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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-41232

NSTS BANCORP, INC.

(Exact name of the registrant as specified in its charter)


Delaware		87-2522769
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

700 S. Lewis Ave. Waukegan, Illinois		60085
(Address of principal executive offices)		(Zip Code)

(847) 336-4430

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	NSTS	NASDAQ Capital Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of August 7, 2025, the Registrant had 5,239,038 shares of its common stock outstanding.

Table of Contents

NSTS Bancorp, Inc.

Form 10Q

Index

PART I.	FINANCIAL INFORMATION	2
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS	2
	CONSOLIDATED BALANCE SHEETS	2
	CONSOLIDATED STATEMENTS OF OPERATIONS	3
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	4
	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	5
	CONSOLIDATED STATEMENTS OF CASH FLOWS	7
	NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37
ITEM 4.	CONTROLS AND PROCEDURES	38

PART II.	OTHER INFORMATION	38
ITEM 1.	LEGAL PROCEEDINGS	38
ITEM 1A.	RISK FACTORS	38
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38
ITEM 4.	MINE SAFETY DISCLOSURES	38
ITEM 5.	OTHER INFORMATION	38
ITEM 6.	EXHIBITS	39
SIGNATURES		40

Table of Contents

Part I. Financial Information

Item 1. Consolidated Financial Statements

NSTS BANCORP, INC.

Consolidated Balance Sheets

	*June 30, 2025*
	*(unaudited)*			*December 31, 2024*
	(Dollars in thousands)
Assets:
Cash and due from banks	$	1,008		$	1,223
Interest-bearing bank deposits		46,480			52,258
Cash and cash equivalents		47,488			53,481
Time deposits with other financial institutions		1,494			1,494
Securities available for sale		69,588			71,249
Federal Home Loan Bank stock (FHLB)		605			585
Loans held for sale		4,429			1,218
Loans, net of unearned income		134,035			131,557
Allowance for credit losses on loans		(1,200	)		(1,201	)
Loans, net		132,835			130,356
Premises and equipment, net		5,252			5,311
Accrued interest receivable		851			870
Bank-owned life insurance (BOLI)		9,774			9,661
Other assets		3,660			4,463
Total assets	$	275,976		$	278,688
Liabilities:
Deposits:
Noninterest bearing	$	12,371		$	11,896
Interest-bearing
Demand and NOW checking		14,522			14,930
Money market		27,507			28,967
Savings		43,696			41,544
Time deposits over $250,000		24,345			21,990
Other time deposits		70,519			70,829
Total deposits		192,960			190,156
Escrow deposits		1,781			1,739
Other borrowings		—			5,000
Accrued expenses and other liabilities		3,402			5,303
Total liabilities	$	198,143		$	202,198
Stockholders' equity:
Common Stock ($0.01 par value; 10,000,000 shares authorized; 5,239,038 shares outstanding at June 30, 2025 and 5,249,826 shares at December 31, 2024)		56			56
Treasury Stock, at cost (360,821 shares at June 30, 2025 and 352,033 shares at December 31, 2024)		(3,348	)		(3,240	)
Additional paid-in capital		52,037			51,684
Retained earnings		39,680			40,266
Unallocated common shares held by ESOP		(3,564	)		(3,670	)
Accumulated other comprehensive loss, net		(7,028	)		(8,606	)
Total stockholders' equity		77,833			76,490
Total liabilities and stockholders' equity	$	275,976		$	278,688

See accompanying notes to consolidated unaudited financial statements

Table of Contents

NSTS BANCORP, INC.

Consolidated Statements of Operations (unaudited)

	*For the three months ended*						*For the six months ended*
	*June 30,*						*June 30,*
	*2025*			*2024*			*2025*			*2024*
	(Dollars in thousands)
Interest income:
Loans, including fees	$	1,793		$	1,721		$	3,593		$	3,196
Securities
Taxable		335			387			690			805
Tax-exempt		61			61			121			124
Federal funds sold and other		522			357			1,030			774
Time deposits with other financial institutions		18			28			36			51
FHLB Stock		9			9			18			18
Total interest income		2,738			2,563			5,488			4,968
Interest expense:
Deposits		877			714			1,736			1,354
Other borrowings		53			61			113			121
Total interest expense		930			775			1,849			1,475
Net interest income		1,808			1,788			3,639			3,493
Provision for credit losses		57			123			20			122
Net interest income after provision for credit losses		1,751			1,665			3,619			3,371
Noninterest income:
Gain on sale of mortgage loans		507			271			696			427
Rental income on office building		16			16			32			32
Service charges on deposits		64			64			123			125
Increase in cash surrender value of BOLI		57			53			113			106
Other non-interest income		91			97			105			123
Total noninterest income		735			501			1,069			813
Noninterest expense:
Salaries and employee benefits		1,642			1,468			3,175			2,842
Equipment and occupancy		210			198			434			412
Data processing		233			217			455			412
Professional services		180			172			316			283
Advertising		39			91			81			175
Supervisory fees and assessments		42			35			80			71
Loan expenses		79			65			171			95
Deposit expenses		107			58			175			112
Director fees		51			56			99			104
Other non-interest expense		161			132			288			250
Total noninterest expense		2,744			2,492			5,274			4,756
Loss before income taxes		(258	)		(326	)		(586	)		(572	)
Income tax expense		—			—			—			—
Net loss	$	(258	)	$	(326	)	$	(586	)	$	(572	)
Basic and diluted loss per share	$	(0.05	)	$	(0.07	)	$	(0.12	)	$	(0.12	)
Weighted average shares outstanding		4,886,652			4,925,388			4,885,290			4,957,483

See accompanying notes to consolidated unaudited financial statements

Table of Contents

NSTS BANCORP, INC.

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

	*For the three months ended June 30,*
	*2025*			*2024*
	(Dollars in thousands)
Net loss	$	(258	)	$	(326	)
Unrealized net holding gain (loss) on securities
Unrealized net holding gain (loss) on securities arising during period		698			(222	)
Tax effect		(199	)		63
Other comprehensive income (loss), net of taxes		499			(159	)
Comprehensive income (loss)	$	241		$	(485	)

	*For the six months ended June 30,*
	*2025*			*2024*
	(Dollars in thousands)
Net loss	$	(586	)	$	(572	)
Unrealized net holding gain (loss) on securities
Unrealized net holding gain (loss) on securities arising during period		2,206			(991	)
Tax effect		(628	)		282
Other comprehensive income (loss), net of taxes		1,578			(709	)
Comprehensive income (loss)	$	992		$	(1,281	)

See accompanying notes to consolidated unaudited financial statements

Table of Contents

NSTS BANCORP, INC.

Consolidated Statements of Stockholders’ Equity (unaudited)

	*Common Shares*			*Common Stock*		*Treasury Stock*			*Additional Paid-In Capital*			*Retained earnings*			*Accumulated other comprehensive loss*			*Unallocated Common Shares Held by ESOP*			*Total*
				(Dollars in thousands)
				*Quarter ended June 30, 2024*
Balance at March 31, 2024		5,315,261		$	56	$	(2,381	)	$	51,080		$	40,809		$	(8,773	)	$	(3,829	)	$	76,962
Net loss		—			—		—			—			(326	)		—			—			(326	)
ESOP shares committed to be released		—			—		—			(2	)		—			—			53			51
Purchase of treasury stock from stock repurchase program		(8,399	)		—		(81	)		—			—			—			—			(81	)
Purchase of treasury stock from taxes withheld on net share settlement of restricted stock awards		(11,403	)		—		(109	)		—			—			—			—			(109	)
Compensation cost for stock options and restricted stock		—			—		—			162			—			—			—			162
Change in net unrealized loss on securities available for sale, net		—			—		—			—			—			(159	)		—			(159	)
Balance at June 30, 2024		5,295,459		$	56	$	(2,571	)	$	51,240		$	40,483		$	(8,932	)	$	(3,776	)	$	76,500
				*Quarter ended June 30, 2025*
Balance at March 31, 2025		5,247,826		$	56	$	(3,240	)	$	51,852		$	39,938		$	(7,527	)	$	(3,617	)	$	77,462
Net loss		—			—		—			—			(258	)		—			—			(258	)
ESOP shares committed to be released		—			—		—			10			—			—			53			63
Purchase of treasury stock from taxes withheld on net share settlement of restricted stock awards		(8,788	)		—		(108	)		—			—			—			—			(108	)
Compensation cost for stock options and restricted stock		—			—		—			175			—			—			—			175
Change in net unrealized loss on securities available for sale, net		—			—		—			—			—			499			—			499
Balance at June 30, 2025		5,239,038		$	56	$	(3,348	)	$	52,037		$	39,680		$	(7,028	)	$	(3,564	)	$	77,833

See accompanying notes to consolidated unaudited financial statements

Table of Contents

	*Common Shares*			*Common Stock*		*Treasury Stock*			*Additional Paid-In Capital*			*Retained earnings*			*Accumulated other comprehensive loss*			*Unallocated Common Shares Held by ESOP*			*Total*
				(Dollars in thousands)
				*Six months ended June 30, 2024*
Balance at December 31, 2023		5,315,261		$	56	$	(2,381	)	$	50,920		$	41,055		$	(8,223	)	$	(3,882	)	$	77,545
Net loss		—			—		—			—			(572	)		—			—			(572	)
ESOP shares committed to be released		—			—		—			(4	)		—			—			106			102
Purchase of treasury stock from stock repurchase program		(8,399	)		—		(81	)		—			—			—			—			(81	)
Purchase of treasury stock from taxes withheld on net share settlement of restricted stock awards		(11,403	)		—		(109	)		—			—			—			—			(109	)
Compensation cost for stock options and restricted stock		—			—		—			324			—			—			—			324
Change in net unrealized loss on securities available for sale, net		—			—		—			—			—			(709	)		—			(709	)
Balance at June 30, 2024		5,295,459		$	56		(2,571	)	$	51,240		$	40,483		$	(8,932	)	$	(3,776	)	$	76,500
				*Six months ended June 30, 2025*
Balance at December 31, 2024		5,249,826		$	56	$	(3,240	)	$	51,684		$	40,266		$	(8,606	)	$	(3,670	)	$	76,490
Net loss		—			—		—			—			(586	)		—			—			(586	)
ESOP shares committed to be released		—			—		—			21			—			—			106			127
Forfeiture of stock options and restricted stock		(2,000	)		—		—			(8	)		—			—			—			(8	)
Purchase of treasury stock from taxes withheld on net share settlement of restricted stock awards		(8,788	)		—		(108	)		—			—			—			—			(108	)
Compensation cost for stock options and restricted stock		—			—		—			340			—			—			—			340
Change in net unrealized loss on securities available for sale, net		—			—		—			—			—			1,578			—			1,578
Balance at June 30, 2025		5,239,038		$	56	$	(3,348	)	$	52,037		$	39,680		$	(7,028	)	$	(3,564	)	$	77,833

See accompanying notes to consolidated unaudited financial statements

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NSTS BANCORP, INC.

Consolidated Statements of Cash Flows (unaudited)

	*For the six months ended June 30,*
	*2025*			*2024*
	(Dollars in thousands)
Cash flows from operating activities:
Net loss	$	(586	)	$	(572	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		152			149
Securities amortization and accretion, net		242			263
Loans originated for sale		(38,366	)		(21,945	)
Proceeds from sales of loans held for sale		38,595			20,042
Gain on sale of mortgage loans		(696	)		(427	)
Provision for credit losses		20			122
Earnings on bank owned life insurance		(113	)		(106	)
ESOP expense		127			102
Stock based compensation		332			324
Change in deferred income taxes		628			(282	)
Net change in accrued interest receivable and other assets		(434	)		5
Net change in accrued expenses and other liabilities		(1,922	)		785
Net cash used in operating activities		(2,021	)		(1,540	)
Cash flows from investing activities:
Net change in portfolio loans		(5,222	)		(12,976	)
Principal repayments on mortgage-backed securities		2,545			2,780
Maturities and calls of securities available for sale		1,080			2,800
Purchase of Federal Home Loan Bank stock		(20	)		(35	)
Net change in time deposits with other financial institutions		—			995
Purchases of premises and equipment, net		(93	)		(132	)
Net cash used in investing activities		(1,710	)		(6,568	)
Cash flows from financing activities:
Net change in deposits		2,804			8,998
Net change in escrow deposits		42			343
Repayment of FHLB Advance		(5,000	)		—
Purchase of treasury shares (None and 8,399 shares for the six months ended June 30, 2025 and 2024, respectively)		—			(81	)
Purchase of treasury stock from taxes withheld on stock awards		(108	)		(109	)
Net cash (used in) provided by financing activities		(2,262	)		9,151
Net change in cash and cash equivalents		(5,993	)		1,043
Cash and cash equivalents at beginning of period		53,481			31,388
Cash and cash equivalents at end of period	$	47,488		$	32,431
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	1,877		$	1,473
Loans transferred to held for sale from portfolio, net		2,744			2,470

See accompanying notes to consolidated unaudited financial statements

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Notes to the Unaudited Consolidated Financial Statements

Note 1: Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and conform to practices within the banking industry. The accounting policies followed in the preparation of the interim consolidated financial statements are consistent with those used in the preparation of the annual financial statements. The interim consolidated financial statements reflect all normal and recurring adjustments that are necessary, in the opinion of management, for fair statement of results for the interim periods presented. Results for the three and six month periods ended June 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Nature of Operations

NSTS Bancorp, Inc. (“NSTS” or the “Company”, “we” or “our”) was formed to serve as the stock holding company for North Shore Trust and Savings (the “Bank”) in connection with the conversion of North Shore Trust and Savings, NSTS Financial Corporation and North Shore MHC, into the stock form of organization, which was completed on January 18, 2022. Shares of NSTS Bancorp, Inc. stock began trading on January 19, 2022 on the Nasdaq Capital Market under the trading symbol "NSTS."

The Bank operates primarily out of three bank branch locations in the northern suburbs of Chicago, Illinois. In efforts to expand our loan originations within the Chicagoland area, the Bank also has three loan production offices, located in Chicago, Aurora and Plainfield, Illinois. The lending team operates as Oak Leaf Community Mortgage, powered by North Shore Trust and Savings. The Bank offers a variety of financial services to customers in our surrounding communities. Financial services consist primarily of 1-4 family mortgage loans, savings accounts, and certificate of deposit accounts. There are no significant concentrations of loans to any one industry or customer. The Bank’s exposure to credit risk is significantly affected by changes in the economy in the Bank’s market area.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements were prepared in accordance with GAAP and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with NSTS Bancorp, Inc.’s Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The unaudited Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Management is required 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 revenue and expenses during the reporting period. Actual results may vary from those estimates. Material estimates that could significantly change in the near-term include the adequacy of the allowance for credit losses, determination of the valuation allowance on deferred tax assets and the valuation of investment securities and the related tax effect. The results of operations for the three and six months ended June 30, 2025, are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2025. Certain amounts in prior year financial statements have been reclassified to conform to the current presentation. Subsequent events have been evaluated through the date of issuance of the unaudited Consolidated Financial Statements. No significant subsequent events have occurred through this date requiring adjustment to the financial statements or disclosures.

All of the Company’s financial results are similar and considered by management to be aggregated into one reportable operating segment. While the Company has assigned certain management responsibilities by business-line, the Company’s Chief Operating Decision Maker ("CODM") evaluates financial performance on a Company-wide basis. The Company's assigned business lines have similar economic characteristics, products, services and customers. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable operating segment.

Financial performance is reported to the CODM monthly, and the primary measure of performance is consolidated net income. The allocation of resources throughout the Company is determined annually based upon consolidated net income performance. The presentation of financial performance to the CODM is consistent with amounts and financial statement line items shown in the Company's consolidated balance sheets and consolidated statements of operations. Additionally, the Company's significant expenses are adequately segmented by category and amount in the consolidated statements of operations to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include salaries and employee benefits, equipment and occupancy expense, data processing, professional services and advertising.

On December 14, 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation, and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments require that all entities disclose on an annual basis the following information about income taxes paid: (1) The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes, and (2) The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amendments also require that all entities disclose the following information: (1) Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and (2) Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company will adopt this ASU, and does not expect the amendments to have a material impact to the annual financial statements of the Company.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” The pronouncement requires public entities to disclose additional information about specific expense categories in the notes to the financial statements. The guidance is effective for public business entities for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is assessing ASU 2024-03 and its impact on its Consolidated Financial Statements and disclosures.

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Note 2: Securities Available for Sale

The amortized cost and estimated fair value of debt securities at June 30, 2025 and December 31, 2024, by contractual maturity, are shown below. The accrued interest receivable for securities available for sale was $260,000 and $278,000 on June 30, 2025 and December 31, 2024, respectively. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties, therefore, these securities have been included in the below table based on average remaining life.

June 30, 2025	*U.S. government agency obligations*			*Municipal obligations*			*Mortgage-backed residential obligations*			*Collateralized mortgage obligations*			*Total available-for-sale*
	(Dollars in thousands)
1 year or less	$	—		$	79		$	—		$	879		$	958
1 to 5 years		3,015			1,311			8,244			14,225			26,795
5 to 10 years		4,677			2,780			16,265			8,941			32,663
After 10 years		—			7,400			576			1,196			9,172
Fair value		7,692			11,570			25,085			25,241			69,588
Gross unrealized gains		—			—			—			—			—
Gross unrealized losses		(799	)		(2,428	)		(3,629	)		(2,975	)		(9,831	)
Amortized cost	$	8,491		$	13,998		$	28,714		$	28,216		$	79,419

December 31, 2024	U.S. government agency obligations			Municipal obligations			Mortgage-backed residential obligations			Collateralized mortgage obligations			Total available-for-sale
	(Dollars in thousands)
1 year or less	$	1,000		$	—		$	—		$	—		$	1,000
1 to 5 years		3,047			1,452			8,971			15,086			28,556
5 to 10 years		4,610			2,401			15,794			7,786			30,591
After 10 years		—			7,883			1,150			2,069			11,102
Fair value		8,657			11,736			25,915			24,941			71,249
Gross unrealized gains		—			—			—			—			—
Gross unrealized losses		(1,062	)		(2,367	)		(4,766	)		(3,842	)		(12,037	)
Amortized cost	$	9,719		$	14,103		$	30,681		$	28,783		$	83,286

As of June 30, 2025, and December 31, 2024, no securities were pledged to secure public deposits or for other purposes as required or permitted by law.

Information pertaining to securities with gross unrealized losses at June 30, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows:

	*Less than 12 Months*				*12 Months or Longer*				*Total*
	(Dollars in thousands)
	*Fair*		*Unrealized*		*Fair*		*Unrealized*		*Fair*		*Unrealized*
	*Value*		*Losses*		*Value*		*Losses*		*Value*		*Losses*
June 30, 2025
U.S. government agency obligations	$	—	$	—	$	7,692	$	799	$	7,692	$	799
Municipal obligations		—		—		11,570		2,428		11,570		2,428
Mortgage-backed residential obligations		—		—		25,085		3,629		25,085		3,629
Collateralized mortgage obligations		—		—		25,241		2,975		25,241		2,975
Total	$	—	$	—	$	69,588	$	9,831	$	69,588	$	9,831
December 31, 2024
U.S. government agency obligations	$	—	$	—	$	8,657	$	1,062	$	8,657	$	1,062
Municipal obligations		467		28		11,269		2,339		11,736		2,367
Mortgage-backed residential obligations		—		—		25,915		4,766		25,915		4,766
Collateralized mortgage obligations		—		—		24,941		3,842		24,941		3,842
Total	$	467	$	28	$	70,782	$	12,009	$	71,249	$	12,037

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At June 30, 2025 and December 31, 2024, all investment securities were in unrealized loss positions. There were no securities with identified credit losses at June 30, 2025 and December 31, 2024, respectively. Unrealized losses have not been recognized into income because, based on management's evaluation, the decline in fair value is largely due to increased market rates, temporary market conditions and trading spreads, and, as such, are considered to be temporary by the Bank. In addition, management has the intent and ability to hold the securities until they mature or they recover their carrying values.

All U.S. government agency obligations, mortgage-based residential obligations and collateralized mortgage obligations are agency-issued or government-sponsored enterprise issued. Agency-issued securities are generally guaranteed by a U.S. government agency, such as the Government National Mortgage Association. Government-sponsored enterprises, such as the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or the Small Business Administration, have either a direct or implied guarantee by the U.S. government.

The Bank holds two classifications of municipal bonds, general obligation bonds and revenue bonds. General obligation bonds are backed by the general revenue of the issuing municipality, while revenue bonds are supported by a specific revenue source. All general obligation and revenue bonds have a bond rating of investment grade by Standard and Poor's or Moody's Investor Services or are not rated. There have been no declines in investment grades on bonds in a loss position and, as of June 30, 2025, all municipal bonds are paying as agreed.

There were no sales of securities available-for-sale during the six months ended June 30, 2025 and 2024.

Note 3: Loans and allowance for credit losses

A summary of loans by major category as of June 30, 2025 and December 31, 2024 is as follows:

	*June 30, 2025*			*December 31, 2024*
	(Dollars in thousands)
First mortgage loans
1-4 family residential	$	121,837		$	119,409
Multi-family		3,304			3,368
Commercial		4,271			4,197
Construction		3,901			3,651
Total first mortgage loans		133,313			130,625
Consumer loans		314			282
Total loans		133,627			130,907
Net deferred loan costs		408			650
Allowance for credit losses on loans		(1,200	)		(1,201	)
Total loans, net	$	132,835		$	130,356

First mortgage loans serviced for others are not included in the accompanying balance sheets. The unpaid principal balance of these loans totaled $21.7 million and $13.9 million at June 30, 2025 and December 31, 2024, respectively. Custodial escrow balances maintained in connection with the loans serviced were $342,000 and $236,000 at June 30, 2025 and December 31, 2024, respectively.

The accrued interest receivable for loans, net, was $563,000 and $560,000 for June 30, 2025 and December 31, 2024, respectively

In the normal course of business, loans are made by the Bank to directors and officers of the Company and the Bank (related parties). The terms of these loans, including interest rate and collateral, are similar to those prevailing for comparable transactions with other customers and do not involve more than a normal risk of collectability. At June 30, 2025 and December 31, 2024, such borrowers were indebted to the Bank in the aggregate amount of $575,000 and $587,000, respectively.

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The following tables present the activity in the allowance for credit losses ("ACL") for the three and six months ended June 30, 2025 and 2024:

	*June 30, 2025*
	*1-4 family*
	*residential*		*Multi-family*		*Commercial*		*Construction*		*Consumer*		*Total*
	(Dollars in thousands)
Three months ended
Beginning balance	$	1,034	$	37	$	38	$	45	$	2	$	1,156
Charge-offs		—		—		—		—		—		—
Recoveries		—		—		—		—		—		—
Net recoveries (charge-offs)		—		—		—		—		—		—
Provision for credit losses		22		—		6		16		—		44
Ending balance	$	1,056	$	37	$	44	$	61	$	2	$	1,200

	*June 30, 2025*
	*1-4 family*
	*residential*		*Multi-family*		*Commercial*		*Construction*			*Consumer*		*Total*
	(Dollars in thousands)
Six months ended
Beginning balance	$	1,056	$	37	$	41	$	65		$	2	$	1,201
Charge-offs		—		—		—		—			—		—
Recoveries		—		—		—		—			—		—
Net recoveries (charge-offs)		—		—		—		—			—		—
Provision for (release of) credit losses		—		—		3		(4	)		—		(1	)
Ending balance	$	1,056	$	37	$	44	$	61		$	2	$	1,200

	*June 30, 2024*
	*1-4 family*
	*residential*		*Multi-family*		*Commercial*		*Construction*		*Consumer*			*Total*
	(Dollars in thousands)
Three months ended
Beginning balance	$	1,091	$	36	$	37	$	11	$	2		$	1,177
Charge-offs		—		—		—		—		—			—
Recoveries		—		—		—		—		—			—
Net recoveries (charge-offs)		—		—		—		—		—			—
Provision for (release of) credit losses		74		—		4		13		(1	)	$	90
Ending balance	$	1,165	$	36	$	41	$	24	$	1		$	1,267

	*June 30, 2024*
	*1-4 family*
	*residential*		*Multi-family*			*Commercial*		*Construction*		*Consumer*		*Total*
	(Dollars in thousands)
Six months ended
Beginning balance	$	1,094	$	40		$	37	$	4	$	1	$	1,176
Charge-offs		—		—			—		—		—		—
Recoveries		—		—			—		—		—		—
Net recoveries (charge-offs)		—		—			—		—		—		—
Provision for (release of) credit losses		71		(4	)		4		20		—		91
Ending balance	$	1,165	$	36		$	41	$	24	$	1	$	1,267

The ACL on loans excludes $80,000 and $45,000 of allowance for off-balance sheet exposures as of June 30, 2025 and 2024, respectively, recorded within Other Liabilities on the Consolidated Balance Sheets. The net provision for credit losses for the three and six months ended June 30, 2025 in the table above excludes a provision for credit losses of $13,000 and $21,000, respectively, related to off balance sheet exposures. The net provision for credit losses for the three and six months ended June 30, 2024 in the table above excludes a provision for credit losses of $33,000 and $31,000, respectively, related to off balance sheet exposures.

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As of June 30, 2025, there were two collateral dependent loan totaling $287,000 in the one to four-family residential loan segment. These loans are collateralized by residential real estate and have no ACL as of June 30, 2025. There were no other collateral dependent loans as of June 30, 2025. There were no collateral dependent loans as of December 31, 2024.

The Bank evaluates collectability based on payment activity and other factors. The Bank uses a graded loan rating system as a means of identifying potential problem loans, as follows:

Pass

Loans in these categories are performing as expected with low to average risk.

Special Mention

Loans in this category are internally designated by management as “watch loans.” These loans are starting to show signs of potential weakness and are closely monitored by management.

Substandard

Loans in this category are internally designated by management as “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the paying capacity of the obligors or the current net worth of the collateral pledged. Substandard loans present a distinct possibility that the Bank will sustain losses if such weaknesses are not corrected.

Doubtful

Loans classified as doubtful have all the weaknesses inherent in those designated as “substandard” with the added characteristic that the weaknesses may make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

On an annual basis, or more often if needed, the Bank formally reviews the ratings on commercial loans. In addition, the Bank performs an independent review of a significant portion of the commercial loan portfolio. Management uses the results of the independent review as part of its annual review process.

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The following tables present the credit risk profile of the Company's loan portfolio based on risk rating category and year of origination as of June 30, 2025 and December 31, 2024.

	*As of June 30, 2025*
	*Term loans amortized cost basis by origination year*
	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving loans amortized cost basis*		*Revolving loans converted to term loans amortized cost basis*		*Total*
	(Dollars in thousands)
1-4 family residential
Pass	$	12,235	$	15,068	$	19,831	$	12,265	$	16,825	$	40,210	$	5,116	$	—	$	121,550
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		263		—		—		—		24		—		—		287
Total 1-4 family residential		12,235		15,331		19,831		12,265		16,825		40,234		5,116		—		121,837
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—		—
Multi-family
Pass		—		511		—		—		226		2,567		—		—	$	3,304
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total multi-family		—		511		—		—		226		2,567		—		—		3,304
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—		—
Commercial
Pass		—		—		171		—		94		2,960		1,046		—	$	4,271
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total commercial		—		—		171		—		94		2,960		1,046		—		4,271
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—		—
Construction
Pass		507		3,299		95		—		—		—		—		—	$	3,901
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total construction		507		3,299		95		—		—		—		—		—		3,901
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—		—
Consumer
Pass		120		75		62		49		6		2		—		—	$	314
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Total consumer		120		75		62		49		6		2		—		—		314
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—		—
Total
Pass		12,862		18,953		20,159		12,314		17,151		45,739		6,162		—		133,340
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		263		—		—		—		24		—		—		287
Total		12,862		19,216		20,159		12,314		17,151		45,763		6,162		—		133,627
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—		—

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	As of December 31, 2024
	Term loans amortized cost basis by origination year
	2024		2023		2022		2021		Prior		Revolving loans amortized cost basis		Revolving loans converted to term loans amortized cost basis		Total
	(Dollars in thousands)
1-4 family residential
Pass	$	20,577	$	20,986	$	12,421	$	18,074	$	43,245	$	4,106	$	—	$	119,409
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total 1-4 family residential		20,577		20,986		12,421		18,074		43,245		4,106		—		119,409
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—
Multi-family
Pass		515		—		—		230		2,623		—		—		3,368
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total multi-family		515		—		—		230		2,623		—		—		3,368
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—
Commercial
Pass		148		301		—		96		3,158		494		—		4,197
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total commercial		148		301		—		96		3,158		494		—		4,197
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—
Construction
Pass		3,134		517		—		—		—		—		—		3,651
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total construction		3,134		517		—		—		—		—		—		3,651
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—
Consumer
Pass		127		77		58		18		2		—		—		282
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total consumer		127		77		58		18		2		—		—		282
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—
Total
Pass		24,501		21,881		12,479		18,418		49,028		4,600		—		130,907
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total		24,501		21,881		12,479		18,418		49,028		4,600		—		130,907
Current year-to-date gross write-offs		—		—		—		—		—		—		—		—

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The aging of the Bank’s loan portfolio as of June 30, 2025 and December 31, 2024, is as follows:

	*31-89 Days Past Due and Accruing*		*Greater than 90 Days Past Due and Accruing*		*Non-Accrual*		*Total Past Due and Non-Accrual*		*Current*		*Total Loan Balance*
	(Dollars in thousands)
June 30, 2025
1-4 family residential	$	455	$	—	$	287	$	742	$	121,095	$	121,837
Multi-family		—		—		—		—		3,304		3,304
Commercial		—		—		—		—		4,271		4,271
Construction		—		—		—		—		3,901		3,901
Consumer		—		—		—		—		314		314
Total	$	455	$	—	$	287	$	742	$	132,885	$	133,627

December 31, 2024
1-4 family residential	$	371	$	—	$	—	$	371	$	119,038	$	119,409
Multi-family		—		—		—		—		3,368		3,368
Commercial		—		—		—		—		4,197		4,197
Construction		—		—		—		—		3,651		3,651
Consumer		—		—		—		—		282		282
Total	$	371	$	—	$	—	$	371	$	130,536	$	130,907

The following table presents the amortized cost basis of loans on nonaccrual status recorded at June 30, 2025, December 31, 2024 and January 1, 2024. There was no interest recognized on non-accrual loans for the six months ended June 30, 2025 and 2024.

	*June 30, 2025*				*December 31, 2024*				*January 1, 2024*
	*Nonaccrual with no Allowance for Credit Losses*		*Total Nonaccrual*		*Nonaccrual with no Allowance for Credit Losses*		*Total Nonaccrual*		*Nonaccrual with no Allowance for Credit Losses*		*Total Nonaccrual*
	(Dollars in thousands)
First mortgage loans
1-4 family residential	$	287	$	287	$	—	$	—	$	200	$	200
Multi-family		—		—		—		—		—		—
Commercial		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Total loans	$	287	$	287	$	—	$	—	$	200	$	200

The Bank may modify loans to borrowers experiencing financial difficulty by providing modifications to repayment terms; more specifically, modifications to loan interest rates. Management performs an analysis at the time of loan modification. Any reserve required is recorded through a provision to the allowance for credit losses on loans. There were no modifications on loans to borrowers experiencing financial difficulty during the six months ended June 30, 2025 and 2024.

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Note 4: Deposits

As of June 30, 2025 the scheduled maturities of time deposits are as follows:

For the 12 months ended
June 30,	*Amount*
	(Dollars in thousands)
2026	$	69,570
2027		8,937
2028		6,751
2029		6,008
2030 and beyond		3,598
Total	$	94,864

In the normal course of business, deposit accounts are held by directors and executive officers of the Company and the Bank (related parties). The terms for these accounts, including interest rates, fees, and other attributes, are similar to those prevailing for comparable transactions with other customers and do not involve more than the normal level of risk associated with deposit accounts. At June 30, 2025 and December 31, 2024, total deposits held by directors and officers of the Company and the Bank were $1.5 million and $1.1 million, respectively.

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Note 5: Other Borrowings

There were no additional borrowings made during the six months ended June 30, 2025 and 2024. In June 2025, the Company repaid the $5.0 million advance from FHLB Chicago. There was no outstanding borrowed funds at June 30, 2025.

The following table shows certain information regarding our borrowings at or for the dates indicated:

	*For the three months ended*						*For the six months ended*
	*June 30,*						*June 30,*
	*2025*			*2024*			*2025*			*2024*
	(Dollars in thousands)
FHLB of Chicago advances and other borrowings:
Average balance outstanding	$	4,396		$	5,000		$	4,696		$	5,000
Maximum amount outstanding at any month-end during the period		5,000			5,000			5,000			5,000
Average interest rate during the period		4.8	%		4.9	%		4.8	%		4.8	%

	*June 30, 2025*		*December 31, 2024*
	(Dollars in thousands)
Balance outstanding at end of period		—		5,000
Weighted average interest rate at end of period		N/A		4.8	%

The eligible borrowings are collateralized by $108.2 million and $103.8 million of first mortgage loans under a blanket lien arrangement at June 30, 2025 and December 31, 2024, respectively.

The following table shows the outstanding advances, additional borrowing capacity and total borrowing capacity from the FHLB Chicago at the dates presented.

	*June 30, 2025*		*December 31, 2024*
	(Dollars in thousands)
Outstanding advances	$	—	$	5,000
Additional borrowing capacity		81,461		73,094
Total borrowing capacity	$	81,461	$	78,094

Additionally, at June 30, 2025 and December 31, 2024, we had a $10.0 million federal funds line of credit with BMO Harris Bank, none of which was drawn at June 30, 2025 and December 31, 2024.

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Note 6: Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1

Quoted prices in active markets for identical assets or liabilities

Level 2

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3

Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities

An asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, 2025 or December 31, 2024.

Securities available for sale (Recurring)

Where quoted market prices are available in an active market, securities such as U.S. Treasuries, would be classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available, securities would be classified within Level 3 of the hierarchy.

Individually Evaluated (Nonrecurring)
Individually evaluated loans are recorded at fair value on a nonrecurring basis. The fair value of loans is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made
in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Individually evaluated loans are evaluated on a quarterly basis for additional credit losses and adjusted accordingly.

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The following table presents the Bank’s assets that are measured at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of June 30, 2025 and December 31, 2024:

	*Fair Value Measurements Using*
	*Fair Value*		*Level 1*		*Level 2*		*Level 3*
	(Dollars in thousands)
June 30, 2025
Securities available-for-sale
U.S. government agency obligations	$	7,692	$	—	$	7,692	$	—
Municipal obligations		11,570		—		11,570		—
Mortgage-backed residential obligations		25,085		—		25,085		—
Collateralized mortgage obligations		25,241		—		25,241		—
Total	$	69,588	$	—	$	69,588	$	—

December 31, 2024
Securities available-for-sale
U.S. government agency obligations	$	8,657	$	—	$	8,657	$	—
Municipal obligations		11,736		—		11,736		—
Mortgage-backed residential obligations		25,915		—		25,915		—
Collateralized mortgage obligations		24,941		—		24,941		—
Total	$	71,249	$	—	$	71,249	$	—

The Bank may be required, from time to time, to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with accounting principles generally accepted in the United States of America. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. There were no assets measured at fair value on a nonrecurring basis as of June 30, 2025 and December 31, 2024.

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Note 7: Fair Value of Financial Instruments

Financial instruments are classified within the fair value hierarchy using the methodologies described in Note 6 – Fair Value Measurements. The following disclosures include financial instruments that are not carried at fair value on the Consolidated Balance Sheets. The calculation of estimated fair values is based on market conditions at a specific point in time and may not reflect current or future fair values.

Certain financial instruments generally expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market. The carrying value of these financial instruments assumes to approximate the fair value of these instruments. These instruments include cash and cash equivalents, non-interest bearing deposit accounts, time deposits with other financial institutions, FHLB stock, escrow deposits and accrued interest receivable and payable.

The carrying amounts and estimated fair values by fair value hierarchy of certain financial instruments are as follows:

	*Carrying*								*Estimated*
	*Amount*		*Level 1*		*Level 2*		*Level 3*		*Fair Value*
	(Dollars in thousands)
June 30, 2025
Financial assets:
Loans, net	$	132,835	$	—	$	—	$	124,366	$	124,366
Loans held for sale		4,429		—		4,664		—		4,664
Financial liabilities:
Interest-bearing deposits	$	180,589	$	—	$	181,036	$	—	$	181,036

December 31, 2024
Financial assets:
Loans, net	$	130,356	$	—	$	—	$	124,084	$	124,084
Loans held for sale		1,218		—		1,242		—		1,242
Financial liabilities:
Interest-bearing deposits	$	178,260	$	—	$	178,872	$	—	$	178,872
Other Borrowings		5,000		—		4,999		—		4,999

Note 8: Capital Ratios

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under accounting principles generally accepted in the United States of America, regulatory reporting requirements and regulatory capital standards. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulatory reporting standards to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital to risk-weighted assets, common equity Tier 1 capital to total risk-weighted assets and of Tier I capital to average assets, as such individual components and calculations are defined by related standards.

As of June 30, 2025 the most recent notification from the regulators categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification which management believes have changed the Bank’s category. On November 13, 2019, the federal regulators finalized and adopted a regulatory capital rule establishing a community bank leverage ratio (“CBLR”), which became effective on January 1, 2020. The intent of CBLR is to provide a simple alternative measure of capital adequacy for electing qualifying depository institutions and depository institution holding companies, as directed under the Economic Growth, Relief, and Consumer Protection Act. Under CBLR, if a qualifying depository institution or depository institution holding company elects to use such measure, such institution or holding company will be considered well capitalized if its ratio of Tier 1 capital to average total consolidated assets (i.e., leverage ratio) exceeds 9% subject to a limited two quarter grace period, during which the leverage ratio cannot drop 100 basis points below the then applicable threshold, and will not be required to calculate and report risk-based capital ratios. The Bank elected to begin using CBLR for the first quarter of 2020. Management believes, as of June 30, 2025, that the Bank met all capital adequacy requirements to which it was subject.

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The Bank’s actual capital amounts and ratios as of June 30, 2025 and December 31, 2024, are presented below:

						*Minimum Required to be*
	*Actual*					*Well-Capitalized (1)*
	*Amount*		*Ratio*			*Amount*		*Ratio*
As of June 30, 2025	*(Dollars in thousands)*
Tier 1 capital (to Average Assets)	$	65,125		23.20	%	$	25,264		>9%
As of December 31, 2024
Tier 1 capital (to Average Assets)	$	64,634		23.53	%	$	24,722		>9%

(1) As defined by regulatory agencies. Failure to exceed the leverage ratio thresholds required under CBLR in the future, subject to any applicable grace period, would require the Bank to return to the risk-based capital ratio thresholds previously utilized under the fully phased-in Basel III Capital Rules to determine capital adequacy.

Note 9: Commitments and Contingencies

In the ordinary course of business, the Bank has various commitments and contingent liabilities that are not reflected in the accompanying financial statements. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the financial position of the Bank.

Financial Instruments

The Bank does not engage in the use of interest rate swaps or futures, forwards or option contracts.

At June 30, 2025 and December 31, 2024, unused lines of credit and outstanding commitments to originate loans were as follows:

	*June 30, 2025*		*December 31, 2024*
	(Dollars in thousands)
Unused line of credit	$	11,154	$	8,950
Commitments to originate loans		2,192		1,109
Total commitments	$	13,346	$	10,059

Concentrations of Credit Risk

The Bank generally originates single-family residential loans within its primary lending area. These loans are secured by the underlying properties.

The Bank maintains its cash in deposit accounts at the Federal Reserve Bank or other institutions, the balances of which may exceed federally insured limits. The Bank has not experienced any losses in such accounts. The Bank believes it is not exposed to any significant credit risk on cash and cash equivalents.

Interest Rate Risk

The Bank assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, fair values of its financial instruments will change when interest rate levels change, and that change may be either favorable or unfavorable to the Bank. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the overall interest rate risk.

Litigation

Due to the nature of its business activities, the Bank is at times subject to legal action which arises in the normal course of business. In the opinion of management, the ultimate resolution of these matters is not expected to have a material effect on the financial position or results of operations of the Bank.

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Note 10: Earnings Per Share

Basic EPS represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares (such as stock options) were exercised or converted into additional common shares that should then share in the earnings of the entity. Diluted EPS is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period, plus the effect of potential dilutive common share equivalents.

There were no securities or other contracts that had a dilutive effect for the three and six months ended June 30, 2025 and 2024, and therefore the weighted average common shares outstanding used to calculate both basic and diluted EPS are the same. Shares held by the Employee Stock Ownership Plan ("ESOP") that have not been allocated to employees in accordance with the terms of the ESOP, referred to as "unallocated ESOP shares", are not deemed outstanding for EPS calculations.

	*Three Months Ended June 30,*						*Six months ended June 30,*
	*2025*			*2024*			*2025*			*2024*
	(Income in thousands)						(Income in thousands)
Net loss applicable to common shares	$	(258	)	$	(326	)	$	(586	)	$	(572	)

Average number of common shares outstanding		5,246,571			5,308,341			5,247,847			5,352,903
Less: Average unallocated ESOP shares		359,919			382,953			362,557			395,420
Average number of common shares outstanding used to calculate basic loss per common share		4,886,652			4,925,388			4,885,290			4,957,483
Loss per common share basic and diluted	$	(0.05	)	$	(0.07	)	$	(0.12	)	$	(0.12	)

All unallocated ESOP shares have been excluded from the calculation of basic and diluted EPS. Due to the net loss position, all outstanding share option awards are anti-dilutive and excluded from the computation of diluted earnings per share.

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Note 11: Stock Based Compensation

ESOP

Employees participate in an Employee Stock Ownership Plan ("ESOP"). The ESOP borrowed funds from the Company to purchase 431,836 shares of stock at $10 per share. The Bank makes discretionary contributions to the ESOP, as well as paying dividends on unallocated shares to the ESOP, and the ESOP uses funds it receives to repay the loan. When loan payments are made, ESOP shares are allocated to participants based on relative compensation. Participants receive the shares at the end of employment. Dividends on allocated shares increase participants accounts.

There were no contributions to the ESOP during the first six months of 2025, as the annual loan payment will be made during the fourth quarter. Expense recorded was $63,000 and $51,000 for the three months ended June 30, 2025 and 2024, respectively, and is recognized over the service period. Expense recorded was $127,000 and $102,000 for the six months ended June 30, 2025 and 2024, respectively, and is recognized over the service period.

Shares held by the ESOP were as follows:

	*As of June 30,*
	*2025*			*2024*
	(Dollars in thousands)
Shares allocated		64,844			43,624
Shares committed for allocation		10,610			10,590
Shares distributed to plan participants		(1,597	)		—
Unallocated		356,382			377,622
Total ESOP shares		430,239			431,836

Fair value of unearned shares as of June 30, 2025 and 2024, respectively	$	4,394		$	3,636

Fair value of unearned shares is based on a stock price of $12.33 and $9.63 as of June 30, 2025 and 2024, respectively.

Equity Incentive Plan

At the Company's annual meeting of stockholders held on May 24, 2023, stockholders approved the NSTS Bancorp, Inc. 2023 Equity Incentive Plan (“2023 Equity Plan”), which provides for the granting of up to 755,714 shares (215,918 shares of restricted stock and 539,796 shares available for future grants of stock options) of the Company’s common stock pursuant to equity awards made under the 2023 Equity Plan.

Stock options granted under the 2023 Equity Plan generally vest in equal annual installments over a service period of five years beginning on the date of grant. The vesting of the options accelerates upon death, disability or following a change in control of the Company. Stock options are generally granted at an exercise price equal to the fair value of the Company’s common stock on the grant date based on the closing market price of the Company's common stock on the date of grant, and have an expiration period of ten years. As of June 30, 2025, the Company has 26,296 shares available for future grants of stock options under the 2023 Equity Plan.
The Company recognizes compensation expense for the fair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards. Upon exercise of vested options, management expects to first draw on treasury stock as the source for shares.

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The following is a summary of the Company's stock option activity and related information for the periods presented.

Stock Option	*Shares*		*Weighted Average Exercise Price*		Aggregate Intrinsic Value⁽¹⁾

Outstanding at March 31, 2024		442,500	$	9.36
Granted		—		—
Exercised		—		—
Forfeited		—		—
Outstanding at June 30, 2024		442,500	$	9.36	$	96
Exercisable - End of Period		111,500		9.36		30

Outstanding at March 31, 2025		492,500	$	9.59
Granted		—		—
Exercised		—		—
Forfeited		2,000		9.36
Outstanding at June 30, 2025		490,500	$	9.59	$	1,344
Exercisable - End of Period		186,800		9.36		555

Stock Option	*Shares*		*Weighted Average Exercise Price*		*Aggregate Intrinsic Value (1)*

Outstanding at December 31, 2023		442,500	$	9.36
Granted		—		—
Forfeited		—		—
Outstanding at June 30, 2024		442,500	$	9.36	$	96
Exercisable - End of Period		111,500		9.36		30

Outstanding at December 31, 2024		500,500	$	9.59
Granted		—		—
Exercised		—		—
Forfeited		10,000		9.36
Outstanding at June 30, 2025		490,500	$	9.59	$	1,344
Exercisable - End of Period		186,800		9.36		555

(1) Dollars in thousands. The aggregate intrinsic value of outstanding and exercisable options at June 30, 2025 and 2024 were calculated based on the closing market price of the Company's common stock of June 30, 2025 and 2024 of $12.33 and $9.63, respectively, per share less the exercise price.

Expected future expense relating to the non-vested options outstanding as of June 30, 2025 is $1.1 million over a weighted average period of 3.1 years. As of June 30, 2025, the Company had 490,500 in outstanding stock options with a weighted average remaining life of 8.1 years outstanding.

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Restricted shares granted under the 2023 Equity Plan generally vest in equal annual installments over a service period of five years beginning on the date of grant. The vesting of the awards accelerates upon death, disability or following a change in control of the Company. The product of the number of shares granted and the grant date closing market price of the Company’s common stock determines the fair value of restricted shares under the 2023 Equity Plan. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period.

As of June 30, 2025, the Company has 14,018 shares of restricted stock available for future grants under the 2023 Equity Plan.

The following is a summary of the status of the Company's restricted shares as of and for the periods presented.

Restricted Stock	*Shares*		*Weighted Average Grant Date Fair Value*

Non-vested balance as of March 31, 2024		178,000	$	9.36
Granted		—		—
Vested		35,600		9.36
Forfeited		—		—
Non-vested balance as of June 30, 2024		142,400	$	9.36

Non-vested balance as of March 31, 2025		149,740	$	9.57
Granted		—		—
Vested		33,260		9.36
Forfeited		—		—
Non-vested balance as of June 30, 2025		116,480	$	9.63

Restricted Stock	*Shares*		*Weighted Average Grant Date Fair Value*

Non-vested balance as of December 31, 2023		178,000	$	9.36
Granted		—		—
Vested		35,600		9.36
Forfeited		—		—
Non-vested balance as of June 30, 2024		142,400	$	9.36

Non-vested balance as of December 31, 2024		151,740	$	9.57
Granted		—		—
Vested		33,260		9.36
Forfeited		2,000		9.36
Non-vested balance as of June 30, 2025		116,480	$	9.63

Expected future expense related to the non-vested restricted shares outstanding as of period end is $1.1 million over a weighted average period of 4.0 years.

NSTS Bancorp, Inc. 10-Q