum setting forth the method and assumptions used in the appraisal report are
available for inspection at our office and as specified under "Where You Can Find Additional Information."
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 to the minimum, maximum and overall purchase
limitations set forth in the plan of conversion and as described below under " – Limitations on Common Stock Purchases."
Priority 1: Eligible Account Holders.
Each depositor with aggregate deposit account balances of $50.00 or more (a "Qualifying Deposit") on December 31, 2015
(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 5,000 shares ($50,000) of our common stock, 0.10% of the total
number of shares of common stock issued in the offering, or 15 times the number of shares offered multiplied by a fraction of which
the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposits
of all Eligible Account Holders, subject to the overall purchase limitations. See " – Limitations on Common Stock Purchases."
If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each
Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100
shares or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Eligible
Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to
the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an
amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated
(one or more times as necessary) among those Eligible Account Holders whose subscriptions are not fully satisfied until all available
shares have been allocated.
To ensure proper allocation of shares of
our common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she
had an ownership interest on December 31, 2015. In the event of oversubscription, failure to list an account, or including incomplete
or incorrect information, could result in fewer shares being allocated than if all information had been disclosed. In the event
of an oversubscription, the subscription rights of Eligible Account Holders who are also our directors or senior officers or their
associates will be subordinated to the subscription rights of other Eligible Account Holders to the extent of such portion of their
subscription rights attributable to their increased deposits during the year preceding December 31, 2015.
Priority 2: Tax-Qualified Plans.
Our tax-qualified employee benefit plans, specifically our employee stock ownership plan which we are establishing in connection
with the conversion, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up
to 10% of the shares of common stock sold in the offering. Our employee stock ownership plan intends to purchase up to 8% of the
total number of shares of common stock sold in the stock offering. Alternatively, subject to market conditions and receipt of regulatory
approval, the employee stock ownership plan may instead elect to purchase shares of common stock in the open market following the
completion of the offering in order to fill all or a portion of the employee stock ownership plan's intended subscription.
Priority 3: Supplemental Eligible
Account Holders.
To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions
by Eligible Account Holders and our tax-
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qualified employee benefit plans, each depositor
with a Qualifying Deposit on ________ who is not an Eligible Account Holder ("Supplemental Eligible Account Holder")
will receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of 5,000 shares ($50,000)
of common stock, 0.10% of the total number of shares of common stock issued in the offering, or 15 times the number of shares offered
multiplied by a fraction of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator
is the aggregate Qualifying Deposits of all Supplemental Eligible Account Holders, subject to the overall purchase limitations.
See " – Limitations on Common Stock Purchases." If there are not sufficient shares available to satisfy all subscriptions,
shares will be allocated so as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to
make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she
subscribed. Thereafter, unallocated shares will be allocated to each Supplemental Eligible Account Holder whose subscription remains
unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of
all Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed
for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated (one or more times as necessary)
among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been
allocated.
To ensure proper allocation of common stock,
each Supplemental Eligible Account Holder must list on the stock order form all deposit accounts in which he or she had an ownership
interest at _____________, 2017. In the event of oversubscription, failure to list an account, or including incomplete or incorrect
information, could result in fewer shares being allocated than if all information had been disclosed.
Priority 4: Other Members.
To the extent that there are shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders,
our tax-qualified employee benefit plans, and Supplemental Eligible Account Holders, each depositor on the voting record date of
__________, 2017 who is not an Eligible Account Holder or Supplemental Eligible Account Holder ("Other Members") will
receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of 5,000 shares ($50,000)
of common stock or 0.10% of the total number of shares of common stock issued in the offering, subject to the overall purchase
limitations. See " – Limitations on Common Stock Purchases." If there are not sufficient shares available to
satisfy all subscriptions, available shares will be allocated so as to permit each Other Member to purchase a number of shares
sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which
he or she subscribed. Thereafter, unallocated shares will be allocated to each Other Member whose subscription remains unfilled
in the proportion that the amount of his or her subscription bears to the total amount of subscriptions of all Other Members whose
subscriptions remain unfilled.
To ensure proper allocation of common stock,
each Other Member must list on the stock order form all deposit accounts in which he or she had an ownership interest at _____________.
In the event of oversubscription, failure to list an account, or including incomplete or incorrect information, could result in
fewer shares being allocated than if all accounts had been disclosed.
Expiration Date
.
The Subscription
Offering will expire at 2:00 p.m., Central Time, on [expiration date], unless extended by us for up to 45 days or such additional
periods of up to 90 days with the approval of the OCC, if necessary. Subscription rights will expire whether or not each person
eligible to subscribe in the subscription offering can be located. We may decide to extend the expiration date of the subscription
offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the
offering range. Subscription rights that have not been exercised prior to the expiration date will become void.
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We will not execute orders in the stock
offering until we have received orders to purchase at least the minimum number of shares of common stock. If we have not received
orders to purchase at least 1,062,500 within 45 days after the [expiration date], and the OCC has not consented to an extension,
the stock offering will be terminated and all funds delivered to purchase shares of common stock in the offering will be returned
promptly to the subscribers with interest at a rate of 0.15% per annum, and all deposit account withdrawal authorizations will
be cancelled. If an extension beyond [extended expiration date] is granted by the OCC, we will resolicit subscribers as described
under " – Procedure for Purchasing Shares – Expiration Date."
Community Offering
To the extent that shares of common stock
remain available for purchase after satisfaction of all subscriptions of the Eligible Account Holders, our tax-qualified employee
benefit plans, Supplemental Eligible Account Holders and Other Members, we may offer shares pursuant to the plan of conversion
to the public in a community offering, with a preference given to natural persons and trusts of natural persons residing in St.
Tammany Parish, Louisiana (the "Community").
Subscribers in the community offering may
purchase up to 5,000 shares ($50,000) of common stock, subject to the overall purchase limitations. See " – Limitations
on Common Stock Purchases."
The opportunity to purchase shares of common stock in 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 and trusts of natural persons residing in the Community, we will allocate
the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser
of 100 shares, or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among such
persons whose orders remain unsatisfied on an equal number of shares basis per order. If, instead, we do not have sufficient shares
of common stock available to fill the orders of other members of the public, we will allocate the available shares among those
persons in the manner described above for persons residing in the Community. 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 means any person who occupies a dwelling within the Community, has a present intent to remain within
the Community for a period of time and manifests the genuineness of that intent by establishing an ongoing physical presence within
the Community, together with an indication that this presence within the Community is something other than merely transitory in
nature. We may utilize deposit or loan records or other evidence provided to us to decide 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 at the same time as, during or after the subscription offering. We will not execute orders in the stock offering
until we have received orders to purchase at least the minimum number of shares of common stock. The community offering is expected
to conclude at 2:00 p.m., Central Time on [expiration date], but must terminate no more than 45 days following the expiration of
the subscription offering, unless extended with regulatory approval. We may decide to extend the community offering for any reason
and are not required to give purchasers notice of any such extension unless such period extends beyond [extended expiration date].
If an extension beyond [extended expiration date] is granted by the required regulatory agencies, we will resolicit persons whose
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orders we accept in the community offering,
giving them an opportunity to confirm, change or cancel their orders. If a person does not respond, we will cancel his or her stock
order and return funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of
shares of common stock. These extensions may not go beyond [final date], which is two years after the special meeting of members.
Syndicated Community Offering
Our board of directors may decide to offer
for sale shares of common stock not subscribed for in the subscription and community offerings in a syndicated community offering
in a manner that will achieve a widespread distribution of our shares of common stock to the general public.  If a syndicated
community offering is held, FIG Partners, LLC will serve as sole book running manager and will assist us in selling our common
stock on a best efforts basis.  In such capacity, FIG Partners, LLC may form a syndicate of other broker-dealers who
are FINRA member firms.  Neither FIG Partners, LLC nor any registered broker-dealer will have any obligation to take
or purchase any shares of the common stock in the syndicated community offering.
In the syndicated community offering, any
person may purchase up to 5,000 shares ($50,000) of common stock, subject to the overall purchase limitations. See " –
Limitations on Common Stock Purchases."  We retain the right to accept or reject in whole or in part any orders
in the syndicated community offering.  Unless the OCC permits otherwise, accepted orders for our common stock in the
syndicated community offering will first be filled up to a maximum of 2% of the shares sold in the offering. Thereafter any remaining
shares will be allocated on an equal number of shares per order basis until all shares have been allocated.  Unless the
syndicated community offering begins during the subscription offering or the community offering, the syndicated community offering
will begin as soon as possible after the expiration of the subscription and community offerings. The syndicated community offering
must terminate no more than 45 days following the expiration of the subscription offering.
The syndicated community offering will be
conducted in accordance with certain Securities and Exchange Commission rules applicable to best efforts "min/max"
offerings. Orders in the syndicated community offering will be submitted in substantially the same manner as utilized in the subscription
and community offerings. Payments in the syndicated offering, however, must be made in immediately available funds (bank checks,
money orders, Heritage Bank of St. Tammany deposit account withdrawal authorizations or wire transfers). Personal checks will not
be accepted. If the closing of the stock offering does not occur, either as a result of not confirming receipt of at least $10.6
million in gross proceeds (the minimum of the offering range) or the inability to satisfy other closing conditions to the offering,
the funds will be promptly returned with interest at a rate of 0.15% per annum.
The closing of the syndicated community
offering, which will be simultaneous with the closing of the subscription and community offerings, is subject to conditions set
forth in an agency agreement among Heritage Bank of St. Tammany and Heritage NOLA Bancorp on one hand, and FIG Partners, LLC on
the other hand.
Expiration Date.
The syndicated
community offering may begin concurrently with, during or after the subscription offering, and may terminate at the same time as
the subscription offering, but must terminate no more than 45 days following the expiration of the subscription offering, unless
extended with regulatory approval. The syndicated community offering is expected to conclude at 2:00 p.m., Central Time, on [expiration
date], but must terminate no more than 45 days following the expiration of the subscription offering, unless extended with regulatory
approval. We may decide to extend the syndicated community offering for any reason and are not required to give purchasers notice
of any such extension unless such period extends beyond [extended expiration date]. If an extension beyond
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[extended expiration date] is granted by the required regulatory
agencies, we will resolicit persons whose orders we accept in the syndicated community offering, giving them an opportunity to
confirm, change or cancel their orders. If a person does not respond, we will cancel his or her stock order and return funds, with
interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. These
extensions may not go beyond [final date], which is two years after the special meeting of members.
If for any reason we cannot conduct a syndicated
community offering of shares of common stock, or in the event that we are unable to find purchasers from the general public to
reach the minimum of the offering range, we will try to make other arrangements for the sale of unsubscribed shares, including
an underwritten public offering, if possible. The OCC and FINRA must approve any such arrangements.
Limitations on Common Stock Purchases
The plan of conversion includes the following
limitations on the number of shares of common stock that may be purchased in the offering:
·
No person or entity, together with any associate or group of persons acting in concert, may purchase more than 20,000 shares
($200,000) of common stock in all categories of the offering combined, except that our tax-qualified employee benefit plans may
purchase in the aggregate up to 10% of the shares of common stock sold in the offering (including shares issued in the event of
an increase in the offering range of up to 15%);
·
The maximum number of shares of common stock that may be purchased in all categories of the offering by our senior officers
and directors and their associates, in the aggregate, may not exceed 34% of the shares sold in the offering; and
·
The minimum purchase by each person purchasing shares in the offering is 25 shares, to the extent those shares are available.
Depending upon market or financial conditions,
with the receipt of any required approvals of the OCC, we may increase the individual or aggregate purchase limitations to an amount
not to exceed 5.0% of the common stock sold in the offering. If a purchase limitation is increased, subscribers in the subscription
offering who ordered the maximum amount of common stock and who indicated a desire on their stock order form to be resolicited,
will be, and, in our sole discretion some other large subscribers may be, given the opportunity to increase their subscriptions
up to the then-applicable limit. The effect of this type of resolicitation will be to increase the number of shares of common stock
owned by subscribers who choose to increase their subscriptions. In the event that a purchase limitation is increased to 5.0% of
the stock sold in the offering, such limitation may be further increased to 9.99%, provided that orders for shares of common stock
exceeding 5.0% of the shares of common stock sold in the offering do not exceed in the aggregate 10.0% of the total shares of the
common stock sold in the offering. Any such requests to purchase additional shares of common stock in the event that a purchase
limitation is so increased will be determined by our board of directors in its sole discretion.
In the event of an increase in the offering
range of up to 15% of the total number of shares of common stock offered in the offering, shares will be allocated in the following
order of priority in accordance with the plan of conversion:
(i)
to fill our tax-qualified employee benefit plans' subscriptions for up to 10% of the number of shares of common stock
sold in the offering;
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(ii)
in the event that there is an oversubscription at the Eligible Account Holder, Supplemental Eligible Account Holder or Other
Member levels, to fill unfulfilled subscriptions of these subscribers according to their respective priorities; and
(iii)
to fill unfulfilled subscriptions in the community offering, with preference given to natural persons and trusts of natural
persons residing in St. Tammany Parish, Louisiana.
The term "associate" of a person
means:
(1)
any corporation or organization, other than Heritage Bank of St. Tammany, Heritage NOLA Bancorp or a majority-owned subsidiary
of these entities, of which the person is a senior officer, partner or 10% or greater beneficial stockholder;
(2)
any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary
capacity, excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee
or in a fiduciary capacity; and
(3)
any blood or marriage relative of the person, who either resides with the person or who is a director or officer of Heritage
Bank of St. Tammany or Heritage NOLA Bancorp.
The term "acting in concert"
means:
(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
(2)
a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether written or otherwise.
In general, a person or company that acts
in concert with another person or company ("other party") shall also be deemed to be acting in concert with any person
or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will
not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining
whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated. Persons having
the same address or exercising subscription rights through qualifying accounts registered to the same address generally will be
assumed to be associates of, and acting in concert with, each other. We have the right to determine, in our sole discretion, whether
purchasers are associates or acting in concert.
Our directors are not treated as associates
of each other solely because of their membership on the board of directors. Shares of common stock purchased in the offering will
be freely transferable except for shares purchased by our senior officers and directors and except as described below. Any purchases
made by any associate of Heritage Bank of St. Tammany or Heritage NOLA Bancorp for the explicit purpose of meeting the minimum
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 the guidelines of FINRA, members of FINRA 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 shares of our common stock
at the time of conversion and thereafter, see " – Restrictions on Transfer of Subscription Rights and Shares,"
" – Other Restrictions" and "Restrictions on Acquisition of Heritage NOLA Bancorp."
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Marketing and Distribution; Compensation
Offering materials have been initially distributed
to certain persons by mail, with additional copies made available through our Stock Information Center.
To assist in the marketing of our shares
of common stock, we have retained FIG Partners, LLC, which is a broker-dealer registered with FINRA. In its role as financial advisor,
FIG Partners, LLC will:
·
provide advice on the financial and securities market implications of the plan of conversion;
·
assist in structuring our stock offering, including developing a market strategy for the stock offering;
·
review all offering documents, including the prospectus, stock order forms and related offering materials (we are responsible
for the preparation and filing of such documents);
·
assist us in analyzing proposals from outside vendors retained in connection with the stock offering, as needed;
·
assist us in preparing for and scheduling meetings with potential investors and broker-dealers, as necessary; and
·
provide general advice and assistance as may be reasonably necessary to promote the successful completion of the stock offering.
For these services, FIG Partners, LLC has
received a non-refundable management fee of $25,000, and will receive a success fee of $275,000 for the shares of common stock
sold in the subscription and direct community offerings. The $25,000 management fee will be credited against the $275,000 success
fee.
The plan of conversion provides that, if
necessary, all shares of common stock not purchased in the subscription offering and direct community offering may be offered for
sale to the general public in a syndicated community offering to be managed by FIG Partners, LLC. In such capacity, FIG Partners,
LLC may form a syndicate of other broker-dealers. Neither FIG Partners, LLC nor any registered broker-dealer will have any obligation
to take or purchase any shares of common stock in the syndicated community offering. FIG Partners, LLC will not purchase any shares
of the common stock in any syndicated community offering; however, FIG Partners, LLC has agreed to use its best efforts in the
sale of shares in any syndicated community offering. If there is a syndicated community offering, FIG Partners, LLC will receive
a transaction fee not to exceed 6.00% of the aggregate dollar amount of the common stock sold in the syndicated community offering.
The success fee described above will be credited against such transaction fee. Of this amount, FIG Partners, LLC will pass on to
selected broker-dealers, who assist in the syndicated community offering, an amount competitive with gross underwriting discounts
charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment. 
If all shares of common stock were sold in a syndicated community offering (except for shares purchased by our directors, officers,
employees and their family members and our
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employee stock ownership plan), the maximum selling agent commissions
would be approximately $529,000, $632,000, $736,000 and $855,000 at the minimum, midpoint, maximum, and adjusted maximum levels
of the offering, respectively.
We will indemnify FIG Partners, LLC against
liabilities and expenses (including legal fees) related to or arising out of FIG Partners, LLC's engagement as our financial
advisor and performance of services as our financial advisor.
Some of our directors and executive officers
may participate in the solicitation of offers to purchase common stock. These persons will be reimbursed for their reasonable out-of-pocket
expenses incurred in connection with the solicitation. Other regular employees of Heritage Bank of St. Tammany 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 FIG Partners, LLC. Our other employees have been instructed not to solicit offers to
purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the
Securities Exchange Act of 1934, as amended, and sales of common stock will be conducted within the requirements of Rule 3a4-1,
so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers, directors or
employees will be compensated in connection with their participation in the offering.
We have also engaged FIG Partners, LLC to
act as our records agent in connection with the stock offering. In its role as records agent, FIG Partners, LLC will, among other
things:
·
consolidate deposit accounts, develop a central file and calculate eligible votes;
·
design and prepare proxy forms and stock order forms;
·
organize and supervise the Stock Information Center;
·
tabulate proxies and ballots;
·
act as or support the inspector of election at the special meeting of members; and
·
provide necessary subscription services to distribute, collect and tabulate stock orders in the subscription and community
offerings.
FIG Partners, LLC will receive fees of
$35,000 for these services. Of the fees for serving as records agent, $5,000 has been paid as of the date of this prospectus. In
the event of any material changes in the regulations or the plan of conversion, or delays requiring duplicate or replacement
processing due to changes to the record dates, FIG Partners, LLC may be entitled to an additional fee not to exceed
$10,000.
FIG Partners, LLC also will be reimbursed
for its reasonable expenses in an amount not to exceed $20,000 and for its attorneys' fees and expense not
to exceed $75,000 for its role as our financial advisor and records agent. The expense cap, including legal fees, may be
increased an additional $30,000, including in the event of any material delay of the offering which would require an update of
the financial information in tabular form to reflect a period later than set forth in the original filing of the prospectus.
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Prospectus Delivery
To ensure that each purchaser in the subscription
and community offerings receives a prospectus at least 48 hours before the expiration of the offering in accordance with Rule 15c2-8
of the Securities Exchange Act of 1934, we may not mail a prospectus any later than five days prior to the expiration date or hand
deliver a prospectus any later than two days prior to that date. We are not obligated to deliver a prospectus or stock order form
by means other than U.S. Mail. Execution of a stock order form will confirm receipt of delivery of a prospectus in accordance with
Rule 15c2-8. Stock order forms will be distributed only if preceded or accompanied by a prospectus.
In the syndicated community offering, a
prospectus and stock order form in electronic format may be made available on Internet sites or through other online services maintained
by FIG Partners, LLC or one or more other members of the syndicate, or by their respective affiliates. In those cases, prospective
investors may view offering terms online and, depending upon the syndicate member, prospective investors may be allowed to place
orders online. The members of the syndicate may agree with us to allocate a specific number of shares for sale to online brokerage
account holders. Any such allocation for online distributions will be made on the same basis as other allocations.
Other than the prospectus in electronic
format, the information on the Internet sites referenced in the preceding paragraph and any information contained in any other
Internet site maintained by any member of the syndicate is not part of this prospectus or the registration statement of which this
prospectus forms a part, has not been approved and/or endorsed by us or by FIG Partners, LLC or any other member of the syndicate
in its capacity as selling agent or syndicate member and should not be relied upon by investors.
Procedure for Purchasing Shares
Expiration Date.
The offering
will expire at 2:00 p.m., Central Time, on [expiration date], unless we extend it for up to 45 days. This extension may be approved
by us, in our sole discretion, without further approval or additional notice to subscribers in the offering. Any extension of the
subscription and/or community offering beyond [extended expiration date] would require the OCC's approval. If the offering
is extended past [extended expiration date], we will resolicit subscribers. You will have the opportunity to confirm, change or
cancel your order within a specified period of time. If you do not respond during that period, your stock order will be cancelled
and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest
at 0.15% per annum from the date your stock order was processed. No single extension will exceed 90 days. Aggregate extensions
may not go beyond [final date], which is two years after the special meeting of members. 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 0.15% per annum from the date of processing as described above.
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.
Use of Stock Order Forms.
In order to purchase shares of common stock, you must complete and sign an original stock order form and remit full payment. We
will not be required to accept incomplete stock order forms, unsigned stock order forms, or orders submitted on photocopied or
facsimiled stock order forms. All stock order forms must be
received
, not postmarked, prior to 2:00 p.m., Central Time,
on [expiration date]. We are not required to accept stock order forms that are not received by that time,
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are 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 permit the correction of incomplete or improperly executed stock
order forms or waive immaterial irregularities. We do not represent, however, that we will do so. You may submit your stock order
form and payment by mail using the stock order reply envelope provided, by overnight delivery to our Stock Information Center at
the indicated address on the stock order form or by hand-delivery to Heritage Bank of St. Tammany's main office, located
at 205 North Columbia Street, Covington, Louisiana.
Please do not mail stock order forms to Heritage Bank of St. Tammany.
Once tendered, a stock order form cannot be modified or revoked without our consent or unless the offering is terminated or is
extended beyond [extended expiration date], or the number of shares of common stock to be sold is increased to more than 1,653,125
shares or decreased to fewer than 1,062,500 shares. 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 prior to completion of the offering.
If you are ordering shares in the subscription
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. Our interpretation of the terms and conditions of the plan of conversion
and of the acceptability of the order forms will be final, subject to the authority of the OCC.
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 Heritage Bank
of St. Tammany 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 or the Securities Exchange Act of 1934.
Payment for Shares.
Payment
for all shares of common stock will be required to accompany all completed order forms for the purchase to be valid. Payment for
shares may be made by:
·
personal check, bank check or money order, payable to Heritage NOLA Bancorp, Inc.; or
·
authorization of withdrawal of available funds (without any early withdrawal penalty) from your deposit account(s) with Heritage
Bank of St. Tammany.
Appropriate means for designating withdrawals
from deposit accounts at Heritage Bank of St. Tammany are provided in the order forms. 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 contract rate until the offering
is completed, at which time the designated withdrawal will be made. Interest will remain in the account. 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 will be canceled at the time of withdrawal without penalty, and the remaining balance will
earn interest at the then current statement savings rate subsequent to the withdrawal.
In the case of payments made by personal
check, these funds must be available in the account(s). Checks and money orders will be immediately cashed and placed in a segregated
account at Heritage Bank of St. Tammany and will earn interest at a rate of 0.15% per annum from the date payment is processed
until the offering is completed, at which time, a subscriber will be issued a check for interest earned.
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Regulations prohibit Heritage Bank of St.
Tammany from knowingly lending funds or extending credit to any person to purchase shares of common stock in the offering. You
may not pay by wire transfer. You may not submit cash or use a check drawn on a Heritage Bank of St. Tammany line of credit. We
will not accept third-party checks (a check written by someone other than you) payable to you and endorsed over to Heritage NOLA
Bancorp. You may not designate on your stock order form a direct withdrawal from a Heritage Bank of St. Tammany retirement account.
See " – Using Retirement Account Funds" for information on using such funds. Additionally, you may not designate
on your stock order form a direct withdrawal from Heritage Bank of St. Tammany deposit accounts with check-writing privileges.
Please submit a check instead. If you request direct withdrawal, we reserve the right to interpret that as your authorization to
treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your
checking account(s). 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 the expiration date, in which event purchasers may be given the opportunity to increase,
decrease or rescind their orders for a specified period of time.
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 at any time prior to 48 hours before the completion of the
offering. This payment may be made by wire transfer.
Our employee stock ownership plan will not
be required to pay for any shares purchased in the offering until completion of the stock offering, provided there is a loan commitment
from either an unrelated financial institution or Heritage NOLA Bancorp to lend to the employee stock ownership plan the necessary
amount to fund the purchase at the time of the expiration of the subscription offering. 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 Retirement Account Funds.
If
you are interested in using your individual retirement account funds to purchase shares of common stock, you must do so through
a self-directed individual retirement account such as a brokerage firm individual retirement account. By regulation, Heritage Bank
of St. Tammany's individual retirement accounts are not self-directed, so they cannot be invested in shares of our common
stock.
Therefore, if you wish to use your funds that are currently in a Heritage Bank of St. Tammany individual retirement account,
you may not designate on the stock 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 have to be transferred to a brokerage account. It may take several
weeks to transfer your Heritage Bank of St. Tammany individual retirement account to an independent trustee, so please allow yourself
sufficient time to take this action.
There will be no early withdrawal or Internal Revenue Service interest penalties for these
transfers. Depositors interested in using funds in an individual retirement account or any other retirement account to purchase
shares of common stock should contact our Stock Information Center as soon as possible, preferably at least two weeks prior to
the [expiration date] end of the offering period, because processing such transactions takes additional time, and whether such
funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee
that you will be able to use such funds.
Delivery of Shares of Common Stock
Purchased in the Offering
.
All shares of Heritage NOLA Bancorp common stock sold will be issued in book entry form
and held electronically on the books of our transfer agent. Stock certificates will not be issued. A statement reflecting ownership
of shares of common stock issued in the offering will be mailed by our transfer agent to the persons entitled thereto at the registration
address noted by them on their stock order form as soon as practicable following consummation of the conversion.
Until a statement
reflecting ownership of shares of common stock
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is available and delivered to purchasers,
purchasers may not be able to sell the shares of common stock which they ordered, even though the 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.
Restrictions on Transfer of Subscription Rights and Shares
OCC regulations prohibit any person with
subscription rights, specifically 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. 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
prior to completion of the offering. On the stock order form, you may not add the names of others for joint stock registration
who do not have subscription rights or who qualify only in a lower subscription offering priority than you do. You may add only
those who were eligible to purchase shares of common stock in the subscription offering at your date of eligibility.
We intend to 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.
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 FINRA, 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 stock order if an opinion is not timely furnished. In
addition, we are not required to offer shares of common stock to any person who resides in a foreign country or in a state of the
United States with respect to which any of the following apply: (a) a small number of persons otherwise eligible to subscribe for
shares under the plan of conversion reside in the state; (b) the issuance of subscription rights or the offer or sale of shares
of common stock to such persons would require us, under the securities laws of the state, to register as a broker, dealer, salesman
or agent or to register or otherwise qualify our securities for sale in the state; or (c) registration or qualification would be
impracticable for reasons of cost or otherwise.
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 questions regarding the conversion or offering, please call our
Stock Information Center. The toll-free telephone number is (866) 806-1790. The Stock Information Center is open for telephone
calls Monday through Friday, between 10:00 a.m. and 4:00 p.m., Central Time. The Stock Information Center will be closed on bank
holidays.
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Liquidation Rights
In the unlikely event of a complete liquidation
of Heritage Bank of St. Tammany prior to the conversion, all claims of creditors of Heritage Bank of St. Tammany, including those
of depositors of Heritage Bank of St. Tammany (to the extent of their deposit balances), would be paid first. Then, if there were
any assets of Heritage Bank of St. Tammany remaining, members of Heritage Bank of St. Tammany would receive those remaining assets,
pro rata, based upon the deposit balances in their deposit account in Heritage Bank of St. Tammany immediately prior to liquidation.
In the unlikely event that Heritage Bank of St. Tammany were to liquidate after the conversion, all claims of creditors, including
those of depositors, would be paid first, followed by distribution of the "liquidation account" to certain depositors,
with any assets remaining thereafter distributed to Heritage NOLA Bancorp as the sole holder of Heritage Bank of St. Tammany capital
stock. Pursuant to the rules and regulations of the OCC, a post-conversion merger, consolidation, sale of bulk assets or similar
combination or transaction with another insured savings institution would not be considered a liquidation and, in these types of
transactions, the liquidation account would be assumed by the surviving institution.
The plan of conversion provides for the
establishment, upon the completion of the conversion, of a "liquidation account" for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders in an amount equal to the total equity of Heritage Bank of St. Tammany as of
the date of its latest balance sheet contained in this prospectus.
The purpose of the liquidation account is
to provide Eligible Account Holders and Supplemental Eligible Account Holders who maintain their deposit accounts with Heritage
Bank of St. Tammany after the conversion with a liquidation interest in the unlikely event of the complete liquidation of Heritage
Bank of St. Tammany after the conversion. Each Eligible Account Holder and Supplemental Eligible Account Holder that continues
to maintain his or her deposit account at Heritage Bank of St. Tammany, would be entitled, on a complete liquidation of Heritage
Bank of St. Tammany after the conversion, to an interest in the liquidation account prior to any payment to the stockholders of
Heritage NOLA Bancorp. Each Eligible Account Holder would have an initial interest in the liquidation account for each deposit
account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit
accounts, and certificates of deposit, with a balance of $50 or more held in Heritage Bank of St. Tammany on December 31, 2015.
Each Eligible Account Holder would have a pro rata interest in the total liquidation account for each such deposit account, based
on the proportion that the balance of each such deposit account on December 31, 2015 bears to the balance of all such deposit accounts
in Heritage Bank of St. Tammany on such date. Each Supplemental Eligible Account Holder would have an initial interest in the liquidation
account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts,
money market deposit accounts, and certificates of deposit, with a balance of $50 or more held in Heritage Bank of St. Tammany
on ___________, 2017. Each Supplemental Eligible Account Holder would have a pro rata interest in the total liquidation account
for each such deposit account, based on the proportion that the balance of each such deposit account on ____________, 2017 bears
to the balance of all such deposit accounts in Heritage Bank of St. Tammany on such date.
If, however, on any December 31 annual closing
date commencing on or after the effective date of the conversion, the amount in any such deposit account is less than the amount
in the deposit account on December 31, 2015 or ____________, 2017, respectively, or any other annual closing date, then the interest
in the liquidation account relating to such deposit account would be reduced from time to time by the proportion of any such reduction,
and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would
ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of
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any insured deposit accounts to such depositor.
Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are
satisfied would be distributed to Heritage NOLA Bancorp, as the sole stockholder of Heritage Bank of St. Tammany.
Material Income Tax Consequences
Consummation of the conversion is subject
to the prior receipt of an opinion of counsel or tax advisor with respect to federal and state income taxation that the conversion
will not be a taxable transaction to Heritage Bank of St. Tammany, Heritage NOLA Bancorp, Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members. Unlike private letter rulings, opinions of counsel or tax advisors are not binding
on the Internal Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. In the event
of such disagreement, there can be no assurance that Heritage Bank of St. Tammany or Heritage NOLA Bancorp would prevail in a judicial
proceeding.
Heritage Bank of St. Tammany and Heritage
NOLA Bancorp have received an opinion of counsel, Luse Gorman, PC, regarding all of the material federal income tax consequences
of the conversion, which includes the following:
1.
The conversion of Heritage Bank of St. Tammany to a federally chartered stock savings association will qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code.
2.
Heritage Bank of St. Tammany will not recognize any gain or loss upon the receipt of money from Heritage NOLA Bancorp in exchange
for shares of common stock of Heritage Bank of St. Tammany.
3.
The basis and holding period of the assets received by Heritage Bank of St. Tammany, in stock form, from Heritage Bank of St.
Tammany, in mutual form, will be the same as the basis and holding period in such assets immediately before the conversion.
4.
No gain or loss will be recognized by account holders of Heritage Bank of St. Tammany, including Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members, upon the issuance to them of withdrawable deposit accounts in Heritage
Bank of St. Tammany, in stock form, in the same dollar amount and under the same terms as held at Heritage Bank of St. Tammany,
in mutual form. In addition, Eligible Account Holders and Supplemental Eligible Account Holders will not recognize gain or loss
upon receipt of an interest in a liquidation account in Heritage Bank of St. Tammany in exchange for their ownership interests
in Heritage Bank of St. Tammany.
5.
The basis of the account holders deposit accounts in Heritage Bank of St. Tammany, in stock form, will be the same as the basis
of their deposit accounts in Heritage Bank of St. Tammany, in mutual form. The basis of the Eligible Account Holders and, Supplemental
Eligible Account Holders interests in the liquidation account will be zero, which is the cost of such interest to such persons.
6.
It is more likely than not that the nontransferable subscription rights have no value, based on the fact that these rights
are acquired by the recipients without cost, are nontransferable and of short duration, and afford the recipients the right only
to purchase the common stock at a price equal to its estimated fair market value, which will be the same price as the subscription
price for the shares of common stock in the offering.
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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 Heritage NOLA Bancorp common stock, provided that the amount to be paid
for Heritage NOLA Bancorp common stock is equal to the fair market value of Heritage NOLA Bancorp common stock.
7.
It is more likely than not that the basis of the shares of Heritage NOLA Bancorp common stock purchased in the offering will
be the purchase price. The holding period of the Heritage NOLA Bancorp common stock purchased pursuant to the exercise of nontransferable
subscription rights will commence on the date on which the right to acquire such stock was exercised.
8.
No gain or loss will be recognized by Heritage NOLA Bancorp on the receipt of money in exchange for shares of Heritage NOLA
Bancorp common stock sold in the offering.
In the view of RP Financial, LC. (which
is acting as independent appraiser of the value of the shares of Heritage NOLA Bancorp common stock in connection with the conversion),
the subscription rights do not have any value for the reasons set forth above. RP Financial, LC.'s view is not binding on
the Internal Revenue Service. If the subscription rights granted to Eligible Account Holders, Supplemental Eligible Account Holders
and Other Members are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible
Account Holders, Supplemental Eligible Account Holders and Other Members who exercise the subscription rights in an amount equal
to their value, and Heritage NOLA Bancorp could recognize gain on a distribution. Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are encouraged to consult with their own tax advisors as to the tax consequences in the event
that subscription rights are deemed to have an ascertainable value.
The Internal Revenue Service will not issue
private letter rulings with respect to the issue of whether nontransferable rights have value. Unlike private letter rulings, an
opinion of counsel or the view of an independent appraiser is not binding on the Internal Revenue Service and the Internal Revenue
Service could disagree with the conclusions reached therein. Depending on the conclusion or conclusions with which the Internal
Revenue Service disagrees, the Internal Revenue Service may take the position that the transaction is taxable to any one or more
of Heritage Bank of St. Tammany, the members of Heritage Bank of St. Tammany, Heritage NOLA Bancorp, Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members who exercise their subscription rights. In the event of a disagreement,
there can be no assurance that Heritage NOLA Bancorp or Heritage Bank of St. Tammany would prevail in a judicial or administrative
proceeding.
The federal tax opinion has been filed with
the Securities and Exchange Commission as an exhibit to Heritage NOLA Bancorp's registration statement. An opinion regarding
the Louisiana state income tax consequences consistent with the federal tax opinion has been issued by Hannis T. Bourgeois, LLP,
tax advisors to Heritage Bank of St. Tammany and Heritage NOLA Bancorp.
Restrictions on Purchase or Transfer of Our Shares after
Conversion
The shares being acquired by the directors,
executive officers and their associates are being acquired for investment purposes, and not with a view towards resale. All shares
of common stock purchased in the offering by a director or an executive officer of Heritage NOLA Bancorp or Heritage Bank of St.
Tammany generally may not be sold for a period of one year following the closing of the conversion, except in the event of the
death of the director or executive officer. Each statement of
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ownership or certificate for restricted shares
will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer
within this time period of any certificate or ownership of the shares other than as provided above is a violation of the restriction.
Any shares of common stock issued at a later date as a stock dividend, stock split or otherwise with respect to the restricted
stock will be similarly restricted. The directors and executive officers of Heritage NOLA Bancorp also will be restricted by the
insider trading rules promulgated pursuant to the Securities Exchange Act of 1934, as amended.
Purchases of shares of our common stock
by any of our directors, executive officers and their associates, during the three-year period following the closing of the conversion
may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written
approval of the OCC. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding
common stock, to purchases of our common stock to fund stock options by one or more stock-based benefit plans or to any of our
tax-qualified employee stock benefit plans or nontax-qualified employee stock benefit plans, including any stock-based benefit
plans.
Federal
conversion regulations prohibit Heritage NOLA Bancorp from repurchasing its shares of common stock during the first year following
the conversion unless compelling business reasons exist for such repurchases, or to fund management recognition plans that have
been ratified by stockholders (with OCC approval) or tax-qualified employee stock benefit plans.
RESTRICTIONS ON ACQUISITION OF HERITAGE
NOLA BANCORP
Although the board of directors of Heritage
NOLA Bancorp is not aware of any effort that might be made to obtain control of Heritage NOLA Bancorp after the conversion, the
board of directors believes that it is appropriate to include certain provisions as part of Heritage NOLA Bancorp's articles
of incorporation and bylaws to protect the interests of Heritage NOLA Bancorp and its stockholders from takeovers which our board
of directors might conclude are not in the best interests of Heritage Bank of St. Tammany, Heritage NOLA Bancorp or Heritage NOLA
Bancorp's stockholders.
The following discussion is a general summary
of the material provisions of Heritage NOLA Bancorp's articles of incorporation and bylaws, Heritage Bank of St. Tammany's
federal stock charter, Maryland corporation law and certain other regulatory provisions that may be deemed to have an "anti-takeover"
effect. The following description of certain of these provisions is necessarily general and, with respect to provisions contained
in Heritage NOLA Bancorp's articles of incorporation and bylaws and Heritage Bank of St. Tammany' federal stock charter
and bylaws, reference should be made in each case to the document in question, each of which is part of Heritage Bank of St. Tammany'
application for conversion filed with the OCC, and except for Heritage Bank of St. Tammany's federal stock charter and bylaws,
Heritage NOLA Bancorp's registration statement filed with the Securities and Exchange Commission. See "Where You Can
Find Additional Information."
Heritage NOLA Bancorp's Articles of Incorporation
and Bylaws
Heritage NOLA Bancorp articles of incorporation
and bylaws contain a number of provisions relating to corporate governance and rights of stockholders that might discourage future
takeover attempts. As a result, stockholders who might desire to participate in such transactions may not have an opportunity to
do so. In addition, these provisions will also render the removal of the board of directors or management of Heritage NOLA Bancorp
more difficult.
Directors
.
The board
of directors will be divided into three classes. The members of each class will be elected for a term of three years and only one
class of directors will be elected annually. Thus, it
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would take at least two annual elections to
replace a majority of our directors. The bylaws establish qualifications for board members, including:
·
a prohibition on service as a director by a person who is a director, officer or a 10% shareholder of a competitor of Heritage
Bank of St. Tammany;
·
a prohibition on service as a director by a person (i) who has been convicted of a crime involving dishonesty or breach of
trust that is punishable by imprisonment for a term exceeding one year under state or federal law, (ii) who is currently charged
in an information, indictment or other complaint with the commission of or participation in such a crime, or (iii) against whom
a financial or securities regulatory agency has, within the past ten years, issued a cease and desist, consent or other formal
order, other than a civil money penalty, which order is subject to public disclosure by such agency;
·
a prohibition on service as a director by a person who is party to any agreement or understanding that (i) provides such person
with material benefits that are contingent upon Heritage NOLA Bancorp entering into a merger or similar transaction in which Heritage
NOLA Bancorp is not the surviving entity, (ii) materially limits such person's voting discretion with respect to Heritage
NOLA Bancorp's strategic direction, or (iii) materially impairs such person's ability to discharge his or her fiduciary
duties with respect to the fundamental strategic direction of Heritage NOLA Bancorp;
·
a requirement that any person proposed to serve as director (other than the initial directors and other than directors who
are also officers of Heritage NOLA Bancorp or Heritage Bank of St. Tammany) have maintained his or her principal residence within
ten miles of an office of Heritage NOLA Bancorp or Heritage Bank of St. Tammany for a period of at least one year immediately before
his or her nomination or appointment to the Board of Directors;
·
a prohibition on service as a director by a person who has lost more than one election for service as a director of Heritage
NOLA Bancorp; and
·
a prohibition on service by nominees or representatives (as defined in applicable Federal Reserve Board regulations) of another
person who would not be eligible for service or of an entity the partners or controlling persons of which would not be eligible
for service.
Further, the bylaws impose notice and information
requirements in connection with the nomination by stockholders of candidates for election to the Board of Directors or the proposal
by stockholders of business to be acted upon at an annual meeting of stockholders. Such notice and information requirements are
applicable to all stockholder business proposals and nominations, and are in addition to any requirements under the federal securities
laws.
Evaluation of Offers.
The
articles of incorporation of Heritage NOLA Bancorp provide that its board of directors, when evaluating a transaction that would
or may involve a change in control of Heritage NOLA Bancorp (whether by purchases of its securities, merger, consolidation, share
exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection
with the exercise of its business judgment in determining what is in the best interests of Heritage NOLA Bancorp and its stockholders
and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited
to:
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·
the economic effect, both immediate and long-term, upon Heritage NOLA Bancorp's stockholders, including stockholders,
if any, who do not participate in the transaction;
·
the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, Heritage
NOLA Bancorp and its subsidiaries and on the communities in which Heritage NOLA Bancorp and its subsidiaries operate or are located;
·
whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition
of Heritage NOLA Bancorp;
·
whether a more favorable price could be obtained for Heritage NOLA Bancorp's stock or other securities in the future;
·
the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates
as they would affect the employees of Heritage NOLA Bancorp and its subsidiaries;
·
the future value of the stock or any other securities of Heritage NOLA Bancorp or the other entity to be involved in the proposed
transaction;
·
any antitrust or other legal and regulatory issues that are raised by the proposal;
·
the business and historical, current or expected future financial condition or operating results of the other entity to be
involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations
to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved
in the proposed transaction; and
·
the ability of Heritage NOLA Bancorp to fulfill its objectives as a financial institution holding company and on the ability
of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable
statutes and regulations.
If the board of directors determines that
any proposed transaction should be rejected, it may take any lawful action to defeat such transaction.
Restrictions on Calling Special Meetings.
The bylaws provide that special meetings of stockholders can be called by only the Chairperson or Vice Chairperson of the Board,
a majority of the total number of directors that Heritage NOLA Bancorp would have if there were no vacancies on the board of directors,
or the Secretary upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at
the meeting.
Prohibition of Cumulative Voting.
The articles of incorporation prohibit cumulative voting for the election of directors.
Limitation of Voting Rights.
The articles of incorporation provide that in no event will any person who beneficially owns more than 10% of the then-outstanding
shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit. The
10% limit shall not apply if, before the stockholder acquires shares in excess of the 10% limit, the acquisition is approved by
a majority of the directors who are not affiliated with the holder and who were members of
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the Board of Directors prior to the time of
the acquisition (or who were chosen to fill any vacancy of an otherwise unaffiliated director by a majority of the unaffiliated
directors).
Restrictions on Removing Directors
from Office.
The articles of incorporation provide that directors may be removed only for cause, and only by the affirmative
vote of the holders of a majority of the voting power of all of our then-outstanding capital stock entitled to vote generally in
the election of directors (after giving effect to the limitation on voting rights discussed above in " – Limitation
of Voting Rights"), voting together as a single class.
Shareholder Nominations and Proposals.
The bylaws provide that any shareholder desiring to make a nomination for the election of directors or a proposal for new
business at an annual meeting of shareholders must submit written notice to Heritage NOLA Bancorp at least 90 days prior and not
earlier than 120 days prior to the anniversary date of the proxy statement relating to the previous year's annual meeting.
However, if less than 90 days' prior public disclosure of the date of the meeting is given to shareholders and the date of
the annual meeting is advanced by more than 30 days, or delayed by more than 30 days, from the anniversary date of the preceding
year's annual meeting then shareholders must submit written notice to Heritage NOLA Bancorp no later than 10 days following
the day on which public disclosure of the date of the meeting is first made in a press release, in a document filed with the Securities
and Exchange Commission or on a website maintained by Heritage NOLA Bancorp.
Authorized but Unissued Shares
.
After the conversion, Heritage NOLA Bancorp will have authorized but unissued shares of common and preferred stock. See "Description
of Capital Stock of Heritage NOLA Bancorp." The articles of incorporation authorize 1,000,000 shares of serial preferred
stock. Heritage NOLA Bancorp is authorized to issue preferred stock from time to time in one or more series subject to applicable
provisions of law, and the board of directors is authorized to fix the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of such shares. In addition, the
articles of incorporation provide that a majority of the total number of directors that Heritage NOLA Bancorp would have if there
were no vacancies on the board of directors may, without action by the stockholders, amend the articles of incorporation to increase
or decrease the aggregate number of shares of stock of any class or series that Heritage NOLA Bancorp has the authority to issue.
In the event of a proposed merger, tender offer or other attempt to gain control of Heritage NOLA Bancorp that the board of directors
does not approve, it would be possible for the board of directors to authorize the issuance of a series of preferred stock with
rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of preferred stock
therefore may be to deter a future attempt to gain control of Heritage NOLA Bancorp. The board of directors has no present plan
or understanding to issue any preferred stock.
Amendments to Articles of Incorporation
and Bylaws.
Except as provided under " – Authorized but Unissued Shares," above, regarding the amendment
of the articles of incorporation by the board of directors to increase or decrease the number of shares authorized for issuance,
or as otherwise allowed by law, any amendment to the articles of incorporation must be approved by our board of directors and also
by two-thirds of the outstanding shares of our voting stock (or a majority of the outstanding shares of our voting stock if the
amendment is approved by two-thirds of our board of directors); provided, however, that approval by at least 80% of the outstanding
voting stock is generally required to amend the following provisions:
(i)
The limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares
of common stock;
(ii)
The division of the board of directors into three staggered classes;
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(iii)
The ability of the board of directors to fill vacancies on the board;
(iv)
The requirement that at least a majority of the voting power of the stockholders must vote to remove directors, and can only
remove directors for cause;
(v)
The ability of the board of directors to amend and repeal the bylaws and the required stockholder vote to amend or repeal the
bylaws;
(vi)
The ability of the board of directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire
Heritage NOLA Bancorp;
(vii)
The authority of the board of directors to provide for the issuance of preferred stock;
(viii)
The validity and effectiveness of any action lawfully authorized by the affirmative vote of the holders of a majority of the
total number of outstanding shares of common stock;
(ix)
The number of stockholders constituting a quorum or required for stockholder consent;
(x)
The provision regarding stockholder proposals and nominations;
(xi)
The indemnification of current and former directors and officers, as well as employees and other agents, by Heritage NOLA Bancorp;
(xii)
The limitation of liability of officers and directors to Heritage NOLA Bancorp for money damages; and
(xiii)
The provision of the articles of incorporation requiring approval of at least 80% of the outstanding voting stock to amend
the provisions of the articles of incorporation set forth in (i) through (xii) of this list and the provisions related to amendment
of the articles of incorporation.
The articles of incorporation also provide
that the bylaws may be amended by the affirmative vote of a majority of the total number of directors that Heritage NOLA Bancorp
would have if there were no vacancies on the board of directors or by the stockholders by the affirmative vote of at least 80%
of the votes entitled to be cast in the election of directors (after giving effect to the limitation on voting rights discussed
above in " – Limitation of Voting Rights").
Maryland Corporate Law
Under Maryland law, "business combinations"
between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five
years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, certain transfers of assets,
certain stock issuances and transfers, liquidation plans and reclassifications involving interested stockholders and their affiliates
or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as: (i) any person who beneficially
owns 10% or more of the voting power of a corporation's voting stock after the date on which the corporation had 100 or more
beneficial owners of its stock; or (ii) an affiliate or associate of the corporation at any time after the date on which the corporation
had 100 or more beneficial owners of its stock who, within the two-year period prior to the date in question, was the beneficial
owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation. A person is not an interested
stockholder under the statute if
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the board of directors approved in advance the transaction by
which the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors
may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined
by the Board.
After the five-year prohibition, any business
combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors
of the corporation and approved by the affirmative vote of at least: (i) 80% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation; and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the
corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is
to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not
apply if the corporation's common stockholders receive a minimum price, as defined under Maryland law, for their shares in
the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.
Heritage Bank of St. Tammany Charter
The charter of Heritage Bank of St. Tammany
provides that for a period of five years from the closing of the conversion and offering, no person (including a group acting in
concert) other than Heritage NOLA Bancorp may offer directly or indirectly to acquire the beneficial ownership of more than 10%
of any class of equity security of Heritage Bank of St. Tammany. This provision does not apply to any tax-qualified employee benefit
plan of Heritage Bank of St. Tammany or Heritage NOLA Bancorp, or to an underwriter or member of an underwriting or selling group
involving the public sale or resale of securities of Heritage Bank of St. Tammany or any of its subsidiaries, so long as after
the sale or resale, no underwriter or member of the selling group is a beneficial owner, directly or indirectly, of more than 10%
of any class of equity securities of Heritage Bank of St. Tammany. In addition, during this five-year period, all shares owned
over the 10% limit may not be voted on any matter submitted to shareholders for a vote.
Conversion Regulations
OCC regulations prohibit any person from
making an offer, announcing an intent to make an offer or participating in any other arrangement to purchase stock or acquiring
stock or subscription rights in a converting institution or its holding company from another person prior to completion of its
conversion. Further, without the prior written approval of the OCC, no person may make an offer or announcement of an offer to
purchase shares or actually acquire shares of a converted institution or its holding company for a period of three years from the
date of the completion of the conversion if, upon the completion of such offer, announcement or acquisition, the person would become
the beneficial owner of more than 10% of the outstanding stock of the institution or its holding company. The OCC 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 savings association or its holding company, or an underwriter
or member of a selling group acting on the converting institution's or its holding company's behalf for resale to the
general public are excepted. The regulation also provides civil penalties for willful violation or assistance in any such violation
of the regulation by any person connected with the management of the converting institution or its holding company or who controls
more than 10% of the outstanding shares or voting rights of a converted institution or its holding company.
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Change in Control Regulations
Under the Change in Bank Control Act, no
person may acquire control of a savings and loan holding company unless the Federal Reserve Board has been given 60 days'
prior written notice and has not issued a notice disapproving the proposed acquisition. In addition, Federal Reserve Board regulations
provide that no company may acquire control of a savings and loan holding company without the prior approval of the Federal Reserve
Board.
Control, as defined under federal law, means
ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner
of the election of a majority of the institution's directors, or a determination by the Federal Reserve Board that the acquirer
has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the
institution.
Acquisition of more than 10% of any class
of a savings and loan holding company's voting stock, if the acquirer is also subject to any one of eight "control
factors," constitutes a rebuttable determination of control under Federal Reserve Board regulations. Such control factors
include the acquirer being one of the two largest stockholders. The determination of control may be rebutted by submission to the
Federal Reserve Board, prior to the acquisition of stock or the occurrence of any other circumstances giving rise to such determination,
of a statement setting forth facts and circumstances which would support a finding that no control relationship will exist and
containing certain undertakings. The regulations provide that persons or companies that acquire beneficial ownership exceeding
10% or more of any class of a savings and loan holding company's stock who do not intend to participate in or seek to exercise
control over a savings and loan holding company's management or policies may qualify for a safe harbor by filing with the
Federal Reserve Board a certification form that states, among other things, that the holder is not in control of such institution,
is not subject to a rebuttable determination of control and will take no action which would result in a determination or rebuttable
determination of control without prior notice to or approval of the Federal Reserve Board, as applicable. There are also rebuttable
presumptions in the regulations concerning whether a group "acting in concert" exists, including presumed action in
concert among members of an "immediate family."
The Federal Reserve Board may prohibit an
acquisition of control if it finds, among other things, that:
·
the acquisition would result in a monopoly or substantially lessen competition;
·
the financial condition of the acquiring person might jeopardize the financial stability of the institution;
·
the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors
or the public to permit the acquisition of control by such person; or
·
the acquisition would have an adverse effect on the FDIC's Deposit Insurance Fund.
In addition, a savings and loan holding
company must obtain the approval of the Federal Reserve Board prior to acquiring voting control of more than 5% of any class of
voting stock of another savings association or another savings association holding company.
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DESCRIPTION OF CAPITAL STOCK OF HERITAGE
NOLA BANCORP
General
Heritage NOLA Bancorp is authorized to issue
9,000,000 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.
Heritage NOLA Bancorp currently expects to issue in the offering up to 1,437,500 of common stock. Heritage NOLA Bancorp will not
issue shares of preferred stock in the stock offering. Each share of Heritage NOLA Bancorp common stock will have the same relative
rights as, and will be identical in all respects to, each other share of common stock. Upon payment of the subscription price for
the common stock in accordance with the plan of conversion all of the shares of common stock will be duly authorized, fully paid
and nonassessable.
The shares of common stock of Heritage NOLA
Bancorp will represent nonwithdrawable capital, will not be an account of an insurable type, and will not be insured by the FDIC
or any other government agency.
Common Stock
Dividends.
Heritage NOLA Bancorp
can pay dividends on its common stock if, after giving effect to such distribution, (i) it would be able to pay its indebtedness
as the indebtedness comes due in the usual course of business and (ii) its total assets exceed the sum of its liabilities and the
amount needed, if Heritage NOLA Bancorp were to be dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of any holders of capital stock who have a preference in the event of dissolution. The holders of common stock
of Heritage NOLA Bancorp 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 Heritage NOLA Bancorp 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 consummation
of the conversion, the holders of common stock of Heritage NOLA Bancorp will have exclusive voting rights in Heritage NOLA Bancorp.
They will elect Heritage NOLA Bancorp'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 Heritage NOLA Bancorp's common stock, however, will not be entitled
or permitted to vote any shares of common stock held in excess of the 10% limit. If Heritage NOLA Bancorp issues shares of preferred
stock, holders of the preferred stock may also possess voting rights. Amendments to the articles of incorporation generally require
a two-thirds vote, and certain amendments require an 80% stockholder vote.
As a federal stock savings association,
corporate powers and control of Heritage Bank of St. Tammany will be vested in its board of directors, who elect the officers of
Heritage Bank of St. Tammany and who fill any vacancies on the board of directors. Voting rights of Heritage Bank of St. Tammany
will be vested exclusively in the owners of the shares of capital stock of Heritage Bank of St. Tammany, which will be Heritage
NOLA Bancorp, and voted at the direction of Heritage NOLA Bancorp's board of directors. Consequently, the holders of the
common stock of Heritage NOLA Bancorp will not have direct control of Heritage Bank of St. Tammany.
Liquidation.
In the event
of any liquidation, dissolution or winding up of Heritage Bank of St. Tammany, Heritage NOLA Bancorp, as the holder of 100% of
Heritage Bank of St. Tammany's capital
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stock, would be entitled to receive all assets
of Heritage Bank of St. Tammany available for distribution, after payment or provision for payment of all debts and liabilities
of Heritage Bank of St. Tammany, including all deposit accounts and accrued interest thereon, and after distribution of the balance
in the liquidation account to Eligible Account Holders and Supplemental Eligible Account Holders. In the event of liquidation,
dissolution or winding up of Heritage NOLA Bancorp, the holders of its common stock would be entitled to receive, after payment
or provision for payment of all its debts and liabilities, all of the assets of Heritage NOLA Bancorp 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 Heritage NOLA Bancorp will not be entitled to preemptive rights with respect to any shares that may be issued,
unless such preemptive rights are approved by the board of directors. The common stock is not subject to redemption.
Preferred Stock
None of the shares of Heritage NOLA Bancorp's
authorized 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 Heritage
NOLA Bancorp's common stock will be American Stock Transfer & Trust Company, LLC.
EXPERTS
The financial statements of Heritage Bank
of St. Tammany as of December 31, 2016 and 2015, and for the years then ended, have been included herein in reliance upon the report
of Hannis T. Bourgeois, LLP, independent registered public accounting firm, which is included herein and upon the authority of
said firm as experts in accounting and auditing.
RP Financial, LC. has consented to the publication
herein of the summary of its report to Heritage NOLA Bancorp setting forth its opinion as to the estimated pro forma market value
of the shares of common stock upon completion of the conversion and offering and its letter with respect to subscription rights.
LEGAL MATTERS
Luse Gorman, PC, Washington, D.C., counsel
to Heritage NOLA Bancorp and Heritage Bank of St. Tammany, has issued to Heritage NOLA Bancorp its opinion regarding the legality
of the common stock and the federal income tax consequences of the conversion. Hannis T. Bourgeois, LLP has provided an opinion
to us regarding the Louisiana state income tax consequences of the conversion. Certain legal matters will be passed upon for FIG
Partners, LLC by Vedder Price P.C., Chicago, Illinois.
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
Heritage NOLA Bancorp 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 at the public reference facilities of the Securities
and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from
the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission telephone number is 1-800-SEC-0330.
In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission,
including Heritage NOLA Bancorp. The statements contained in this prospectus as to the contents of any contract or other document
filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and should be
read in conjunction with, such contract or document.
Heritage Bank of St. Tammany has filed with
the OCC an application with respect to the conversion. This prospectus omits certain information contained in the application filed
by Heritage Bank of St. Tammany. Heritage Bank of St. Tammany's application may be examined at the Southern District Office
of the OCC located at 500 North Akard Street, Suite 1600, Dallas, Texas 75201. A copy of the plan of conversion is available for
your review at Heritage Bank of St. Tammany's offices.
In connection with the offering, Heritage
NOLA Bancorp will register its common stock under Section 12(g) of the Securities Exchange Act of 1934 and, upon such registration,
Heritage NOLA Bancorp and the holders of its common stock will become subject to the proxy solicitation rules, reporting requirements
and restrictions on common stock purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic
reporting and certain other requirements of the Securities Exchange Act of 1934. Under the plan of conversion, Heritage NOLA Bancorp
has undertaken that it will not terminate such registration for a period of at least three years following the offering.
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INDEX TO FINANCIAL
STATEMENTS OF
HERITAGE BANK OF ST. TAMMANY
Report of Independent Registered Public Accounting Firm
F-2
Balance Sheets at December 31, 2016 and 2015
F-3
Statements of Income for the years ended December 31, 2016 and 2015
F-4
Statements of Comprehensive Income (Loss) for the years ended December 31, 2016 and 2015
F-5
Statements of Changes in Equity for the years ended December 31, 2016 and 2015
F-6
Statements of Cash Flows for the years ended December 31, 2016 and 2015
F-7
Notes to Financial Statements
F-9
* * *
Separate financial statements for Heritage
NOLA Bancorp have not been included in this prospectus because Heritage NOLA Bancorp has not engaged in any significant activities,
has no significant assets, and has no contingent liabilities, revenue or expenses.
All financial statement schedules have been
omitted as the required information either is not applicable or is included in the financial statements or related notes.
F-
1
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2322 Tremont
Drive • Baton Rouge, LA
70809
178 Del Orleans
Avenue,
Suite C • Denham Springs
,
LA
70726
Phone:
225.928.4770
• Fax:
225.926.0945
650
Poydras
Street, Suite 1200 • New Orleans
,
LA 70130
Phone
:
504.274
.
0200 •
Fax:
504.274
.
0201
www.htbcpa.com
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Audit Committee of the Board of Directors
Heritage Bank of St. Tammany
Covington, Louisiana
We have audited
the accompanying balance sheets of Heritage Bank of St. Tammany, as of December 31, 2016 and 2015, and the
related
statements of income, comprehensive income, changes in equity, and cash flows for each of the
years in the two-year period ended on December 31, 2016. Heritage Bank of St. Tammany's management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion
.
In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial position of Heritage Bank of St. Tammany as
of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of years in the two-year period ended
December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.
Respectfully submitted,
New Orleans, Louisiana
March 8, 2017
F-
2
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HERITAGE BANK OF ST. TAMMANY
BALANCE SHEETS
DECEMBER 31, 2016 AND 2015
(Dollars in thousands)
2016
2015
ASSETS
Cash and Due from Banks
$
530
$
468
Interest Earning Deposits in Banks
7,484
7,604
Federal Funds Sold
-
500
Total Cash and Cash Equivalents
8,014
8,572
Securities Available for Sale, at Fair Value
7,175
6,896
Securities Held to Maturity
832
1,114
Federal Home Loan Bank Stock
495
460
Other Investments
178
-
Loans Receivable, Net
74,659
71,966
Premises and Equipment
3,716
3,892
Bank Owned Life Insurance
2,001
1,949
Foreclosed Real Estate
93
756
Mortgage Servicing Rights
325
282
Accrued Interest Receivable
318
319
Prepaid Expenses and Other Assets
209
256
Total Assets
$
98,015
$
96,462
LIABILITIES AND EQUITY
Interest Bearing Deposits
$
69,901
$
71,264
Noninterest Bearing Deposits
4,350
2,315
74,251
73,579
Borrowed Funds
13,274
12,656
Advances from Borrowers for Taxes and Insurance
275
254
Accrued Expenses and Other Liabilities
755
647
88,555
87,136
Retained Earnings
9,429
9,271
Accumulated Other Comprehensive Income
31
55
Total Equity
9,460
9,326
Total Liabilities and Equity
$
98,015
$
96,462
The accompanying notes are an integral part
of these financial statements.
F-
3
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HERITAGE BANK OF ST TAMMANY
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Dollars in thousands)
2016
2015
Interest Income:
First Mortgage Loans
$
3,808
$
3,352
Securities
143
194
Second Mortgages
31
25
Share Loans
10
10
Other Interest Earning Assets
93
77
Total Interest Income
4,085
3,658
Interest Expense:
Deposits
833
835
Borrowed Funds
160
89
Total Interest Expense
993
924
Net Interest Income
3,092
2,734
Provision for Loan Losses
180
20
Net Interest Income after Provision for Loan Losses
2,912
2,714
Noninterest Income:
Gain on Sale of Loans Originated for Sale
111
85
Loan Servicing Income
200
163
Gain (Loss) on Sale of Foreclosed Real Estate
(50
)
68
Other Income
90
87
351
403
Noninterest Expense:
Salaries and Employee Benefits
1,592
1,488
Data Processing
197
186
Occupancy and Equipment - Other
182
181
Occupancy and Equipment - Depreciation
184
193
FDIC Insurance and Examination Fees
132
129
Director Compensation
80
79
Expense on Foreclosed Real Estate, Net
32
42
Advertising
90
114
Write-down of Foreclosed Real Estate
90
55
Other
416
374
2,995
2,841
Income Before Income Tax Expense (Benefit)
268
276
Income Tax Expense (Benefit)
110
(1
)
Net Income
$
158
$
277
The accompanying notes are an integral part of these financial statements.
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HERITAGE BANK OF ST TAMMANY
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Dollars in thousands)
2016
2015
Net Income
$
158
$
277
Other Comprehensive Income (Loss):
Unrealized Gains (Loss) on Investment Securities
(35
)
(59
)
Income Tax Effect
11
20
(24
)
(39
)
Comprehensive Income
$
134
$
238
The accompanying notes are an integral part of these financial statements.
F-
5
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HERITAGE BANK OF ST TAMMANY
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Dollars in thousands)
Accumulated
Other
Retained
Comprehensive
Total
Earnings
Income (Loss)
Equity
Balance at January 1, 2015
$
8,994
$
94
$
9,088
Net Income
277
-
277
Other Comprehensive Income
-
(39
)
(39
)
Balance December 31, 2015
9,271
55
9,326
Net Income
158
-
158
Other Comprehensive Loss
-
(24
)
(24
)
Balance December 31, 2016
$
9,429
$
31
$
9,460
The accompanying notes are an integral part of these financial statements.
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6
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HERITAGE BANK OF ST. TAMMANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Dollars in thousands)
2016
2015
Cash Flows From Operating Activities:
Net Income
$
158
$
277
Adjustments to Reconcile Net Income to Net Cash
    Provided by Operating Activities:
Provision for Loan Losses
180
20
Writedowns of Foreclosed Real Estate
90
55
Provision for Depreciation
184
193
Deferred Income Tax Expense (Benefit)
47
(80
)
Change in Mortgage Servicing Rights
(43
)
(20
)
(Accretion) Amortization of:
Premiums and Discounts on Securities
44
41
Deferred Loan Origination Fees
37
31
Gain on Sale of Loans Originated for Sale
(111
)
(85
)
Gain on Sale of Foreclosed Real Estate
50
(68
)
(Increase) Decrease in Accrued Interest Receivable
1
(38
)
(Increase) Decrease in Bank Owned Life Insurance
(52
)
(55
)
(Increase) Decrease in Prepaid Expenses and Other Assets
11
58
Increase (Decrease) in Accrued Expenses and  Other Liabilities
108
167
Net Cash Provided by Operating Activities
704
496
Cash Flows From Investing Activities:
Purchases of Securities Available For Sale
(2,069
)
(1,375
)
Principal Collected on Securities Available for Sale
1,724
4,546
Principal Collected on Securities Held to Maturity
269
356
Purchase of Federal Home Loan Bank Stock
(35
)
(168
)
Purchase of Other Investments
(178
)
-
Principal Collected on Loans
14,762
12,099
Loans Originated
(20,876
)
(23,963
)
Loans Purchased
(3,437
)
(5,689
)
(CONTINUED)
F-
7
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2016
2015
Proceeds from Sales of Loans
6,752
5,037
Purchases of Premises and Equipment
(8
)
(2
)
Proceeds from Sales of Foreclosed Real Estate
523
558
Net Cash Used in Investing Activities
(2,573
)
(8,601
)
Cash Flows From Financing Activities:
Net  Increase (Decrease) in Deposits
672
928
(Decrease) Increase in Advances from Borrowers for Taxes and Insurance
21
(26
)
Funds Borrowed
8,400
10,250
Repayments of Borrowed Funds
(7,782
)
(3,861
)
Net Cash Provided by Financing Activities
1,311
7,291
Net Decrease in Cash and Cash Equivalents
(558
)
(814
)
Cash and Cash Equivalents - Beginning of Year
8,572
9,386
Cash and Cash Equivalents - End of Year
$
8,014
$
8,572
Supplemental Disclosure of Non-Cash Activities:
Cash Payments for:
Interest Paid on Deposits and Borrowed Funds
$
992
$
918
Non-Cash Investing Activities:
Foreclosed Real Estate Acquired in Settlement of Loans
$
-
$
717
The accompanying notes are an integral part of these financial statements.
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8
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HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Note A - Summary of Significant Accounting Policies
-
Nature of Operations
Heritage Bank of St. Tammany (the
Bank) provides various financial services through its two branches in Slidell and Covington, Louisiana. The primary lending products
are single-family residential loans and construction loans. The primary deposit products are demand and savings accounts, and certificates
of deposit.
Significant
Group Concentrations of Credit Risk
Most of the
Bank's activities are with customers located within St. Tammany Parish, Louisiana. The types of securities that the Bank invests
in are included in Note C. The types of lending that the Bank engages in are included in Note D. The Bank does not have any significant
concentrations to any one industry or customer. Real estate loans related to residential properties represented 85% and 78% of
the total loan portfolio at December 31, 2016 and 2015, respectively.
Fair Value of Financial Instruments
Fair values of financial instruments
are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of
significant judgment. Changes in assumptions or in market conditions could significantly affect the estimate.
Cash and Cash Equivalents
For purposes of the statement of
cash flows, cash and cash equivalents, are defined as all highly liquid debt instruments, excluding securities, with original maturities
at purchase of three months or less.
Securities
Securities are classified in three
categories at the time of purchase and accounted for as follows:
Securities that the Bank has the
positive intent and ability to hold to maturity are classified as held to maturity and reported at cost, adjusted for amortization
of premiums and accretion of discounts which are recognized in interest income using the interest method.
Securities that are bought and held
by the Bank primarily for the purpose of selling them in the near future are classified as trading securities and reported at fair
value. Unrealized gains and losses are included in earnings. The Bank had no securities classified as trading as of December 31,
2016 and 2015.
Securities classified as available
for sale are those securities that the Bank intends to hold for an indefinite period of time but not necessarily to maturity. Any
decision to sell a security classified as available for sale would be based on various factors including changes in market interest
rates, liquidity needs, changes in yields or alternative investments, and for other reasons. They are reported at fair value. Amortization
of premiums and accretion of discounts are recognized in interest income using the interest method. Unrealized gains and
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HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
losses, net of income tax, are excluded
from earnings and reported as a separate component of equity until realized. Gains and losses on the sale of securities available
for sale are determined using the specific identification method.
Declines in the fair value of individual
held to maturity and available for sale securities below their cost that are other-than-temporary result in write-downs of the
individual securities to their fair value. The related write-downs are included in earnings as realized losses.
On a quarterly basis (and more frequently
when economic or market conditions warrant), management evaluates the investment securities portfolio on an individual security
basis for other-than- temporary impairment (OTTI). If a security is in a loss position, management will determine if OTTI exists
and will consider the following. First, if it is probable that the issuer of the security will be unable to pay all amounts due
according to the contractual terms of the debt security, OTTI will be recognized. Second, if management intends to sell the security
and does not expect to recover the loss before the anticipated sale date, OTTI will be recognized. In both instances, OTTI will
be recognized for the affected security equal to the difference between the fair value and amortized cost through a charge to earnings.
Third, if a security does not meet either of the criteria above and is both in a loss position for greater than one year and at
a current loss of 10% or more, management will evaluate its ability and intent to retain its investment for a period of time sufficient
to allow for any anticipated recovery in fair value.
Federal Home Loan Bank of Dallas
(FHLB) Stock
FHLB stock is redeemable at par
value at the discretion of the FHLB and is used to collateralize FHLB advances. The stock is carried at cost which approximates
fair value. The Bank is a member of the FHLB System which requires the Bank to purchase and maintain stock in the FHLB. The requirement
is generally 0.04% of total assets at the most recent December 31 plus 4.10% of outstanding FHLB advances. The Bank was in compliance
with these requirements at December 31, 2016 and 2015.
Loans Receivable
The Bank grants land, residential,
commercial real estate, and consumer loans to customers. A substantial portion of the loan portfolio is represented by real estate
loans primarily in St. Tammany Parish. The ability of the Bank's debtors to honor their contracts is dependent upon the real estate
and general economic conditions in this area.
Loans that management has the intent
and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal
balances adjusted for charge-offs, the allowance for loan losses, and any deferred loan fees or costs on originated loans.
For loans amortized at cost, interest
income is accrued based on the unpaid principal balance. Loan origination fees are deferred and amortized as a level yield adjustment
over the respective term of the loan.
The accrual of interest on the loans
is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Loans
are typically charged off not later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases,
loans are placed
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HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
on nonaccrual or charged off at
an earlier date if collection of principal or interest is considered doubtful.
All interest accrued but not collected
for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted
for on the cash basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when
all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Allowance for Loan Losses
The allowance for loan losses is
established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged
against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any,
are credited to the allowance.
The allowance for loan losses is
evaluated on a regular basis by management and is based upon management's periodic review of the collectability of the loans in
light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's
ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently
subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
The allowance consists of allocated
and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified
as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the
impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on
historical charge-off experience. Other adjustments may be made to the allowance for pools of loans after an assessment of internal
and external influence on credit quality that are not fully reflected in the historical loss or risk rating data.
A loan is considered impaired when,
based upon current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal
and 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 are considered on a case by case basis, taking
into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons
for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan's
effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent.
Mortgage Servicing Rights
Mortgage servicing rights are recognized
separately when rights are acquired through the sale or servicing of financial assets. Under authorization guidance of FASB ASC
860-50, servicing rights resulting from the sale of loans originated by the Bank are initially measured at fair value at the date
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HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
of transfer. The Bank subsequently
measures each class of servicing asset using the amortization method. Under the amortization method, servicing rights are amortized
in proportion to and over the period of estimated net servicing income. The amortized assets are assessed for impairment or increased
obligation based on fair value at each reporting date. Servicing fee income is recorded for fees earned for servicing loans. The
fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when
earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.
Foreclosed Real Estate
Foreclosed real estate properties
acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated costs
to sell at the date of foreclosure. Loan losses arising from the acquisition of these properties are charged against the allowance
for loan losses. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower
of carrying amount or fair value less estimated costs to sell. Costs relating to development and improvement of property are capitalized,
whereas costs relating to holding property are expensed.
Premises and Equipment
Premises and equipment are stated
at cost less accumulated depreciation. Depreciation is computed by the straight-line method (book purposes) or accelerated methods
(tax purposes) over the estimated useful lives of the assets. Land is carried at cost. The cost of assets retired or otherwise
disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal and the resulting
gains or losses are included in current operations.
Income Taxes
Current income tax expense reflects
taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or
excess of deductions over revenues. The Bank determines deferred income taxes using the liability (or balance sheet) method. Under
this method, the net deferred tax asset or liability is based on the tax effects of the differences between book and tax bases
of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.
Deferred income tax expense results
from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than
not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely
than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related
appeals or litigation process, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and
subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon
settlement with the taxing authority that has full knowledge of all relevant information. The determination of whether or not a
tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available
at the reporting date and is subject to management's judgment. Deferred tax assets are reduced by a valuation allowance if, based
on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.
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HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
The income tax accounting guidance
related to accounting for uncertainty in income taxes sets out a consistent framework to determine the appropriate level of tax
reserves to maintain for uncertain tax positions. As of December 31, 2016 and 2015, management is not aware of any uncertain tax
positions that would have a material effect on the Bank's financial statements.
Advertising Costs
Advertising costs are expensed as incurred.
Compensated Absences
Employees of the Bank are entitled
to paid vacation, paid sick days and personal days off, depending on length of service and other factors. It is impractical to
estimate the amount of compensation for future absences, and, accordingly, no liability has been recorded in the accompanying financial
statements. The Bank's policy is to recognize the costs of compensated absences when actually paid to employees.
Estimates
The use of estimates in the preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Material estimates that are particularly
susceptible to significant change relate to the determination of the allowance for loan losses, valuation of foreclosed real estate,
and the valuation allowance for deferred tax assets. In connection with the determination of the allowance for loan losses and
valuation of foreclosed real estate, management obtains independent appraisals for significant properties. With regard to the valuation
allowance for deferred tax assets, management has developed a tax-planning strategy.
In the ordinary course of business,
the Bank enters into off-balance-sheet financial instruments consisting of commitments to extend credit, including unfunded commitments
under lines of credit. Such financial instruments are recorded in the financial statements when they are funded.
Recent Accounting Pronouncements
In January 2016, the FASB issued
ASU No. 2016-01,
Financial Instruments - Overall (Subtopic 825- 10), Recognition and Measurement of Financial Assets and Financial
Liabilities.
The provisions of the update require equity investments to be measured at fair value with changes in fair value
recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair
values at cost minus impairment. The update also simplifies the impairment assessment of equity investments without readily determinable
fair values by requiring a qualitative assessment to identify impairment. It also eliminates the requirement to disclose the fair
value of financial instruments measured at amortized cost for entities that are not public business entities, and eliminates the
requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for
financial instruments measured at amortized cost on the balance sheet. ASU No. 2016-01 requires public business entities to use
the exit price notion when measuring the fair value of financial
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HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
instruments for disclosure purposes.
It also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value
of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability
at fair value in accordance with the fair value option for financial instruments. The update requires separate presentation of
financial assets and financial liabilities by category and form on the balance sheet or the accompanying notes to the financial
statements. In addition, the update clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax
asset related to available-for-sale securities in combination with the entity's other deferred tax assets. For public business
entities, the amendments in the update are effective for fiscal years beginning after December 15, 2017, including interim periods.
The adoption of this ASU is not expected to have a material impact on the Bank's financial statements.
In February 2016, the FASB issued
ASU 2016-02,
Leases (Topic 842), Conforming Amendments Related to Leases
. This ASU amends the codification regarding leases
in order to increase transparency and comparability. The ASU requires companies to recognize lease assets and liabilities on the
statement of condition and disclose key information about leasing arrangements. A lessee would recognize a liability to make lease
payments and a right-of-use asset representing its right to use the leased asset for the lease term. For public business entities,
this ASU is effective for annual and interim periods beginning after December 15, 2018. The adoption of this ASU is not expected
to have a material effect on the Bank's financial statements.
In June 2016, the FASB issued ASU
2016-13,
Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments
.
The amendments introduce an impairment model that is based on expected credit losses ("ECL"), rather than incurred
losses, to estimate credit losses on certain types of financial instruments (ex. loans and held to maturity securities), including
certain off-balance sheet financial instruments (ex. commitments to extend credit and standby letters of credit that are not unconditionally
cancellable). The ECL should consider historical information, current information, and reasonable and supportable forecasts, including
estimates of prepayments, over the contractual term. An entity must use judgment in determining the relevant information and estimation
methods that are appropriate in its circumstances. Financial instruments with similar risk characteristics may be grouped together
when estimating the ECL. The ASU also amends the current available for sale security impairment model for debt securities whereby
credit losses relating to available for sale debt securities should be recorded through an allowance for credit losses. For public
business entities, this ASU is effective for fiscal years beginning after December 31, 2019. The amendments will be applied through
a modified retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the
first reporting period in which the guidance is effective. The Bank is currently planning for the implementation of this accounting
standard. It is too early to assess the impact this guidance will have on the Bank's financial statements.
Reclassifications
Certain reclassifications have been
made to the 2015 financial information in order to conform to the 2016 financial statement presentation. Such reclassifications
had no effect on previously reported net income.
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HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Subsequent Events
In preparing the financial statements,
the Bank has evaluated events and transactions for potential recognition or disclosure through March 8, 2017, the date the financial
statements were available to be issued.
Note B – Commitments and Contingencies -
The Bank is a party to financial
instruments with off-balance-sheet risk to meet the financing needs of its customers. These financial instruments are commitments
to extend credit. The instruments contain various elements of credit and interest rate risk in excess of the amount recognized
in the balance sheets. The Bank's exposure to credit loss, if the other party to the financial instrument for commitments to extend
credit does not perform, is the contractual amount of those instruments. The Bank uses the same credit policies in making commitments
that it does for on-balance-sheet financial instruments. The Bank had loan commitments at December 31, 2016 of $955,000 at an average
fixed rate of 3.885%. The Bank had loan commitments at December 31, 2015 of $520,000 at an average rate of 4.788%. At December
31, 2016 and 2015, the Bank had unfunded commitments under home equity lines of credit of $1,837,000 and $1,278,000 at an effective
variable rate of 4.283% and 4.281%, respectively.
The Bank maintained cash accounts
at various financial institutions during 2016 and 2015. The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage
under defined limits. At various times in 2016 and 2015, the Bank had funds on deposit at these institutions which were in excess
of the insured amount. Deposits at the FHLB are not subject to insurance coverage.
Commitments to extend credit are
agreements to lend to a customer if there is no violation of any contract conditions. Commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without
being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each
customer's credit request separately and determines and obtains the amount of collateral needed when credit is extended. Collateral
includes primarily real estate.
The Bank was a participant in the
FHLB's Mortgage Partnership Finance (MPF) program. Under the MPF program (discontinued July 31, 2008, for new loans but continues
for existing loans previously sold to FHLB), the Bank is assigned the primary responsibility for managing the credit risk on loans
sold to the FHLB. For managing this credit risk, the Bank receives a monthly credit enhancement fee from the FHLB. If realized
losses, as defined, are incurred on any loan sold to the FHLB, such loss would be absorbed through a credit enhancement (recourse
obligation) provided by the Bank. This recourse obligation to the FHLB amounted to $-0- and $30,000 at December 31, 2016 and 2015,
respectively. There have been no realized losses on any MPF related loans in 2016 and 2015. On December 30, 2016, the Bank re-purchased
the remaining loans in the MPF program.
The Bank has established a federal
funds line of credit agreement with First National Bankers Bank (FNBB) that renews annually on June 30. In 2016 the line was renewed
at $3,000,000 until 2017. The interest rate would be set by FNBB on the day any borrowing occurs. There were no borrowings under
this agreement in either 2016 or 2015.
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15
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Note C - Investment Securities -
The amortized costs and estimated
fair values of securities at December 31 were as follows:
December 31, 2016
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
(Dollars in thousands)
Cost
Gains
(Losses)
Value
Available for Sale:
Mortgage-Backed Securities
$
7,126
$
87
$
(38
)
$
7,175
Held to Maturity:
Mortgage-Backed Securities
$
832
$
1
$
(9
)
$
824
December 31, 2015
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
(Dollars in thousands)
Cost
Gains
(Losses)
Value
Available for Sale:
Mortgage-Backed Securities
$
6,812
$
126
$
(42
)
$
6,896
Held to Maturity:
Mortgage-Backed Securities
$
1,114
$
2
$
(14
)
$
1,102
There were no securities sold in
2016 and 2015.
The amortized cost and fair value
of investment securities at December 31, 2016, by contractual maturity are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The
scheduled contractual maturities of securities available for sale and held to maturity at December 31, 2016, were as follows:
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TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Amortized
Fair
(Dollars in thousands)
Cost
Value
Available for Sale:
Less than One Year
$
5
$
5
After One Year Through Five Years
10
10
After Five Years Through Ten Years
1,647
1,655
After Ten Years
5,464
5,505
$
7,126
$
7,175
Held to Maturity:
After Ten Years
$
832
$
824
The following table reflects gross
unrealized losses, fair values, and length of time in a continued unrealized loss position for all securities with fair values
below amortized cost at December 31, 2016 and 2015:
2016
Less Than
    12 Months
12 Months
    or Longer
Total
(Dollars in thousands)
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
Available for Sale:
Mortgage-Backed Securities
$
2,300
$
15
$
1,231
$
23
$
3,531
$
38
Held to Maturity:
Mortgage-Backed Securities
$
587
$
2
$
218
$
7
$
805
$
9
2015
Less Than
    12 Months
12 Months
    or Longer
Total
(Dollars in thousands)
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
Available for Sale:
Mortgage-Backed Securities
$
2,784
$
24
$
800
$
18
$
3,584
$
42
Held to Maturity:
Mortgage-Backed
    Securities
$
202
$
2
$
307
$
12
$
509
$
14
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17
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Management evaluates securities
for OTTI as described in Note A. No declines at December 31, 2016 and 2015, were deemed to be other-than-temporary. The unrealized
losses on the securities available for sale generally result from changes in market interest rates and not credit quality. The
Bank does not intend to sell any such investments before recovery of their amortized cost bases, which may be at maturity.
Note D - Loans Receivable -
Loans receivable at December 31
are summarized as follows:
2016
2015
(Dollars in thousands)
Real Estate:
Secured by one-to four family residential properties
Owner-occupied
$
46,353
$
43,034
Non-owner-occupied
11,237
11,873
Home Equity Lines of Credit
2,246
2,091
Commercial (Nonresidential) Properties
7,234
8,024
Land
2,907
2,667
Construction
3,475
4,250
Multi-family
2,629
2,352
Commercial Business
295
-
Consumer Loans
285
297
Total Loans
76,661
74,588
Less:  Net Deferred Loan Fees
(459
)
(496
)
Loans in Process
(851
)
(1,534
)
Allowance for Loan Losses
(692
)
(592
)
$
74,659
$
71,966
Discounts on loans purchased amounted
to $352,000 and $417,000 as December 31, 2016 and 2015, respectively.
At December 31, 2016, the Bank did
have not any loans where formal foreclosure procedures had been initiated.
Under its current lending status
with the FHLB (Note J), the Bank may be required to deliver qualifying loans and securities to the FHLB in order to collateralize
any outstanding and future advances. The Bank did not deliver any available for sale securities to the FHLB at December 31, 2016
and 2015. The Bank delivered to the FHLB certain loans with unpaid principal balances of $-0- and $4,547,000 at December 31, 2016
and 2015, respectively.
Loans - Real Estate and Consumer
Commercial real estate loans are
secured by the subject property and are underwritten based upon standards set forth in policies approved by the Bank's Board of
Directors (Board). Such standards
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TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
include, among other factors, loan
to value limits, cash flow coverage, and general creditworthiness of the obligors.
Residential real estate loans are
underwritten in accordance with policies approved by the Board, including repayment capacity and source, value of the underlying
property, credit history and stability.
Construction loans to borrowers
are to finance the construction of owner occupied and leased properties. These loans are categorized as construction loans during
the construction period, later converting to commercial or residential real estate loans after the construction is complete and
amortization of the loan begins. Construction loan funds are disbursed periodically based on the percentage of construction completed.
Management carefully monitors these loans with on-site inspections.
The Bank also makes loans on occasion
for the purchase of land for future development for either commercial or residential use by the borrower.
Consumer loans are extended for deposit account collateralized
loans.
The tables below provide an allocation
and rollforward of the allowance for loan losses by loan type as of and for the years ended December 31, 2016 and 2015. The allocation
of a portion of the allowance to one category does not preclude its availability to absorb losses in other categories.
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TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Allowance for Credit Losses and Recorded Investment in Loans
Receivable
For the Year Ended December 31, 2016
(Dollars in thousands)
Real Estate
Commercial
Land
One-to-Four
Family
Construction
Multi-Family
Consumer
Commercial
Business
Total
Allowance for Credit Losses:
Beginning Balance
$
48
$
85
$
447
$
9
$
3
$
-
$
-
$
592
Charge-offs
-
(10
)
(108
)
-
-
-
-
(118
)
Recoveries
-
-
38
-
-
-
-
38
Provision
(5
)
26
151
(1
)
-
-
9
180
Ending Balance
$
43
$
101
$
528
$
8
$
3
$
-
$
9
$
692
Ending Balance:
Individually
    Evaluated for Impairment
$
-
$
2
$
36
$
-
$
-
$
-
$
-
$
38
Ending Balance:
Collectively
    Evaluated for Impairment
$
43
$
99
$
492
$
8
$
3
$
-
$
9
$
654
Loans Receivable:
Ending Balance
$
7,234
$
2,907
$
59,836
$
3,475
$
2,629
$
285
$
295
$
76,661
Ending Balance:
Individually
    Evaluated for Impairment
$
-
$
17
$
501
$
-
$
-
$
-
$
-
$
518
Ending Balance:
Collectively
    Evaluated for Impairment
$
7,234
$
2,890
$
59,335
$
3,475
$
2,629
$
285
$
295
$
76,143
(CONTINUED)
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20
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Allowance for Credit Losses and Recorded Investment in Loans
Receivable
For the Year Ended December 31, 2015
(Dollars in thousands)
Real Estate
Commercial
Land
One-to-Four
Family
Construction
Multi-Family
Consumer
Commercial
Business
Total
Allowance for Credit Losses:
Beginning
    Balance
$
111
$
102
$
431
$
5
$
1
$
-
$
-
$
650
Charge-offs
-
(21
)
(58
)
-
-
-
-
(79
)
Recoveries
-
-
1
-
-
-
-
1
Provision
(63
)
4
73
4
2
-
-
20
Ending Balance
$
48
$
85
$
447
$
9
$
3
$
-
$
-
$
592
Ending Balance:
Individually Evaluated
    for Impairment
$
-
$
26
$
168
$
-
$
-
$
-
$
-
$
194
Ending Balance:
Collectively Evaluated
    for Impairment
$
48
$
59
$
279
$
9
$
3
$
-
$
-
$
398
Loans Receivable:
Ending Balance
$
8,024
$
2,667
$
56,998
$
4,250
$
2,352
$
297
$
-
$
74,588
Ending Balance:
Individually Evaluated
    for Impairment
$
-
$
253
$
979
$
-
$
-
$
-
$
-
$
1,232
Ending Balance:
Collectively Evaluated
    for Impairment
$
8,024
$
2,414
$
56,019
$
4,250
$
2,352
$
297
$
-
$
73,356
Credit quality indicators
as of December 31, 2016 and 2015
:
Pass
- A pass asset is properly approved, documented, collateralized, and performing. It does not reflect an abnormal amount of risk.
Special
mention
- A special mention asset has potential weaknesses that deserve management's close attention. If left uncorrected,
these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Bank's credit position
at some future date. Special mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant
adverse classification.
Substandard
- An asset classified as substandard has a well-defined weakness or weaknesses. A substandard asset is inadequately protected by
the current net worth or paying capacity of the obligor
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21
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
or pledged
collateral, if any. It is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are
not corrected.
Doubtful
- Assets classified as doubtful have all the weaknesses inherent in those classified as substandard. In addition, these weaknesses
make collection or liquidation in full highly questionable and improbable on the basis of currently existing facts, conditions,
and values.
Loss
- Assets classified
as loss are considered uncollectible or of such little value that the continuance of the loan or other asset on the books of the
Bank is not warranted. Some recovery of funds could be possible in the future, but the amount and probability of this recovery
are not determinable thus providing little justification for the assets to remain on the books.
The following tables represent the
Bank's credit exposure by credit quality indicator as of Decem- ber 31, 2016 and 2015:
Credit Risk Profile by Internally Assigned Grade
as of December 31, 2016
(Dollars in thousands)
Real Estate
Commercial
Land
One-to-Four
Family
Construction
Multi-Family
Consumer
Commercial
Business
Total
Pass
$
7,050
$
2,852
$
59,183
$
3,475
$
2,629
$
285
$
295
$
75,769
Special Mention
-
-
-
-
-
-
-
-
Substandard
184
55
653
-
-
-
-
892
Doubtful
-
-
-
-
-
-
-
-
Loss
-
-
-
-
-
-
-
-
$
7,234
$
2,907
$
59,836
$
3,475
$
2,629
$
285
$
295
$
76,661
Credit Risk Profile by Internally Assigned Grade
as of December 31, 2015
(Dollars in thousands)
Real Estate
Commercial
Land
One-to-Four
Family
Construction
Multi-Family
Consumer
Commercial
Business
Total
Pass
$
7,827
$
2,416
$
56,043
$
4,250
$
2,352
$
297
$
-
$
73,185
Special Mention
-
-
-
-
-
-
-
-
Substandard
197
251
955
-
-
-
-
1,403
Doubtful
-
-
-
-
-
-
-
-
Loss
-
-
-
-
-
-
-
-
$
8,024
$
2,667
$
56,998
$
4,250
$
2,352
$
297
$
-
$
74,588
The following tables are an aging
analysis of loans as of December 31, 2016 and 2015:
F-
22
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Aged Analysis of Past Due Loans Receivable
as of December 31, 2016
(Dollars in thousands)
Recorded
Investment
Over 90
Greater
Days Past
30-89
Than
Total
Due and
Days
90 Days
Total
Nonaccrual
Loans
Still
Past Due
Past Due
Past Due
Status
Current
Receivable
Accruing
Real Estate:
Commercial
$
141
$
-
$
141
$
-
$
7,093
$
7,234
$
-
Land
20
-
20
17
2,870
2,907
-
Residential
1,588
-
1,588
501
57,747
59,836
-
Construction
-
-
-
-
3,475
3,475
-
Multi-family
-
-
-
-
2,629
2,629
-
Consumer
5
5
-
280
285
-
Commercial
Business
-
-
-
-
295
295
-
$
1,754
$
-
$
1,754
$
518
$
74,389
$
76,661
$
-
Aged Analysis of Past Due Loans Receivable
as of December 31, 2015
(Dollars in thousands)
Recorded
Investment
Over 90
Greater
Days Past
30-89
Than
Total
Due and
Days
90 Days
Total
Nonaccrual
Loans
Still
Past Due
Past Due
Past Due
Status
Current
Receivable
Accruing
Real Estate:
Commercial
$
201
$
-
$
201
$
-
$
7,823
$
8,024
$
-
Land
35
-
35
253
2,379
2,667
-
Residential
1,236
-
1,236
979
54,783
56,998
-
Construction
-
-
-
-
4,250
4,250
-
Multi-family
-
-
-
-
2,352
2,352
-
Consumer
-
-
-
-
297
297
-
Commercial
Business
-
-
-
-
-
-
-
$
1,472
$
-
$
1,472
$
1,232
$
71,884
$
74,588
$
-
The following tables below present impaired loans disaggregated
by class as of and for the years ended December 31, 2016 and 2015:
F-
23
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Impaired Loans as of and
for the Year Ended December 31, 2016
(Dollars in thousands)
Unpaid
Average
Interest
Recorded
Principal
Related
Recorded
Income
Investment
Balance
Allowance
Investment
Recognized
With an allowance recorded:
Real Estate:
Commercial
$
-
$
-
$
-
$
-
$
-
Land
17
20
2
18
-
Residential
501
686
36
538
-
Construction
-
-
-
-
-
Multi-family
-
-
-
-
-
Consumer
-
-
-
-
-
Commercial
-
-
-
-
-
Business
-
-
-
-
-
$
518
$
706
$
38
$
556
$
-
With no allowance recorded:
Real Estate:
Commercial
$
-
$
-
$
-
$
-
$
-
Land
-
-
-
-
-
Residential
-
-
-
-
-
Construction
-
-
-
-
-
Multi-family
-
-
-
-
-
Consumer
-
-
-
-
-
Commercial
-
-
-
-
-
Business
-
-
-
-
-
$
-
$
-
$
-
$
-
$
-
Total Impaired Loans:
Real Estate:
Commercial
$
-
$
-
$
-
$
-
$
-
Land
17
20
2
18
-
Residential
501
686
36
538
-
Construction
-
-
-
-
-
Multi-family
-
-
-
-
-
Consumer
-
-
-
-
-
Commercial
-
-
-
-
-
Business
-
-
-
-
-
$
518
$
706
$
38
$
556
$
-
(CONTINUED)
F-
24
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Impaired Loans as of and
for the Year Ended December 31, 2015
(Dollars in thousands)
Unpaid
Average
Interest
Recorded
Principal
Related
Recorded
Income
Investment
Balance
Allowance
Investment
Recognized
With an allowance recorded:
Real Estate:
Commercial
$
-
$
-
$
-
$
-
$
-
Land
253
296
26
232
-
Residential
979
1,263
168
1,034
-
Construction
-
-
-
-
-
Multi-family
-
-
-
-
-
Consumer
-
-
-
-
-
Commercial
-
-
-
-
-
Business
-
-
-
-
-
$
1,232
$
1,559
$
194
$
1,266
$
-
With no allowance recorded:
Real Estate:
Commercial
$
-
$
-
$
-
$
-
$
-
Land
-
-
-
-
-
Residential
-
-
-
-
-
Construction
-
-
-
-
-
Multi-family
-
-
-
-
-
Consumer
-
-
-
-
-
Commercial
-
-
-
-
-
Business
-
-
-
-
-
$
-
$
-
$
-
$
-
$
-
Total Impaired Loans:
Real Estate:
Commercial
$
-
$
-
$
-
$
-
$
-
Land
253
296
26
232
-
Residential
979
1,263
168
1,034
-
Construction
-
-
-
-
-
Multi-family
-
-
-
-
-
Consumer
-
-
-
-
-
Commercial
-
-
-
-
-
Business
-
-
-
-
-
$
1,232
$
1,559
$
194
$
1,266
$
-
F-
25
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
The tables below present modifications
disaggregated by class for the years ended December 31, 2016 and 2015:
None of the 2016 troubled debt restructurings
defaulted subsequent to the modification.
Modifications as
    of December 31, 2016:
(Dollars in thousands)
Pre-Modification
Post-Modification
Number
Outstanding
Outstanding
of
Recorded
Recorded
Contracts
Investment
Investment
Troubled Debt Restructuring
Residential - Modified Amortization
4
$
441
$
290
None of the 2015 troubled debt restructurings defaulted
subsequent to the modification.
Modifications as
    of December 31, 2015:
(Dollars in thousands)
Pre-Modification
Post-Modification
Number
Outstanding
Outstanding
of
Recorded
Recorded
Contracts
Investment
Investment
Troubled Debt Restructuring
Land - Interest Rate
2
$
554
$
181
Residential - Modified Amortization
4
458
294
6
$
1,012
$
475
The Bank's troubled debt restructurings
are generally due to a modification of terms allowing the customer to make interest-only payments for an amount of time, an extension
of the loan term, and/or a reduction in interest rate to obtain a lower payment for the customer. The Bank is not committed to
lend additional funds to debtors whose loans have been modified.
Note E - Accrued Interest Receivable -
Accrued interest receivable at December 31 is summarized
as follows:
(Dollars in thousands)
2016
2015
Securities Available for Sale
$
13
$
5
Securities Held to Maturity
4
12
Interest Bearing Deposits
6
8
Loans Receivable
295
294
$
318
$
319
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26
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Note F - Servicing -
In 2016 and 2015, the Bank recognized
a gain of $111,000 and $85,000, respectively, on loans sold to the Federal Home Loan Mortgage Corporation under their seller/servicer
program; gross proceeds were $6,752,000 and $5,037,000, respectively.
Mortgage loans serviced for others
are not included in the accompanying balance sheets. The risks inherent in mortgage servicing assets relate primarily to changes
in prepayments that result from shifts in mortgage interest rates. The unpaid principal balances of mortgage loans serviced for
others were $41,908,000 and $39,386,000 at December 31, 2016 and 2015, respectively. In connection with the foregoing mortgage
loans serviced, custodial escrow balances (net) in the amount of $1,640,000 and $433,000 at December 31, 2016 and 2015, respectively,
were maintained in non-interest bearing accounts.
(Dollars in thousands)
2016
2015
Beginning Balance
$
282
$
262
Additions
77
65
Amortization
(34
)
(45
)
Ending Balance
$
325
$
282
Note G - Premises and Equipment -
Major classes of premises and equipment at December 31
are summarized as follows:
Estimated
(Dollars in thousands)
Life
2016
2015
Land
-
$
351
$
351
Buildings
25 - 39 Years
5,288
5,288
Furniture and Fixtures
3 - 10 Years
666
658
6,305
6,297
Less Accumulated Depreciation
2,589
2,405
$
3,716
$
3,892
The provision for depreciation charged
to operating expenses was $184,000 and $193,000 for the years ended December 31, 2016 and 2015, respectively.
Note H - Leases –
The Bank leases a portion of its
Covington and Slidell buildings to third parties under operating leases. These leases contain renewal options. Rental income under
these leases amounted to $50,000 and $52,000 in 2016 and 2015, respectively. At December 31, 2016, the remaining future minimum
receipts under these leases are as follows:
F-
27
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
(Dollars in thousands)
2017
$
70
2018
56
2019
11
$
137
Note I - Deposits -
The aggregate amount of certificates
of deposit with a minimum denomination of greater than $250,000 or more was approximately $4,262,000 and $3,392,000 at December
31, 2016 and 2015, respectively.
At December 31, 2016, the scheduled maturities of certificates
of deposit were as follows:
(Dollars in thousands)
3 Months or Less
$
7,460
3 Months through 12 Months
16,226
1 Year through 3 years
15,509
Over 3 Years
11,814
$
51,009
Note J - Borrowed Funds -
Borrowed funds at December 31, 2016
and 2015 in the amounts of $13,274,000 and $12,656,000, consisted of advances from the FHLB. These advances were at fixed interest
rates at December 31, 2016, ranging from 0.750% to 2.136%. At December 31, 2016, the scheduled maturities of the advances were
as follows:
(Dollars in thousands)
2017
$
7,050
2018
1,950
2019
980
2020
1,577
Thereafter
1,717
$
13,274
At December 31, 2016, the Bank had the capacity to borrow an additional
$26,793,000 from the FHLB.
Note K - Income Taxes -
The provision for income tax for the years ended December
31 is summarized as follows:
F-
28
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
(Dollars in thousands)
2016
2015
Current Tax Provisions
$
63
$
79
Deferred Tax Expense
47
(80
)
Provision (Benefit)
$
110
$
(1
)
The provision for income taxes differs
from that computed by applying the federal statutory rate to income before income tax expense primarily due to tax-exempt interest
income and certain non-deductible expenses.
The provision for federal income
taxes differs from that computed by applying federal statutory rates to income before federal income tax expense, as indicated
in the following analysis:
(Dollars in thousands)
2016
2015
Federal Statutory Income Tax at 34%
$
91
$
94
Tax Exempt Income
(18
)
(19
)
Other-Net
37
(76
)
$
110
$
(1
)
At December 31, the net deferred
tax asset included in prepaid expenses and other assets in the balance sheet consisted of the following:
(Dollars in thousands)
2016
2015
Deferred Tax Assets:
Allowance for Loan Losses
$
235
$
201
Net Operating Loss (NOL) carryforward
-
102
Deferred Loan Fees and Costs, net
36
27
Nondeductible Writedowns on Foreclosed Real Estate
6
13
Other
177
163
454
506
Deferred Tax Liabilities:
Tax over Book Depreciation
276
284
Dividends on FHLB Stock
39
37
Mortgage Servicing Rights
110
96
Net Unrealized Gains on Securities
16
29
Other
-
18
441
464
Valuation Allowance
-
-
Net Deferred Tax Asset
$
13
$
42
F-
29
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
The Bank's tax filings for the years
ended December 31, 2013 through the current date are open to audit under statutes of limitations by the Internal Revenue Service.
Management believes that its tax positions would be sustained if audited. There were no penalties or interest incurred in 2016
or 2015 related to the Bank's tax positions but, if incurred, they would be classified in the statement of income as other expense.
Note L – Employee Benefit Plans -
The Bank has established a 401(k)
plan that covers substantially all employees. Contributions to the plan by the Bank are discretionary. In general, any such contribution
by the Bank is allocated to each participant in proportion to their compensation for the plan year while a participant. The Bank
contributed $42,000 and $38,000 to the plan in 2016 and 2015.
The Bank has established a deferred
compensation agreement with certain directors, past directors and officers. The expense incurred for these agreements for the years
ended December 31, 2016 and 2015 amounted to approximately $77,000 and $90,000, respectively. The accrued liability for these agreements
at December 31, 2016 and 2015 amounted to approximately $632,000 and $555,000, respectively.
The Bank has entered into an arrangement
to provide for the cost of split-dollar life insurance policies on the lives of the certain of the Bank's current and former members
of the Board of Directors.
Note M - Related Party Transaction -
Certain officers and directors were
deposit and loan customers of the Bank in the ordinary course of business. Deposits and loans of these officers and directors at
December 31 were as follows:
(Dollars in thousands)
2016
2015
Deposits
$
1,965
$
760
Loans
Beginning Loan Balance
$
1,689
$
293
New Loans
90
1,453
Repayments
(404
)
(57
)
Ending Loan Balance
$
1,375
$
1,689
Note N - Legal Contingencies -
Various legal claims arise from
time to time in the normal course of business which, in the opinion of management, will have no material effect on the Bank's financial
statements.
Note O - Regulatory Matters -
The Bank is subject to various regulatory
capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (OCC). Failure
to meet minimum regulatory capital requirements can initiate certain mandatory, and possible additional discretionary actions by
regulators that if undertaken, could have a direct material effect on the Bank's financial statements. Under the capital
adequacy guidelines and the regulatory framework for prompt corrective action, the
F-
30
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Bank must meet specific capital
guidelines involving quantitative measures of 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 regulators
about components, risk weightings and other factors.
Quantitative measures established
by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios as of January 1, 2015, of Total
capital, Tier 1 capital, Common Equity Tier 1 capital to risk-weighted assets (as defined in the regulations), and Leverage capital,
which is Tier 1 capital to adjusted average total assets (as defined). Management believes, as of December 31, 2016 and 2015, that
the Bank met all the capital adequacy requirements to which it is subject.
As of December 31, 2016 and 2015,
the most recent notifications from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective
action. To remain categorized as well capitalized, the Bank will have minimum Total capital, Common Equity Tier 1 capital, Tier
1 capital and Leveraged capital ratios as disclosed in the table below. There are no conditions or events since the most recent
notification that management believes have changed the Bank's prompt corrective action category.
The Bank's actual and required
capital amounts and ratios are as follows:
To be Well
Capitalized Under
For Capital
Prompt Corrective
Actual
Adequacy
    Purposes
Action Provisions
Amount
Ratio
Amount
Ratio %
Amount
Ratio
(dollars in thousands)
December 31, 2016:
Total Capital to Risk Weighted Assets
$
10,096
18.59
%
$
4,344
8.00
%
$
5,430
10.00
%
Tier 1 Capital to Risk Weighted Assets
$
9,418
17.35
%
$
3,258
6.00
%
$
4,344
8.00
%
Common Equity Tier 1 to Risk Weighted Assets
$
9,418
17.35
%
$
2,443
4.50
%
$
3,529
6.50
%
Tier 1 Leverage Capital to Adjusted Total Assets
$
9,418
9.79
%
$
3,849
4.00
%
$
4,811
5.00
%
(CONTINUED)
F-
31
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
To be Well
Capitalized Under
For Capital
Prompt Corrective
Actual
Adequacy
    Purposes
Action Provisions
Amount
Ratio
Amount
Ratio %
Amount
Ratio
(dollars in thousands)
December 31, 2015:
Total Capital to Risk Weighted Assets
$
9,821
18.16
%
$
4,326
8.00
%
$
5,407
10.00
%
Tier 1 Capital to Risk Weighted Assets
$
9,229
17.07
%
$
3,244
6.00
%
$
4,326
8.00
%
Common Equity Tier 1 to Risk Weighted Assets
$
9,229
17.07
%
$
2,433
4.50
%
$
3,515
6.50
%
Tier 1 Leverage Capital to Adjusted Total Assets
$
9,229
9.82
%
$
3,759
4.00
%
$
4,699
5.00
%
Note P - Accumulated Other Comprehensive Income (Loss) -
The following is a summary of the changes in the balances
of each component of accumulated other comprehensive income (loss) for the years ended December 31, 2016 and 2015:
(Dollars in thousands)
2016
2015
Unrealized Gains (Losses) on Securities Available for Sale:
Balance at Beginning of Year
$
55
$
94
Other Comprehensive Income (Loss)
Before Reclassifications - Net of Tax
(24
)
(39
)
Reclassification Adjustments for (Gains) Losses
Realized - Net of Tax
-
-
Other Comprehensive Income (Loss)
(24
)
(39
)
Balance at End of Year
$
31
$
55
Note Q
- Fair Value of Financial Statements -
Fair Value Disclosures
The Bank groups its financial assets
and liabilities measured at fair value in three levels. Fair value should be based on the assumptions market participants would
use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those
assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the
use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
F-
32
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
·
Level 1 - Includes the most reliable sources,
and includes quoted prices in active markets for identical assets or liabilities.
·
Level 2 - Includes observable inputs.
Observable inputs include inputs other than quoted prices that are observable for the asset or liability (for example, interest
rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default
rates) as well as inputs that are derived principally from or corroborated by observable market data by correlation or other means
(market-corroborated inputs).
·
Level 3 - Includes unobservable inputs
and should be used only when observable inputs are unavailable.
Recurring Basis
Fair values of investment securities
available for sale and held to maturity were primarily measured using information from a third-party pricing service. This pricing
service provides information by utilizing evaluated pricing models supported with market data information. Standard inputs include
benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data
from market research publications.
The following tables present the
balance of assets and liabilities measured on a recurring basis as of December 31, 2016 and 2015. The Bank did not record any liabilities
at fair value for which measurement of the fair value was made on a recurring basis.
(Dollars in thousands)
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
Description
Fair Value
(Level 1)
(Level 2)
(Level 3)
December 31, 2016
Mortgage-Backed Securities
$
7,175
$
-
$
7,175
$
-
December 31, 2015
Mortgage-Backed Securities
$
6,896
$
-
$
6,896
$
-
Nonrecurring Basis
The Company has segregated all financial
assets and liabilities that are measured at fair value on a nonrecurring basis into the most appropriate level within the fair
value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The Company did
not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring basis.
The fair value of the impaired loans
is measured at the fair value of the collateral for collateral-dependent loans. Impaired loans are Level 2 assets measured using
appraisals from external parties
F-
33
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
of the collateral less any prior
liens. Repossessed assets are initially recorded at fair value less estimated costs to sell. The fair value of repossessed assets
is based on property appraisals and an analysis of similar properties available. As such, the Bank records repossessed assets as
Level 2.
(Dollars in thousands)
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
December 31, 2016
Assets
Impaired Loans
$
480
$
-
$
480
$
-
Repossessed Assets
93
-
93
-
Total
$
573
$
-
$
573
$
-
(Dollars in thousands)
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
Inputs
Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
December 31, 2015
Assets
Impaired Loans
$
1,038
$
-
$
1,038
$
-
Repossessed Assets
756
-
756
-
Total
$
1,794
$
-
$
1,794
$
-
Fair values of financial instruments
- In cases where quoted market prices of financial instruments are not available, fair values are based on estimates using present
value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. The fair values of
certain financial instruments and all non-financial instruments are not required to be disclosed. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used by
the Company in estimating fair values of financial instruments:
Cash, due from banks, federal funds
sold and interest-earning deposits with banks - The carrying amount is a reasonable estimate of fair value.
Securities - Fair value is based
on quoted market price, if available. If a quoted market price is not
F-
34
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
available, fair value is estimated
using quoted market prices for similar securities.
Loans Receivable - Fair value is
estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.
Mortgage Servicing Rights - Fair
value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, based on a valuation
model that calculates the present value of estimated future net servicing income.
Cash Value of Life Insurance - The
carrying amount approximates its fair value.
Deposits - The fair value of demand,
savings, NOW and money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity
time deposits is estimated using the rates currently offered for deposits of similar remaining maturities.
Borrowings - The carrying amounts
of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings maturing within ninety days
approximate their fair values. Fair values of other borrowings are estimated using discounted cash flow analyses based on current
incremental borrowing rates for similar types of borrowing arrangements.
Commitments to
extend credit and standby letters of credit - The fair values of commitments to extend credit and standby letters of credit do
not differ significantly from the commitment amount and are therefore omitted from this disclosure.
The carrying amounts and estimated
fair values of the Company's financial instruments at December 31, are as follows:
(Dollars in thousands)
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Carrying
Fair
Assets
Inputs
Inputs
December 31, 2016
Amount
Value
(Level 1)
(Level 2)
(Level 3)
Financial Assets:
Cash, Short-Term Investments and Federal Funds Sold
$
8,014
$
8,014
$
8,014
$
-
$
-
Securities-Available for Sale
7,175
7,175
-
7,175
-
Securities-Held to Maturity
832
824
-
824
-
Other Equity Securities
673
673
-
-
673
Cash Value of Life Insurance
2,001
2,001
-
2,001
-
Loans-Net
74,659
74,866
-
-
74,866
$
93,354
$
93,553
$
8,014
$
10,000
$
75,539
Financial Liabilities:
Deposits
$
74,251
$
75,732
$
-
$
-
$
75,732
Borrowed Funds
13,274
13,209
-
13,209
-
$
87,525
$
88,941
$
-
$
13,209
$
75,732
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TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
(Dollars in thousands)
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Carrying
Fair
Assets
Inputs
Inputs
December 31, 2015
Amount
Value
(Level 1)
(Level 2)
(Level 3)
Financial Assets:
Cash, Short-Term Investments  and Federal Funds Sold
$
8,572
$
8,572
$
8,572
$
-
$
-
Securities-Available for Sale
6,896
6,896
-
6,896
-
Securities-Held to Maturity
1,114
1,102
-
1,102
-
Other Equity Securities
460
460
-
-
460
Cash Value of Life Insurance
1,949
1,949
-
1,949
-
Loans-Net
71,966
73,799
-
-
73,799
$
90,957
$
92,778
$
8,572
$
9,947
$
74,259
Financial Liabilities:
Deposits
$
73,579
$
75,006
$
-
$
-
$
75,006
Borrowed Funds
12,656
12,511
-
12,511
-
$
86,235
$
87,517
$
-
$
12,511
$
75,006
Note R
– Plan of Conversion and Change in Corporate Form –
On March 7, 2017, the Board of
Directors of the Bank adopted a plan of conversion (Plan). The Plan is subject to the approval of the Office of the Comptroller
of the Currency and the Board of Governors of the Federal Reserve System and must be approved by the affirmative vote of at least
a majority of the total votes eligible to be cast by the voting members of the Bank at a special meeting. The Plan sets forth that
the Bank proposes to convert into a stock savings bank structure with the establishment of a stock holding company (Heritage NOLA
Bancorp, Inc.), as parent of the Bank. The Bank will convert to the stock form of ownership, followed by the issuance of all of
the Bank's outstanding stock to Heritage NOLA Bancorp, Inc. Pursuant to the Plan, the total offering value and number of
shares of common stock to be offered and sold will be determined based upon an independent appraiser's valuation. The stock
will be priced at $10.00 per share. In addition, the Bank's Board of Directors will adopt an employee stock ownership plan
(ESOP) which will subscribe for up to 8% of the common stock sold in the offering. Heritage NOLA Bancorp, Inc. is organized as
a corporation under the laws of the State of Louisiana and will own all of the outstanding common stock of the Bank upon completion
of the conversion.
The costs of issuing the common
stock will be deferred and deducted from the sales proceeds of the offering. If the conversion is unsuccessful, all deferred costs
will be charged to operations. Deferred conversion costs totaled approximately $185,000 at February 28, 2017. The Bank had incurred
no deferred conversion costs as of December 31, 2016.
At the completion of the conversion
to stock form, the Bank will establish a liquidation account in the amount of retained earnings contained in the final prospectus.
The liquidation account will be
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36
TABLE OF CONTENTS
HERITAGE BANK OF ST. TAMMANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
maintained for the benefits of
eligible account holders who maintain deposit accounts in the Bank after conversion.
The conversion will be accounted
for as a change in corporate form with the historic basis of the Bank's assets, liabilities and equity unchanged as a result.
F-
37
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 Heritage NOLA Bancorp or Heritage Bank of St. Tammany. This prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any
jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is
not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither
the delivery of this prospectus nor any sale hereunder shall under any circumstances create any implication that there has been
no change in the affairs of Heritage NOLA Bancorp or Heritage Bank of St. Tammany since any of the dates as of which information
is furnished herein or since the date hereof.
Up to 1,437,500 shares
(Subject to Increase to up to 1,653,125
shares)
Heritage
NOLA Bancorp Logo
(Proposed Holding Company for
Heritage Bank of St. Tammany)
COMMON
STOCK
par value $0.01 per share
PROSPECTUS
FIG
Partners, LLC
_________________, 2017
These securities are not deposits or
accounts and are not federally insured or guaranteed.
Until [expiration date], all dealers that effect transactions
in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition
to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or
subscriptions.
PART II:	INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.
Other Expenses of Issuance and Distribution
Amount
*
Registrant's Legal Fees and Expenses
$
425,000
*
Registrant's Accounting Fees and Expenses
110,000
*
Marketing Agent Fees and expenses (1)
370,000
*
Records Management Fees and Expenses (1)
35,000
*
Appraisal Fees and Expenses
42,500
*
Printing, Postage, Mailing and EDGAR Fees
100,000
*
Filing Fees (Blue Sky, FINRA and SEC)
35,000
*
Transfer Agent Fees and Expenses
15,000
*
Business Plan Fees and Expenses
30,000
*
Other
37,500
*
Total
$
1,200,000
*          Estimated
(1)
Heritage NOLA Bancorp, Inc. has retained FIG Partners, LLC to assist in the sale of common stock on
a best efforts basis.
Item 14.
Indemnification of Directors and Officers
Articles 10 and 11 of the
Articles of Incorporation of Heritage NOLA Bancorp, Inc. (the "Corporation") set forth circumstances under which directors,
officers, employees and agents of the Corporation may be insured or indemnified against liability which they incur in their capacities
as such. References to the MGCL refer to Maryland General Corporation Law:
ARTICLE 10. Indemnification,
etc. of Directors and Officers.
A. Indemnification.
The
Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request
any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement
of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent
as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B
of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
B. Procedure.
If a
claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has
been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period
shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting
or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both
(i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of
conduct has not been met and (ii) a written affirmation by the indemnitee of his good faith belief that the standard of conduct
necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall
be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking
the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable
standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to 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
II-
1
standard of conduct or, in the case of such a
suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification
or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses,
under this Article 10 or otherwise shall be on the Corporation.
C. Non-Exclusivity.
The
rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any other right
that any Person may have or hereafter acquire under any statute, these Articles, the Corporation's Bylaws, any agreement,
any vote of stockholders or the Board of Directors, or otherwise.
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.
E. Miscellaneous.
The
Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee to the
extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the amounts
otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and
B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director
or officer and shall inure to the benefit of the indemnitee's heirs, executors and administrators.
F. Limitations Imposed
by Federal Law
. Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made by the
Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation,
Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.
Any repeal or modification
of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director or officer
or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Article 10
is in force.
ARTICLE 11. Limitation
of Liability.
An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders
for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit in
money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to
the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the
proceeding that the Person's action, or failure to act, was the result of active and deliberate dishonesty and was material
to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended
to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of
the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.
Any repeal or modification
of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director
or officer of the Corporation existing at the time of such repeal or modification.
Item 15.
Recent Sales of Unregistered Securities
Not Applicable.
Item 16.
Exhibits and Financial Statement Schedules:
The exhibits and financial
statement schedules filed as part of this registration statement are as follows:
II-
2
(a)
List of Exhibits
1.1
Engagement Letter between Heritage Bank of St. Tammany
and FIG Partners, LLC
1.2
Form of Agency Agreement between Heritage NOLA Bancorp,
Inc., Heritage Bank of St. Tammany and FIG Partners, LLC*
2
Plan of Conversion of Heritage Bank of St. Tammany
3.1
Articles of Incorporation of Heritage NOLA Bancorp, Inc.
3.2
Bylaws of Heritage NOLA Bancorp, Inc.
4
Form of Common Stock Certificate of Heritage NOLA Bancorp,
Inc.
5
Opinion of Luse Gorman, PC regarding the legality of the
securities being registered.
8.1
Federal Tax Opinion of Luse Gorman, PC
8.2
State Tax Opinion of Hannis T. Bourgeois, LLP*
10.1
Employment Agreement with W. David Crumhorn.
10.2
Employment Agreement with Dana Whitaker
10.3
Employment Agreement with Lisa Hughes
10.4
Salary Continuation Agreement for W. David Crumhorn
10.5
Supplemental Retirement Plan for W. David Crumhorn
10.6
Split Dollar Life Insurance Agreement with W. David Crumhorn
10.7
Director Supplemental Retirement Plan for W. David Crumhorn
10.8
Form of Director Supplemental Retirement Plan
10.9
Form of Split Dollar Insurance Plan for Directors
21
Subsidiaries of Heritage NOLA Bancorp, Inc.
23.1
Consent of Luse Gorman, PC (contained in Opinions included
as Exhibits 5 and 8.1).
23.2
Consent of RP Financial, LC.
23.3
Consent of Hannis T. Bourgeois, LLP
24
Power of Attorney (set forth on signature page).
99.1
Appraisal Agreement between Heritage Bank of St. Tammany
and RP Financial, LC.
99.2
Letter of RP Financial, LC. with respect to Subscription
Rights.
99.3
Appraisal Report of RP Financial, LC.
99.4
Marketing Materials
99.5
Stock Order and Certification Form.
*
To be filed by amendment.
(b)
Financial Statement Schedules
No financial statement
schedules are filed because the required information is not applicable or is included in the consolidated financial statements
or related notes.
Item 17.
Undertakings
The undersigned Registrant
hereby undertakes:
(1)   To
file, during any period in which it offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(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
II-
3
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 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.
(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.
(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.
(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:
(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;
(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.
(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.
(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.
(7)   The
undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each
purchaser.
(8)   Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the
II-
4
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.
II-
5
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 Covington, State of Louisiana on March 10, 2017.
HERITAGE NOLA BANCORP, INC.
By:
/s/ W. David Crumhorn
W. David Crumhorn
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors
and officers of Heritage NOLA Bancorp, Inc. (the "Company") hereby severally constitute and appoint W. David Crumhorn
as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said W.
David Crumhorn may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, 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 Company'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 W. David Crumhorn 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.
Signatures
Title
Date
/s/ W. David Crumhorn
President, Chief Executive Officer and
March 10, 2017
W. David Crumhorn
Director (Principal Executive Officer)
/s/ Lisa Hughes
Senior Vice President and Chief
March 10, 2017
Lisa Hughes
Financial Officer (Principal Financial and Accounting Officer)
/s/ W. Thomas Ballantine, Jr.
Director
March 10, 2017
W. Thomas Ballantine, Jr.
/s/ Salvatore A. Caruso, Jr.
Director
March 10, 2017
Salvatore A. Caruso, Jr.
/s/ Elizabeth M. Eustis
Director
March 10, 2017
Elizabeth M. Eustis
/s/ Jason S. Hunt
Director
March 10, 2017
Jason S. Hunt
/s/ Julian J. Rodrigue, Jr.
Director
March 10, 2017
Julian J. Rodrigue, Jr.
As filed with the Securities and Exchange
Commission on March 10, 2017
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO THE
REGISTRATION STATEMENT
ON
FORM S-1
Heritage NOLA Bancorp, Inc.
Covington, Louisiana
EXHIBIT INDEX
1.1
Engagement Letter between Heritage Bank of St. Tammany
and FIG Partners, LLC
1.2
Form of Agency Agreement between Heritage NOLA Bancorp,
Inc., Heritage Bank of St. Tammany and FIG Partners, LLC*
2
Plan of Conversion of Heritage Bank of St. Tammany
3.1
Articles of Incorporation of Heritage NOLA Bancorp, Inc.
3.2
Bylaws of Heritage NOLA Bancorp, Inc.
4
Form of Common Stock Certificate of Heritage NOLA Bancorp,
Inc.
5
Opinion of Luse Gorman, PC regarding the legality of the
securities being registered.
8.1
Federal Tax Opinion of Luse Gorman, PC
8.2
State Tax Opinion of Hannis T. Bourgeois, LLP*
10.1
Employment Agreement with W. David Crumhorn.
10.2
Employment Agreement with Dana Whitaker
10.3
Employment Agreement with Lisa Hughes
10.4
Salary Continuation Agreement for W. David Crumhorn
10.5
Supplemental Retirement Plan for W. David Crumhorn
10.6
Split Dollar Life Insurance Agreement with W. David Crumhorn
10.7
Director Supplemental Retirement Plan for W. David Crumhorn
10.8
Form of Director Supplemental Retirement Plan
10.9
Form of Split Dollar Insurance Plan for Directors
21
Subsidiaries of Heritage NOLA Bancorp, Inc.
23.1
Consent of Luse Gorman, PC (contained in Opinions included
as Exhibits 5 and 8.1).
23.2
Consent of RP Financial, LC.
23.3
Consent of Hannis T. Bourgeois, LLP
24
Power of Attorney (set forth on signature page).
99.1
Appraisal Agreement between Heritage Bank of St. Tammany
and RP Financial, LC.
99.2
Letter of RP Financial, LC. with respect to Subscription
Rights.
99.3
Appraisal Report of RP Financial, LC.
99.4
Marketing Materials
99.5
Stock Order and Certification Form.
*
To be filed by amendment.