WCFB WFC Bancorp Inc

[X]	Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

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

WCF Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Iowa		81-2510023
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
401 Fair Meadow Drive, Webster City, Iowa		50595
(Address of Principal Executive Offices)		(Zip Code)

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Part I – Financial Information

Item 1    Financial Statements

WCF Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

March 31, 2019 (unaudited) and December 31, 2018

Assets	March 31, 2019				December 31, 2018
Cash and due from banks	$	3,432,865			$	3,587,631
Federal funds sold	732,000				11,175,000
Cash and cash equivalents	4,164,865				14,762,631
Time deposits in other financial institutions	4,536,380				4,540,687
Securities available-for-sale, at fair value	43,098,700				43,622,041
Loans receivable	72,016,626				64,314,968
Allowance for loan losses	(528,958		)		(508,920		)
Loans receivable, net	71,487,668				63,806,048
Federal Home Loan Bank (FHLB) stock, at cost	736,800				1,110,000
Bankers' Bank stock, at cost	147,500				147,500
Office property and equipment, net	3,532,392				3,585,740
Deferred taxes on income	650,974				768,831
Income taxes receivable	28,092				34,739
Accrued interest receivable	512,012				424,909
Goodwill	55,148				55,148
Bank-owned life insurance	3,252,912				3,231,032
Prepaid expenses and other assets	1,217,693				1,275,166
Total assets	$	133,421,136			$	137,364,472
Liabilities and Stockholders' Equity
Deposits	$	89,117,264			$	83,577,825
FHLB advances	14,500,000				24,000,000
Advance payments by borrowers for taxes and insurance	367,109				556,494
Accrued interest payable	162,952				18,221
Accrued expenses and other liabilities	1,244,607				1,441,057
Total liabilities	105,391,932				109,593,597
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.01 par value. Authorized 10,000,000 shares; issued none	—				—
Common stock, $0.01 par value. Authorized 30,000,000 shares; 2,561,542 issued and outstanding at March 31, 2019 and December 31, 2018	25,615				25,615
Additional paid-in capital	14,223,738				14,223,738
Retained earnings, substantially restricted	15,429,913				15,565,683
Unearned ESOP shares	(1,191,116		)		(1,204,808		)
Accumulated other comprehensive (loss)	(458,946		)		(839,353		)
Total stockholders' equity	28,029,204				27,770,875
Total liabilities and stockholders' equity	$	133,421,136			$	137,364,472

See notes to consolidated financial statements.

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WCF Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

(unaudited)

	Three Months Ended March 31,
	2019				2018
Interest income:
Loans receivable	$	753,735			$	739,664
Investment securities - taxable	219,707				160,729
Investment securities - tax exempt	53,424				62,793
Other interest earning assets	57,909				34,042
Total interest income	1,084,775				997,228
Interest expense:
Deposits	222,695				164,381
FHLB advances	103,056				77,425
Overnight borrowings	2,380				—
Total interest expense	328,131				241,806
Net interest income	756,644				755,422
Provision for losses on loans	30,000				19,500
Net interest income after provision for losses on loans	726,644				735,922
Noninterest income:
Fees and service charges	104,642				96,132
Gain (loss) on sale of securities available-for-sale, net	10,509				(14,465		)
Increase in cash value - bank-owned life insurance	21,880				23,309
Gain on sale of land	—				435,818
Other income (expense)	217				(9,923		)
Total noninterest income	137,248				530,871
Noninterest expense:
Compensation, payroll taxes, and employee benefits	351,475				368,902
Advertising	11,762				17,776
Office property and equipment	91,772				107,903
Federal insurance premiums	7,704				8,111
Data processing services	126,449				123,327
Charitable contributions	1,610				1,800
Other real estate expenses, net	7,433				4,923
Dues and subscriptions	7,882				10,797
Accounting, regulatory and professional fees	177,652				139,137
Debit card expenses	—				1,123
Other expenses	95,705				92,468
Total noninterest expense	879,444				876,267
(Loss) earnings before taxes on income	(15,552		)		390,526
Tax (benefit) expense	(329		)		106,002
Net (loss) income	$	(15,223	)		$	284,524
Basic earnings (loss) per common share	$	(0.01	)		$	0.12
Diluted earnings (loss) per common share	$	(0.01	)		$	0.12

See notes to consolidated financial statements.

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WCF Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

	Three Months Ended March 31,
	2019				2018
Net (loss) income	$	(15,223	)		$	284,524
Other comprehensive income (loss):
Net change in unrealized gains (losses) on securities	531,352				(734,338		)
Reclassification adjustment for net losses (gains) realized in net income	(10,509		)		14,465
Income tax (expense) benefit	(140,436		)		152,273
Other comprehensive income (loss)	380,407				(567,600		)
Comprehensive income (loss)	$	365,184			$	(283,076	)

See notes to consolidated financial statements.

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WCF Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(unaudited)

	Common stock				Additional paid-in capital				Retained earnings				Unearned ESOP shares				Accumulated other comprehensive income (loss)					Total
Balance at December 31, 2017	$	25,615			$	14,215,017			$	15,758,825			$	(1,259,576	)		$	(310,367	)			$	28,429,514
Net income	—				—				284,524				—				—					284,524
Other comprehensive loss	—				—				—				—				(567,600		)			(567,600		)
Reclass of stranded tax effects of rate change	—				—				61,135				—				(61,135		)			—
Release of ESOP Shares	—				—				—				13,692				—					13,692
Dividends paid on common stock, $0.05 per common share	—				—				(120,171		)		—				—					(120,171		)
Balance at March 31, 2018	$	25,615			$	14,215,017			$	15,984,313			$	(1,245,884	)		$	(939,102	)			$	28,039,959
Balance at December 31, 2018	$	25,615			$	14,223,738			$	15,565,683			$	(1,204,808	)		$	(839,353	)			$	27,770,875
Net loss	—				—				(15,223		)		—				—					(15,223		)
Other comprehensive income	—				—				—				—				380,407					380,407
Release of ESOP Shares	—				—				—				13,692				—					13,692
Dividends paid on common stock, $0.05 per common share	—				—				(120,547		)		—				—					(120,547		)
Balance at March 31, 2019	$	25,615			$	14,223,738			$	15,429,913			$	(1,191,116	)		$	(458,946	)			$	28,029,204

See notes to the consolidated financial statements.

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WCF Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

	Three Months Ended March 31,
	2019				2018
Cash flows from operating activities:
Net (loss) income	$	(15,223	)		$	284,524
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	148,079				186,139
Provision for losses on loans	30,000				19,500
ESOP expenses	13,692				13,692
Deferred taxes on income	(22,579		)		65,769
(Gain) loss on sales of securities	(10,509		)		14,465
Gain on sales of one-to-four family residential loans	(1,725		)		—
Proceeds from sales of one-to-four family residential loans	5,532,737				—
Originations of one-to-four family residential loans	(5,531,012		)		—
Loss on sale of other real estate owned	—				9,417
Gain on sale of land	—				(435,818		)
Increase in cash value of bank-owned life insurance	(21,880		)		(23,309		)
Change in:
Accrued interest receivable	(87,103		)		25,395
Prepaid expenses and other assets	57,473				7,062
Advance payments by borrowers for taxes and insurance	(189,385		)		(246,458		)
Accrued interest payable	144,731				96,874
Accrued expenses and other liabilities	(196,450		)		(96,366		)
Income tax receivable	6,647				40,320
Net cash used in operating activities	(142,507		)		(38,794		)
Cash flows from investing activities:
Proceeds from maturity of time deposits in other financial institutions	984,307				1,719,298
Purchase of time deposits in other financial institutions	(980,000		)		(1,719,000		)
Proceeds from calls and maturities of investment securities available-for-sale	260,000				1,455,555
Proceeds from sale of investment securities available-for-sale	1,700,899				2,121,241
Purchase of investment securities available-for-sale	(998,350		)		(7,372,195		)
Purchase of loans	(5,396,137		)		—
Net change in loans receivable	(2,315,483		)		1,585,210
Net change in FHLB stock	373,200				(6,600		)
Proceeds from sale of land	—				685,818
Purchase of office property and equipment	(2,587		)		—
Net cash used in investing activities	(6,374,151		)		(1,530,673		)
Cash flows from financing activities:
Net change in deposits	5,539,439				11,751
Net change in FHLB advances	(9,500,000		)		—
Dividends paid	(120,547		)		(120,171		)
Net cash used in financing activities	(4,081,108		)		(108,420		)
Net decrease in cash and cash equivalents	(10,597,766		)		(1,677,887		)
Cash and cash equivalents at beginning of year	14,762,631				5,982,400
Cash and cash equivalents at end of quarter	$	4,164,865			$	4,304,513
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	183,400			$	144,932
Taxes on income	—				—
Noncash investing activities:
Transfers to other real estate owned from loans	—				104,929
Loans to finance the sale of other real estate owned	—				26,267

See notes to consolidated financial statements.

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WCF Bancorp, Inc. and Subsidiaries

Form 10-Q

Notes to Consolidated Financial Statements (unaudited)

(1)	Basis of Presentation

The accompanying unaudited consolidated financial statements of WCF Bancorp, Inc. (the Company), and its wholly owned subsidiaries, WCF Financial Bank (the Bank) and Webster City Federal Service Corp, have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) for interim financial information and in accordance with Securities and Exchange Commission (SEC) rules and regulations. Accordingly, the statements do not include all the information and footnotes required by GAAP for complete financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto that were included in the Company’s annual report for the year ended December 31, 2018 . The consolidated balance sheet of the Company as of December 31, 2018 has been derived from the audited consolidated balance sheet of the Company as of that date. Certain reclassifications, none of each were material, have been made to conform prior year financial statements to the March 31, 2019 presentation. These reclassifications did not change previously reported net income or stockholders' equity. All significant intercompany transactions are eliminated in consolidation. In the opinion of the Company’s management, all adjustments necessary (i) for a fair presentation of the financial statements for the interim periods included herein and (ii) to make such financial statements not misleading have been made and are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.

In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded 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 for the period. Actual results could differ from the estimates. For further information with respect to significant accounting policies followed by the Company in preparation of the financial statements, refer to the Company’s annual report for the year ended December 31, 2018 .

As an “emerging growth company,” as defined in Title 1 of Jumpstart Our Business Startups (JOBS) Act, the Company has elected to use the extended transition period to delay adoption of new or reissued accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, the consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. As of March 31, 2019 , there is no significant difference in the comparability of the financial statements as a result of this extended transition period.

Prior to July 1, 2018, the Bank was a federally chartered bank regulated by The Office of the Comptroller of Currency. The Bank converted its charter and is now an Iowa state chartered commercial bank and a member of the Federal Home Loan Bank (FHLB) system. The Bank maintains insurance on deposits accounts with the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (FDIC).

Organization and Business

WCF Bancorp, Inc. (the Company) is an Iowa-chartered corporation organized in 2016 to be the successor to Webster City Federal Bancorp, a federal corporation (Old Bancorp) upon completion of the second-step conversion of WCF Financial M.H.C. from the mutual holding company to the stock holding company form of organization. WCF Financial M.H.C. (the MHC) was the former mutual holding company for Old Bancorp prior to the completion of the second-step conversion. In conjunction

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with the second-step conversion, each of the MHC and Old Bancorp ceased to exist. The second-step conversion was completed on July 13, 2016.

The Company's principal business is the ownership and operation of the Bank. The Bank is a community bank and its deposits are insured by the FDIC. The primary business of the Bank is accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in real estate loans secured by one-to-four family residences. The Company and Bank are in the process of expanding its Commercial Real Estate offerings by adding commercial banking staff to support expansion into commercial banking. We also invest in investment securities. Our primary lending area is broader than our primary deposit market area and includes north central and northeastern Iowa. Our revenues are derived principally from interest on loans and securities, and from loan origination and servicing fees. Our primary sources of funds are deposits, principal and interest payments on loans and securities and advances from the FHLB. As a state savings bank, WCF Financial Bank is subject to comprehensive regulation and examination by the Federal Deposit Insurance Company (the FDIC) and the Iowa Division of Banking. As a savings and loan holding company, the Company is subject to comprehensive regulation and examination by the Board of Governors of the Federal Reserve System (the Federal Reserve Board).

The primary business of WCF Financial Service Corp (the Service Corp), a wholly-owned subsidiary of the Bank, was the sale of credit life and disability insurance products that were previously disallowed by savings and loan regulations. Currently the Service Corp is inactive.

Investment Securities

Investment securities are classified based on the Company’s intended holding period. Securities that may be sold prior to maturity to meet liquidity needs, to respond to market changes, or to adjust the Company’s asset-liability position are classified as available-for-sale. Currently, all securities are classified as available-for-sale.

Securities available-for-sale are carried at fair value, with the aggregate unrealized gains or losses, net of the effect of taxes on income, reported as accumulated other comprehensive income or loss. Other-than-temporary impairment is recorded in net income. The Company’s net income reflects the full impairment (that is, the difference between the security’s amortized cost basis and fair value), if any, on debt securities that the Company intends to sell, or would more likely than not be required to sell, before the expected recovery of the amortized cost basis. For available-for-sale debt securities that management has no intent to sell, and believes that it will not more likely than not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in net income, while the rest of the fair value loss is recognized in other comprehensive income. The credit loss component recognized in net income is identified as the amount of principal cash flows not expected to be received over the remaining term of the security as projected using the Company’s cash flow projections using its base assumptions.

A decline in the fair value of any available-for-sale security below cost and that is deemed to be other-than-temporary results in an impairment to reduce the carrying amount by fair value for the credit portion of the loss. The impairment is charged to net income and a new cost basis for the security is established. To determine whether an impairment is other-than-temporary, the Company considers whether it has the ability to hold and lack of intent to sell the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year-end, and the general market conditions.

Net realized gains or losses are shown in the consolidated statements of income in the noninterest income line using the specific identification method. There were $10,509 in net realized gains and $14,465 in net realized losses for the three months ended March 31, 2019 and 2018, respectively.

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Loans Receivable, Net

Loans receivable are stated at the amount of unpaid principal, reduced by the allowance for loan losses, deferred loan fees and discounts on loans purchased. Loans receivable are charged against the allowance when management believes collectability of principal is unlikely.

Interest on loans receivable is accrued and credited to operations based primarily on the principal amount outstanding. Certain loan balances include unearned discounts, which are recorded as income over the term of the loan.

Delinquencies are determined based on the payment terms of the individual loan agreements. The accrual of interest on past due and other impaired loans is generally discontinued at 90 days past due or when, in the opinion of management, the borrower may be unable to make all payments pursuant to contractual terms.  Unless considered collectible, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income, if accrued in the current year, or charged to the allowance for loan losses, if accrued in the prior year.  Generally, all payments received while a loan is on nonaccrual status are applied to the principal balance of the loan. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. 

Accrued interest receivable on loans receivable that become more than 90 days in arrears is charged to an allowance that is established by a charge to interest income. Interest income is subsequently recognized only to the extent cash payments are received until, in management’s judgment, the borrower’s ability to make periodic interest and principal payments is reasonably assured, in which case the loan is returned to accrual status.

Under the Company’s credit policies, commercial loans are considered impaired when management believes it is probable the Company will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. Loan impairment is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate except, where more practical, at the observable market price of the loan or the fair value of the collateral, if the loan is collateral dependent.

Allowance for Loan Losses

The allowance for loan losses is based on management’s periodic evaluation of the loan portfolio and reflects an amount that, in management’s opinion, is appropriate to absorb probable losses in the existing portfolio. In evaluating the portfolio, management takes into consideration numerous factors, including current economic conditions, prior loan loss experience, the composition of the loan portfolio, value of underlying collateral, and management’s estimate of probable credit losses.

Taxes on Income

Deferred income taxes are provided under the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest and penalties on unrecognized tax benefits are classified as other noninterest expense.

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Regulatory Environment

The Company is subject to regulations of certain state and federal agencies, including periodic examinations by those regulatory agencies. The Company and the Bank are also subject to minimum regulatory capital requirements. At March 31, 2019 and December 31, 2018 , capital levels exceeded minimum capital requirements (see Note 6).

Investment in Affiliate

The Company records its investment in an affiliate, New Castle Players, LLC, in which it has a 27.17% interest, using the equity method of accounting. The affiliate holds an investment in a local hotel in Webster City, Iowa. The Company records the value of its investment at period-end based on the affiliate’s most current available financial statements. The investment in affiliate is analyzed annually. If impairment is determined to be other-than-temporary, the carrying amount is written down to fair value. The investment is included as a component of prepaid expenses and other assets on the consolidated balance sheets, while the equity income earned is included as a component of other noninterest income on the consolidated statements of income. Summary unaudited financial information of the affiliate as of and for the three months ended March 31, 2019 and 2018 is presented below.

	As of and For the
	Three Months Ended March 31,
	2019				2018
Current assets	$	153,125			$	136,150
Long-term assets	1,631,944				1,669,687
Current liabilities	184,389				86,294
Total equity	1,600,680				1,719,544
Total revenue	996,735				924,323
Net income	159,957				140,603

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Earnings per Common Share

The calculation of earnings per common share and diluted earnings per common share for the three months ended March 31, 2019 and 2018 is presented below.

	Three Months Ended March 31,
	2019				2018
Net (loss) income	$	(15,223	)		$	284,524
Weighted average common shares outstanding and diluted common shares outstanding	2,417,143				2,410,295
Basic earnings (losses) per common share	$	(0.01	)		$	0.12
Diluted earnings (losses) per common share	$	(0.01	)		$	0.12
Unearned Employee Stock Ownership Plan (ESOP) shares are not considered outstanding and are therefore not taken into account when computing earnings per share. Unearned ESOP shares are presented as a reduction to stockholders’ equity and represent shares to be allocated to ESOP participants in future periods for services provided to the Company. ESOP shares that have been committed to be released are considered outstanding and included for the purposes of computing basic and diluted earnings per share.

Employee Stock Ownership Plan

The Company has an employee stock ownership plan (ESOP) covering substantially all employees. The cost of shares issued to the ESOP but not yet allocated to the participants is presented in the consolidated balance sheet as a reduction of stockholders' equity. Compensation expense is recorded based on the market price of the shares as they are committed to be released for allocation to participant accounts and dividends paid for unallocated shares.

The shares of stock purchased by the ESOP are held in a suspense account until they are released for allocation among participants. The shares will be released annually from the suspense account and the released shares will be allocated to the participants on the basis of each participant’s compensation for the year of allocation. As shares are released from collateral, the Company recognizes compensation expense equal to the average market price of the shares during the period and the shares will be outstanding for earnings-per-share purposes. The shares not released are reported as unearned ESOP shares in the stockholders’ equity section on the consolidated balance sheets. At March 31, 2019 there were 22,249 allocated shares and 148,890 unallocated shares.   The fair value of unallocated ESOP shares at March 31, 2019 was $1,228,000 .

Subsequent Events

The Company has evaluated subsequent events through May 14, 2019, which is the date the consolidated financial statements were issued. There are no subsequent events requiring recognition or disclosure in the consolidated financial statements by the Company.

Current Accounting Developments

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 660): Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40). The guidance in this update supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the Codification. This update is effective for interim and annual periods beginning after December 15, 2018. The Company adopted the guidance

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effective January 1, 2019, using the modified retrospective method. The Company's revenue is primarily composed of interest income on financial instruments, including investment securities and loans, which are excluded from the scope of this update. Also excluded from the scope of the update is revenue from bank-owned life insurance, loan fees and letter of credit fees. Deposit account related fees, including service charges, debit card usage fees, overdraft fees and wire transfer fees are within the scope of the guidance; however, revenue recognition practices did not change under the guidance, as deposit agreements are considered day-to-day contracts. Deposit account transaction related fees will continue to be recognized as the services are performed. Other noninterest income sources of revenue are considered immaterial. Implementation of the guidance did not change current business practices. Implementation of the guidance did not have a material impact on the Company's consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The update enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information by updating certain aspects or recognition, measurement, presentation and disclosure of financial instruments. Among other changes, the update requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, and clarifies that entities should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entities' other deferred tax assets. This update was effective for the Company interim and annual periods beginning after December 15, 2018. The Company adopted the guidance effective January 1, 2019, using the modified retrospective method. Upon adoption, the fair value of the Company's loan portfolio is now presented using an exit price method. Also, the Company is no longer required to disclose the methodologies used for estimating fair value of financial assets and liabilities that are not measured at fair value on a recurring or nonrecurring basis. The remaining requirements of this update did not have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) The guidance in the update supersedes the requirements in ASC Topic 840, Leases. The guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for leases with terms more than 12 months. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2018. The Company currently has no leases. In July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements, which amends ASC 842, Leases. This update provides for an adoption option that will not require earlier periods to be restated at the adoption date. The Company is currently assessing the impact that this guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit L osses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. This is in contrast to existing guidance whereby credit losses generally are not recognized until they are incurred. This update will be effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact that this guidance will have on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. The amendments in this ASU shorten the amortization period for certain callable debt securities purchased at a premium. Upon adoption of the standard, premiums on these qualifying callable debt securities will be amortized to the earliest call date. Discounts on purchased debt securities will continue to be accreted to maturity. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. Upon

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transition, entities should apply the guidance on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption and provide the disclosures required for a change in accounting principle. The Company is currently assessing the impact that this guidance will have on its consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendment in this update allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the December 22, 2017, enactment of Public Law 115-97, commonly know as the Tax Cut and Jobs Act (Tax Act), which reduced the federal corporate income tax rate and became effective in 2018. For public companies, the update was effective for annual periods beginning after December 15, 2018, with early adoption permitted. The amendment can be adopted at the beginning of the period or on a retrospective basis. The Company adopted the amendment effective January 1, 2018, using the beginning of period method. The reclassified amount was $61,135 .

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The update is effective for interim and annual periods in fiscal years beginning after December 15, 2019, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis, and the new disclosures will be adopted on a prospective basis. The adoption will not have a material effect on the Company's consolidated financial statements.

(2) Securities Available-for-Sale

Securities available-for-sale at March 31, 2019 and December 31, 2018 were as follows:

Description		Amortized cost				Gross unrealized gains				Gross unrealized losses				Fair value
March 31, 2019:
U.S. agency securities		$	3,740,704			$	10,227			$	12,816			$	3,738,115
Mortgage-backed securities*		25,146,794				6,741				600,019				24,553,516
Municipal bonds		13,805,897				70,014				81,125				13,794,786
Corporate bonds		998,364				13,919				—				1,012,283
		$	43,691,759			$	100,901			$	693,960			$	43,098,700
December 31, 2018:
U.S. agency securities		$	3,740,431			$	8,531			$	34,913			$	3,714,049
Mortgage-backed securities*		26,511,033				3,911				866,060				25,648,884
Municipal bonds		14,484,479				29,095				254,466				14,259,108
		$	44,735,943			$	41,537			$	1,155,439			$	43,622,041

*All mortgage-backed securities are issued by FNMA, FHLMC, or GNMA and are backed by residential mortgage loans.

The amortized cost and estimated fair value of securities available-for-sale at March 31, 2019 are shown below by contractual maturity. 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.

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	March 31, 2019
	Amortized cost				Fair value
Due in one year or less	$	2,926,752			$	2,936,795
Due after one year through five years	1,981,826				1,996,468
Due after five years, but less than ten years	7,299,136				7,291,215
Due after ten years	5,338,887				5,308,423
	17,546,601				17,532,901
Mortgage-backed securities	25,146,794				24,553,516
Corporate bonds	998,364				1,012,283
	$	43,691,759			$	43,098,700

The details of the sales of investment securities for the three months ended March 31, 2019 and 2018 are summarized in the following table.

	Three Months Ended March 31,
	2019				2018
Proceeds from sales	$	1,700,899			$	2,121,241
Gross gains on sales	11,073				—
Gross losses on sales	564				14,465

At March 31, 2019 and December 31, 2018 , accrued interest receivable for securities available-for-sale totaled $331,443 and $231,087 , respectively.

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The following tables show the Company’s available-for-sale investments’ gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at March 31, 2019 and December 31, 2018 .

	March 31, 2019
	Up to 12 months								Greater than 12 months								Total
	Fair value				Gross unrealized loss				Fair value				Gross unrealized loss				Fair value				Gross unrealized loss
U.S. agency securities	$	—			$	—			$	1,227,888			$	12,816			$	1,227,888			$	12,816
Mortgage-backed securities	1,719,658				14,131				20,661,492				585,888				22,381,150				600,019
Municipal bonds	—				—				8,017,017				81,125				8,017,017				81,125
Total	$	1,719,658			$	14,131			$	29,906,397			$	679,829			$	31,626,055			$	693,960
	December 31, 2018
	Up to 12 months								Greater than 12 months								Total
	Fair value				Gross unrealized loss				Fair value				Gross unrealized loss				Fair value				Gross unrealized loss
U.S. agency securities	$	—			$	—			$	1,205,518			$	34,913			$	1,205,518			$	34,913
Mortgage-backed securities	3,393,192				36,192				20,903,713				829,868				24,296,905				866,060
Municipal bonds	4,400,121				102,524				6,694,327				151,942				11,094,448				254,466
Total	$	7,793,313			$	138,716			$	28,803,558			$	1,016,723			$	36,596,871			$	1,155,439

The Company’s assessment of other‑than‑temporary impairment is based on its reasonable judgment of the specific facts and circumstances impacting each individual security at the time such assessments are made. The Company reviews and considers factual information, including expected cash flows, the structure of the security, the credit quality of the underlying assets, and the current and anticipated market conditions.

The Company does not intend to sell its available-for-sale investment securities and it is not likely that the Company will be required to sell them before the recovery of its cost. Due to the issuers’ continued satisfactions of their obligations under the securities in accordance with their contractual terms and the expectation that they will continue to do so, and management’s intent and ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value, the Company believes that the investment securities identified in the tables above were temporarily impaired as of March 31, 2019 and December 31, 2018 .

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(3)	Loans Receivable

At March 31, 2019 and December 31, 2018 , loans receivable consisted of the following segments:

	March 31, 2019				December 31, 2018
Loans:
One-to-four family residential	$	56,541,012			$	52,335,005
Non-owner occupied one-to-four family residential	3,211,965				3,013,417
Commercial real estate	5,367,251				2,162,851
Consumer	6,911,695				6,801,419
Total loans receivable	72,031,923				64,312,692
Premiums on loans purchased	16,284				30,318
Deferred loan costs (fees)	(31,581		)		(28,042		)
Allowance for loan losses	(528,958		)		(508,920		)
	$	71,487,668			$	63,806,048

Accrued interest receivable on loans receivable was $180,569 and $193,822 at March 31, 2019 and December 31, 2018 , respectively.

The loan portfolio included $40.3 million of fixed rate loans as of March 31, 2019 and $39.1 million as of December 31, 2018 . The loan portfolio also included $31.7 million and $25.2 million of variable rate loans as of March 31, 2019 and December 31, 2018 , respectively.

The Company originates residential, commercial real estate loans and other consumer loans, primarily in its Hamilton County, and Buchanan County, Iowa market areas and their adjacent counties. A substantial portion of its borrowers’ ability to repay their loans is dependent upon economic conditions in the Company’s market area.

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Allowance for Loan Losses

The following tables present the balance in the allowance for loan losses and recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2019 and December 31, 2018 .

	March 31, 2019
	One-to-four family residential				Non-owner occupied on-to-four family residential				Commercial real estate				Consumer				Total
Allowance for loan losses:
Individually evaluated for impairment	$	—			$	—			$	—			$	—			$	—
Collectively evaluated for impairment	367,973				13,245				53,218				94,522				528,958
Total	$	367,973			$	13,245			$	53,218			$	94,522			$	528,958
Loans receivable:
Individually evaluated for impairment	$	—			$	—			$	—			$	—			$	—
Collectively evaluated for impairment	56,541,012				3,211,965				5,367,251				6,911,695				72,031,923
Total	$	56,541,012			$	3,211,965			$	5,367,251			$	6,911,695			$	72,031,923
	December 31, 2018
	One-to-four family residential				Non-owner occupied on-to-four family residential				Commercial real estate				Consumer				Total
Allowance for loan losses:
Individually evaluated for impairment	$	—			$	—			$	—			$	—			$	—
Collectively evaluated for impairment	407,086				13,252				19,110				69,472				508,920
Total	$	407,086			$	13,252			$	19,110			$	69,472			$	508,920
Loans receivable:
Individually evaluated for impairment	$	—			$	—			$	—			$	—			$	—
Collectively evaluated for impairment	52,335,005				3,013,417				2,162,851				6,801,419				64,312,692
Total	$	52,335,005			$	3,013,417			$	2,162,851			$	6,801,419			$	64,312,692

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Activity in the allowance for loan losses by segment for the three months ended March 31, 2019 and 2018 is summarized in the following tables:

	Three months ended March 31, 2019
	Beginning Balance				Charge-offs				Recoveries				Provisions			*	Ending Balance
Loans:
One-to-four family residential	$	407,086			$	—			$	—			$	(39,113	)		$	367,973
Non-owner occupied one-to-four family residential	13,252				—				—				(7		)		13,245
Commercial real estate	19,110				—				—				34,108				53,218
Consumer	69,472				9,962				—				35,012				94,522
Total	$	508,920			$	9,962			$	—			$	30,000			$	528,958
	Three months ended March 31, 2018
	Beginning Balance				Charge-offs				Recoveries				Provisions			*	Ending Balance
Loans:
One-to-four family residential	$	393,341			$	—			$	—			$	8,969			$	402,310
Non-owner occupied one-to-four family residential	25,893				—				—				1,000				26,893
Commercial real estate	33,204				—				—				(949		)		32,255
Consumer	85,881				792				—				10,480				95,569
Total	$	538,319			$	792			$	—			$	19,500			$	557,027

* The negative provisions for the various segments are either related to the decline in outstanding balances in each of those portfolio segments during the time periods disclosed and/or improvement in the credit quality factors related to those portfolio segments.

(a)	Loan Portfolio Segment Risk Characteristics

One-to-four family residential : The Company generally retains most residential mortgage loans that are originated for its own portfolio. The market value of real estate securing residential real estate loans can fluctuate as a result of market conditions in the geographic area in which the real estate is located. Adverse developments affecting real estate values in the Company’s market could increase credit risk associated with its loan portfolio. Additionally, real estate lending typically involves large loan principal amounts and the repayment of the loans generally is dependent, in large part, on the borrower’s continuing financial stability, and is therefore more likely to be affected by adverse personal circumstances.

Non-owner occupied one-to-four family residential: The Company originates fixed-rate and adjustable-rate loans secured by non-owner occupied one-to-four family properties. These loans may have a term of up to 25 years . Generally the Bank will lend up to 75% of the property’s appraised value. Appraised values are determined by an outside independent appraiser. In deciding to originate a loan secured by a non-owner occupied one-to-four family residential property, management reviews the creditworthiness of the borrower and the expected cash flows from the property securing the loan, the cash flow requirements of the borrower and the value of the property securing the loan. This segment is generally secured by one-to-four family properties.

Commercial real estate: On a very limited basis, the Company originates fixed-rate and adjustable-rate commercial real estate and land loans. These loans may have a term of up to 20 years . Generally the Bank will lend up to 75% of the property’s appraised value. Appraised values are determined by an outside independent appraiser. This segment is generally secured by retail, industrial, service or other commercial properties and loans secured by raw land, including timber.

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Consumer : Consumer loans typically have shorter terms, lower balances, higher yields, and higher rates of default. Consumer loan collections are dependent on the borrower’s continuing financial stability, and are therefore more likely to be affected by adverse personal circumstances. This segment consists mainly of loans collateralized by automobiles. The collateral securing these loans, may depreciate over time, may be difficult to recover and may fluctuate in value based on condition.

(b)	Charge‑off Policy

The Company requires a loan to be at least partially charged off as soon as it becomes apparent that some loss will be incurred, or when its collectability is sufficiently questionable that it no longer is considered a bankable asset. The primary considerations when determining if and how much of a loan should be charged off are as follows: (1) the potential for future cash flows; (2) the value of any collateral; and (3) the strength of any co-makers or guarantors.

(c)	Troubled Debt Restructurings (TDR)

All loans deemed troubled debt restructurings, or “TDR”, are considered impaired, and are evaluated for collateral sufficiency. A loan is considered a TDR when the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Bank would not otherwise consider. There were no new troubled debt restructurings in the first three months of 2019 and 2018.

(d)	Loans Measured Individually for Impairment

Loans that are deemed to be impaired are reserved for with the necessary allocation. All loans deemed troubled debt restructurings are considered impaired. Generally loans for 1-4 family residential and consumer are collectively evaluated for impairment.

(e)	Loans Measured Collectively for Impairment

All loans not evaluated individually for impairment are grouped together by type and further segmented by risk classification. The Company’s historical loss experiences for each portfolio segment are calculated using a 12 quarter rolling average loss rate for estimating losses adjusted for qualitative factors. The qualitative factors consider economic and business conditions, changes in nature and volume of the loan portfolio, concentrations, collateral values, level and trends in delinquencies, external factors, lending policies, experience of lending staff, and monitoring of credit quality.

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The following tables set forth the composition of each class of the Company’s loans by internally assigned credit quality indicators.

	Pass				Special mention/watch				Substandard				Doubtful				Total
March 31, 2019:
Loans
One-to-four family residential	$	55,049,481			$	1,041,190			$	450,341			$	—			$	56,541,012
Non-owner occupied one-to-four family residential	3,069,186				142,779				—				—				3,211,965
Commercial real estate	5,367,251				—				—				—				5,367,251
Consumer	6,799,104				106,904				5,687				—				6,911,695
Total	$	70,285,022			$	1,290,873			$	456,028			$	—			$	72,031,923
	Pass				Special mention/watch				Substandard				Doubtful				Total
December 31, 2018:
Loans
One-to-four family residential	$	50,712,926			$	1,041,019			$	581,060			$	—			$	52,335,005
Non-owner occupied one-to-four family residential	2,876,981				136,436				—				—				3,013,417
Commercial real estate	2,162,851				—				—				—				2,162,851
Consumer	6,301,242				436,522				63,655				—				6,801,419
Total	$	62,054,000			$	1,613,977			$	644,715			$	—			$	64,312,692

Special Mention/Watch – Loans classified as special mention/watch are assets that do not warrant adverse classification but possess credit deficiencies or potential weakness deserving close attention.

Substandard – Substandard loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well‑defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable, and improbable.

The Company had no impaired loans as of March 31, 2019 and December 31, 2018 . No interest income was recorded on impaired loans during 2019 or 2018 .

(f)	Nonaccrual and Delinquent Loans

Loans are placed on nonaccrual status when (1) payment in full of principal and interest is no longer expected or (2) principal or interest has been in default for 90 or more (unless the loan is well secured with marketable collateral) and in the process of collection.

A nonaccrual asset may be restored to an accrual status when all past-due principal and interest has been paid and the borrower has demonstrated satisfactory payment performance (excluding renewals and modifications that involve the capitalizing of interest).

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Delinquency status of a loan is determined by the number of days that have elapsed past the loan’s payment due date, using the following classification groupings: 30-59 days, 60-89 days, and 90 days or more. Loans shown in the 30‑59 day’s and 60‑89 day’s columns in the table below reflect contractual delinquency status only, and include loans considered nonperforming due to classification as a TDR or being placed on nonaccrual.

The following tables set forth the composition of the Company’s past-due loans at March 31, 2019 and December 31, 2018 .

	30-59 days past due				60-89 days past due				90 days or more past due				Total past due				Current				Total loans receivable				Recorded investment > 90 days and accruing
March 31, 2019:
Loans
One-to-four family residential	$	558,307			$	155,244			$	450,341			$	1,163,892			$	55,377,120			$	56,541,012			$	—
Non-owner occupied one-to-four family residential	6,865				—				—				6,865				3,205,100				3,211,965				—
Commercial real estate	—				—				—				—				5,367,251				5,367,251				—
Consumer	34,810				19,762				5,687				60,259				6,851,436				6,911,695				—
Total	$	599,982			$	175,006			$	456,028			$	1,231,016			$	70,800,907			$	72,031,923			$	—
	30-59 days past due				60-89 days past due				90 days or more past due				Total past due				Current				Total loans receivable				Recorded investment > 90 days and accruing
December 31, 2018:
Loans
One-to-four family residential	$	706,658			$	283,116			$	369,058			$	1,358,832			$	50,976,173			$	52,335,005			$	—
Non-owner occupied one-to-four family residential	—				—				—				—				3,013,417				3,013,417				—
Commercial real estate	—				—				—				—				2,162,851				2,162,851				—
Consumer	229,899				23,400				63,655				316,954				6,484,465				6,801,419				—
Total	$	936,557			$	306,516			$	432,713			$	1,675,786			$	62,636,906			$	64,312,692			$	—

The following tables set forth the composition of the Company’s recorded investment in loans on nonaccrual status as of March 31, 2019 and December 31, 2018 .

	March 31, 2019				December 31, 2018
Loans
One-to-four family residential	$	551,940			$	581,060
Non-owner occupied one-to-four family residential	—				—
Commercial real estate	—				—
Consumer	5,687				63,655
Total	$	557,627			$	644,715

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(4)	Deposits

At March 31, 2019 and December 31, 2018 , deposits are summarized as follows:

	March 31, 2019				December 31, 2018
Statement savings	$	13,797,178			$	13,461,826
Money market plus	11,213,186				11,153,339
NOW	18,437,407				18,214,876
Certificates of deposit	45,669,493				40,747,784
	$	89,117,264			$	83,577,825

Included in the NOW accounts were $5.7 million and $4.6 million of non-interest bearing deposits as of March 31, 2019 and December 31, 2018 , respectively.

(5)	Tax benefit and expense

        Taxes on income comprise the following:

	March 31, 2019
	Federal				State				Total
Current	$	26,654			$	(4,404	)		$	22,250
Deferred	(25,094		)		2,515				(22,579		)
	$	1,560			$	(1,889	)		$	(329	)
	March 31, 2018
	Federal				State				Total
Current	$	25,933			$	14,300			$	40,233
Deferred	65,769				—				65,769
	$	91,702			$	14,300			$	106,002

Taxes on income differ from the amounts computed by applying the federal income tax rate of 21% to earnings before taxes on income for the following reasons, expressed in dollars:

	March 31, 2019				March 31, 2018
Federal (benefit) tax at statutory rate	$	(3,266	)		$	82,010
Items affecting federal income tax rate:
State taxes on income, net of federal benefit	(1,492		)		11,297
Tax-exempt income	(10,057		)		(11,840		)
Bank-owned life insurance	(4,595		)		(4,895		)
Valuation allowance	—				2,000
Other	19,081				27,430
	$	(329	)		$	106,002

Federal income tax expense for the periods ended March 31, 2019 and December 31, 2018 was computed using the consolidated effective federal tax rate. The Company also recognized income tax expense pertaining to state franchise taxes payable individually by the Bank.

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The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at March 31, 2019 and December 31, 2018 are presented below:

		March 31, 2019				December 31, 2018
Deferred tax assets:
Deferred directors’ fees		$	178,000			$	185,000
Allowance for loan losses		132,000				127,000
Net operating loss carryforward		210,000				191,000
AMT credit		8,680				17,360
Charitable contribution		59,000				59,000
Professional fees		43,000				44,000
Securities available for sale		134,113				274,549
Other		32,181				19,922
Gross deferred tax assets		796,974				917,831
Valuation allowance		(88,000		)		(88,000		)
Net deferred tax assets		708,974				829,831
Deferred tax liabilities:
Prepaid expenses		(14,000		)		(14,000		)
FHLB stock dividends		(25,000		)		(25,000		)
Fixed assets		(5,000		)		(8,000		)
Intangible assets		(14,000		)		(14,000		)
Gross deferred tax liabilities		(58,000		)		(61,000		)
Net deferred tax assets		$	650,974			$	768,831

Based upon the Company’s level of historical taxable income and anticipated future taxable income over the periods that the deferred tax assets are deductible, management has reviewed whether it is more likely than not the Company will realize the benefits of these deductible differences. Management has determined that a valuation allowance was required for deferred tax assets at March 31, 2019 and December 31, 2018 , related to the charitable contribution carryforward and Iowa corporate net operating loss carryovers. The charitable contribution expires in varying amounts between 2020 and 2023.

As of December 31, 2018 , the Company had no material unrecognized tax benefits. The evaluation was performed for those tax years that remain open to audit. The Company files a consolidated tax return for federal purposes and separate tax returns for the State of Iowa purposes.

Under previous law, the provisions of the IRS and similar sections of Iowa law permitted the Bank to deduct from taxable income an allowance for bad debts based on 8% of taxable income before such deduction or actual loss experience. Legislation passed in 1996 eliminated the percentage of taxable income method as an option for computing bad debt deductions for 1996 and in future years.

Deferred taxes have been provided for the difference between tax bad debt reserves and the loan loss allowances recorded in the financial statements subsequent to December 31, 1987. However, at March 31, 2019 and December 31, 2018 , retained earnings contain certain historical additions to bad debt reserves for income tax purposes of approximately $2,134,000 as of December 31, 1987, for which no deferred taxes have been provided because the Bank does not intend to use these reserves for purposes other than to absorb losses. If these amounts which qualified as bad debt deductions are used for purposes other than to absorb bad debt losses or adjustments arising from the carryback of net operating losses, income taxes may be

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imposed at the then-existing rates. The approximate amount of unrecognized tax liability associated with these historical additions is $523,000 .

(6)	Stockholders’ Equity

(a)	Common Stock Repurchase

The Company repurchased no shares during the three months ended March 31, 2019 and 2018 .

(b)	Regulatory Capital Requirements

The Company and WCF Financial Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements (as shown in the following table) can result in certain mandatory and possibly additional discretionary actions by regulators which, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and WCF Financial Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and WCF Financial Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Management believes the Company and WCF Financial Bank met all capital adequacy requirements to which they were subject as of March 31, 2019 and December 31, 2018 .

The Company’s and WCF Financial Bank’s capital amounts and ratios are presented in the following table as of March 31, 2019 and December 31, 2018 (dollars in thousands).

	March 31, 2019
								For capital adequacy							To be well-capitalized
								with capital conservation							under prompt corrective
	Actual							buffer purposes							action provisions
	Amount				Percent			Amount				Percent			Amount				Percent
Tangible capital:
Consolidated	$	28,440			21.79	%		$	5,221			4.00	%		n/a				n/a
WCF Financial Bank	19,606				15.80			4,965				4.00			$	6,206			5.00	%
Common equity tier 1:
Consolidated	28,458				46.88			4,247				7.000			3,944				6.50
WCF Financial Bank	19,606				33.00			4,159				7.000			3,862				6.50
Risk-based capital:
Consolidated	28,969				47.75			6,370				10.500			6,067				10.00
WCF Financial Bank	20,135				33.89			6,239				10.500			5,942				10.00
Tier 1 risk-based capital:
Consolidated	28,440				46.88			5,157				8.500			4,854				8.00
WCF Financial Bank	19,606				33.00			5,051				8.500			4,754				8.00

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	December 31, 2018
															To be well-capitalized
								For capital adequacy							under prompt corrective
	Actual							purposes							action provisions
	Amount				Percent			Amount				Percent			Amount				Percent
Tangible capital:
Consolidated	$	28,534			22.50	%		$	5,081			4.00	%		n/a				n/a
WCF Financial Bank	19,567				16.30			4,792				4.00			$	5,990			5.00	%
Common equity tier 1:
Consolidated	28,534				49.00			3,712				6.38			3,785				6.50
WCF Financial Bank	19,567				34.40			3,631				6.38			3,702				6.50
Risk-based capital:
Consolidated	29,043				49.90			5,750				9.88			5,823				10.00
WCF Financial Bank	20,076				35.20			5,625				9.88			5,696				10.00
Tier 1 risk-based capital:
Consolidated	28,534				49.00			4,585				7.88			4,658				8.00
WCF Financial Bank	19,567				34.40			4,486				7.88			4,557				8.00

In July 2013, the Federal Reserve Board and the OCC issued final rules implementing the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act changes. The rules revised minimum capital requirements and adjusted prompt corrective action thresholds. The final rules revised the regulatory capital elements, added a new common equity Tier 1 capital ratio, increased the minimum Tier 1 capital ratio requirement, and implemented a new capital conservation buffer. The rules also permitted certain banking organizations to retain, through a one-time election, the existing treatment for AOCI. The Company and WCF Financial Bank made the election to retain the existing treatment, which excludes AOCI from regulatory capital amounts. The final rules took effect for the Company and WCF Financial Bank on January 1, 2015, subject to a transition period for certain parts of the rules.

Beginning in 2016, an additional capital conservation buffer was added to the minimum requirements for capital adequacy purposes, subject to a three year phase-in period. The capital conservation buffer was fully phased-in on January 1, 2019 at 2.50%. A banking organization with a conservation buffer of less than 2.50% (or the required phase-in amount in years prior to 2019) will be subject to limitations on capital distributions, including dividend payments, and certain discretionary bonus payments to executive officers. As of March 31, 2019 , the ratios for the Company and WCF Financial Bank were sufficient to meet the fully phased-in conservation buffer.

(c)	Dividends and Restrictions Thereon

The Company declared and paid a $0.05 dividend per share in each of the quarters ended March 31, 2019 and March 31, 2018. The primary source of funds for the Company is dividends from WCF Financial Bank. Under the Iowa Banking Act, Iowa-chartered banks generally may pay dividends only out of undivided profits. The Iowa Division of Banking may restrict the declaration or payment of a dividend by an Iowa-chartered bank, such as WCF Financial Bank. The payment of dividends by any FDIC-insured institution is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and an FDIC-insured institution generally is prohibited from paying any dividends if,

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following payment thereof, the institution would be undercapitalized. As described above, WCF Financial Bank exceeded its capital requirements under applicable guidelines as of December 31, 2018. Notwithstanding the availability of funds for dividends, however, the FDIC and the Iowa Division of Banking may prohibit the payment of dividends by WCF Financial Bank if either or both determine such payment would constitute an unsafe or unsound practice. In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends will have to maintain 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer.

(7)	Fair Value

FASB Accounting Standards Codification (ASC) 820, Fair Value Measurement , defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact.

ASC 820 requires the use of valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

•	Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

•

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

•	Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and liabilities carried at fair value.

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•	Cash and due from banks, federal funds sold, and time deposits in other financial institutions . The carrying amount is a reasonable estimate of fair value.

•

Securities available-for-sale . Investment securities classified as available-for-sale are reported at fair value on a recurring basis. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things.

•

Loans receivable . The Company does not record loans at fair value on a recurring basis. For variable‑rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for other loans are determined using estimated future cash flows, discounted at the interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The Company does record nonrecurring fair value adjustments to loans to reflect (1) partial write‑downs to collateral value or (2) the establishment of specific loan reserves that are based on the observable market price of the loan or the appraised of the collateral. These loans are classified as Level 3.

•	FHLB and Bankers’ Bank stock . The value of FHLB and Bankers’ Bank stock is equivalent to its carrying value because the stock is redeemable at par value.

•	Accrued interest receivable and accrued interest payable . The recorded amount of accrued interest receivable and accrued interest payable approximates fair value as a result of the short‑term nature of the instruments.

•

Deposits . The fair value of deposits with no stated maturity, such as passbook, money market, noninterest‑bearing checking, and NOW accounts, is equal to the amount payable on demand. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the benefit that results from the low‑cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

•	FHLB advances . The fair value of the FHLB advances is based on the discounted value of the cash flows. The discount rate is estimated using the rates currently offered for fixed‑rate advances of similar remaining maturities.

The following tables summarize financial assets measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 , segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value. The Company has no liabilities measured at fair value in the consolidated balance sheets.

	March 31, 2019
	Level 1 inputs				Level 2 inputs				Level 3 inputs				Total fair value
U.S. agency securities	$	—			$	3,738,115			$	—			$	3,738,115
Mortgage-backed securities	—				24,553,516				—				24,553,516
Municipal bonds	—				13,794,786				—				13,794,786
Corporate bonds	—				1,012,283				—				1,012,283
Total	$	—			$	43,098,700			$	—			$	43,098,700

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	December 31, 2018
	Level 1 inputs				Level 2 inputs				Level 3 inputs				Total fair value
U.S. agency securities	$	—			$	3,714,049			$	—			$	3,714,049
Mortgage-backed securities	—				25,648,884				—				25,648,884
Municipal bonds	—				14,259,108				—				14,259,108
Total	$	—			$	43,622,041			$	—			$	43,622,041

There have been no changes in valuation methodologies at March 31, 2019 compared to December 31, 2018 and there were no transfers between levels during the periods ended March 31, 2019 and December 31, 2018 .

The Company is required to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These adjustments to fair value usually result from application of lower-of-cost or fair value accounting or write-downs of individual assets. As of March 31, 2019 and December 31, 2018 , the Company did not have any material assets measured at fair value on a nonrecurring basis.

The estimated fair values of Company’s financial instruments (as described in note 1) at March 31, 2019 and December 31, 2018 were as follows:

			March 31, 2019								December 31, 2018
	Fair value		Carrying				Approximate				Carrying				Approximate
	hierarchy		amount				fair value				amount				fair value
Financial assets:
Cash and due from banks	Level 1		$	3,432,865			$	3,432,865			$	3,587,631			$	3,587,631
Federal funds sold	Level 1		732,000				732,000				11,175,000				11,175,000
Time deposits in other
financial institutions	Level 1		4,536,380				4,536,380				4,540,687				4,540,687
Securities available-for-sale	See previous table		43,098,700				43,098,700				43,622,041				43,622,041
Loans receivable, net	Level 2  (1)		71,487,668				71,198,000				63,806,048				63,467,000
FHLB stock	Level 1		736,800				736,800				1,110,000				1,110,000
Bankers’ Bank stock	Level 1		147,500				147,500				147,500				147,500
Accrued interest receivable	Level 1		512,012				512,012				424,909				424,909
Financial liabilities:
Deposits	Level 2		89,117,264				91,165,000				83,577,825				84,311,000
FHLB advances	Level 2		14,500,000				14,463,000				24,000,000				23,897,000
Accrued interest payable	Level 1		162,952				162,952				18,221				18,221

(1) Impaired loans would have a fair value hierarchy of a Level 3. See previous disclosures.

(8)	Commitments and Contingencies

The Company is involved with various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial statements.

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The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. The financial instruments include commitments to extend credit of approximately $899,387 and $769,169 as of March 31, 2019 and December 31, 2018 , respectively. These commitments expire one year from origination and are both fixed and adjustable interest rates ranging from 3.25% to 6.50% .

(9) Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) components at March 31, 2019 and December 31, 2018 were as follows:

		March 31, 2019				December 31, 2018
Unrealized holding (losses) gains on securities available-for-sale		$	(593,059	)		$	(1,113,902	)
Tax impact		134,113				274,549
		$	(458,946	)		$	(839,353	)

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

General

Management’s discussion and analysis of financial condition at March 31, 2019 and the results of operations for three months ended March 31, 2019 and 2018 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing on Part I, Item 1 of this quarterly report on Form 10-Q.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

•	statements of our goals, intentions and expectations;

•	statements regarding our business plans, prospects, growth and operating strategies;

•	statements regarding the quality of our loan and investment portfolios; and

•	estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

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

•	general economic conditions, either nationally or in our market areas, that are worse than expected;

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

•	our ability to access cost-effective funding;

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•	fluctuations in real estate values and both residential and commercial real estate market conditions;

•	demand for loans and deposits in our market area;

•	our ability to implement and change our business strategies;

•	competition with depository and other financial institutions;

•	inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments, our level of loan originations, or increases in the level of defaults, losses and prepayments on loans we have made and make;

•	adverse changes in the securities markets;

•	changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, including as a result of Basel III;

•	the impact of the Dodd-Frank Act and the implementing regulations;

•	changes in the quality or composition of our loan or investment portfolios;

•	technological changes that may be more difficult or expensive than expected;

•	the inability of third-party providers to perform as expected;

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

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

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

•	changes in consumer spending, borrowing and savings habits;

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

•	our ability to retain key employees;

•	adverse changes in the national agriculture economy and the agriculture economy in our market area;

•	our compensation expense associated with equity allocated or awarded to our employees; and

•	changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

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

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Critical Accounting Policies

There are no material changes to the critical accounting policies disclosed in our annual report on Form 10-K as filed with the Securities and Exchange Commission on March 29, 2019.

Comparison of Financial Condition at March 31, 2019 and December 31, 2018

Total assets decrease d $4.0 million, or 2.9%, to $133.4 million at March 31, 2019 from $137.4 million at December 31, 2018 . Net loans receivable increase d $7.7 million , or 12.1% , to $71.5 million at March 31, 2019 from $63.8 million at December 31, 2018 . The increase in net loans receivable was due mainly to an increase in one-to-four family residential loans resulting from a $5.4 million loan pool purchase in February 2019. Cash and cash equivalents decreased $10.6 million, or 71.8%, to $4.2 million at March 31, 2019 compared to $14.8 million at December 31, 2018 . This reduction was caused primarily by the loan pool purchase noted above.

Total liabilities decrease d $4.2 million , or 3.8% , to $105.4 million at March 31, 2019 from $109.6 million at December 31, 2018 . The decrease in liabilities was mainly due to a $10.0 million decrease in FHLB advances. This was partially offset by an increase of $5.5 million in deposits, or 6.6% , to $89.1 million at March 31, 2019 compared to $83.6 million at December 31, 2018 .

Stockholders' equity increased $258,000, or 1.0% to $28.0 million at March 31, 2019 from $27.8 million at December 31, 2018 . The increase in stockholder's equity resulted from a $380,000 increase in market value of securities available-for-sale, net of income taxes, and a $ 14,000 increase in the anticipated release of ESOP shares, offset in part by $121,000 in aggregate dividends paid on common stock during the first quarter and $15,000 net loss during the quarter.

Comparison of Results of Operations for the Three Months Ended March 31, 2019 and 2018

Net income decrease d $300,000 , or 105.3% , to net loss total of $15,000 for the three months ended March 31, 2019 , from income of $285,000 for the same period in 2018 . Basic and diluted (loss) earnings per share were ( $0.01 ) and $0.12 for the three months ended March 31, 2019 and 2018 , respectively. Total interest income increase d $88,000 , or 8.8% , to $1,085,000 for the 2019 quarter-end, compared to $997,000 for the 2018 quarter. The increase in total interest income was primarily attributable to increase s in interest income in securities. Total interest expense increase d $86,000 , or 35.5% , to $328,000 for the three months ended March 31, 2019 compared to $242,000 for the three months ended March 31, 2018 . This increase was due to increased interest rates on deposits and an increase in the amount of interest paid on FHLB advances.

Each quarter an analysis of allowance factors is completed. Based on these factors, $30,000 in provision for loan losses was recorded for the quarter ended March 31, 2019 compared to $19,500 provision for the quarter ended March 31, 2018 . The allowance for loan losses reflects the estimate believed to be appropriate to cover incurred probable losses which were inherent in the loan portfolio at March 31, 2019 . While we believe the estimates and assumptions used in the determination of the adequacy of the allowance are reasonable, the actual amount of future provisions may exceed the amount of past provisions, and the increase in future provisions that may be required may adversely impact the financial condition and results of operations.

Net interest income after provision for losses on loans decrease d $9,000 , or 1.2% , to $727,000 for the three months ended March 31, 2019 from $736,000 for the three months ended March 31, 2018 .

Noninterest income decrease d $394,000 , or 74.2% , to $137,000 for the three months ended March 31, 2019 from $531,000 for the same period in 2018 . The decrease was due in large part to the sale of Bank-owned

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property in the first quarter of 2018 which resulted in a gain on sale of $436,000, which did not recur in 2019. There were $10,509 in net gains on securities available-for-sale for the three months ended March 31, 2019 compared to $14,465 in losses for the three months ended March 31, 2018 .

Noninterest expense consists primarily of compensation and employee benefits, office property and equipment, data processing services, federal insurance premiums, charitable contributions and accounting, regulatory, and professional fees. During the three months ended March 31, 2019 , noninterest expense increase d $3,000 , or 0.30%, to $879,000 compared to $876,000 , for the same three month period in 2018 . Compensation and employee benefits decrease d $18,000 , or 4.9% , to $351,000 for the three months ended March 31, 2019 compared to $369,000 for the three months ended March 31, 2018 due to staffing changes and not being able to fill staffing positions immediately. Office property and equipment expense decrease d $16,000 , or 14.8% , to $92,000 for the three months ended March 31, 2019 compared to $108,000 for the quarter ended March 31, 2018 due to decreases in depreciation expense. Accounting, regulatory and professional fees increase d $39,000 , or 27.7%, to $178,000 in the first quarter of 2019 compared to $139,000 for the same quarter of 2018 , due to additional auditing and legal services.

We recognized an income tax benefit of $329 for the three month period ended March 31, 2019 compared to an income tax expense of $106,000 for the 2018 quarter.

Item 3	Quantitative and Qualitative Disclosures About Market Risk

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

Item 4	Controls and Procedures

Evaluation of disclosure controls and procedures.

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2019. Based on that evaluation, our management, including the Chief Executive Officer and the Chief Financial Officer, concluded that, due to the material weakness described below, our disclosure controls and procedures were not effective as of March 31, 2019.

Changes in internal controls.

During the quarter ended March 31, 2019, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. Management's assessment of internal controls identified the below described material weakness.

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As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, management identified a material weakness in financial reporting related to the preparation, review and monitoring of reconciliations in the loan area.

Management has developed certain remediation steps to address the material weakness discussed above and to improve internal control over financial reporting. If not remediated, these control deficiencies could result in material misstatements to the Company’s financial statements. The Company is taking steps to ensure that all reconciliations are properly assigned to preparers and reviewers, the control operators have adequate training to complete the assigned tasks and there is a system in place to monitor the activities. The material weakness will not be considered remediated until applicable remedial controls operate for a sufficient period of time and management has concluded that these controls are operating effectively.

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Part II – Other Information

Item 1    Legal Proceedings

The Company is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Bank’s or the Company’s financial condition or results of operations.

Item 1A	Risk Factors

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

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds

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

(b)	Not applicable.

(c)	There were no issuer repurchases of securities during the period covered by this Report.

Item 3    Defaults Upon Senior Securities

None.

Item 4	Mine Safety Disclosures

Not applicable.

Item 5    Other Information

None.

Item 6	Exhibits

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

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

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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		WCF BANCORP, INC.
Date: May 14, 2019		/s/ Michael R. Segner
		Michael R. Segner
		President and Chief Executive Officer
Date: May 14, 2019		/s/ Paul L. Moen
		Paul L. Moen
		Chief Financial Officer

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