EWSB 10-K & 10-Q changes, risk factors and insider trading
EWSB Bancorp, Inc. · OTC · Savings Institutions, Not Federally Chartered · CIK 2013792 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Not applicable, as the Company is a smaller reporting company.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“In evaluating securities available-for sale for potential impairment, the Company considers many factors, including the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and its ability and intent to hold the security for a period of time sufficient for a recovery in value. The Company also considers the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies. …”see in full comparison
“In evaluating securities held-to-maturity for potential impairment, the Company considers many factors, including the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and its ability and intent to hold the security for a period of time sufficient for a recovery in value. The Company also considers the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies.”see in full comparison
“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 sell, the security before recovery of its amortized cost basis. If either of the aforementioned criteria exists, the Company will record an ACL related to securities available-for-sale with an offsetting entry to the provision for credit losses on securities on the statements of income. …”see in full comparison
“Allowance for Credit Losses on Loans. The allowance for credit losses (“ACL”) is an estimate of expected credit losses on the loans held for investment, and unfunded loan commitments. The ACL is calculated according to GAAP standards and is maintained by management at a level believed adequate to absorb estimated credit losses that are expected to occur within the existing loan portfolio through their contractual terms. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans. …”see in full comparison
“For held-to-maturity debt securities in an unrealized loss position, the Company evaluates the securities individually to determine whether the decline in fair value below amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors, such as market interest rate fluctuations.”see in full comparison
“The net proceeds contributed to the Bank from the stock offering completed on September 20, 2024, have significantly increased our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including funding loans. Our financial condition and results of operations will be enhanced by the net proceeds from the offering, which will increase our net interest-earning assets and net interest income. …”see in full comparison
Full comparison: every changed paragraph (44)
The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with U.S. GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.
The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
The following represent our critical accounting policies:
Allowance for Credit Losses on Loans. The allowance for credit losses (“ACL”) is an estimate of expected credit losses on the loans held for investment, and unfunded loan commitments. The ACL is calculated according to GAAP standards and is maintained by management at a level believed adequate to absorb estimated credit losses that are expected to occur within the existing loan portfolio through their contractual terms. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans. The determination of our allowance for credit losses is considered a critical accounting estimate by management because of the high degree of judgment involved in determining qualitative loss factors, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded allowance for credit losses. While management utilizes its best judgment and information available, the ultimate adequacy of the ACL is dependent upon a variety of factors beyond the Company’s direct control, including, but not limited to, the performance of the loan portfolio, consideration of current economic trends, changes in interest rates and property values, estimated losses on pools of homogeneous loans based on an analysis that uses historical loss experience for prior periods that are determined to have like characteristics with the current period such as pre-recessionary, recessionary, or recovery periods, portfolio growth and concentration risk, management and staffing changes, the interpretation of loan risk classifications by regulatory authorities and other credit market factors. While each component of the ACL is determined separately, the entire balance is available for the entire loan portfolio.
The ACL methodology consists of measuring loans on a collective (pool) basis when similar risk characteristics exist. The Company has identified three loan portfolios and measures the ACL using the Scaled CECL Allowance for Losses Estimator (“SCALE”) method. The loan portfolios are real estate; commercial installment; and consumer. The SCALE method uses publicly available data from call reports to derive the initial proxy expected lifetime loss rates. This proxy expected lifetime loss rates are then adjusted for bank-specific facts and circumstances to arrive at the final ACL estimate that adequately reflects the Company’s loss history and credit risk within our portfolio.
The qualitative factors considered for each loan portfolio consist of the impact of other internal and external qualitative and credit market factors as assessed by management through a detailed loan review, ACL analysis and credit discussions. These internal and external qualitative and credit market factors include:
The impact of the above-listed internal and external qualitative and credit market risk factors is assessed within predetermined ranges to adjust the ACL totals calculated.
In addition to the pooled analysis performed for the majority of our loan and commitment balances, we also review those loans that have collateral dependency or nonperforming status which requires a specific review of that loan, per our individually analyzed CECL calculations.
Loans are charged off against the ACL when management believes the uncollectibility of a loan balance is confirmed, while recoveries of amounts previously charged-off are credited to the ACL. Approved releases from previously established ACL reserves authorized under our ACL methodology also reduce the ACL. Additions to the ACL are established through the provision for credit losses on loans, which is charged to expense.
Our ACL methodology is intended to reflect all loan portfolio risk, but management recognizes the inability to accurately depict all future credit losses in a current ACL estimate, as the impact of various factors cannot be fully known. Accrued interest receivable on loans is excluded from the amortized cost basis of financing receivables for the purpose of determining the allowance for credit losses.
Income Taxes. Deferred tax assets and liabilities have been determined using the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the current enacted tax rates, which will be in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Provision (benefit) for deferred taxes is the result of changes in the deferred tax assets and liabilities.
The Company may also recognize a liability for unrecognized tax benefits from uncertain tax positions. Unrecognized tax benefits represent the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured in the financial statements. Interest and penalties related to unrecognized tax benefits are classified as income taxes.
Debt Securities. Debt securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available-for-sale when they might be sold before maturity. Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income or loss, net of tax. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives or earliest call date of the debt securities, as applicable. Gains and losses on the sales of debt securities are recorded on the trade date and determined using the specific-identification method.
For held-to-maturity debt securities in an unrealized loss position, the Company evaluates the securities individually to determine whether the decline in fair value below amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors, such as market interest rate fluctuations.
In evaluating securities held-to-maturity for potential impairment, the Company considers many factors, including the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and its ability and intent to hold the security for a period of time sufficient for a recovery in value. The Company also considers the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies.
Accrued interest receivable on securities held-to-maturity is excluded from the amortized cost basis of those securities for the purpose of determining the allowance for credit losses.
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 sell, the security before recovery of its amortized cost basis. If either of the aforementioned criteria exists, the Company will record an ACL related to securities available-for-sale with an offsetting entry to the provision for credit losses on securities on the statements of income. If neither of these criteria exists, the Company will evaluate the securities individually to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors, such as market interest rate fluctuations.
In evaluating securities available-for sale for potential impairment, the Company considers many factors, including the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and its ability and intent to hold the security for a period of time sufficient for a recovery in value. The Company also considers the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies. The amount of the impairment related to other factors is recognized in other comprehensive income (loss).
Accrued interest receivable on securities available-for-sale is excluded from the amortized cost basis of those securities for the purpose of determining the allowance for credit losses.
Through December 31, 2025, declines in fair value of debt securities that are deemed to be other than temporary, if applicable, are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers the length of time and the extent to which fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
Our accounting and financial reporting policies conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable based upon the information available. These estimates and assumption affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented.
Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. As of December 31, 2024, there have been no material changes to our critical accounting policies as compared to the critical accounting policies disclosed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Prospectus.
Total Assets. Total assets increaseddecreased $10.7$2.3 million, or 4.0%,0.9%, to $271.0 million at December 31, 2025 from $273.3 million at December 31, 2024 from $262.6 million at December 31, 2023.2024. The change was primarily the result of a $12.0$3.6 million decrease in our net deferred tax asset and $3.1 million decrease in total investment securities, offset by a $3.1 million increase in portfolio loans offset byand a $2.2$879,000 million decreaseincrease in totalFederal investmentHome securities.Loan Bank stock.
Cash and Cash Equivalents and Time Deposits with Other Financial Institutions. Total cash and due from banks and time deposits with other financial institutions decreasedincreased $419,000,$85,000, or 6.9%1.5% to $5.8 million at December 31, 2025 from $5.7 million at December 31, 20242024. Positive cash flow from $6.1investing activities was $1.9 million atwas December 31, 2023. The changewhich was relatedoffset toby generala business$1.7 activity.million decrease in cash flow from operating activities and a $105,000 decrease in cash flow from financing activities.
Securities Available-for-Sale. Securities available-for-sale decreased $1.1$517,000 or 2.3%, to $22.3 million orat 4.8%,December to31, 2025 from $22.8 million at December 31, 2024 from $23.9 million at December 31, 2023.2024. The decrease was primarily due to principal paydowns of $1.1$1.9 million on mortgage-backed securities.securities and other security maturities. The unrealized loss of the portfolio declined $1.3 million to $2.6 million on December 31, 2025 compared to $3.9 million on December 31, 2024 anddue Decemberto 31,a 2023decline wasin consistentinterest at $3.9 million.rates. The proceeds from principal paydowns and security maturities are utilized to manage liquidity and support loan growth.
Loans, net. Loans, net increased $12.0$3.1 million, or 6.9%,1.6%, to $186.4$189.4 million at December 31, 20242025 from $174.3$186.3 million at December 31, 2023.2024. One- to four-family, homeHome equity loans and lines of credit, construction,credit and marine and recreational vehicles, and other consumerconstruction loans increased $7.8 million, $1.9 million, $2.8 million, $350,000,$840,000 and $174,000,$5.4 million, respectively, to $130.1$8.9 million, $8.1 million, $6.8 million, $31.2 million,million and $4.2$12.2 million at December 31, 2024,2025, respectively, as a result of loan production exceeding payoffs and amortization. These increases were partially offset by decreases toin one-to-four family, multi-family and commercial real estate, marine and multifamilyrecreational, and other consumer loans of $40,000$405,000, $854,000, $907,000 and $860,000$1.0 million respectively, to $3.9$129.7 million, $3.0 million, $30.2 million and $3.5$3.2 million at December 31, 2024,2025, respectively.
Deposits. Total deposits increaseddecreased $1.1$14.3 million or 0.5%6.2% to $217.3 million at December 31, 2025 from $231.5 million at December 31, 20242024. fromNon-interest $230.5bearing deposits decreased $1.8 million, or 18.7%, to $7.7 million at December 31, 2023.2025 Non-interest bearing deposits decreased $789,000, or 7.7%, tofrom $9.5 million at December 31, 2024 from $10.3 million at December 31, 2023.2024. Total interest-bearing deposits, other than time deposits, decreased approximately $3.9$14.3 million, or 3.4%,12.8%, to $111.8$97.4 million at December 31, 2024,2025, from $115.7$111.7 million at December 31, 2023.2024. WeThe acquireddecline is related to a $9.4 million reduction in interest-bearing brokered demand deposits inand 2024an which partially offset theoverall decline in savings and money market account balances experienced during the year. Certificates of deposits increased $5.8$1.8 million, or 5.5%,1.7%, to $112.1 million at December 31, 2025, from $110.3 million at December 31, 2024, from $104.5 million at December 31, 2023.2024. The deposit mix changes were consistent with industry trends as consumers continue to transition to higher yielding term deposits due to the interest rate environment.
Borrowings. Total borrowings increased $5.2$14.2 million or 33.0%58.5% to $38.4 million at December 31, 2025 from $24.2 million at December 31, 2024 from $19.0 million at December 31, 2023.2024. The increase in borrowings were utilized to offset deposit declines and to fund loan growth.
Stockholders’ Equity. Total stockholders’ equity increaseddecreased $4.1$2.4 million, or 35.5%,15.4%, to $13.2 million at December 31, 2025 from $15.6 million at December 31, 2024 from $11.5 million at December 31, 2023,2024, due to neta proceeds of $5.5$4.1 million from the stock offering and other comprehensive income of $810,000. These increases were partially offset by a decrease in retained earnings of $1.7 million, which resultedresulting from the net loss incurred for the year ended December 31, 20242025. andThe decrease was partially offset by $1.7 million in other comprehensive income for the $500,000year valueended ofDecember the31, unallocated common shares held by the ESOP.2025
Net Income/(Loss). We recorded a net loss of $4.1 million for the year ended December 31, 2025, compared to a net loss of $1.7 million for the year ended December 31, 2024, compared to a net loss of $935,000 for the year ended December 31, 2023, which is an increase of $755,000,$2.4 million, or 80.7%.140.9%. The increase in our net loss year-over-year resulted primarily from a decrease$3.5 million increase in netthe interestprovision for income taxes and $224,000 increase in noninterest expense, partially offset by ana $1.3 million increase in net interest income and a $60,000 increase in our noninterest income.
Interest Income. Interest income increased $806,000,$1.4 million, or 9.0%,14.2%, to $11.1 million for the year ended December 31, 2025 from $9.7 million for the year ended December 31, 2024 from $8.9 million for the year ended December 31, 2023,2024, primarily due to a $913,000$1.3 million increase in interest and fees on loans. The increase in interest and fees on loans was primarily due to an increase of 4534 basis points in the weighted average yield on the loan portfolio to 5.05% for the year ended December 31, 2025 from 4.71% for the year ended December 31, 2024 from 4.26% for 2023 and an increase of $2.2$14.4 million in the average balance of the loan portfolio to $194.5 million for the year ended December 31, 2025 from $180.1 million for the year ended December 31, 2024 from $177.9 million for the year ended December 31, 2023,2024, reflecting the increased rates on originations and adjustable rate loans as well as the growth in the one- to four-family, home equity loans and lines of credit, construction,credit and marineconstruction and recreational vehicles, and other consumerloans portfolios.
Interest Expense. Total interest expense increased $2.0 million,$137,000, or 46.3%,2.2%, to $6.5 million for the year ended December 31, 2025 from $6.4 million for the year ended December 31, 20242024. fromInterest $4.4expense on deposits decreased $225,000, or 4.3%, to $5.0 million for the year ended December 31, 2023.2025 Interest expense on deposits increased $1.6 million, or 43.9%, tofrom $5.2 million for the year ended December 31, 2024 from $3.6 million for the year ended December 31, 2023,2024, due primarily to ana increasedecrease in the weighted average rate paid on certificates of deposit of 12934 basis points to 4.03% for the year ended December 31, 2025 from 4.37% for the year ended December 31, 2024 from 3.08% for the year ended December 31, 2023 combined with ana increase$4.2 million decline in the average balance of suchnon-maturity interest-bearing deposits of $7.3 million during 2024.2025.
Interest expense on borrowed funds increased $429,000$353,000 or 58.2%,31.1%, to $1.2$1.5 million for the year ended December 31, 20242025 from $737,000$1.1 million for the year ended December 31, 2023.2024. The rate paid on borrowed funds increaseddecreased 8756 basis points to 4.47%3.92% for the year ended December 31, 2025 from 4.48% for the year ended December 31, 2024 from 3.60% for the year ended December 31, 2023 while the average balance of borrowed funds increased $5.5$13.0 million, or 26.9%,50.4%, to $39.0 million for the year ended December 31, 2025 from $26.0 million for the year ended December 31, 2024 from $20.5 million for the year ended December 31, 2023.2024. The increase in the average balance was generally related to the measured use of borrowings to offset deposit outflows and to support the increase in the loan portfolio.
Net Interest Income. Net interest income decreasedincreased $1.2 million, or 26.4%,36.8%, to $4.6 million for the year ended December 31, 2025 from $3.4 million for the year ended December 31, 20242024, fromprimarily $4.5due millionto an increase in the interest rate spread to 1.65% for the year ended December 31, 2023,2025 primarily due to a decrease in the interest rate spread tofrom 1.29% for the year ended December 31, 2024 fromand 1.79%an increase in the net interest margin to 1.74% for the year ended December 31, 20232025, and a decrease in the net interest margin tofrom 1.35% for the year ended December 31, 2024, from 1.82% for the year ended December 31, 2023.2024. The decreasesincreases in the interest rate spread and the net interest margin were primarily due to an increase inof the rates paid on interest-bearing liabilities in conjunction with an increase in other borrowings, partially offset by a 3431 basis point increasepoints in the weighted average yield on our interest earning assets.assets and decrease of 5 basis points on our weighted average cost of interest-bearing liabilities, partially offset by an increase of $11.0 million in average interest-bearing liabilities.
Provision for Credit Losses. Based on management’s analysis of the adequacy of the ACL and unfunded loan commitments, a net provision of $167,000$131,000 comprising of a provision of $85,000$82,000 to the ACL for loans and a provision of $82,000$49,000 for unfunded loan commitments was recorded for the year ended December 31, 2024,2025, compared to a provisionprovisions of $145,000$85,000 to the ACL and $82,000 unfunded loan commitments for the same period in 2023.2024. The $22,000$36,000 increasedecrease in provision expense is primarily due to thea increasemix change in outstandingour loan balancesportfolio along withand an analysis of current credit characteristics in conjunction with loss history of the loan portfolio and peer group loss data.
Noninterest Income. Noninterest income increased $216,000,$60,000 or 14.9%,3.5%, to $1.8 million for the year ended December 31, 2025 from $1.7 million for the year ended December 31, 2024 from $1.4 million for the year ended December 31, 2023.2024. The increase resulted primarily from a $271,000 gain on an interest rate swap in place during 2024, an increase of $41,000$210,000 to $395,000$605,000 in total mortgage banking income, and an increase of $178,000$32,000 to $480,000$512,000 in other income. The increase in other income was driven primarily by an increase of $131,000$49,000 reciprocal deposit fee income and $13,000 in investmentinsurance agency income offset by a $26,000 decrease in consumer loan related application, late, and gap insurance income.fees. These increases to noninterest income were offset by nonrecurringa gains$187,000 ofdecrease $208,000 onin the sale of office properties and equipment resulting from the sale of one of our branch offices and a $71,000 gain on saleinterest ofrate landswap forand sale$16,000 occurringdecline in thedeposit yearaccount endedservice Decembercharges 31,and 2023.interchange income. The table below sets forth our noninterest income for the years ended December 31, 20242025 and 20232024:
Noninterest Expense. Noninterest expense increased $88,000,$224,000, or 1.2%,3.1%, to $7.6 million for the year ended December 31, 2025 from $7.3 million for the year ended December 31, 2024 from $7.2 million for the year ended December 31, 2023.2024. Salaries and related benefits increased $249,000,$88,000, or 6.3%,2.1%, to $4.2$4.3 million at December 31, 20242025 primarily due to higher employee salary expense and related benefits due to market factors. Data processing expense increased $136,000$34,000, toor 3.1% totaling $1.1 million at December 31, 20242025 primarily due to implementation of additional network management services and general activity increases. Other expense increased $193,000, or 21.4% primarily due to a $173,000 increase in accounting, legal and shareholder services professional fees. Partially offsetting these increases was a decrease of $262,000$43,000 in othernet noninterestoccupancy expense due to $900,000closing atof Decembertwo 31,branch 2024.locations, The$34,000 decrease in otherloss nonintereston expensesale wasand duedisposal inof largefixed partassets related to a total2024 ofbranch $241,000closing, expensedand a $38,000 decrease in 2023advertising relatedexpense due to thereduced proposed acquisition of another mutual institution that was later terminated.activity. The table below sets forth our noninterest expense for the year ended December 31, 20242025 and 20232024:
Income Tax Expense. Our benefitprovision for income taxes increased $339,000$3.6 million to $2.9 million for the year ended December 31, 2025, from a benefit of $736,000 for the year ended December 31, 2024, from a benefit of $398,000 for the year ended December 31, 20232024 due to anthe increaserecording of a $3.3 million valuation against our deferred tax asset and a $306,000 decrease in the income tax benefit related to a reduction in the loss before provision for (benefit from) income taxes.
General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset Liability Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. The Asset Liability Committee, which is a management-level committee, meets quarterly, or more frequently when necessary, is comprised of our President/Chief Executive Officer, Senior Vice President of Finance, Vice President of Lending and Vice President of Member Relations, and reports to the full board of directors on at least aan annual basis. The Asset Liability Committee is responsible for recommending to the board of directors policies and procedures regarding asset/liability management, while it is the responsibility of the board of directors to determine whether to adopt such policies and procedures. We currently utilize a third-party modeling program, prepared quarterly, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.
The table above indicates that at December 31, 2024,2025, we would have experienced a 1.31%3.02% decreaseincrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 8.77%0.82% increasedecrease in net interest income in the event of an instantaneous parallel 200 basis point decrease in market interest rates.
Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We are also able to borrow from the FHLB. At December 31, 2024,2025, we had outstanding advances of $24.2$38.4 million from the FHLB. At December 31, 2024,2025, we had unused borrowing capacity of $43.3$26.9 million from the FHLB. At December 31, 2024,2025, we also had a $25.0 million available line of credit with the Discount Window at the Federal Reserve Bank of Chicago. In addition, at December 31, 20242025 we had aan unsecured $6.0 million federal funds line of credit with a correspondent bank. We have not drawn against the Discount Window or the federal funds line of credit.
At December 31, 20242025 and December 31, 2023,2024, our capital levels at the Bank level exceeded the levels required to be technically considered “well capitalized” under federal regulatory capital regulations. However, we operate under an MOU with the Department and the FDIC pursuant to which, among other things, we have agreed to achieve and maintain Tier 1 capital and total risk-based capital ratio levels above that which are required under federal regulatory capital regulations and a net worth ratio (as defined under Wisconsin law) of 6.0%. At December 31, 2024,2025, we had Tier 1 capital equal to 7.2%6.1% of total average assets, total risk-based capital equal to 13.0%11.6% of risk-weighted assets and a net worth ratio of 4.89%. At December 31, 2024, we had Tier 1 capital equal to 6.9% of total average assets, total risk-based capital equal to 12.5% of risk-weighted assets and a net worth ratio of 5.67%. At December 31, 2023, we had Tier 1 capital equal to 6.3% of total average assets, total risk-based capital equal to 11.9% of risk-weighted assets and a net worth ratio of 4.5%. Our net worth ratio for purposes of compliance with Wisconsin law is calculated differently from the federal regulatory capital regulations in that it reflects the impact of the Bank’s unallocated general loan loss reserves. The Bank’s unallocated general loan loss reserves do not impact the calculation of the federal regulatory capital ratios.
The net proceeds contributed to the Bank from the stock offering completed on September 20, 2024, have significantly increased our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including funding loans. Our financial condition and results of operations will be enhanced by the net proceeds from the offering, which will increase our net interest-earning assets and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the offering, as well as other factors associated with the offering, our return on equity may be adversely affected for a period of time following the offering. This could negatively affect the trading price of our shares of common stock.
Our off-balance sheet credit exposures are limited to unfunded loan commitments primarily related to residential real estate loans. The unfunded commitments are evaluated on an annual basis. Our expected losses related to the unfunded commitments as of December 31, 20242025 were estimated to be $82,000 and have provisioned for this exposure$131,000 and recorded a reserve of $82,000$131,000 as of December 31, 2024.2025.
What changed in the latest 10-Q
Risk Factors
Not applicable, as the Company is a smaller reporting company.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Comparison of Operating Results for the Six Months Ended June 30, 2026 and 2025”
Largest changes
“We are considering implementing a private offering of up to $3.5 million of our common stock. If conducted, we anticipate such offering would be made only to stockholders of the Company as of April 1, 2026, that qualify as “accredited investors”, as such term is defined by the Securities and Exchange Commission. …”see in full comparison
Atsee in full comparisonMarchJune31,30, 2026 and December 31, 2025, our capital levels at the Bank level exceeded the levels required to be technically considered “well capitalized” under federal regulatory capital regulations.However, we operate under an MOU with the Department and the FDIC pursuant to which, among other things, we have agreed to achieve and maintain Tier 1 capital and total risk-based capital ratio levels above that which are required under federal regulatory capital regulations and a net worth ratio (as defined under Wisconsin law) of 6.0%.AtMarchJune31,30, 2026, we had Tier 1 capital equal to6.3%7.1% of total averageassets,assets and total risk-based capital equal to11.5%12.6% of risk-weightedassets and a net worth ratio of 4.99%.assets. At December 31, 2025, we had Tier 1 capital equal to 6.1% of total averageassets,assets and total risk-based capital equal to 11.6% of risk-weightedassets and a net worth ratio of 4.89%.assets.
“On June 29, 2026, the Company issued 261,682 shares of its common stock pursuant to a private placement for gross proceeds of $2,616,820. The private placement was conducted as a rights offering to eligible holders of the Company’s common stock. Only holders of the Company’s common stock who qualified as “accredited investors,” as defined in Regulation D under the Securities Act of 1933, as amended, were eligible to participate. The proceeds from the rights offering are being used to support the regulatory capital ratios of the Bank.”see in full comparison
“Comparison of Operating Results for the Six Months Ended June 30, 2026 and 2025”see in full comparison
“Net Interest Income. Net interest income increased $314,000 or 15.0%, to $2.4 million for the six months ended June 30, 2026 from $2.1 million for the six months ended June 30, 2025, primarily due to an increase in the interest rate spread to 1.83% for the six months ended June 30, 2026 from 1.54% for the six months ended June 30, 2025 and an increase in the net interest margin to 1.92% for the six months ended June 30, 2026, from 1.62% for the six months ended June 30, 2025. …”see in full comparison
Noninterest Income. Noninterest income increasedsee in full comparison$102,000,$40,000, or31.8%,11.2%, to$422,000$400,000 for the three months endedMarchJune31,30, 2026 from$320,000$360,000 for the three months endedMarchJune31,30, 2025. Theincreasechange resulted primarily fromana$8,000$45,000 increase inmortgage banking income, a $101,000 increase inthe gain on sale of mortgage loans,a $9,000 increase in the gain on interest rate swap, anda $6,000 increase in bank owned life insuranceincome.income,Theseaincreases$6,000wereincreasepartiallyinoffsetthe gain onathecomparativeinterestbasisraterelatedswap,toand a$15,000$8,000decreaseincrease in other income primarily related toafeereductionincome on reciprocal deposit activity. These increases inrevenuenon-interest income were offset by a $18,000 decrease inourmortgageinvestmentbankinggroupservicingand title insurance activitiesincome and a $6,000 decrease indebit cardinterchangeincome.income due to activity declines on a year-over-year basis. The table below sets forth our noninterest income for the three months endedMarchJune31,30, 2026 and 2025:
Full comparison: every changed paragraph (48)
This Quarterly Report on Form 10-Q contains forward-looking statements,statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “could,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:
These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this prospectus.Quarterly Report on Form 10-Q.
Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. As of MarchJune 31,30, 2026, there have been no material changes to our critical accounting policies as compared to the critical accounting policies disclosed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Comparison of Financial Condition at MarchJune 31,30, 2026 and December 31, 2025
Total Assets. Total assets decreased $7.7$5.0 million, or 2.9%,1.8%, to $263.2$266.0 million at MarchJune 31,30, 2026 from $271.0 million at December 31, 2025. The change was primarily the result of a $4.5$3.5 million net decrease in portfolio loans due to the sale of approximately $6.3 million in loans, a $2.5$5.2 million decrease in securities held-to-maturity, a $308,000$575,000 decrease in cashsecurities available for sale, and casha equivalents$499,000 anddecrease in time deposits with other financial institutions,institutions offset by a $5.4 million increase in cash and acash $307,000 decrease in securities available-for-sale.equivalents.
Cash and Cash Equivalents and Time Deposits with Other Financial Institutions. Total cash and due from banks and time deposits with other financial institutions decreasedincreased $308,000,$4.9 million or 5.3%85.1% to $5.5$10.7 million at MarchJune 31,30, 2026 from $5.8 million at December 31, 2025. The change was related to generalproceeds businessfrom activity.the common stock issuance in the second quarter of 2026, the sale of loans in the first quarter of 2026, maturities of investment securities, and an increase in total deposits.
Securities Available-for-Sale. Securities available-for-sale declined $307,000,$575,000, or 1.4%,2.6%, to $22.0$21.7 million at MarchJune 31,30, 2026 from $22.3 million at December 31, 2025. The decrease was primarily due to $223,000$487,000 in net maturities of investment securities and principal paydowns on mortgage-backed securities and a $84,000$102,000 decrease in the market value of the portfolio due to an increase in market interest rates during the threesix months ended MarchJune 31,30, 2026. The proceeds from maturities and principal paydowns are utilized to manage balance sheet liquidity.
Securities Held-to-Maturity. Securities held-to-maturity decreased $2.5$5.2 million, or 6.8%,14.4%, to $33.9$31.2 million at MarchJune 31,30, 2026 from $36.4 million at December 31, 2025. The decrease in securities held-to-maturity was due to $2.8$5.8 million of investment securities maturitiesmaturing during the period offset by $240,000$459,000 in amortization of unrealized losses and discounts.
Loans, net. Loans, net decreased $4.5$3.5 million, or 2.4%,1.9%, to $185.0$185.9 million at MarchJune 31,30, 2026 from $189.4 million at December 31, 2025. One- to four-family residential, other consumer, marine and recreational, home equity, construction, and commercial real estate loans decreased $4.6$4.3 million, $399,000,$627,000, $224,000,$579,000, $98,000, $95,000,$105,000, and $26,000,$59,000, respectively, to $125.1$125.4 million, $2.8$2.6 million, $30.0$29.7 million, $1.9 million, $12.1 million, and $1.9 million at MarchJune 31,30, 2026, respectively,respectively. asThese achanges were the result of the sale of approximately $6.3 million in aggregate principal balances of one- to four- family residential loans in January 2026 and loan payoffs and amortization exceeding productions.production. These decreases were partially offset by increases in home equity lines of credit, construction, commercial installment, and multi-family loans of $495,000,$1.3 $347,000,million, $612,000, $190,000, and $146,000,$134,000, to $7.4$8.2 million, $3.9$12.8 million, $3.7 million, and $1.2 million at MarchJune 31,30, 2026, respectively.
Deposits. Total deposits increased $1.8$7.7 million or 0.8%3.5% to $219.0$224.9 million at MarchJune 31,30, 2026, from $217.2 million at December 31, 2025. Non-interest bearing deposits decreasedincreased $99,000,$3.1 million, or 1.3%,39.7%, to $7.6$10.8 million at MarchJune 31,30, 2026, compared to $7.7 million at December 31, 2025. Total interest-bearing deposits, other than time deposits, increased approximately $406,000,$4.2 million, or 0.4%,4.3%, to $97.8$101.6 million at MarchJune 31,30, 2026, from $97.4 million at December 31, 2025. Certificates of deposit increased $1.4 million, or 1.3%, to $113.5 million at March 31, 2026, from $112.1 million at December 31, 2025. Deposit mix changes were consistent with industry trends as consumers continue to transition to higher yielding money market and term deposits due to the interest rate environment.
Certificates of deposit increased $407,000, or 0.4%, to $112.5 million at June 30, 2026, from $112.1 million at December 31, 2025. Non interest-bearing deposits have increased due to funding received from the Company’s stock offering held in escrow and our emphasis on deposit growth from both business and personal customers. Interest-bearing deposits have increased in both savings and money market accounts due to emphasis on deposit growth and increased utilization of fully insured deposit offerings.
Borrowings. We had $29.3$23.4 million of borrowings at MarchJune 31,30, 2026 as compared to $38.4 million at December 31, 2025. The decrease of $9.1$15.0 million in FHLB borrowings is primarily due to utilizing cash generated from loan sales andsales, maturities of investment securitiessecurities, proceeds from the stock offering, and increase in deposits during the threesix months ended MarchJune 31,30, 2026 to paydown borrowings.
Stockholders’ Equity. Total stockholders’ equity decreasedincreased $244,000$2.0 million to $13.0$15.2 million at MarchJune 31,30, 2026 from $13.2 million at December 31, 2025. Common stock and additional paid-in capital increased $2.4 million related to issuance of common stock net of issuance costs from the stock offering. Retained earingsearnings decreased $341,000$679,000 resulting from the net loss incurred for the threesix months ended MarchJune 31,30, 2026. Accumulated other comprehensive loss decreased $115,000$260,000 due to amortization of unrealized holding gains on securities held-to-maturity partially offset by an increase in the unrealized holding loss on securities available-for-sale.
Comparison of Operating Results for the Three Months Ended MarchJune 31,30, 2026 and 2025
Net Income/(Loss). We recorded a net loss of $365,000$315,000 for the three months ended MarchJune 31,30, 2026, compared to a net loss of $569,000$279,000 for the three months ended MarchJune 31,30, 2025, a decreasechange of $36,000 year-over-year for the period. The increase in our net loss of $204,000 year-over-year. The change in year-over-year performance resulted primarily from a $215,000$146,000 decrease in the income tax benefit and an increase in net interest income due to an overall increase in yield on average earning assets and decline in funding cost on interest-bearing liabilities, a decline of $57,000$34,000 in the provision for credit losses,losses offset by a $102,000$99,000 increase in net interest income, an increase of $40,000 in noninterest income, and a decline$5,000 of $57,000decrease in noninterest expense offset by a $228,000 decline in the benefit from income taxes.expense.
Interest and Dividend Income. Interest and dividend income increaseddecreased $77,000$96,000, or 3.0%,3.5%, to $2.7 million for the three months ended MarchJune 31,30, 2026, from $2.6$2.8 million for the three months ended MarchJune 31,30, 2025, due to a $62,000$103,000 increasedecrease in interest and fees on loans and a $36,000 increase in interest and dividends on other investment offset by a $21,000 decline in interest on investment securities.loans. The increasedecrease in interest and fees on loans was primarily due to ana increasedecline of 23$7.8 million in average loan balances and a one basis pointspoint decline in the weighted average yield on the loan portfolio to 5.15%5.06% for the three months ended MarchJune 31,30, 20262026, from 4.92%5.07% for the same period in 2025. Average loan balances declined $3.7 million for the three months ended March 31, 2026 compared to the same period in 2025. Interest and dividend income on securities and other investments increased $15,000$7,000 to $331,000$321,000 for the three months ended MarchJune 31,30, 2026 primarily due to ana $2.8 million increase in dividendsthe onaverage Federalbalance Homeof Loaninterest-bearing Bankcash stockbalances holdingsand other interest-earning assets offset by the interest income impact of a $4.0$7.0 million decline in average investment securities balances year-over-year for the period. The average balance decrease in investment securities was primarily related to maturitiessecurity and paydowns during the three months ended March 31, 2026.maturities.
Interest Expense. Total interest expense decreased $195,000, or 11.9% to $1.4 million for the three months ended June 30, 2026 compared to $1.6 million for the three months ended June 30, 2025. Interest expense on deposits declined $93,000 to $1.2 million for the three months ended June 30, 2026 compared to $1.3 million for the three months ended June 30, 2025. This decrease was due to a $5.7 million decline in average total interest-bearing deposit balances for the three months ended June 30, 2026 compared to the same period in 2025. The weighted average rate paid on deposits declined 12 basis points to 2.20% from 2.32% for the three months ended June 30, 2026 and 2025.
Interest Expense. Total interest expense decreased $138,000, or 8.4%, to $1.5 million for the three months ended March 31, 2026, from $1.6 million for the three months ended March 31, 2025. Interest expense on deposits decreased $215,000 or 15.6%, to $1.2 million for the three months ended March 31, 2026 compared to $1.4 million for the three months ended March 31, 2025, due primarily to a decrease in the weighted average rate paid on interest-bearing demand deposits of 64 basis points to 0.11% for the three months ended March 31, 2026 from 0.75% for the three months ended March 31, 2025 combined with a decrease in the average balance of such deposits of $7.7 million related to brokered deposits utilized during the same period in the prior year. Brokered deposits were not used during the three months ended March 31, 2026. Interest expense on time deposits declined $140,000 to $1.1 million for the three months ended March 31, 2026 compared to $1.2 million for the three months ended March 31, 2025 due to a 54 basis point decline in average cost of funds to 3.81% from 4.35% during the same period in the prior year.
Interest expense on borrowed funds increaseddecreased $77,000, or 29.3%, to $339,000$101,000 for the three months ended MarchJune 31,30, 2026,2026 fromto $262,000$264,000 compared to $365,000 for the three months ended MarchJune 31,30, 2025. The weighted average rate paid on borrowed funds decreaseddeclined six15 basis points to 4.06%3.86% for the three months ended MarchJune 31,30, 2026, from 4.12%4.01% for the three months ended MarchJune 31,30, 2025 while the average balance of borrowed funds increaseddecreased $8.1$9.1 million, or 31.3%,24.8%, to $33.9$27.4 million for the three months ended MarchJune 31,30, 2026 from $25.8$36.5 million for the three months ended MarchJune 31,30, 2025. The increasedecrease in the average balance was generally related to the measureddecline usein offunding borrowingsneeds due to offsetthe brokered$11.9 depositmillion outflows.reduction in average interest-earning assets and proceeds received from the common stock issuance.
Net Interest Income. Net interest income increased $215,000$99,000, or 22.3%,8.7%, to $1.2 million for the three months ended MarchJune 31,30, 2026 from $1.0$1.1 million for the three months ended MarchJune 31,30, 2025, primarily due to an increase in the interest rate spread to 1.79%1.86% for the three months ended MarchJune 31,30, 2026 from 1.47%1.64% for the three months ended MarchJune 31,30, 2025 and an increase in the net interest margin to 1.88%1.98% for the three months ended MarchJune 31,30, 2026, from 1.51%1.72% for the three months ended MarchJune 31,30, 2025. The increases in the interest rate spread and the net interest margin were primarily due to an improvementincrease in the weighted average yield on total interest-earningsinterest-earning assets ofand 16decline basisin pointsweighted resulting from an increase of loanaverage yield ofon 23interest-bearing basis points to 5.15% for the three months ended March 31, 2026 compared to 4.92% for the three months ended March 31, 2025.liabilities.
Provision for Credit Losses. Based on management’s analysis of the adequacy of the ACL on loans and unfunded loan commitments, a net provision of $53,000$43,000 comprisingwas of a provision of $49,000made to the ACL on loans and a provision of $4,000$6,000 to the ACL for unfunded loan commitments was recorded for the three months ended MarchJune 31,30, 2026,2026. compared to aA provision of $64,000$6,000 was made to the ACL on loans and $46,000$9,000 to the ACL for unfunded loan commitments for the three months ended June 30, 2025. The adequacy of the ACL and provision expense is based on an analysis of current credit characteristics in conjunction with loss history of the sameloan periodportfolio inand 2025.peer group loss data.
Noninterest Income. Noninterest income increased $102,000,$40,000, or 31.8%,11.2%, to $422,000$400,000 for the three months ended MarchJune 31,30, 2026 from $320,000$360,000 for the three months ended MarchJune 31,30, 2025. The increasechange resulted primarily from ana $8,000$45,000 increase in mortgage banking income, a $101,000 increase inthe gain on sale of mortgage loans, a $9,000 increase in the gain on interest rate swap, and a $6,000 increase in bank owned life insurance income.income, Thesea increases$6,000 wereincrease partiallyin offsetthe gain on athe comparativeinterest basisrate relatedswap, toand a $15,000$8,000 decreaseincrease in other income primarily related to afee reductionincome on reciprocal deposit activity. These increases in revenuenon-interest income were offset by a $18,000 decrease in ourmortgage investmentbanking groupservicing and title insurance activitiesincome and a $6,000 decrease in debit card interchange income.income due to activity declines on a year-over-year basis. The table below sets forth our noninterest income for the three months ended MarchJune 31,30, 2026 and 2025:
Noninterest Expense. Noninterest expense decreased $57,000,$5,000, or 2.9%,0.3%, tototaling $1.9 million for the three months ended MarchJune 31,30, 2026 from $2.0 million for the three months ended March 31,and 2025. Salary and benefit expenses decreased $62,000$56,000 and occupancy expense declined $14,000 due primarily to savings realized on the closing of two branches over recent years and reduction in employee count. Data processing expense decreased $81,000 due to reduction in numbermanagement of employees,related data processingcontracts and information technology expense decreased $16,000 due to a reductionchanges in network management costs, and other noninterest expense decreased $15,000 due a decline in legal services and general expense.services. The decreasedecreases in noninterest expense was partiallywere offset by a $43,000$66,000 increase in FDIC insurance premiums.premiums and $83,000 increase in other expenses related to additional legal, professional and consulting services. The table below sets forth our noninterest expense for the three months ended MarchJune 31,30, 2026 and 2025:
Income Tax Expense. We did not record income tax expense or benefit for the three months ended MarchJune 31,30, 20262026, compared to a benefit of $227,000$146,000 for the three months ended MarchJune 31,30, 2025. The current year change in the deferred tax valuation allowance of $93,000 was offset by an equal deferred tax benefit.
Comparison of Operating Results for the Six Months Ended June 30, 2026 and 2025
Net Income/(Loss). We recorded a net loss of $679,000 for the six months ended June 30, 2026, compared to a net loss of $847,000 for the six months ended June 30, 2025, a decrease in loss of $168,000 year-over-year for the period. The change in year-over-year performance resulted primarily from a $314,000 increase in net interest income due to an overall increase in yield on average earning assets and decline in funding cost on interest-bearing liabilities, a decline of $23,000 in the provision for credit losses, a $142,000 increase in noninterest income, and a decrease of $62,000 in noninterest expense offset by a $374,000 decline in the benefit from income taxes.
Interest and Dividend Income. Interest and dividend income decreased $19,000 or 0.3%, to $5.3 million for the six months ended June 30, 2026, from $5.4 million for the six months ended June 30, 2025, due to a $40,000 decrease in interest and fees on loans and a $43,000 decrease in interest on investment securities offset by a $65,000 increase in interest and dividends on other investments. The decrease in interest and fees on loans was primarily due to a $5.0 million decline in average loan balances for the six months ended June 30, 2026 compared to the same period in 2025 offset by an increase of nine basis points in the weighted average yield on the loan portfolio to 5.11% for the six months ended June 30, 2026 from 5.02% for the same period in 2025. The decrease in interest on investment securities was primarily due to a $5.9 million decline in average investment balances due to maturities and paydowns for the six months ended June 30, 2026 compared to the same period in 2025 offset by a three basis point increase in weighted average yield to 1.73% for the six months ended June 30, 2026 from 1.70% for the same period in 2025. Interest and dividend income on cash, cash equivalents, and other interest-earning assets increased $64,000 to $172,000 for the six months ended June 30, 2026 primarily due to a $2.9 million increase in average balances for the six months ended June 30, 2026 compared to the same period in 2025 and related increase in dividends on Federal Home Loan Bank stock holdings of $39,000 and a $26,000 increase in interest earned on overnight investment accounts.
Interest Expense. Total interest expense decreased $332,000, or 10.1%, to $2.9 million for the six months ended June 30, 2026, from $3.3 million for the six months ended June 30, 2025. Interest expense on deposits decreased $308,000 or 11.6%, to $2.3 million for the six months ended June 30, 2026 compared to $2.6 million for the six months ended June 30, 2025, due primarily to a decrease in the weighted average rate paid on interest-bearing demand deposits of 51 basis points to 0.11% for the six months ended June 30, 2026 from 0.62% for the six months ended June 30, 2025 combined with a decrease in the average balance of such deposits of $10.5 million related to brokered deposits utilized during the same period in the prior year. Brokered deposits were not used during the six months ended June 30, 2026. Interest expense on time deposits declined $220,000 to $2.1 million for the six months ended June 30, 2026 compared to $2.3 million for the six months ended June 30, 2025 due to a 41 basis point decline in average cost of funds to 3.80% from 4.21% during the same period in the prior year.
Interest expense on borrowed funds decreased $25,000, or 3.9%, to $603,000 for the six months ended June 30, 2026, from $628,000 for the six months ended June 30, 2025. The rate paid on borrowed funds decreased 16 basis points to 3.97% for the six months ended June 30, 2026, from 4.13% for the six months ended June 30, 2025 while the average balance of borrowed funds remained consistent at $30.6 million for the six months ended June 30, 2026 and 2025.
Net Interest Income. Net interest income increased $314,000 or 15.0%, to $2.4 million for the six months ended June 30, 2026 from $2.1 million for the six months ended June 30, 2025, primarily due to an increase in the interest rate spread to 1.83% for the six months ended June 30, 2026 from 1.54% for the six months ended June 30, 2025 and an increase in the net interest margin to 1.92% for the six months ended June 30, 2026, from 1.62% for the six months ended June 30, 2025. The increases in the interest rate spread and the net interest margin were primarily due to an improvement in yield on total interest-earnings assets of 12 basis points resulting from an increase in loan yield of nine basis points to 5.11% for the six months ended June 30, 2026 compared to 5.02% for the six months ended June 30, 2025. Interest rate spread and net interest margin were also favorably impacted by a 17 basis point reduction in average rate paid on interest-bearing liabilities to 2.44% for the six months ended June 30, 2026 from 2.61% for the six months ended June 30, 2025. The average rate paid on certificates of deposit and borrowed funds declined 41 basis points and 16 basis points for the six months ended June 30, 2026 compared to same period in 2025.
Provision for Credit Losses. Based on management’s analysis of the adequacy of the ACL on loans and unfunded loan commitments, a total provision of $102,000 comprising of a provision of $92,000 to the ACL on loans and a provision of $10,000 to the ACL for unfunded loan commitments was recorded for the six months ended June 30, 2026, compared to a provision of $70,000 to the ACL on loans and $56,000 to the ACL for unfunded commitments in the same period in 2025.
Noninterest Income. Noninterest income increased $142,000, or 20.9%, to $823,000 for the six months ended June 30, 2026 from $680,000 for the six months ended June 30, 2025. The increase resulted primarily from a $146,000 increase in gain on sale of mortgage loans, a $14,000 increase in the gain on interest rate swap, and a $13,000 increase in bank owned life insurance income. These increases were partially offset on a comparative basis related to a $11,000 decrease in debit card interchange income, a $10,000 decrease in mortgage banking income, and a $7,000 decrease in other income related to a reduction in revenue in our investment group and title insurance activities. The table below sets forth our noninterest income for the six months ended June 30, 2026 and 2025:
Noninterest Expense. Noninterest expense decreased $62,000, or 1.6%, to $3.8 million for the six months ended June 30, 2026 from $3.9 million for the six months ended June 30, 2025. Salary and benefit expenses decreased $118,000 due to reduction in number of employees, data processing and information technology expense decreased $97,000 due to a reduction in network management costs, and occupancy expense decreased $16,000 due to savings realized on closing two branch locations over recent years. The decreases were partially offset by a $110,000 increase in FDIC insurance premiums and a $68,000 increase in other noninterest expense due to increases in legal, consulting, commercial lending, and general expense. The table below sets forth our noninterest expense for the six months ended June 30, 2026 and 2025:
Income Tax Expense. We did not record income tax expense or benefit for the six months ended June 30, 2026 compared to benefit of $374,000 for the six months ended June 30, 2025. The current year change in the deferred tax valuation allowance of $186,000 was offset by an equal deferred tax benefit.
The following table sets forth, as of MarchJune 31,30, 2026, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the U.S. Treasury yield curve.
The table above indicates that at MarchJune 31,30, 2026, we would have experienced a 0.85%1.26% decreaseincrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 2.79%0.22% increase in net interest income in the event of an instantaneous parallel 200 basis point decrease in market interest rates.
The following table sets forth, as of MarchJune 31,30, 2026, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the U.S. Treasury yield curve.
The table above indicates that at MarchJune 31,30, 2026, we would have experienced a 19.39%12.88% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 21.22%13.86% increase in EVE in the event of an instantaneous parallel 200 basis point decrease in market interest rates. The change in EVE that we would experience in the event of an instantaneous parallel 200 basis point increase and decrease in market interest rates is outside of the limits set forth in the Bank’s asset/liability management policy. While the Bank has developed policies and procedures that it believes will help reduce its interest rate exposure, any targeted improvement is expected to be realized gradually given the constraints imposed by the Bank’s current balance sheet composition and capital structure as well as regulatory requirements.
Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We are also able to borrow from the FHLB. At MarchJune 31,30, 2026, we had outstanding advances of $29.3$23.4 million from the FHLB. At MarchJune 31,30, 2026, we had unused borrowing capacity of $29.0$43.7 million from the FHLB. At MarchJune 31,30, 2026, we also had a $25.0 million available line of credit with the Discount Window at the Federal Reserve Bank of Chicago. In addition, at MarchJune 31,30, 2026 we had a $6.0 million federal funds line of credit with a correspondent bank. We have not drawn against the Discount Window or the federal funds line of credit.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. For additional information, see the condensed consolidated statements of cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025 included as part of the consolidated financial statements appearing elsewhere in this filing.
On June 29, 2026, the Company issued 261,682 shares of its common stock pursuant to a private placement for gross proceeds of $2,616,820. The private placement was conducted as a rights offering to eligible holders of the Company’s common stock. Only holders of the Company’s common stock who qualified as “accredited investors,” as defined in Regulation D under the Securities Act of 1933, as amended, were eligible to participate. The proceeds from the rights offering are being used to support the regulatory capital ratios of the Bank.
Existing stockholders who did not participate in the rights offering experienced dilution as a result of the rights offering. The 261,682 shares of common stock issued in the rights offering represented approximately 25.8% of the 1,014,220 shares of common stock outstanding immediately following the issuance.
On July 16, 2026, the Company subsequently completed the rights offering through its issuance of 88,318 shares of its Series A Junior Non-Voting Participating Preferred Stock pursuant to the rights offering for gross proceeds of $883,180. The results of the issuance of the Series A Junior Non-Voting Participating Preferred Stock is not reflected in the Company’s financial condition or results of operations for the quarter ended June 30, 2026.
As a Wisconsin-chartered savings bank, we must maintain a net worth ratio of 6.0% (with “net worth ratio” defined under Wisconsin law as the Bank’s total liabilities subtracted from its total assets, plus unallocated general loan loss reserves, all divided by the Bank’s total assets). At MarchJune 31,30, 2026 and December 31, 2025, we had a net worth ratio of 4.99%5.77% and 4.89%, respectively.
At MarchJune 31,30, 2026 and December 31, 2025, our capital levels at the Bank level exceeded the levels required to be technically considered “well capitalized” under federal regulatory capital regulations. However, we operate under an MOU with the Department and the FDIC pursuant to which, among other things, we have agreed to achieve and maintain Tier 1 capital and total risk-based capital ratio levels above that which are required under federal regulatory capital regulations and a net worth ratio (as defined under Wisconsin law) of 6.0%. At MarchJune 31,30, 2026, we had Tier 1 capital equal to 6.3%7.1% of total average assets,assets and total risk-based capital equal to 11.5%12.6% of risk-weighted assets and a net worth ratio of 4.99%.assets. At December 31, 2025, we had Tier 1 capital equal to 6.1% of total average assets,assets and total risk-based capital equal to 11.6% of risk-weighted assets and a net worth ratio of 4.89%.assets.
We are considering implementing a private offering of up to $3.5 million of our common stock. If conducted, we anticipate such offering would be made only to stockholders of the Company as of April 1, 2026, that qualify as “accredited investors”, as such term is defined by the Securities and Exchange Commission. Any securities issued in such an offering (1) will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements, and (2) will be offered and sold in reliance upon exemptions from registration under the Securities Act and state securities laws.
Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At MarchJune 31,30, 2026, we had outstanding commitments to extend credit of $26.4$30.0 million. We anticipate that we will have sufficient funds available to meet our current lending commitments. Certificates of deposit that are scheduled to mature in one year or less from MarchJune 31,30, 2026 totaled $94.9$92.9 million. Management expects that a substantial portion of these time deposits will be retained. However, if a substantial portion of these time deposits is not retained, we may utilize advances from the FHLB or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
Our off-balance sheet credit exposures are limited to unfunded loan commitments primarily related to residential real estate loans. The unfunded commitments are evaluated on a quarterly basis. Our losses related to the unfunded commitments as of MarchJune 31,30, 2026 were estimated to be $135,000.$141,000. We have provisioned for this exposure and recorded a reserve of $135,000$141,000 as of MarchJune 31,30, 2026.
EWSB insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 9 Form 4 filings (5 insiders, 2 trade dates, 342,342 shares, about $3.4M) and open-market sales in 0 filings. Net open-market shares: 342,342 (purchases minus sales); net value about $3.4M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-29 | Schmalz Charles D |
Open-market purchase | 8,500 | $10.00 | $85.0K |
| 2026-06-29 | Schmalz Charles D |
Open-market purchase | 59,141 | $10.00 | $591.4K |
| 2026-06-29 | Mangold James E |
Open-market purchase | 39,950 | $10.00 | $399.5K |
| 2026-06-29 | Schneider Kory J |
Open-market purchase | 15,040 | $10.00 | $150.4K |
| 2026-06-29 | Schneider Kory J |
Open-market purchase | 32,860 | $10.00 | $328.6K |
| 2026-06-29 | Vander Loop Kailee |
Open-market purchase | 1,500 | $10.00 | $15.0K |
| 2026-06-29 | Vander Loop Kailee |
Open-market purchase | 6,040 | $10.00 | $60.4K |
| 2026-06-29 | Vander Loop Kailee |
Open-market purchase | 7,640 | $10.00 | $76.4K |
| 2026-06-29 | Haen Steven |
Open-market purchase | 1,000 | $10.00 | $10.0K |
| 2025-06-29 | Vander Loop Kailee |
Open-market purchase | 7,640 | $10.00 | $76.4K |
| 2025-06-29 | Vander Loop Kailee |
Open-market purchase | 1,500 | $10.00 | $15.0K |
| 2025-06-29 | Vander Loop Kailee |
Open-market purchase | 6,040 | $10.00 | $60.4K |
| 2025-06-29 | Schneider Kory J |
Open-market purchase | 32,860 | $10.00 | $328.6K |
| 2025-06-29 | Schneider Kory J |
Open-market purchase | 15,040 | $10.00 | $150.4K |
| 2025-06-29 | Mangold James E |
Open-market purchase | 39,950 | $10.00 | $399.5K |
| 2025-06-29 | Schmalz Charles D |
Open-market purchase | 59,141 | $10.00 | $591.4K |
| 2025-06-29 | Schmalz Charles D |
Open-market purchase | 8,500 | $10.00 | $85.0K |
Well-known investors holding EWSB (13F)
None of the 59 investors we track reported a position in their latest 13F.