UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~March~~June 3130, 2025

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

For the transition period from _______________ to _______________

Commission File No. 000-56602

PFS Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)



Maryland	92-2956265
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

1730 Fourth Street, Peru, Illinois	61354
(Address of Principal Executive Offices)	(Zip Code)

(815) 223-4300

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

Title of each class		Trading symbol(s)		Name of each exchange on which registered

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 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 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 Act). YES ☐ NO ☒

1,~~657~~648,~~112~~910 shares of the registrant’s common stock, par value $0.01 per share, were outstanding as of ~~May~~August 78, 2025.

Table of Contents

PFS Bancorp, Inc.

Form 10-Q

Index


		Page
	Part I. – Financial Information	2

Item 1.	Financial Statements	2

	Consolidated Balance Sheets as of ~~March~~June 3130, 2025 (unaudited) and December 31, 2024	2

	Consolidated Statements of Income for the Three ~~Months~~and Six months Ended ~~March~~June 3130, 2025 and 2024 (unaudited)	3

	Consolidated Statements of Comprehensive Income (Loss) for the Three ~~Months~~and Six months Ended ~~March~~June 3130, 2025 and 2024 (unaudited)	4

	Consolidated Statements of Stockholders’ Equity for the Three ~~Months~~and Six months Ended ~~March~~June 3130, 2025 and 2024 (unaudited)	5

	Consolidated Statements of Cash Flows for the ~~Three~~Six ~~Months~~months Ended ~~March~~June 3130, 2025 and 2024 (unaudited)	67

	Notes to Consolidated Financial Statements (unaudited)	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3642

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4553

Item 4.	Controls and Procedures	4553

	Part II. – Other Information	4654

Item 1.	Legal Proceedings	4654

Item 1A.	Risk Factors	4654

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	4654

Item 3.	Defaults upon Senior Securities	4654

Item 4.	Mine Safety Disclosures	4654

Item 5.	Other Information	4654

Item 6.	Exhibits	4755

	Signature Page	4856

Table of Contents

Part I. – Financial Information

Item 1.

Financial Statements

PFS Bancorp, Inc.

Consolidated Balance Sheets

~~March~~June 3130, 2025 (Unaudited) and December 31, 2024

(Dollars In thousands, except per share amounts)


	~~March~~June 3130,		December 31,
	2025		2024
Assets
Cash and cash equivalents — cash and due from bank	$	1814,~~795~~489	$	16,256
Available-for-sale debt securities (net of credit losses of $0 at March 31, 2025 and December 31, 2024, respectively, amortized cost of $72,501 and $71,289 at March 31, 2025 and December 31, 2024, respectively)		68,767		66,658
Available-for-sale debt securities (net of credit losses of $0 at June 30, 2025 and December 31, 2024, respectively, amortized cost of $74,375 and $71,289 at June 30, 2025 and December 31, 2024, respectively)		71,123		66,658
Held-to-maturity debt securities (net of allowance for credit losses of $0 as of March 31, 2025 and December 31, 2024)		7,922		8,168
Held-to-maturity debt securities (net of allowance for credit losses of $0 as of June 30, 2025 and December 31, 2024)		6,892		8,168
Equity securities		~~324~~351		325
Loans, net of allowance for credit losses of $745 and $700 at March 31, 2025 and December 31, 2024		99,576		96,274
Loans, net of allowance for credit losses of $813 and $700 at June 30, 2025 and December 31, 2024		105,532		96,274
Premises and equipment, net of accumulated depreciation of $2,845 and $2,811 at March 31, 2025 and December 31, 2024		2,082		2,101
Premises and equipment, net of accumulated depreciation of $2,878 and $2,811 at June 30, 2025 and December 31, 2024		2,049		2,101
Federal Home Loan Bank stock		~~347~~354		347
Interest receivable		~~712~~778		733
Cash surrender value of bank-owned life insurance		4,~~005~~031		3,979
Deferred income taxes		1,~~597~~406		1,857
Mortgage servicing rights		254		254
Other		~~625~~647		685

Total assets	$	~~205~~207,~~006~~906	$	197,637

Liabilities and Equity Capital

Liabilities
Deposits
Demand	$	1912,~~983~~395	$	17,952
Savings, NOW and money market		7483,~~890~~300		73,082
Time		7173,~~231~~042		68,553

Total deposits		~~166~~168,~~104~~737		159,587
Deferred compensation		~~624~~646		645
Income tax payable		~~251~~176		173
Interest payable and other liabilities		~~615~~581		557

Total liabilities		~~167~~170,~~594~~140		160,962

Stockholders' Equity
Preferred Stock, $0.01 par value, 1,000,000 shares authorized, none issued		—		—
Common Stock, $0.01 par value, 14,000,000 shares authorized, 1,725,000 issued, 1,660,265 and 1,679,307 outstanding at March 31, 2025 and December 31, 2024		17		17
Common Stock, $0.01 par value, 14,000,000 shares authorized, 1,725,000 issued, 1,617,032 and 1,679,307 outstanding at June 30, 2025 and December 31, 2024		17		17
Additional Paid in Capital		15,~~604~~605		15,603
Unallocated common stock of ESOP		(1,~~256~~244)		(1,270)
Treasury stock - 64,735 shares at March 31, 2025 and 45,693 shares at December 31, 2024		(669)		(463)
Treasury stock - 107,968 shares at June 30, 2025 and 45,693 shares at December 31, 2024		(1,111)		(463)
Deferred compensation liability		400		400
Retained earnings		2526,~~986~~424		25,701
Accumulated other comprehensive (loss)		(2,~~670~~325)		(3,313)

Total stockholders' equity		37,~~412~~766		36,675

Total liabilities and stockholders' equity	$	~~205~~207,~~006~~906	$	197,637

See Notes to Consolidated Financial Statements

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PFS Bancorp, Inc.

Consolidated Statements of Income

For the Three ~~Months~~and Six months Ended ~~March~~June 3130, 2025 (Unaudited) and 2024 (Unaudited)

(Dollars In Thousands, except per share amounts)


	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	~~March~~June 3130, 2025		~~March~~June 3130, 2024		June 30, 2025		June 30, 2024
Interest and Dividend Income
Loans, including fees	$	1,~~317~~417	$	1,~~073~~132	$	2,733	$	2,205
Debt securities
Taxable		~~415~~449		~~350~~397		864		747
Tax-exempt		134		~~139~~138		269		277
Dividends		74		75		11		12
Other		~~248~~254		~~314~~324		502		638

Total interest and dividend income		2,~~121~~258		1,~~883~~996		4,379		3,879

Interest Expense
Deposits		813		~~649~~748		1,626		1,397

Net Interest Income		1,~~308~~445		1,~~234~~248		2,753		2,482

Provision for Credit Losses		5657		267		113		33

Net Interest Income After Provision for Credit Losses		1,~~252~~388		1,~~208~~241		2,640		2,449

Noninterest Income
Commission income		37		123		10		15
Customer service fees		~~101~~116		107		217		214
Net realized gain on loan sales		2		2		3		4
Loan servicing fees		15		1716		30		33
Other		3159		4854		90		102

Total noninterest income		~~152~~199		~~186~~182		350		368

Noninterest Expense
Salaries and employee benefits		~~555~~562		~~588~~528		1,118		1,117
Occupancy		8973		8160		162		140
Depreciation		3433		4041		67		81
Data processing		~~146~~106		~~139~~179		252		318
Professional fees		88111		90116		198		206
Marketing		3747		3647		83		83
Printing and office supplies		1229		1417		41		31
Deposit insurance premiums		40		3738		80		75
Other		34		3537		69		72

Total noninterest expense		1,035		1,~~060~~063		2,070		2,123

Income Before Income Taxes		~~369~~552		~~334~~360		920		694

Provision for Income Taxes		84114		5886		197		144

Net Income	$	~~285~~438	$	~~276~~274	$	723	$	550

Earnings per share-basic and diluted	$	0.1828	$	0.17	$	0.46	$	0.35
Weighted-average shares outstanding-basic and diluted		1,~~583~~553,~~514~~758		1,~~593~~594,~~900~~592		1,566,621		1,593,904

See Notes to Consolidated Financial Statements

Table of Contents

PFS Bancorp, Inc.

Consolidated Statements of Comprehensive Income (Loss)

For the Three ~~Months~~and Six months Ended ~~March~~June 3130, 2025 (Unaudited) and 2024 (Unaudited)

(In Thousands)


	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	~~March~~June 3130, 2025		~~March~~June 3130, 2024		June 30, 2025		June 30, 2024
Net Income	$	~~285~~438	$	~~276~~274	$	723	$	550

Other Comprehensive Income (Loss)
Unrealized gains (losses) on available-for-sale debt securities, net of taxes of $254 and $(129) for the three months ended March 31, 2025 and 2024, respectively.		643		(322)
Unrealized gains (losses) on available-for-sale debt securities, net of taxes of $137 and $81 for the three months ended June 30, 2025 and 2024, respectively, and $391 and $(47) for the six months ended June 30, 2025 and 2024, respectively.		345		204		988		(118)

Other comprehensive income (loss)		~~643~~345		~~(322)~~204		988		(118)

Comprehensive Income (Loss)	$	928	$	(46)
Comprehensive Income	$	783	$	478	$	1,711	$	432

See Notes to Consolidated Financial Statements

Table of Contents

PFS Bancorp, Inc.

Consolidated Statements of Stockholders’ Equity

For the Three ~~Months~~and Six months Ended ~~March~~June 3130, 2025 (Unaudited) and 2024 (Unaudited)

(In Thousands)


									Accumulated
					Unallocated				Other							Total
	Common		Additional		Common Stock		Retained		Comprehensive		Treasury		Deferred Comp			Stockholders'
	Stock		Paid-in Capital		of ESOP		Earnings		Income (loss)		Stock		Liability		Equity
Balance, December 31, 2023	$	17	$	15,605	$	(1,325)	$	24,796	$	(3,174)	$	(400)		400	$	35,919
Balance, March 31, 2024	$	17	$	15,604	$	(1,311)	$	25,072	$	(3,496)	$	(400)		400	$	35,886

Net income		—		—		—		~~276~~274		—		—		—		~~276~~274
ESOP shares committed to be released (1,380 shares)				(1)		1413		—		—		—		—		1312
Other comprehensive loss		—		—		—		—		(322)		—		—		(322)
Other comprehensive income		—		—		—		—		204		—		—		204
Balance, March 31, 2024	$	17	$	15,604	$	(1,311)	$	25,072	$	(3,496)	$	(400)	$	400	$	35,886
Balance, June 30, 2024	$	17	$	15,603	$	(1,298)	$	25,346	$	(3,292)	$	(400)	$	400	$	36,376

Balance, December 31, 2024	$	17	$	15,603	$	(1,270)	$	25,701	$	(3,313)		(463)		400	$	36,675
Balance, March 31, 2025	$	17	$	15,604	$	(1,256)	$	25,986	$	(2,670)		(669)		400	$	37,412

Net income		—		—		—		~~285~~438		—		—		—		~~285~~438
ESOP shares committed to be released (1,380 shares)		—		1		1412		—		—		—		—		1513
Purchased 19,042 shares of treasury stock		—		—		—		—		—		(206)		—		(206)
Purchased 43,233 shares of treasury stock		—		—		—		—		—		(442)		—		(442)
Other comprehensive income		—		—		—		—		~~643~~345		—		—		~~643~~345

Balance, March 31, 2025	$	17	$	15,604	$	(1,256)	$	25,986	$	(2,670)	$	(669)	$	400	$	37,412
Balance, June 30, 2025	$	17	$	15,605	$	(1,244)	$	26,424	$	(2,325)	$	(1,111)	$	400	$	37,766

See Notes to Consolidated Financial Statements

Table of Contents


									Accumulated
					Unallocated				Other								Total
	Common		Additional		Common Stock		Retained		Comprehensive		Treasury			Deferred Comp			Stockholders'
	Stock		Paid-in Capital		of ESOP		Earnings		Income (loss)		Stock			Liability		Equity
Balance, December 31, 2023	$	17	$	15,605	$	(1,325)	$	24,796	$	(3,174)	$	(400)		$	400	$	35,919

Net income		—		—		—		550		—		—			—		550
ESOP shares committed to be released (2,760 shares)				(2)		27		—		—		—	—	—	—		25
Other comprehensive loss		—		—		—		—		(118)		—			—		(118)
Balance, June 30, 2024	$	17	$	15,603	$	(1,298)	$	25,346	$	(3,292)	$	(400)		$	400	$	36,376

Balance, December 31, 2024	$	17	$	15,603	$	(1,270)	$	25,701	$	(3,313)	$	(463)		$	400	$	36,675

Net income		—		—		—		723		—		—			—		723
ESOP shares committed to be released (2,760 shares)		—		2		26		—		—		—			—		28
Purchased 62,275 shares of treasury stock		—		—		—		—		—		(648)			—		(648)
Other comprehensive income		—		—		—		—		988		—			—		988

Balance, June 30, 2025	$	17	$	15,605	$	(1,244)	$	26,424	$	(2,325)	$	(1,111)		$	400	$	37,766

See Notes to Consolidated Financial Statements

Table of Contents

PFS Bancorp, Inc.

Consolidated Statements of Cash Flows ~~Three~~Six ~~Months~~months Ended ~~March~~June 3130, 2025 (Unaudited) and 2024 (Unaudited)(In Thousands)


	2025		2024
Operating Activities
Net income	$	~~285~~723	$	~~276~~550
Items not requiring (providing) cash
Items not requiring (providing) cash:
Depreciation		3467		4081
Provision for credit losses		56113		2633
Amortization of premiums and discounts on debt securities		1418		62109
Deferred income taxes		660		~~(8)~~23
Change in fair value of equity securities		1(26)		(2355)
Net realized (gain) loss on loan sales		(23)		(24)
Earnings on cash surrender value of life insurance		(26)		(24)
Loss on disposal of premises and equipment		—		4
ESOP compensation expense		15		13
Earnings on cash surrender value of life insurance		(52)		(49)
Changes in
ESOP compensation expense		28		25
Interest receivable		21		13
Changes in:
Other assets		60		139
Interest receivable		(45)		(30)
Interest payable and other liabilities		104		(29)
Other assets		38		130
Net cash provided by operating activities		568		483
Interest payable and other liabilities		28		190
Net cash provided by operating activities		949		1,007

Investing Activities
Purchases of available-for-sale debt securities		(37,~~481~~089)		(710,~~483~~302)
Proceeds from maturities of available-for-sale debt securities		23,~~255~~989		13,~~745~~424
Proceeds from maturities of held-to-maturity debt securities		~~246~~1,272		—270
Net change in loans		(39,~~345~~368)		(~~536~~637)
Purchase of premises and equipment		(15)		(68150)
Net cash (used in) provided by investing activities		(4,340)		(6,342)
Purchase of FHLB Stock		(7)		—
Net cash used in investing activities		(11,218)		(7,395)

Financing Activities
Net increase (decrease) in demand deposits, money market,
NOW and savings accounts		34,~~839~~661		(13258)
Net increase in certificates of deposit		24,~~678~~489		34,~~833~~663
Purchase of treasury stock		(~~206~~648)		—
Net cash provided by (used in) financing activities		6,311		3,820
Net cash provided by financing activities		8,502		4,405
Increase (Decrease) in Cash and Cash Equivalents		2(1,~~539~~767)		(21,~~039~~983)
Cash and Cash Equivalents, Beginning of Year		16,256		20,202
Cash and Cash Equivalents, End of Year	$	1814,~~795~~489	$	18,~~163~~219
Supplemental Cash Flows Information
Interest paid	$	~~809~~1,632	$	~~648~~1,396
Income taxes paid (refunded)	$	—	$	155
Income taxes paid	$	213	$	262

See Notes to Consolidated Financial Statements

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

PFS Bancorp, Inc, a Maryland corporation (the “Company”), is the savings and loan holding company for Peru Federal Savings Bank (“Bank”). Upon completion of the Bank’s mutual-to-stock conversion, which occurred on October 17, 2023, the Company became 100% owner of the Bank. 100% of the common stock of PFS Bancorp, Inc is held by the public. The cost of conversion and the issuing of common stock totaling $1.6 million were deferred and deducted from the sales proceeds of the offering.

The Bank is a federal chartered stock savings bank. The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers in northern Illinois, primarily LaSalle County, from its two facilities located in Peru, Illinois. The Bank is subject to competition from other financial institutions. The Bank is subject to the regulation of the Office of the Comptroller of the Currency (“OCC”) and undergoes periodic examinations by the OCC. The Bank has a wholly owned subsidiary, PFSB Financial Services Inc., which is inactive.

Jumpstart Our Business Startups Act

The Jumpstart Our Business Act (the JOBS Act), which was signed into law on April 5, 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.235 billion (adjusted for inflation) during the most recently completed fiscal year qualifies as an “emerging growth company”. The Company qualifies as an “emerging growth company” and expects to continue to qualify as an “emerging growth company” until December 31, 2028.

As an “emerging growth company” the Company has elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, the Company’s consolidated financial statements may not be comparable to the financial statements of companies that comply with such new or revised accounting standards.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, mortgage servicing rights, and fair values of financial instruments.

In the opinion of Company management, the accompanying unaudited consolidated financial statements at ~~March~~June 3130, 2025 and for the periods ended ~~March~~June 3130, 2025 and ~~March~~June 3130, 2024 include all adjustments, consisting of only normal recurring entries, necessary for a fair presentation of the consolidated balance sheet at ~~March~~June 3130, 2025 and the consolidated statements of income for the interim periods ended ~~March~~June 3130, 2025 and 2024. The consolidated statement of income for the interim period ended ~~March~~June 3130, 2025 is not necessarily indicative of the results of operations for the full year. This information should be read in conjunction with the Company’s audited consolidated financial statements for the years ended December 31, 2024 and 2023 contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Cash Equivalents

The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At ~~March~~June 3130, 2025 and December 31, 2024, cash equivalents consisted of due from bank accounts.

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

At ~~March~~June 3130, 2025 and December 31, 2024, the Company’s cash accounts exceeded federally insured limits by $32,~~760~~880 and $4,270, respectively.

Debt Securities

Certain debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Securities not classified as held to maturity are classified as “available for sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities available-for-sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and the allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on available-for-sale debt securities totaled $~~355~~376 and $378 at ~~March~~June 3130, 2025 and December 31, 2024 respectively and is excluded from the estimate of credit losses.

The Company uses the current expected credit loss (“CECL”) model to estimate the allowance for credit losses on securities held to maturity. The CECL model considers historical loss rates and other qualitative adjustments, as well as a forward-looking component that considers reasonable and supportable forecasts over the expected life of each security.

Management believes the Company will collect all amounts owed on securities held to maturity issued by the U.S. government or a U.S. government-sponsored agency since these securities are either explicitly or implicitly guaranteed by the U.S. government, and have a long history of no credit losses. Management evaluates all other securities held to maturity using a probability of default method. The probability of default method estimates the probability a security with a certain credit rating will default during its remaining contractual term (probability of default) and how much loss is expected to be incurred if a security defaults (loss give default rate). The Company obtains information from third parties (e.g., Moody’s) to estimate the probability of default for each credit rating based on the remaining term of the security and the loss given default rate.

Accrued interest receivable on held-to-maturity debt securities totaled $2826 and $31 at ~~March~~June 3130, 2025 and December 31, 2024 respectively and is excluded from the estimate of credit losses.

~~Equity Securities~~9

The Company measures equity securities at fair value with changes in fair value recognized in net income. Gains and losses on the sale of equity securities are recorded on the trade date and are determined using the specific identification method.

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Equity Securities

Loans Held for Sale

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to noninterest income. Gains and losses on loan sales are recorded on the consolidated statements of income.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for credit losses, and for loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of direct origination costs are deferred over the life of the loan.

The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The Company maintains lending policies and procedures designed to focus lending efforts on the type, location, and duration of loans most appropriate for its business model and markets. The Company’s principal lending activity is the origination of residential and commercial real estate loans, commercial loans, and consumer loans. The primary lending market is in LaSalle County, Illinois. Generally, loans are collateralized by assets of the borrower and guaranteed by the principals of the borrowing entity.

The Board of Directors reviews and approves the Company’s lending policy on an annual basis. Quarterly, the Board Loan Committee reviews the allowance for credit losses and reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans.

Allowance for Credit Losses on Loans and Unfunded Commitments

The allowance for credit losses on loans and unfunded commitments (“allowance”) represents management’s estimate of the reserve necessary to adequately account for probable losses that could ultimately be realized from current loan exposures. In determining the adequacy of the allowance, management relies predominately on a disciplined credit review and approval process. The review process is directed by overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty.

The allowance for credit losses is established as losses are estimated to have occurred through a provision for credit losses charged to income. Credit losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for credit losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

910

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are individually evaluated. For those loans that are individually evaluated, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the individually evaluated loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical charge-off experience and expected loss given default derived from the Company’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

The Company uses the CECL model to estimate the allowance for credit losses on loans. The CECL model considers historical loss rates and other qualitative adjustments, as well as forward-looking component that considers reasonable and supportable forecasts over the expected life of each loan. To develop the allowance for credit losses on loans estimate under the CECL model, the Company segments the loan portfolio into loan pools based on loan type and similar credit risk elements, performs an individual evaluation of certain collateral dependent and other credit-deteriorated loans, calculates the historical loss rates for the segmented loan pools, applies the loss rates over the calculated life of the collectively evaluated loan pools; adjusts for forecasted macro-level economic conditions and other anticipated changes in credit quality; and determines qualitative adjustments based on factors and conditions unique to the Company’s loan portfolio.

Under the CECL model, loans that do not share similar risk characteristics with the loans in their respective pools are individually evaluated for expected credit losses and are excluded from the collectively evaluated loan credit loss estimates. Management evaluates nonaccrual loans, and other loans with evidence of credit deterioration. For loans individually evaluated, a specific reserve is estimated based on either the fair value of collateral or the discounted value of expected future cash flows.

Management evaluates all collectively evaluated loan pools using the weighted average remaining life (“remaining life”) methodology. The remining life methodology applies calculated quarterly net loss rates to collectively evaluated loan pools on a periodic basis based on the estimated remining life of each pool. The estimated losses under the remaining life methodology are then adjusted for qualitative factors deemed appropriate by management.

The estimated remining life of each pool is determined using quarterly, pool-based attrition measurements using the Company’s loan-level historical data. The Company’s historical call report data is utilized for historical loss rate calculations, and the lookback period for each collectively evaluated loan pool is determined by management based upon the estimated remaining life of the pool. Forecasted historical loss rates are calculated using the Company’s historical data based on the lookback, forecast, and reversion period inputs by management. Management elected to utilize a 2-year forecast period, with immediate reversion to historical losses after the forecast period.

The quantitative analysis described above is supplemented with other qualitative factors based on the risks presented for each collectively evaluated loan pool. These qualitative factors include: past due loan trends; collateral value trends, changes to lending policies, quality of loan review, expertise of management, regulatory environment, micro and macro-economic conditions, and effects of changes in credit concentrations.

Unfunded commitments are evaluated using the same pool methodology and assumptions as the allowance for credit losses on collectively evaluated loans, adjusted for estimated funding rates based on historical rates. A reserve is maintained for these unfunded commitments to absorb estimated probable credit losses over noncancelable loan commitments. The allowance for losses on unfunded commitments is included in other liabilities on the balance sheet.

The Company may modify loans to borrowers experiencing financial difficulty and grant concessions that could include principal loan forgiveness, maturity date extension, interest rate, interest-only period, and payment deferral.

The Company excludes accrued interest receivable from the amortized cost basis of loans when estimating credit losses and when presenting required disclosures in the financial statements. Accrued interest on loans totaling $329 and $324 at March 11

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

31The Company excludes accrued interest receivable from the amortized cost basis of loans when estimating credit losses and when presenting required disclosures in the consolidated financial statements. Accrued interest on loans totaling $376 and $324 at June 30, 2025 and December 31, 2024, respectively, was excluded from the amortized cost basis of loans. Accrued interest is written off at the same time as when a loan is moved to non-accrual status.

Risk characteristics applicable to each segment of the loan portfolio are described as follows.

Residential 1-4 Family Real Estate: The residential 1-4 family real estate are generally secured by owner-occupied 1-4 family residences. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers. Credit risk in these loans can be impacted by economic conditions within the Company’s market areas that might impact either property values or a borrower’s personal income. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Commercial Real Estate: Commercial real estate loans typically involve larger principal amounts, and repayment of these loans is generally dependent on the successful operations of the property securing the loan or the business conducted on the property securing the loan. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economies in the Company’s market areas.

Construction and Land Development Real Estate: Construction and land development real estate loans are usually based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are considered to be higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions, and the availability of long-term financing. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economies in the Company’s market areas.

Commercial: The commercial portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations.

Consumer: The consumer loan portfolio consists of various term and line of credit loans such as automobile loans and loans for other personal purposes. Repayment for these types of loans will come from a borrower’s income sources that are typically independent of the loan purpose. Credit risk is driven by consumer economic factors (such as unemployment and general economic conditions in the Company’s market area) and the creditworthiness of a borrower.

Premises and Equipment

Land is carried at cost. Depreciable assets are stated at cost less accumulated depreciation. Depreciation is charged to expense using the straight-line method over the estimated useful lives of the assets.

The estimated useful lives for each major depreciable classification of premises and equipment are as follows:

Buildings and improvements		5-50 years
Equipment		3-7 years

~~Federal Home Loan Bank Stock~~12

Federal Home Loan Bank stock is a required investment for institutions that are members of the Federal Home Loan Bank system. The required investment in the common stock is based on a predetermined formula, carried at cost and evaluated for impairment.

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Federal Home Loan Bank Stock

Bank-owned Life Insurance

The Company has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Mortgage Servicing Rights

Mortgage servicing assets are recognized separately when rights are acquired through purchase or through sale of financial assets. Under the servicing assets and liabilities accounting guidance (ASC 860-50), servicing rights resulting from the sale or securitization of loans originated by the Company are initially measured at fair value at the date of transfer. The Company has elected to initially and subsequently measure the mortgage servicing rights for consumer mortgage loans using the fair value method. Under the fair value method, the servicing rights are carried in the balance sheet at fair value and the changes in fair value are reported in earnings in the period in which the changes occur.

Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. These variables change from quarter to quarter as market conditions and projected interest rates change and may have an adverse impact on the value of the mortgage servicing right and may result in a reduction to noninterest income.

Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned in loan servicing fees in non-interest income.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

Income Taxes

The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.13

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

~~examined~~Deferred ~~and~~income ~~upon~~tax ~~examination~~expense ~~also~~results ~~include~~from ~~resolution~~changes ofin ~~the~~deferred ~~related~~tax ~~appeals~~assets orand ~~litigation~~liabilities ~~processes,~~between ~~if any~~periods. ADeferred tax ~~position~~assets ~~that~~are ~~meets~~reduced ~~the~~by ~~more-likely-than-not~~a ~~recognition~~valuation ~~threshold~~allowance isif, ~~initially~~based ~~and~~on ~~subsequently measured as~~ the ~~largest~~weight ~~amount~~ of ~~tax~~evidence ~~benefit~~available, ~~that~~it ~~has~~is amore ~~greater~~likely than ~~50 percent~~not ~~likelihood of being realized upon settlement with a taxing authority~~ that ~~has~~some ~~full~~portion ~~knowledge~~or of all ~~relevant information. The determination~~ of ~~whether or not~~ a deferred tax ~~position~~asset ~~has~~will ~~met the more-likely-than-~~not ~~recognition~~be ~~threshold considers the facts, circumstances, and information available at the reporting date and is subject to the management’s judgment~~realized. ~~With a few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2019.~~

Tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to the management’s judgment. With a few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2019.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

The Company files consolidated income tax returns with its subsidiary.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other comprehensive income (loss), net of applicable income taxes. Other comprehensive income (loss) includes unrealized appreciation (depreciation) on available-for-sale securities and reclassification adjustment for realized losses included in net income.

Revenue Recognition

The majority of the Company’s revenues come from interest income and other sources, including loans and securities, which are outside the scope of Financial Accounting Standards Board Accounting Standards Update 2014-09, Revenues from Contracts with Customers (Topic 606). The Company’s services that fall within the scope of Topic 606 are presented within noninterest income in the accompanying consolidated statements of income and are recognized as revenue as the Company satisfies its obligation to the customer.

A description of the Company’s revenue streams accounted for under Topic 606 ~~are~~is as follows:

Customer Service Fees. The Company generates revenues through fees charged to depositors related to deposit account maintenance fees, overdrafts, interchange income, wire transfers and additional miscellaneous services provided at the request of the depositor. For deposit-related services, revenue is recognized when performance obligations are satisfied, which is, generally, at a point in time.

Commission Income. Brokerage commissions and fees primarily relate to investment advisory and brokerage activities as well as the sale of other non-deposit investment products to customers of the Company. The Company’s performance obligation for investment advisory services is generally satisfied, and related revenue recognized, over the period in which the services are provided. Fees earned for brokerage activities, such as facilitating securities transactions, are generally recognized at the time of transaction execution. Commissions or fees earned on the sale of other non-deposit investment products are primarily recognized on a monthly basis based on the executed sales dates. Payment for these services is generally received shortly after month end.

Gains/Losses on Sales of Foreclosed Assets. The Company records a gain or loss from the sale of foreclosed assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed assets to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

1314

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

Rate Lock Commitments

The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate lock commitment). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Rate lock commitments are recorded only to the extent of fees received since recording the estimated fair value of these commitments would not have a significant impact on the consolidated financial statements.

Off-Balance-Sheet Instruments

In the ordinary course of business, the Company has entered into off-balance-sheet financial instruments, including commitments to extend credit, unfunded commitments under lines of credit, and standby letters of credit. Such financial instruments are recorded in the consolidated financial statements when they become payable.

Legal Contingencies

Various legal claims arise from time to time in the normal course of business. In the opinion of management, any liability resulting from such proceedings would not have a material impact on the consolidated financial statements of the Company.

Advertising

Advertising costs are expensed as incurred.

Stock-based Compensation

Stock-based payments to employees, including grants of restricted stock or stock options, are valued at fair value of the award on the date of grant and expensed on a straight-line basis as compenstion expense over the applicable vesting period. A Black-Scholes model is utilized to estimate the fair value of stock options and the quoted market price of the Company’s stock at the date of grant is used to estimate the fair value of restricted stock awards.

Earnings per Common Share

Basic earnings per common share are calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of outstanding common stock awards unless the impact is anti-dilutive, by application of the treasury stock method.

Note 2:  Restriction on Cash and Due From Banks

Effective March 12, 2021, the Federal Reserve’s board of directors approved the final rule reducing the required reserve requirement ratios to zero percent, effectively eliminating the requirement to maintain reserve balances in cash or on deposit with the Federal Reserve Bank. This reduction in the required reserves does not have a defined timeframe and may be revised by the Federal Reserve’s board in the future.

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Note 3:  Debt Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of debt securities are as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Available-for-sale Debt Securities:
March 31, 2025:
June 30, 2025:
U.S. Government and federal agencies	$	7,~~640~~672	$	5177		(8464)	$	7,~~607~~685
Mortgage-backed:
Government sponsored enterprises (GSEs)- residential		44,105		206		(2,836)		41,475
Government sponsored enterprises (GSEs) - residential		45,978		284		(2,506)		43,756
State and political subdivisions		20,~~756~~725		2418		(1,~~095~~061)		19,~~685~~682

	$	7274,~~501~~375	$	~~281~~379	$	(43,~~015~~631)	$	6871,~~767~~123


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Available-for-sale Debt Securities:
December 31, 2024:
U.S. Government and federal agencies	$	8,154	$	—	$	(187)	$	7,967
Mortgage-backed:
Government sponsored enterprises (GSEs) - residential		42,344		71		(3,557)		38,858
State and political subdivisions		20,791		50		(1,008)		19,833

	$	71,289	$	121	$	(4,752)	$	66,658


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Held-to-maturity Debt Securities:
June 30, 2025
U.S. Government and Federal agencies	$	765	$	—	$	(117)	$	648
Certificates of Deposit		6,127		70		—		6,197

	$	6,892	$	70	$	(117)	$	6,845

Held-to-maturity Debt Securities:
December 31, 2024
U.S. Government and Federal agencies	$	815	$	—	$	(140)	$	675
Certificates of Deposit		7,353		113		(1)		7,465

	$	8,168	$	113	$	(141)	$	8,140

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Available-for-sale Debt Securities:
December 31, 2024:
U.S. Government and federal agencies	$	8,154	$	—	$	(187)	$	7,967
Mortgage-backed:
Government sponsored enterprises (GSEs)- residential		42,344		71		(3,557)		38,858
State and political subdivisions		20,791		50		(1,008)		19,833

	$	71,289	$	121	$	(4,752)	$	66,658


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Held-to-maturity Debt Securities:
March 31, 2025
U.S. Government and Federal agencies	$	814	$	—	$	(123)	$	691
Certificates of Deposit		7,108		97		(1)		7,204

	$	7,922	$	97	$	(124)	$	7,895

Held-to-maturity Debt Securities:
December 31, 2024
U.S. Government and Federal agencies	$	815	$	—	$	(140)	$	675
Certificates of Deposit		7,353		113		(1)		7,465

	$	8,168	$	113	$	(141)	$	8,140

The amortized cost and fair value of available-for-sale securities and held-to-maturity debt securities at ~~March~~June 3130, 2025, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Available-for-sale

Held-to-maturity

Amortized

Fair

Amortized

Fair

Cost

Value

Cost

Value

Within one year

1,~~416~~837

1,~~402~~830

32,~~402~~583

32,~~288~~592

One to five years

8,~~642~~496

8,~~460~~356

43,~~520~~544

43,~~607~~605

Five to ten years

1011,~~257~~802

911,~~756~~322

—

After ten years

86,~~081~~262

75,~~674~~859

—

28,~~396~~397

27,~~292~~367

76,~~922~~127

76,~~895~~197

Mortgage-backed securities

4445,~~105~~978

4143,~~475~~756

—765

—648

Totals

7274,~~501~~375

6871,~~767~~123

76,~~922~~892

76,~~895~~845

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $13,~~288~~293 at ~~March~~June 3130, 2025 and $13,446 at December 31, 2024.

There were no sales of securities for the three and six months ended ~~March~~June 3130, 2025 and 2024.

A portion of available-for-sale investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost.

15The following table shows the Company’s investments’ gross unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2025 and December 31, 2024:


	June 30, 2025
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Available-for-sale Debt Securities:
U.S. Government and federal agencies	$	—	$	—	$	2,798	$	(64)	$	2,798	$	(64)
State and political subdivisions		5,144		(183)		12,293		(878)		17,437		(1,061)
Mortgage backed securities-GSE  residential		4,879		(72)		23,535		(2,434)		28,414		(2,506)
Total AFS securities	$	10,023	$	(255)	$	38,626	$	(3,376)	$	48,649	$	(3,631)

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Total fair value of these investments at March 31, 2025 and December 31, 2024, was $51,185 and $58,999. The following table shows the total available-for-sale securities and aggregate depreciation by security type:


	December 31, 2024
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Available-for-sale Debt Securities:
U.S. Government and federal agencies	$	4,690	$	(71)	$	3,277	$	(116)	$	7,967	$	(187)
State and political subdivisions		5,947		(89)		10,829		(919)		16,776		(1,008)
Mortgage backed securities - GSE residential		9,750		(217)		24,506		(3,340)		34,256		(3,557)
Total AFS securities	$	20,387	$	(377)	$	38,612	$	(4,375)	$	58,999	$	(4,752)


	Number of
	securities in a	Aggregate
	loss position	depreciation
March 31, 2025

U.S. Government and Federal agencies	7	(1.95)	%
Mortgage-backed:
Government sponsored enterprises (GSEs) - residential	169	(8.85)	%
State and political subdivisions	48	(5.81)	%

Total Portfolio	224	(7.27)	%

December 31, 2024

U.S. Government and Federal agencies	13	(2.30)	%
Mortgage-backed:
Government sponsored enterprises (GSEs) - residential	184	(9.40)	%
State and political subdivisions	46	(5.67)	%

Total Portfolio	243	(7.45)	%

These unrealized losses relate principally to the changes in interest rates and are not due to changes in the financial condition of the issuer, the quality of the underlying assets, or applicable credit enhancements. In analyzing whether and allowance for credit losses on debt securities is required, management considers whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, industry analysts’ reports, the financial condition and performance of the issuer, and the quality of any underlying assets or credit enhancements. Since management has the ability to hold debt securities for the foreseeable future, no allowance for credit losses related to debt securities has been recorded at March 31, 2025 and December 31, 2024.

Total fair value of these investments at June 30, 2025 and December 31, 2024, was $48,649 and $58,999. The following table shows the total available-for-sale securities and aggregate depreciation by security type:


	Number of
	securities in a	Aggregate
	loss position	depreciation
June 30, 2025

U.S. Government and Federal agencies	5	(2.24)	%
Mortgage-backed:
Government sponsored enterprises (GSEs) - residential	170	(8.11)	%
State and political subdivisions	47	(5.73)	%

Total Portfolio	222	(6.95)	%

December 31, 2024

U.S. Government and Federal agencies	13	(2.30)	%
Mortgage-backed:
Government sponsored enterprises (GSEs) - residential	184	(9.40)	%
State and political subdivisions	46	(5.67)	%

Total Portfolio	243	(7.45)	%

These unrealized losses relate principally to the changes in market interest rates and are not due to changes in the financial condition of the issuer, the quality of the underlying assets, or applicable credit enhancements. In analyzing whether and allowance for credit losses on debt securities is required, management considers whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, industry analysts’ reports, the financial condition and performance of the issuer, and the quality of any underlying assets or credit enhancements. Since management has the ability to hold debt securities for the foreseeable future, no allowance for credit losses related to debt securities has been recorded at June 30, 2025 and December 31, 2024.

Management has evaluated the Company’s held-to-maturities securities unrealized losses and have concluded that no anticipated credit losses are expected and therefore no reserve for losses related to held-to-maturity securities has been included in the Company’s allowance for credit losses.

The following table shows the Company’s investments’ gross unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2025 and December 31, 2024:


	March 31, 2025
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Available-for-sale Debt Securities:
U.S. Government and federal agencies	$	1,453	$	(3)	$	2,773	$	(81)	$	4,226	$	(84)
State and political subdivisions		6,513		(182)		11,251		(913)		17,764		(1,095)
Mortgage backed securities-GSE residential		4,694		(90)		24,501		(2,746)		29,195		(2,836)
Total AFS securities	$	12,660	$	(275)	$	38,525	$	(3,740)	$	51,185	$	(4,015)

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)


	December 31, 2024
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Available-for-sale Debt Securities:
U.S. Government and federal agencies	$	4,690	$	(71)	$	3,277	$	(116)	$	7,967	$	(187)
State and political subdivisions		5,947		(89)		10,829		(919)		16,776		(1,008)
Mortgage backed securities-GSE residential		9,750		(217)		24,506		(3,340)		34,256		(3,557)
Total AFS securities	$	20,387	$	(377)	$	38,612	$	(4,375)	$	58,999	$	(4,752)

Note 4: Equity Securities

Equity securities comprised the following as of ~~March~~June 3130, 2025 and December 31, 2024 and are included in the consolidated balance ~~sheet~~sheets:


	~~March~~June 3130,		December 31,
	2025		2024
Community Development Corp. Stock	$	62	$	62
FHLMC Preferred Stock		~~262~~289		263
Total	$	~~324~~351	$	325

Community Development Corp. (CDC) Stock is presented on the balance ~~sheet~~sheets at fair value. The FHLMC Preferred Stock is presented on the balance sheet at fair value. The table below details changes in the carrying amount of the CDC stock and FHLMC Preferred Stock for the ~~three~~six months ended ~~March~~June 3130, 2025 and year ended December 31, 2024.


	~~March~~June 3130,		December 31,
	2025		2024
Net gains and losses recognized during the period on equity securities	$	~~(1)~~26	$	210
Less: Net gains and losses recognized during the period on equity securities sold during the period		—		—
Unrealized gains and losses recognized during the period on equity securities still held at the reporting date	$	~~(1)~~26	$	210

Note 5: Loans and Allowance for Credit Losses

Classes of loans at ~~March~~June 3130, 2025 and December 31, 2024 include:


	~~March~~June 3130,		December 31,
	2025		2024
Mortgage loans on real estate:
Residential 1-4 family	$	6566,~~146~~000	$	65,721
Commercial		2428,~~735~~587		21,412
Construction and land development		1,~~448~~358		1,637
Total mortgage loans on real estate		9195,~~329~~945		88,770
Commercial loans		56,~~099~~145		4,656
Consumer		34,~~817~~156		3,479
		~~100~~106,~~245~~246		96,905
Plus:
Deferred Loan Costs		7699		69
Less:
Allowance for credit losses		~~745~~813		700
Net loans	$	99105,~~576~~532	$	96,274

The Company participates in the U.S. Department of Agriculture’s Rural Development Section 502 Guaranteed Loan Program. This program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may, purchase, build, rehabilitate, or relocate a dwelling in an eligible rural area with 100% financing. The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural homebuyers. As of June 30, 2025 and December 31, 2024, the company held $2,497 and $2,572 respectively, of USDA Guaranteed loans in the Residential 1-4 Family portfolio of loans.

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

The following tables present the balance in the allowance for credit losses based on portfolio segment for the periods presented:

The Company participates in the U.S. Department of Agriculture’s Rural Development Section 502 Guaranteed Loan Program. This program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may, purchase, build, rehabilitate, or relocate a dwelling in an eligible rural area with 100% financing. The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural homebuyers. As of March 31, 2025 and December 31, 2024, the company held $2,542 and $2,572 respectively, of USDA Guaranteed loans in the Residential 1-4 Family portfolio of loans.


	For the Three Months Ended
	June 30, 2025
	Mortgage Loans on Real Estate
					Construction
	Residential				and Land
	1-4 Family		Commercial		Development		Commercial
Allowance for credit losses:
Balance, beginning of period	$	266	$	383	$	11	$	66
Provision charged to expense		2		43		(1)		22
Losses charged off		—		—		—		—
Recoveries		—		—		—		—
Balance, end of period	$	268	$	426	$	10	$	88

Allowance for credit losses for unfunded loan commitments
Balance, beginning of period	$	4	$	21	$	—	$	3
Provision charged to expense		(1)		(16)		6		—
Losses charged off		—		—		—		—
Recoveries		—		—		—		—
Balance, end of period	$	3	$	5	$	6	$	3

The following tables present the balance in the allowance for credit losses based on portfolio segment as of March 31, 2025 and December 31, 2024:


	For the Three Months Ended
	June 30, 2025 (Continued)
	Consumer		Total
Allowance for credit losses:
Balance, beginning of period	$	19	$	745
Provision charged to expense		2		68
Losses charged off		—		—
Recoveries		—		—
Balance, end of year	$	21	$	813

Allowance for credit losses for unfunded loan commitments
Balance, beginning of year	$	—	$	28
Provision charged to expense		—		(11)
Losses charged off		—		—
Recoveries		—		—
Balance, end of year	$	—	$	17


	For the Three Months Ended
	March 31, 2025
	Mortgage Loans on Real Estate
					Construction
	Residential				and Land
	1-4 Family		Commercial		Development		Commercial
Allowance for credit losses:
Balance, beginning of period	$	271	$	339	$	13	$	60
Provision charged to expense		(5)		44		(2)		6
Losses charged off		—		—		—		—
Recoveries		—		—		—		—
Balance, end of period	$	266	$	383	$	11	$	66

Allowance for credit losses for unfunded loan commitments
Balance, beginning of period	$	2	$	7	$	6	$	2
Provision charged to expense		2		14		(6)		1
Losses charged off		—		—		—		—
Recoveries		—		—		—		—
Balance, end of period	$	4	$	21	$	—	$	3

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)


	For the Three Months Ended
	June 30, 2024
	Mortgage Loans on Real Estate
					Construction
	Residential				and Land
	1-4 Family		Commercial		Development		Commercial
Allowance for credit losses:
Balance, beginning of period	$	256	$	348	$	11	$	75
Provision charged to expense		2		(1)		(3)		(2)
Losses charged off		—		—		—		(11)
Recoveries		—		—		—		—
Balance, end of year	$	258	$	347	$	8	$	62

Allowance for credit losses for unfunded loan commitments
Balance, beginning of year	$	4	$	7	$	2	$	4
Provision charged to expense		—		1		9		(1)
Losses charged off		—		—		—		—
Recoveries		—		—		—		—
Balance, end of year	$	4	$	8	$	11	$	3


	For the Three Months Ended
	~~March~~June 3130, ~~2025~~2024 (Continued)
	Consumer		Total
Allowance for credit losses:
Balance, beginning of period	$	1716	$	~~700~~706
Provision charged to expense		2		45(2)
Losses charged off		—		—(11)
Recoveries		—		—
Balance, end of year	$	1918	$	~~745~~693

Allowance for credit losses for unfunded loan commitments
Balance, beginning of year	$	—	$	17
Provision charged to expense		—		119
Losses charged off		—		—
Recoveries		—		—
Balance, end of year	$	—	$	2826

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)


	~~For~~Six ~~the Three~~ Months Ended
	~~March~~June 3130, ~~2024~~2025
	Mortgage Loans on Real Estate
					Construction
	Residential				and Land
	1-4 Family		Commercial		Development		Commercial
Allowance for credit losses:
Balance, beginning of period	$	247	$	332	$	15	$	65
Balance, beginning of year	$	271	$	339	$	13	$	60
Provision charged to expense		9(3)		1687		(43)		1028
Losses charged off		—		—		—		—
Recoveries		—		—		—		—
Balance, end of year	$	~~256~~268	$	~~348~~426	$	1110	$	7588

Allowance for credit losses for unfunded loan commitments
Balance, beginning of year	$	2	$	107	$	86	$	2
Provision charged to expense		21		(32)		~~(6)~~—		21
Losses charged off		—		—		—		—
Recoveries		—		—		—		—
Balance, end of year	$	43	$	75	$	26	$	43


	~~For~~Six ~~the Three~~ Months Ended
	~~March~~June 3130, ~~2024~~2025 (Continued)
	Consumer		Total
Allowance for credit losses:
Balance, beginning of period	$	16	$	675
Balance, beginning of year	$	17	$	700
Provision charged to expense		—4		31113
Losses charged off		—		—
Recoveries		—		—
Balance, end of year	$	1621	$	~~706~~813

Allowance for credit losses for unfunded loan commitments
Balance, beginning of year	$	—	$	2217
Provision charged to expense		—		~~(5)~~—
Losses charged off		—		—
Recoveries		—		—
Balance, end of year	$	—	$	17


The provision for credit losses is determined by the Company as the amount that is added to ACL accounts to bring the ACL to that, in management's judgement, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The following table presents the components of the provision for credit losses:

	Three months ended March 31,
	2025		2024
Provision for credit losses:
Loans	$	45	$	31
Unfunded loan commitments		11		(5)
Total	$	56	$	26

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)


	For the Six Months Ended
	June 30, 2024
	Mortgage Loans on Real Estate
					Construction
	Residential				and Land
	1-4 Family		Commercial		Development		Commercial
Allowance for credit losses:
Balance, beginning of year	$	247	$	332	$	15	$	65
Provision charged to expense		11		15		(7)		8
Losses charged off		—		—		—		(11)
Recoveries		—		—		—		—
Balance, end of year	$	258	$	347	$	8	$	62

Allowance for credit losses:
Balance, beginning of year	$	2	$	10	$	8	$	2
Provision charged to expense		2		(2)		3		1
Losses charged off		—		—		—		—
Recoveries		—		—		—		—
Balance, end of year	$	4	$	8	$	11	$	3


	For the Six Months Ended
	June 30, 2024 (Continued)
	Consumer		Total
Allowance for credit losses:
Balance, beginning of year	$	16	$	675
Provision charged to expense		2		29
Losses charged off		—		(11)
Recoveries		—		—
Balance, end of year	$	18	$	693

Allowance for credit losses for unfunded loan commitments:
Balance, beginning of year	$	—	$	22
Provision charged to expense		—		4
Losses charged off		—		—
Recoveries		—		—
Balance, end of year	$	—	$	26


The provision for credit losses is determined by the Company as the amount that is added to ACL accounts to bring the ACL to that, in management's judgement, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The following table presents the components of the provision for credit losses:

	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Provision for credit losses:
Loans	$	68	$	(2)	$	113	$	29
Unfunded loan commitments		(11)		9		-		4
Total	$	57	$	7	$	113	$	33

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Management’s opinion as to the ultimate collectability of loans is subject to estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. All commercial and land development loans are graded at inception of the loan. Subsequently, analyses are performed on an annual basis and grade changes are made, as necessary. Interim grade reviews may take place if circumstances of the borrower warrant a timelier review. The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. The Company uses the following definitions for risk ratings:

Pass — Loans classified as pass are well protected by the ability of the borrower to pay or by the value of the asset or underlying collateral.

Special Mention — Loans classified as watch represent loans with the minimum level of acceptable credit risk and servicing requirements and the borrower has the capacity to perform according to the terms and repayment is expected. However, one or more elements of uncertainty exist.

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

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

Loss — Loans classified as loss are the portion of the loan that is considered uncollectible so that its continuance as an asset is not warranted. The amount of the loss determined will be charged-off.

2024

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

The Company evaluates the loan risk grading system definitions and allowance for credit loss methodology on an ongoing basis. No significant changes were made to either during the ~~three~~six months ended ~~March~~June 3130, 2025 or during the year ended December 31, 2024. The following tables represents loans, as of ~~March~~June 3130, 2025 and December 31, 2024, by grading category and year in which the loans were originated:


	~~March~~June 3130, 2025
													Revolving
													Lines of
	2025		2024		2023		2022		2021		Prior		Credit		Total
Pass
Residential 1-4 Family	$	~~866~~2,881	$	78,~~908~~068	$	7,~~441~~188	$	8,~~763~~661	$	7,~~439~~277	$	3130,~~601~~887	$	~~772~~818	$	6465,~~790~~780
Commercial Real Estate		38,~~933~~387		5,~~074~~101		3,~~322~~121		3,~~984~~925		3,~~374~~139		3,~~926~~801		—		2327,~~613~~474
Construction and Land Development		—169		~~481~~231		~~802~~798		—		—		~~165~~160		—		1,~~448~~358
Commercial		~~518~~1,665		1,~~060~~031		2,~~667~~602		~~130~~108		~~208~~98		8772		~~429~~569		56,~~099~~145
Consumer		~~772~~1,523		1,~~446~~243		~~854~~727		~~275~~224		~~318~~297		~~152~~142		—		34,~~817~~156
Total Pass	$	614,~~089~~625	$	15,~~969~~674	$	1514,~~086~~436	$	1312,~~152~~918	$	1110,~~339~~811	$	35,~~931~~062	$	1,~~201~~387	$	98104,~~767~~913
Special Mention
Residential 1-4 Family	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate		—		—		~~631~~626		—		—		—		—		~~631~~626
Construction and Land Development		—		—		—		—		—		—		—		—
Commercial		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Total Special Mention	$	—	$	—	$	~~631~~626	$	—	$	—	$	—	$	—	$	~~631~~626
Substandard
Residential 1-4 Family	$	—	$	—	$	—	$	—	$	—	$	~~356~~220	$	—	$	~~356~~220
Commercial Real Estate		—		—		—		—		—		~~491~~487		—		~~491~~487
Construction and Land Development		—		—		—		—		—		—		—		—
Commercial		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Total Substandard	$	—	$	—	$	—	$	—	$	—	$	~~847~~707	$	—	$	~~847~~707
Total	$	614,~~089~~625	$	15,~~969~~674	$	15,~~717~~062	$	1312,~~152~~918	$	1110,~~339~~811	$	3635,~~778~~769	$	1,~~201~~387	$	~~100~~106,~~245~~246

Current period gross charge-offs:
Residential 1-4 Family	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate		—		—		—		—		—		—		—		—
Construction and Land Development		—		—		—		—		—		—		—		—
Commercial		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

2125

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

	December 31, 2024
													Revolving
													Lines of
	2024		2023		2022		2021		2020		Prior		Credit		Total
Pass
Residential 1-4 Family	$	8,124	$	7,509	$	8,960	$	7,554	$	14,686	$	17,705	$	835	$	65,373
Commercial Real Estate		5,344		3,339		4,034		3,440		1,285		2,837		—		20,279
Construction and Land Development		625		843		—		—		46		123		—		1,637
Commercial		1,086		2,742		180		215		6		93		334		4,656
Consumer		1,659		945		322		373		172		8		—		3,479
Total Pass	$	16,838	$	15,378	$	13,496	$	11,582	$	16,195	$	20,766	$	1,169	$	95,424
Special Mention
Residential 1-4 Family	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate		—		637		—		—		—		—		—		637
Construction and Land Development		—		—		—		—		—		—		—		—
Commercial		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Total Special Mention	$	—	$	637	$	—	$	—	$	—	$	—	$	—	$	637
Substandard
Residential 1-4 Family	$	—	$	—	$	—	$	—	$	—	$	348	$	—	$	348
Commercial Real Estate		—		—		—		—		—		496		—		496
Construction and Land Development		—		—		—		—		—		—		—		—
Commercial		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Total Substandard	$	—	$	—	$	—	$	—	$	—	$	844	$	—	$	844
Total	$	16,838	$	16,015	$	13,496	$	11,582	$	16,195	$	21,610	$	1,169	$	96,905

Current period gross charge-offs:
Residential 1-4 Family	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate		—		—		—		—		—		(179)		—		(179)
Construction and Land Development		—		—		—		—		—		—		—		—
Commercial		—		(13)		—		—		—		—		—		(13)
Consumer		—		(2)		—		—		—		—		—		(2)
	$	—	$	(15)	$	—	$	—	$	—	$	(179)	$	—	$	(194)

The following tables present the Company’s loan portfolio aging analysis as of ~~March~~June 3130, 2025 and December 31, 2024:

March 31, 2025

2025

Total

June 30, 2025

2025

Total

30-59 Days

60-89 Days

90 Days and

Total Past

Loans

Past Due

Greater

Due

Current

Receivable

Mortgage loans on real estate:

Residential 1-4 family

~~372~~639

—171

~~156~~31

~~528~~841

6465,~~618~~159

6566,~~146~~000

Commercial

~~249~~247

—

~~249~~247

2428,~~486~~340

2428,~~735~~587

Construction and land development

—

1,~~448~~358

Total real estate loans

~~621~~886

—171

~~156~~31

~~777~~1,088

9094,~~552~~857

9195,~~329~~945

Commercial

—

56,~~099~~145

Consumer

3138

316

—

3454

34,~~783~~102

34,~~817~~156

Total

~~652~~924

3187

~~156~~31

~~811~~1,142

99105,~~434~~104

~~100~~106,~~245~~246

2226

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)


December 31, 2024							2024				Total
	30-59 Days		60-89 Days		90 Days and		Total Past				Loans
	Past Due		Past Due		Greater		Due		Current		Receivable
Mortgage loans on real estate:
Residential 1-4 family	$	445	$	219	$	317	$	981	$	64,740	$	65,721
Commercial		—		—		—		—		21,412		21,412
Construction and land development		—		—		—		—		1,637		1,637

Total real estate loans		445		219		317		981		87,789		88,770

Commercial		—		—		—		—		4,656		4,656
Consumer		46		—		—		46		3,433		3,479

Total	$	491	$	219	$	317	$	1,027	$	95,878	$	96,905

During the ~~three~~six months ended ~~March~~June 3130, 2025, there was no accrued interest that was written off, related to loans placed in nonaccrual status during the year. During the year ended December 31, 2024 accrued interest that was written off, related to loans placed in nonaccrual status during the year, amounted to $5, all related to Residential Real Estate loans.

Collateral-Dependent Loans

At ~~March~~June 3130, 2025, the Company held loans that were individually evaluated for impairment due to financial difficulties experienced by the borrower and for which the repayment, on the basis of our assessment, is expected to be provided substantially through the sale or operations of the collateral. The ACL for these collateral dependent loans is primarily based on the fair value of the underlying collateral at the reporting date. The following describes the types of collateral that secure collateral dependent loans:

●

One-to-four family mortgages are primarily secured by first liens on residential real estate.

●

Commercial real estate loans are primarily secured by office and industrial buildings.

●

Commercial and industrial loans are primarily secured by accounts receivables, inventory, and equipment.

●

Home equity loans are primarily secured by second liens on residential real estate.

●

Consumer loans are primarily secured by titles on automobiles and recreational vehicles.

2327

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

The following table presents information regarding collateral dependent loans as of ~~March~~June 3130, 2025 and December 31, 2024:


	~~March~~June 3130, 2025				December 31, 2024
	Loan		Specific		Loan		Specific
	Balance		Allowance		Balance		Allowance
Mortgage loans on real estate:
Residential 1-4 family		~~356~~220		—	$	348	$	—
Commercial		~~491~~487		—		496		—
Construction and land development		—		—		—		—

Total real estate loans		~~847~~707		—		844		—

Commercial		—		—		—		—
Consumer		—		—		—		—

Total	$	~~847~~707	$	—	$	844	$	—


							Total		Interest		Amortized
	Nonaccrual		Nonaccrual				Nonaccrual		Income		Cost Basis
	Loans with No		Loans with an		Total		Loans at		Recognized on		of Loans 90+
	Allowance for		Allowance for		Nonaccrual		Beginning of		Nonaccrual		Days Past Due
	Credit Losses		Credit Losses		Loans		Year		Loans		Not on Nonaccrual
March 31, 2025
June 30, 2025
Residential - First Mortgage		~~356~~220		—		~~356~~220		348		—		—
Commercial real estate		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—
Commercial and Industrial		—		—		—		—		—		—
Consumer		—		—		—		—		—		—

Total	$	~~356~~220	$	—	$	~~356~~220	$	348	$	—	$	—

							Total		Interest		Amortized
	Nonaccrual		Nonaccrual				Nonaccrual		Income		Cost Basis
	Loans with No		Loans with an		Total		Loans at		Recognized on		of Loans 90+
	Allowance for		Allowance for		Nonaccrual		Beginning of		Nonaccrual		Days Past Due
	Credit Losses		Credit Losses		Loans		Year		Loans		Not on Nonaccrual
December 31, 2024
Residential - First Mortgage		348		—		348		177		—		—
Commercial real estate		—		—		—		156		—		—
Construction and land development		—		—		—		—		—		—
Commercial and Industrial		—		—		—		—		—		—
Consumer		—		—		—		—		—		—

Total	$	348	$	—	$	348	$	333	$	—	$	—

There were no new loans modified due to borrowers experiencing financial difficulties during the ~~three~~six months ended ~~March~~June 3130, 2025 or 2024.

2428

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Note 6: Premises and Equipment

Major classifications of premises and equipment, stated at cost, are as follows:


	~~March~~June 3130,		December 31,
	2025		2024
Land	$	746	$	746
Buildings and improvements		3,063		3,063
Equipment		1,118		1,103
		4,927		4,912
Less accumulated depreciation		(2,~~845~~878)		(2,811)
Net premises and equipment	$	2,~~082~~049	$	2,101

Note 7: Mortgage Servicing Rights

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage loans serviced for others was $2120,~~020~~469 and $21,650 at ~~March~~June 3130, 2025 and December 31, 2024, respectively.

The following summarizes the activity in mortgage servicing rights measured using the fair value method for the ~~period~~three and six months ended ~~March~~June 3130, 2025 and ~~March~~ December 31, 2024:


	~~March~~June 3130,		~~March~~December 31,
	2025		2024
Fair value as of the beginning of period	$	254	$	300
Changes in fair value due to changes in valuation inputs or assumptions		—		—(46)
Fair value at the end of period	$	254	$	~~300~~254

The estimated fair value of mortgage servicing rights is determined using a valuation model that calculates the present value of expected future servicing and ancillary income, net of expected servicing costs. The model incorporates various assumptions, such as discount rates and prepayment speeds based on market data from independent organizations. Information about the estimated fair value of mortgage servicing rights at ~~March~~June 3130, 2025 and December 31, 2024 follows:


	~~March~~June 3130,		~~March~~December 31,
	2025		2024
Range of discount rates	9.625-12.625	%	9.75625-12.25625	%
Range of prepayment speeds (1)	91-375		8691-~~282~~375
Weighted average default rate	1.06	%	1.2406	%

Management did not utilize a valuation model to calculate the fair value of mortgage servicing rights at ~~March~~June 3130, 2025 but Management determined the change in fair value was not significant to the ~~financials~~consolidated financial statements as of ~~March~~June 3130, 2025.

(1)

Prepayment speeds measured in the Public Securities Associate Standard prepayment model (PSA). PSA is the assumed monthly rate of prepayment that is annualized to the outstanding principal balance of a mortgage loan.

2529

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Note 8: Time Deposits

Time deposits in denominations of $250 or more were $15,230 on ~~March~~June 3130, 2025 and $10,748 on December 31, 2024.

At ~~March~~June 3130, 2025, the scheduled maturities of time deposits are as follows:


2025	$	5239,~~401~~223
2026		1224,~~147~~330
2027		57,~~641~~776
2028		~~753~~1,200
2029		~~278~~265
Thereafter		11248
	$	7173,~~231~~042

Note 9: Borrowings

As of ~~March~~June 3130, 2025 and December 31, 2024, the Company had no borrowed funds.

The Bank has a master contract agreement with the Federal Home Loan Bank that provides for borrowing up to the maximum range of 60-80% of the book value of the Bank’s qualifying loans based on the pledged loan class and range of 90-98% of qualifying investment securities pledged. The FHLB provides both fixed and floating rate advances. Floating rates are based on, but not directly tied to, short-term market rates of interest, such as Secured Overnight Financing Rate (SOFR), federal funds, or treasury bill rates. Advances with call provisions permit the FHLB to request payment beginning on the call date and quarterly thereafter. FHLB advances are subject to a prepayment penalty if they are repaid prior to maturity.

At ~~March~~June 3130, 2025, the Bank’s available and unused portion of this borrowing agreement totaled approximately $4847.16 million. At December 31, 2024, the Bank’s available and unused portion of this borrowing agreement totaled approximately $ 47.6 million.

At ~~March~~June 3130, 2025, the Bank’s available and unused unsecured line of credit with Bankers’ Bank of Wisconsin and United Bankers’ Bank totaled $4.0 million and $5.0 million, respectively. At December 31, 2024, the Bank’s available and unused unsecured line of credit with Bankers’ Bank of Wisconsin and United Bankers’ Bank totaled $4.0 million and $5.0 million, respectively.

Note 10: Income Taxes

Income tax expense was $84114 and $5886 for the three months ended ~~March~~June 3130, 2025 and 2024, respectively, and was $197 and $144 for the six months ended June 30, 2025 and 2024, respectively.

Deferred tax assets are deferred tax consequences attributable to deductible temporary differences and carryforwards. After the deferred tax asset has been measured using the applicable enacted tax rate and provisions of the enacted tax law, it is then necessary to assess the need for a valuation allowance. A valuation allowance is needed when, based on the weight of the available evidence, it is more likely than not that some portion of the deferred asset will not be realized. As required by generally accepted accounting principles, available evidence is weighted heavily on cumulative losses, with less weight placed on future projected profitability. The realization of deferred tax assets is dependent on the existence of taxable income of the appropriate character (e.g., ordinary or capital) within the carry-back and carry-forward periods available under the tax law, which would consider future reversals of existing taxable temporary differences and available tax planning strategies. As of ~~March~~June 3130, 2025 and December 31, 2024 the Company has determined that no allowance is deemed necessary. The net deferred assets were $1,~~597~~406 and $1,857 as of ~~March~~June 3130, 2025 and December 31, 2024, respectively.

The Board of Directors and management continue to assess the deferred tax assets in light of recent changes in market conditions, forecasted future projected income and available tax planning strategies. As such, there may be deferred tax impairment in subsequent periods.

2630

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

The Company’s ~~files~~Board ~~income~~of ~~tax~~Directors ~~returns~~and inmanagement ~~the~~continue ~~U.S.~~to ~~federal~~assess ~~jurisdiction~~the ~~and~~deferred ~~the~~tax ~~State~~assets ofin ~~Illinois.~~light ~~During~~of ~~the three~~recent ~~months~~changes ~~ended~~in ~~March~~market 31conditions, ~~2025~~forecasted future projected income and ~~2024~~available tax planning strategies. As such, ~~the~~there ~~Company~~may ~~recognized~~be nodeferred ~~interest~~tax orimpairment ~~penalties~~in subsequent periods.

The Company files income tax returns in the U.S. federal jurisdiction and the State of Illinois. During the three and six months ended June 30, 2025 and 2024, the Company recognized no interest or penalties.

Note 11: Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), included in equity capital, are as follows:


	~~March~~June 3130,		December 31,
	2025		2024
Net unrealized gain (loss) on available-for-sale debt securities	$	(3,~~734~~252)	$	(4,631)

Tax effect		~~1,064~~927		1,318

Net-of-tax amount	$	(2,~~670~~325)	$	(3,313)

Note 12: Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under U.S. GAAP, regulatory reporting requirements and regulatory capital standards. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Furthermore, the Bank’s regulators could require adjustment to regulatory capital not reflected in these consolidated financial statements.

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

Management believes, as of ~~March~~June 3130, 2025 and December 31, 2024, that the Bank meets all capital adequacy requirements to which it is subject. As of ~~March~~June 3130, 2025, the most recent notification from regulatory agencies categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum capital ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank’s category.

2731

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

The Bank’s actual capital amounts and ratios are also presented in the table.


									Minimum to Be Well
									Capitalized Under
									Prompt
					Minimum Capital				Corrective Action
	Actual				Requirement				Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of March 31, 2025:
As of June 30, 2025:

Leverage ratio (to average assets)	$	3132,~~960~~426	15.76	%	$	8,~~123~~324	4.0	%	$	10,~~154~~406	5.0	%
Common Equity Tier 1 (to risk weighted assets)	$	3132,~~960~~426	3231.2	%	$	4,~~466~~680	4.5	%	$	6,~~451~~760	6.5	%
Tier 1 Capital ratio (to risk weighted assets)	$	3132,~~960~~426	3231.2	%	$	56,~~955~~240	6.0	%	$	78,~~940~~320	8.0	%
Total Capital (to risk-weighted assets)	$	3233,~~733~~256	3332.0	%	$	78,~~940~~320	8.0	%	$	910,~~925~~401	10.0	%

As of December 31, 2024:

Leverage ratio (to average assets)	$	31,662	15.9	%	$	7,972	4.0	%	$	9,965	5.0	%
Common Equity Tier 1 (to risk weighted assets)	$	31,662	33.0	%	$	4,318	4.5	%	$	6,238	6.5	%
Tier 1 Capital ratio (to risk-weighted assets)	$	31,662	33.0	%	$	5,758	6.0	%	$	7,677	8.0	%
Total Capital (to risk-weighted assets)	$	32,379	33.7	%	$	7,677	8.0	%	$	9,596	10.0	%

The net unrealized gain or loss on available-for-sale securities, net of tax is not included in computing regulatory capital.

Note 13: Related Party Transactions

At ~~March~~June 3130, 2025 and December 31, 2024, the Company had loans outstanding to executive officers, directors, significant shareholders, and their affiliates (related parties), of $~~918~~882 and $924, respectively.

Deposits from related parties held by the Company at ~~March~~June 3130, 2025 and December 31, 2024 totaled $1,~~327~~121 and $1,268, respectively.

In management’s opinion, such loans and other extensions of credit and deposits were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. Further, in management’s opinion, these loans did not involve more than normal risk of collectability or present other unfavorable features.

A summary of loans to directors, executive officers, and their affiliates as of ~~March~~June 3130, 2025 and December 31, 2024 is as follows:


	~~March~~June 3130,		December 31,
	2025		2024
Beginning balance	$	924	$	1,053
New Loans		20—		54
Repayments		(2642)		(183)

Ending balance	$	~~918~~882	$	924

The Company’s Board-approved law firm is Duncan & Brandt, P.C, which is solely owned by the Company’s Vice Chairman Jonathan Brandt. The Company pays an annual retainer to Duncan & Brandt of $15 and $15 for the three months ended ~~March~~June 3130, 2025 and 2024, and $30 and $30 for the six months ended June 30,2025 and 2024, respectively. In addition to the annual retainer, the firm received various fees for legal services rendered in the normal course of business of $45 and $3 ~~for the three months ended March 31, 2025 and 2024.~~

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

for the three months ended June 30, 2025 and 2024 and $9 and $6 for the six months ended June 30, 2025 and 2024, respectively.

Note 14: Employee Benefits

The Company has a retirement savings 401(k) plan covering substantially all employees. Employees may contribute a percentage of their compensation, up to the maximum allowable by the IRS, with the Company matching 50 percent of the employee’s contribution on the first 5 percent of the employee’s compensation. Employer contributions charged to expense for the three months ended ~~March~~June 3130, 2025 and 2024 were $2619 and $2019, respectively and $45 and $39 for the six months ended June 30, 2025 and 2024, respectively.

The Company has deferred compensation agreements with directors. The agreements provide for the payment of benefits at termination or retirement. The plan assets are comprised of Company stock held in a Rabbi Trust and cash assets. The cash balances earn a rate of return equivalent to the Moody’s Bond Indices Corporate AAA rate as of December 31st of the prior year. The charge to expense for the agreements was $8 and $(3519) for the three months ended June 30, 2025 and 2024, respectively and $6(27) and $(13) for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, respectively . The liability accrued for these plans totaled $~~624~~646 and $645 at ~~March~~June 3130, 2025 and December 31, 2024, respectively.

The Company has an Employee Stock Ownership Plan. See Note 18.

Note 15: Disclosures About Fair Value of Assets

ASC Topic 820, Fair value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This accounting standard also emphasizes that fair value (i.e., the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date), among other things, is based on exit price versus entry price, should include assumptions about risk such as nonperformance risk in liability fair values, and is a market-based measurement, not an entity-specific measurement. When considering the assumptions that market participants would use in pricing an asset or liability, this accounting standard establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

The fair value hierarchy prioritizes inputs used to measure fair value into three broad levels:


Level 1	In general, fair values determined by Level 1 inputs use quoted market prices for identical assets or liabilities that the entity can access at measurement date.

Level 2	Fair Values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in markets, quoted prices for identical or similar assets or liabilities in markets where there are few transactions and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3	Unobservable inputs for the asset or liability and included situations where there is little, if any, market activity for the asset or liability.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a ~~particular input to the fair value measurement in its entirety requires judgement and considers factors specific to the asset or liability.~~

2933

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

particular input to the fair value measurement in its entirety requires judgement and considers factors specific to the asset or liability.

Some assets and liabilities, such as securities available for sale, are measured at fair value on a recurring basis under accounting principles generally accepted in the United States. Other assets and liabilities, such as individually analyzed loans and equity securities without a readily determinable fair value, may be measured at fair value on a nonrecurring basis.

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the ~~three~~six months ended ~~March~~June 3130, 2025 or year ended December 31, 2024.

Equity Securities

Equity securities with a readily determinable fair value are measured at fair value on a recurring basis. The fair value measurement of equity securities with a readily determinable fair value are based on the quoted price of the security and is considered a Level 1 fair value measurement. Equity securities without a readily determinable fair value are measured at fair value on a nonrecurring basis when transaction prices for identical or similar securities are identified. Fair value measurements on equity securities without a readily determinable fair value are generally considered a Level 2 fair value measurement.

Debt Securities

Securities available for sale may be classified as Level 1, Level 2, or Level 3 measurements within the fair value hierarchy. Level 1 securities included debt securities traded on a national exchange. The fair value measurement of a Level 1 security is based on the quoted price of the security. Level 2 securities include U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities, and mortgage related securities. The fair value measurement of a Level 2 security is obtained from an independent pricing service and is based on recent sales of similar securities and other observable market data. Level 3 securities include trust preferred securities that are not traded in a market. The fair value measurement of Level 3 securities are determined by the Company’s Chief Financial Officer (CFO) and reported to the Company’s board of directors. Fair values are calculated using discounted cash flow models that incorporate various assumptions, including expected cash flows and market credit spreads. When comparable sales are available, these are used to validate the models used. Other available industry data, such as information regarding defaults and deferrals, are incorporated into the expected cash flows.

Mortgage Servicing Rights

Management measures mortgage servicing rights through the completion of a proprietary model. Inputs to the model are developed by the accounting staff and are reviewed by management. The model is tested annually using baseline data to check its accuracy.

Mortgage servicing rights are evaluated on a recurring basis. Serviced loan pools are stratified by year of origination, and a fair value measurement is obtained for each stratum from an independent firm. The measurement is based on recent sales of mortgage servicing rights with similar characteristics. Since the fair value measurement is based on observable market data, it is considered a Level 2 measurement.

3034

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at ~~March~~June 3130, 2025 and December 31, 2024.


			Fair Value Measurements Using
			Quoted Prices
			in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2025:
June 30, 2025:
Available-for Sale debt securities:
U.S. Government and federal agencies	$	7,~~607~~685	$	1,~~096~~107	$	6,~~511~~578	$	—
Mortgage-backed: GSE - residential		4143,~~475~~756		—		4143,~~475~~756		—
State and political Subdivision		19,~~685~~682		—		19,~~685~~682		—
Total Available-For-sale debt securities	$	6871,~~767~~123	$	1,~~096~~107	$	6770,~~671~~016	$	—

Equity securities:
FHLMC stock	$	~~262~~289	$	~~262~~289	$	—	$	—
Community Development Corp. Stock		62		—		62		—
Mortgage servicing rights		254		—		254		—
Total	$	6971,~~345~~728	$	1,~~358~~396	$	6770,~~987~~332	$	—

December 31, 2024:
Available-for Sale debt securities:
U.S. Government and federal agency	$	7,967	$	1,626	$	6,341	$	—
Mortgage-backed: GSE - residential		38,858		—		38,858		—
State and political subdivision		19,833		—		19,833		—
Total Available-for-sale debt securities	$	66,658	$	1,626	$	65,032	$	—

Equity securities:
FHLMC Stock	$	263	$	263	$	—	$	—
Community Development Corp. Stock		62				62
Mortgage servicing rights		254		—		254		—
Total	$	67,237	$	1,889	$	65,348	$	—

The Company estimates the fair value of all financial instruments regardless of whether such instruments are measured at fair value. The following methods and assumptions were used by the Company to estimate fair value of financials instruments not previously discussed.

Cash and cash equivalents — Fair value approximates the carrying value.

Loans — Fair value of variable rate loans that reprice frequently is based on carrying values. Fair value of other loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings. Fair value of individually analyzed and other non-performing loans is estimated using discounted expected cash flows or fair value of the underlying collateral, if applicable.

3135

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

FHLB stock — Fair value is the redeemable (carrying) value based on the redemption provisions of the Federal Home Loan Bank.

Interest receivable and payable — Fair value approximates the carrying value.

Cash surrender value of bank-owned life insurance — Fair value is based on reported values of the assets.

Deposits— Fair value of deposits with no state maturity, such as demand deposits, savings, and money market accounts, by definition, is the amount payable on demand on the reporting date. Fair value of fixed rate time deposits is estimated using discounted cash flows applying interest rates currently being offered on similar time deposits.

The carrying value and estimated fair value of financial instruments follow:


March 31, 2025
June 30, 2025
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	1814,~~795~~489	$	1814,~~795~~489	$	—	$	—
Available-for-sale debt securities		6871,~~767~~123		1,~~096~~107		6770,~~671~~016		—
Held-to-maturity debt securities		76,~~922~~892		—		76,~~895~~845		—
Equity securities		~~324~~351		~~262~~289		62		—
Loans		99105,~~576~~532		—		—		94100,~~385~~740
Interest receivable		~~712~~778		~~712~~778		—		—
Federal Home Loan Bank Stock		~~347~~354		—		—		~~347~~354
Cash surrender value of bank-owned life insurance		4,~~005~~031		—		—		4,~~005~~031
Financial liabilities:
Deposits		~~166~~168,~~104~~737		—		—		~~149~~152,~~967~~188
Interest payable		111		111		—		—


December 31, 2024
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	16,256	$	16,256	$	—	$	—
Available-for-sale debt securities		66,658		1,626		65,032		—
Held-to-maturity debt securities		8,168		—		8,140		—
Equity securities		325		263		62		—
Loans		96,274		—		—		90,996
Interest receivable		733		733		—		—
Federal Home Loan Bank Stock		347		—		—		347
Cash surrender value of bank-owned life insurance		3,979		—		—		3,979
Financial liabilities:
Deposits		159,587		—		—		143,604
Interest payable		7		7		—		—

3236

Table of Contents

Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

Nonrecurring Measurements

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at ~~March~~June 3130, 2025 and December 31, 2024.

Fair Value Measurements Using

Quoted

Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

Fair Value

(Level 1)

(Level 2)

(Level 3)

March 31, 2025:

June 30, 2025:

Individually analyzed loans (collateral dependent)

—

December 31, 2024:

Individually analyzed loans (collateral dependent)

—

During the ~~three~~six months ended ~~March~~June 3130, 2025, there were no loans determined to have credit losses where a specific valuation allowance was needed. During the ~~three~~six months ~~March~~June 3130, 2024, there were no loans were determined to have credit losses where a specific valuation allowance was needed.

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Individually Analyzed (Collateral Dependent)

The estimated fair value of collateral-dependent individually analyzed loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent individually analyzed loans are classified within Level 3 of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by management. Appraisals are reviewed for accuracy and consistency. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the management by comparison to historical results.

Note 16: Commitments, Credit Risk and Contingencies

The Company grants commercial, residential and consumer loans to customers located primarily in LaSalle County, Illinois. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent upon economic conditions in this county.

Lines of Credit

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and

3337

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Notes to Consolidated Financial Statements (Unaudited)

(Dollars in thousands)

equipment, commercial real estate, and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments.

At ~~March~~June 3130, 2025, the Company had granted unused lines of credit to borrowers aggregating approximately $23,~~675~~899 and $1,~~231~~170 for commercial lines and open-end consumer lines, respectively. At December 31, 2024, the Company had granted unused lines of credit to borrowers aggregating approximately $2,911 and $1,251 for commercial lines and open-end consumer lines, respectively.

Note 17: Government Assistance

On October 31, 2012, the Company entered into a settlement agreement on the foreclosure of the Country Aire Subdivision in LaSalle, IL whereby the Company assumed the rights and responsibility as the developer of this subdivision. This subdivision was granted a Tax Incremental Financing (TIF) district by the City of LaSalle in 2004. The previous developer did not complete the terms of the TIF agreement, thus the Company entered into an agreement with the City of LaSalle to meet the requirements of the TIF agreement and then receive the incentives upon completion of all terms of the agreement. The City of LaSalle accepted the subdivision on October 25, 2016. Because the incentives are based on the incremental taxes generated from the sale of the lots and the building of homes the ~~Bank~~Company continued to market and sell lots with the final contract in 2019. At December 31, 2019, the Company had met all the requirements and had all lots sold therefore a TIF receivable was recorded for the estimated value of funds to be received from the City of Lasalle over the remaining term of the TIF district. Each year end the Company evaluates the TIF receivable based on the 3rd party TIF administrator’s estimated value of homes, their incremental taxes and the developer’s share of the incremental taxes. The receivable for these funds are included i

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