PNSB 10-K & 10-Q changes, risk factors and insider trading

This discussion and analysis reflects our financial information and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the accompanying unaudited financial statements and the audited financial statements whichincluded appearwith beginningthe onForm page F-1 of our prospectus dated March 16, 2026.S-1.

Allowance for Credit Losses (ACL). The allowance for credit losses is the estimated amount considered necessary to cover expected credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for credit losses on loans which is charged against income,income; in determining the allowance for credit losses, management makes significant estimates and has identified this policy as one of our most critical accounting policies. The AssociationBank adopted the Current Expected Credit Loss (CECL) accounting standard effective January 1, 2023, using the Weighted Average Remaining Maturity (WARM) method. The WARM method calculates an average annualized historical Net Charge-off (NCO) rate for a specific segment of a loan portfolio over a defined lookback period. The WARM factor represents the estimated remaining life of the loan portfolio segment, adjusted for scheduled amortization and estimated prepayments. Qualitative adjustments (Q factors) are incorporated to account for factors not captured by the historical data, such as current economic conditions and forecasts that might differ from historical trends. The ACL calculation is the average annual NCO rates multiplied by the estimated remaining life of the loan portfolio segment (WARM factor) and then adjusted by the Q factors to arrive at the estimated ACL.

Comparison of Financial Condition at MarchJune 31,30, 2026 and December 31, 2025

Total Assets. Total assets increased $2.3$13.2 million, or 1.9%,11.0%, since December 31, 2025. The increase was primarily comprised of increases in cash and cash equivalents of $888,000,$12.6 million, net loans of $777,000,$2.5 million, deferred tax asset of $465,000, prepaid conversion costs of $302,000,$539,000, and other assets of $93,000,$114,000, which was partially offset by decreases in prepaid Conversion costs of $2.0 million, investment securities available for sale of $176,000,$319,000, and investment securities held to maturity of $56,000.$100,000.

Cash and Cash Equivalents. Cash and cash equivalents increased by $888,000,$12.6 or 9.7%,million, to $10.1$21.8 million at MarchJune 31,30, 2026, compared to $9.2 million at December 31, 2025. This increase was primarily due to annet increaseproceeds received from the issuance of deposits,common stock totaling $13.6 million as part of the Conversion as well as maturities and payments received on investment securities available for sale and investment securities held to maturity.maturity, which was partially offset by the purchase of ESOP shares of $1.4 million.

Investment Securities Available for Sale. Investment securities available for sale decreased by $176,000,$319,000, or 2.0%,3.7%, since December 31, 2025. The decline was a result of maturities and principal payments on mortgage-backed securities. No purchases of investment securities available for sale occurred during the threesix months ended MarchJune 31,30, 2026. The unrealized loss on investment securities available for sale increased $14,000$18,000 during the threesix months ended MarchJune 31,30, 2026 from $409,000 at December 31, 2025 to $423,000$427,000 at MarchJune 31,30, 2026.

Investment Securities Held to Maturity. Investment securities held to maturity decreased by $56,000,$100,000, or 3.7%,6.6%, from December 31, 2025 to $1.5$1.4 million at MarchJune 31,30, 2026. This decrease was the result of principal payments on mortgage-backed securities.

Gross Loans. Gross loans increased $803,000,$2.4 million, or 0.9%,2.7%, to $92.1$93.8 million at MarchJune 31,30, 2026 compared to December 31, 2025, primarily duereflecting growth in residential one- to onefour-family largemortgage loans, including residential construction loans. The increase was partially offset by decreases in consumer and commercial real estate loan of $474,000 funded in February 2026 and stronger residential real estate loan demand as mortgage rates declined.loans.

Residential one- to four-family mortgage loans (including residential construction loans) increased $628,000,$2.4 million, or 0.8%,3.0%, from $79.5 million at December 31, 2025 to $80.2$81.9 million at MarchJune 31,30, 2026. Commercial realloans estate(commercial loansand industrial and municipal loan segments) increased $430,000,$364,000, or 6%, from December 31, 202515.4%, to $7.6$2.7 million at MarchJune 31,30, 2026. Commercial construction and land development loans decreasedincreased by $30,000,$42,000, or 2.7%,3.9%, to $1.1 million at MarchJune 31,30, 2026. Commercial real estate loans decreased $26,000,$106,000, or 1.1%,1.5%, from December 31, 2025 to $2.3$7.0 million at MarchJune 31,30, 2026. Consumer loans decreased $200,000,$218,000, or 16.6%,18.2%, to $1.0 million at MarchJune 31,30, 2026.

Deposits. Deposits increased to $94.7 million at MarchJune 31,30, 2026, an increase of $2.0 million, or 2.2%, from $92.7 million at December 31, 2025. Non-maturity deposits decreased $3.0$2.9 million and time deposits increased by $5.0$4.9 million. The decrease in non-maturity deposits was primarily due to timing of payroll runs with a few larger business customers as well as customers moving from non-maturity savings accounts to time deposits, specifically the new flex CD product. The increase in time deposits was primarily due to customers moving from non-maturity savings accounts to time deposits, specifically the new flex CD product. The majority of the increase in time depositdeposits increasewas were intoin certificates of deposit with maturities of less than one year.

Borrowings. Federal Home Loan Bank advances totaled $8.0 million outstanding at both MarchJune 31,30, 2026 and December 31, 2025. The borrowing originated in September 2023 forto finance the purpose of construction of our new facility in Deer Lodge asand wellto as fundingsupport loan growth. At MarchJune 31,30, 2026, the AssociationBank had access to up to $42.7$45.3 million of additional advances from the Federal Home Loan Bank compared to $42.1 million at December 31, 2025.

Total NetShareholders’ Worth.Equity. Total netshareholders’ worthequity decreasedincreased $1.3$10.8 million, or 6.9%,58.3%, to $17.2$29.2 million at MarchJune 31,30, 2026, compared to $18.5 million at December 31, 2025. RetainedThe earningsincrease werewas decreaseddue primarily to the completion of the common stock offering and issuance of the common stock, resulting in total proceeds, net of offering costs, of $13.6 million, partially offset by decreases from the purchase of ESOP shares of $1.4 million, net losses of $1.3$1.4 million and an increase in accumulated other comprehensive loss of $10,000$13,000 during the threesix months ended MarchJune 31,30, 2026.

Comparison of Operating Results for the Three Months ended MarchJune 31,30, 2026 and 2025

General. Net loss for the three months ended MarchJune 31,30, 2026 was $1.3 million,$148,000, a decrease of $1.4 million, or 1,526.5%,$185,000, compared to net income of $89,000$37,000 for the three months ended MarchJune 31,30, 2025. The decrease in net income was primarily due to aan one-time expenseincrease of $1.7$286,000 millionin data processing for conversion costs forof our core data processing platform to a new platform scheduledcompleted forin July 2026, provision for credit losses on loans and unfunded commitments of $49,000 as compared to a $93,000 recovery in the three months ended March 31, 2025, and an increase in professional fees of $88,000$48,000 incurred in 2026 for the stock offering and conversion,Conversion, partially offset by an increaseincreases of $79,000$29,000 in net interest incomeincome, $42,000 recoveries of credit losses, $32,000 noninterest income, and a $495,000$41,000 decrease in income tax.

Interest Income. Interest income increased by $135,000,$166,000, or 10.6%,12.5%, to $1.4$1.5 million at MarchJune 31,30, 2026 from $1.3 million at MarchJune 31,30, 2025. The increase in interest income is attributed primarily to a $138,000,$134,000, or 12.1%11.4% increase in loan interest income. The increased loan interest income primarily resulted from the lagged impact of elevated 2023 and 2024 loan yields on the portfolio, as those loans had not yet repriced lower by MarchJune 31,30, 2025, partially offset by later 2025 rate declines.

The average balance of loans during the three months ended MarchJune 31,30, 2026 increased by $3.4$6.3 million, or 3.8%,7.2%, from the three months ended MarchJune 31,30, 2025. The average yield on loans increased to 5.62%5.65% for the three months ended MarchJune 31,30, 2026, from 5.20%5.44% for the three months ended MarchJune 31,30, 2025.

The average balance of investment securities decreased $1.7 million, or 13.8% to $10.6$10.3 million for the three months ended MarchJune 31,30, 2026, from $12.3$12.0 million for the three months ended MarchJune 31,30, 2025. The average yield on investment securities remainedincreased stableto at 2.58%2.79% for the three months ended MarchJune 31,30, 20262026, andfrom 2.64% for the three months ended June 30, 2025.

Interest Expense. Total interest expense increased $55,000,$136,000, or 12.5%,32.2%, to $500,000$559,000 for the three months ended MarchJune 31,30, 2026 from MarchJune 31,30, 2025. The increase was primarily attributable to the increased average balance of certificates of deposit during the year, reflecting increased customer demand for certificates of deposit with the additional offering of the flex certificates of deposit accounts.

There was an increase in the average cost of interest-bearing deposits to 1.96%2.16% for the three months ended MarchJune 31,30, 2026 from 1.83%1.73% for the three months ended MarchJune 31,30, 2025, reflecting the renewals of time deposits in the current market interest rate environment. The average balance of interest-bearing deposits increased by $6.2$9.7 million, or 8.0%,12.4%, to $84.3$87.4 million for the three months ended MarchJune 31,30, 2026 from $78.1$77.8 million for the three months ended MarchJune 31,30, 2025.

Interest paid on FHLB borrowings remained stable with no significant changes in borrowings from MarchJune 31,30, 2025 to MarchJune 31,30, 2026.

Net Interest Income. Net interest income increased $79,000,$29,000, or 9.5%,3.2%, to $910,000$931,000 for the three months ended MarchJune 31,30, 2026 compared to $831,000$902,000 for the three months ended MarchJune 31,30, 2025. The increase reflects the increase in theaverage interestnet rateinterest-earning spreadassets of $1.3 million or 6.6%, to 3.01%$21.3 million for the three months ended MarchJune 31,30, 2026 from $19.9 million for the three months ended June 30, 2025, while the interest rate spread decreased to 2.76% for the three months ended MarchJune 31,30, 2025,2026 whilefrom average net interest-earning assets decreased $2.9 million year-to-year. The net interest margin increased to 3.34%3.04% for the three months ended MarchJune 31,30, 20262025. fromThe 3.14%net interest margin decreased to 3.19% for the three months ended MarchJune 31,30, 2026 from 3.41% for the three months ended June 30, 2025. Both the interest rate spread and net interest margin increaseddecreased due to the declining interest rate environment, along with interest-earning assets repricing more slowly than interest-bearing liabilities.

Provision for (Recovery of) Credit Losses. The provision for (recovery of) credit losses on loans for the three months ended MarchJune 31,30, 2026 was $30,000($53,000) compared to ($93,000$11,000) for the three months ended MarchJune 31,30, 2025, ana increasedecrease of $123,000.$42,000. The allowance for credit losses increased by $30,000,$20,000, or 2.7%,1.8%, to $1.2 million at March 31, 2026 from $1.1 million at MarchJune 31,30, 2025.2026. The allowance for credit losses represented 1.19% of total loans at June 30, 2026 and 1.27% of total loans at MarchJune 31, 2026 and March 31,30, 2025. The determination of the adequacy of the allowance for credit losses was based primarily on the low balances of nonperforming loans, delinquent loans and net charge offs in both periods. The provision for (recovery of) credit losses on unfunded loan commitments increaseddecreased by $19,000$300 for the three months ended MarchJune 31,30, 2026 fromcompared to the three months ended MarchJune 31,30, 2025. The reserve for unfunded loan commitments increased $31,000, or 88.6%,88.4%, to $66,000 at MarchJune 31,30, 2026 from $35,000 at MarchJune 31,30, 2025.

The allowance for credit losses reflects the estimate management believes to be appropriate to cover current expected credit losses which were inherent in the loan portfolio at MarchJune 31,30, 2026 and December 31, 2025. While management believes the estimates and assumptions used in the determination of the adequacy of the allowance are reasonable, such estimates and assumptions could be proven incorrect in the future, and the actual amount of future provisions may exceed the amount of past provisions. Any such increase in future provisions that may be required may adversely impact the Bank’s financial condition and results of operations. Furthermore, as an integral part of its examination process, the FDIC will periodically review our allowance for credit losses. The FDIC may have judgementsjudgments different than those of management, and we may determine to increase our allowance as a result of these regulatory reviews.

Noninterest Income. Noninterest income totaled $73,000$86,000 for the three months ended MarchJune 31,30, 2026, aan decreaseincrease of $2,000,$32,000, or 2.7%,60.1%, from $75,000$54,000 for the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarily due to a $21,000 decrease in interchange fees as mostly offset by a $17,000 increase in cash value of life insurance from an additional $1.5 million policy purchased in September 2025, $2,000 increase in service fees, and $2,000a $16,000 increase in other noninterest income.

Noninterest Expense. Noninterest expense increased $1.8 million,$330,000, or 204.9%,34.3%, to $2.7$1.3 million for the three months ended MarchJune 31,30, 2026, compared to $870,000$962,000 for the three months ended MarchJune 31,30, 2025. The increase was primarily attributable to aan one-time expenseincrease of $1.7$286,000 millionin data processing for conversion costs forof our core data processing platform to a new platform scheduledcompleted forin July 2026, and an increase in professional fees of $88,000$48,000 incurred in 2026 for the stock offering and conversion, partially offset by a decrease of $10,000 in salaries and employee benefits.Conversion.

Provision for Income Taxes. The provision for income taxes decreased by $495,000, or 1,231.2%,$42,000, to ($455,000)a benefit of $73,000 for the three months ended MarchJune 31,30, 2026, compared to $40,000a benefit of $31,000 for the three months ended MarchJune 31,30, 2025. The decreaseincreased tax benefit was dueprimarily primarilyattributable to the increase in the deferred tax asset related to accrual to cash adjustments on the one-time conversion expenses, decrease in net income combined withand an increase in tax benefit related to cash value of life insurance of $17,000.$22,000. The effective tax rates were 26.5%32.9% and 31.1%(577.7%) for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We also have the ability to borrow from the FHLB. At MarchJune 31,30, 2026, we had $8.0 million in borrowings from the FHLB with additional capacity to borrow $42.7$45.3 million.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets depend on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. For the threesix months ended MarchJune 31,30, 2026, cash flows from operating, investing, and financing activities resulted in a net increase in cash and cash equivalents of $888,000.$12.6 million. Net cash used infrom operating activities amounted to $764,000,$351,000, primarily due to net losses of $1.3$1.4 million,million and net increases in deferred tax assetasset, andas otheroffset assets, andby net decreasedecreases in other liabilities.assets of $1.9 million. Net cash used in investing activities amounted to $589,000,$2.0 million, primarily due to a net increase in loans as partially offset by paydowns on investment securities. Net cash provided by financing activities amounted to $2.2$14.3 million, primarily due to anet proceeds from issuance of common stock in connection with the Conversion and net decreaseincrease in deposits.deposits as partially offset by the purchase of ESOP shares.

For the threesix months ended MarchJune 31,30, 2025, cash flows from operating, investing, and financing activities resulted in a net decreaseincrease in cash and cash equivalents of $11,000.$2.8 million. Net cash provided byfrom operating activities amounted to $72,000,$187,000, primarily due to net income of $89,000.$126,000. Net cash provided byfrom investing activities amounted to $422,000,$1.7 primarily due to paydowns on investment securities and a net decrease in loans of $171,000. Net cash used in financing activities amounted to $505,000,million, primarily due to a net decrease in loans of $1.3 million and paydowns on investment securities. Net cash from financing activities amounted to $834,000, primarily due to a net increase in deposits.

At MarchJune 31,30, 2026, the AssociationBank was categorized as well-capitalized under regulatory capital guidelines. Management is not aware of any conditions or events since the most recent notification that would change our category. For further information, see Note 5 in the notes to condensed consolidated financial statements appearing elsewhere in this report.

Off-Balance Sheet Arrangements. At MarchJune 31,30, 2026, we had $1.6$1.1 million of outstanding commitments to originate loans, $2.1$1.9 million in unused commercial line of credit commitments, $1.7$1.9 million of remaining draws on construction loans and $3.2$2.9 million of unfunded home equity loans. At MarchJune 31,30, 2026, certificates of deposit and individual retirement accounts that are scheduled to mature on or before MarchJune 31,30, 2027 totaled $36.2$35.6 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.