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

Management’s discussion and analysis of the financial condition and results of operations at and for the three and six months ended MarchJune 31,30, 2026 and 2025 is intended to assist in understanding the financial condition and results of operations of the Company. The information in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing in Part 1, Item 1 of this quarterly report on Form 10-Q.

Our results of operations also are affected by non-interest income, our provision for credit losses and non-interest expense. Non-interest income consists primarily of fee income and service fees, income from our financial services division, earnings on bankdeferred ownedcompensation lifeplan insurance,assets, realized gains on sales of loans and securities and other income. Non-interest expenses consist primarily of compensation and employee benefits, core processing, premises and equipment, professional fees, postage and office supplies, FDIC premiums, advertising and other expenses.

The allowance is established through a provision for credit losses in our consolidated statements of income, and evaluation of the adequacy of the allowance for credit losses is performed by management on a quarterly basis. While management uses available information to anticipate credit losses, future additions to the allowance may be necessary based on changes in economic conditions or the composition of our portfolios. In addition, various regulatory agencies, as an integral part of their examination process, periodically review our allowance for credit losses. At June 30, 2026, and December 31, 2025, the allowance for credit losses on loans totaled $1.8 million and $1.9 million, respectively Our methodology for maintaining our allowance for credit losses is based on historical experience and data, current economic information, and reasonable and supportable forecasts. Accordingly, the estimation of the allowance for credit losses is impacted by the economic forecasts utilized, which require the use of significant judgment. Deterioration in forecasted economic conditions may lead to further required increases to the allowance for credit losses. Conversely, improvements in forecasted economic conditions may warrant further reductions to the allowance for credit losses. In estimating the allowance for credit losses, management considers the sensitivity of the model and significant judgments and assumptions that could result in an amount that is materially different from management’s estimate.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are also not included in the collective evaluation. During the three months ended June 30, 2026, individually evaluated loans were also expanded to include commercial loans that were risk rated special mention along with loans risk rated substandard. A collateral-dependent asset is a financial asset for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower, based on management’s assessment, is experiencing financial difficulty. The allowance for credit loss for a collateral dependentcollateral-dependent financial asset is measured using the fair value of collateral. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

The allowance for credit losses is sensitive to various forecasted macroeconomic drivers, including the Federal Open Market Committee’s (“FOMC”) median forecasted U.S. civilian unemployment rate and the year-over-year change in U.S. Gross Domestic Product (“GDP”). While it is difficult to estimate how potential changes to various factors may impact the allowance for credit losses because such changes to factors may not occur at the same rate or in the same direction, management compared the modeled allowance for credit losses on loans to a hypothetical model using a downside economic forecast. Using an immediate “shock” or increase of 20 basis points in the FOMC’s projected rate of U.S. civilian unemployment, and a decrease of 100 basis points in the FOMC’s projected rate of U.S. GDP growth, this would increase the model’s total calculated allowance for credit losses on loans by $1.1$1.2 million or 53.4%,71.9%, representing a 4553 basis points increase to the coverage ratio of the allowance for credit losses as a percentage of loans at amortized cost, assuming all other quantitative and qualitative factors are kept at current levels, as of MarchJune 31,30, 2026. This example is only one of the numerous possible economic scenarios that could be utilized in assessing the sensitivity of the allowance for credit losses and does not represent management’s assumptions or judgment of factors as of MarchJune 31,30, 2026.

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

Total Assets. Total assets were $315.9$312.4 million as of MarchJune 31,30, 2026 and $312.1 million as of December 31, 2025, an increase of $3.7 million,$263,000, or 1.2%.0.1%. The increase in assets was primarily due to a $7.3$10.7 million increase in net loans, and a $1.9$2.8 million increase in cash and cash equivalents, offset by a $5.6$13.5 million decrease in available-for-sale securities.

Cash and Cash Equivalents. Cash and cash equivalents increased $1.9$2.8 million, or 35.2%,53.0%, to $7.2$8.2 million at MarchJune 31,30, 2026 from $5.3 million at December 31, 2025. The increase primarily resulted from a $6.4 million increase in total deposits and a $5.6$13.5 million decrease in available-for-sale securities, partially offset by a $7.3$10.7 million increase in net loans.

Available-for-Sale Securities. Available-for-sale securities decreased by $5.6$13.5 million, or 11.5%,27.8%, to $43.0$35.1 million at MarchJune 31,30, 2026 from $48.6 million at December 31, 2025. This decrease was primarily due to maturities of $4.5$11.6 million and $838,000$1.5 million in principal repayments during the first threesix months of 2026.

Net Loans. Loans receivable, net of the allowance for credit losses, increased $7.3$10.7 million, or 3.2%,4.7%, to $233.3$236.7 million at MarchJune 31,30, 2026 from $226.0 million at December 31, 2025. The increase in net loans was primarily driven by the origination of $13.0$24.1 million of loans, partially offset by $4.4$13.3 million of paydowns and $1.3$3.4 million of loan sales during the threesix months ended MarchJune 31,30, 2026. Commercial real estate loans increased to $94.9$97.3 million at MarchJune 31,30, 2026 from $88.0 million at December 31, 2025 and commercial and industrial loans increased to $23.7$25.0 million at MarchJune 31,30, 2026 as compared to $22.2 million at December 31, 2025 as we continue to focus on growth in these portfolios. Home equity loans and lines of credit increased to $16.8$18.9 million at MarchJune 31,30, 2026 from $15.9 million at December 31, 2025. Residential construction loans increased to $3.9 million at June 30, 2026 from $3.2 million at December 31, 2025. One- to four-family residential mortgage loans decreased to $92.3$88.6 million at MarchJune 31,30, 2026 from $93.0 million at December 31, 2025.2025 Residential construction loans decreaseddue to $2.4payoffs millionand at March 31, 2026 from $3.2 million at December 31, 2025.amortization. Consumer and other loans decreased to $4.0$3.7 million at MarchJune 31,30, 2026 from $4.3 million at December 31, 2025.

Deposits. Total deposits increased by $6.4 million,$559,000, or 2.7%,0.2%, to $240.9$235.0 million at MarchJune 31,30, 2026 from $234.4 million at December 31, 2025. Core deposits (which we define as all deposits other than certificates of deposit and brokered deposits) increaseddecreased $9.2$2.5 million, or 5.4%1.4% to $181.3$169.6 million at MarchJune 31,30, 2026 from $172.1 million at December 31, 2025 primarily due to an increasedecreases in business money market accounts and savings accounts. As of MarchJune 31,30, 2026, money market deposits increaseddecreased by $8.7$1.6 million and savings account deposits decreased by $1.3 million, partially offset by an increase in time deposits of $3.0 million and NOW and demand deposits increased by $1.1 million, partially offset by decreases in time deposits of $2.8 million and savings accounts of $576,000$435,000 as compared to December 31, 2025. There were $15.7$19.2 million and $16.7 million of brokered deposits included in time deposits at MarchJune 31,30, 2026 and December 31, 2025, respectively.

FHLB Advances. Total FHLB advances were $34.6 million at MarchJune 31,30, 2026 as compared to $35.6 million at December 31, 2025, a decrease of $1.0 million,$938,000, or 2.8%.2.6%. FHLB advances were paid down using funds obtained through depositmaturities growth.and principal repayments in the available-for-sale securities portfolio.

Stockholders’ Equity. Stockholders’ equity decreasedincreased by $193,000,$25,000, or 0.6%,0.1%, to $32.6 million at March 31, 2026 from $32.8 million at DecemberJune 31,30, 2025.2026. The decreaseincrease in stockholders’ equity was dueattributable in part to a $196,000 increase in net unrealized mark-to-market loss on the available-for-sale securities portfolio recognized in accumulated other comprehensive loss as a resultincome of changes in interest rates during the three months ended March 31, 2026 in addition to a net loss of $50,000$43,000 recorded during the threesix months ended MarchJune 31,30, 2026.

Average Balances and Yields. The following tabletables setsset forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or interest expense.

Comparison of Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025

Net Income. ANet net lossincome of $50,000$93,000 was recorded for the three months ended MarchJune 31,30, 2026, aan decreaseincrease of $198,000$289,000, or 147.4%, as compared to a net incomeloss of $148,000$196,000 for the three months ended MarchJune 31,30, 2025. The decreaseincrease in net income was attributable to a $644,000$377,000 increase in net interest income, a $95,000 increase in non-interest income, and a $391,000 decrease in provision for credit losses, partially offset by a $553,000 increase in non-interest expense and a $10,000$21,000 increasedecrease in provisionincome fortax credit losses on loansbenefit during the three months ended MarchJune 31,30, 2026, partially offset by a $316,000 increase in net interest income, a $118,000 increase in non-interest income, and a $22,000 decrease in income tax expense.2026.

Interest Expense.Income. Interest expenseincome increased $75,000,$371,000, or 5.7%,10.3%, to $1.4$4.0 million for the three months ended MarchJune 31,30, 20262026, fromas $1.3compared to $3.6 million for the three months ended MarchJune 31,30, 2025 due to an increase in loan interest expense on deposits.income.

Net Interest Income.income Neton interest incomeloans increased by $316,000,$393,000, or 14.8%,12.7%, to $2.4$3.5 million for the three months ended MarchJune 31,30, 2026 fromas $2.1compared to $3.1 million for the three months ended MarchJune 31,30, 2025. NetThe interestincrease ratewas spread increased nine basis pointsdue to 2.97%a $24.8 million, or 11.8%, increase in the average balance of the loan portfolio to $234.8 million for the three months ended MarchJune 31,30, 2026 asfrom compared$210.0 to 2.88%million for the three months ended MarchJune 31,30, 2025,2025. reflecting a one basis pointThe increase in the average yieldbalance onof interest-earningthe assetsloan inportfolio additionwas primarily due to an eight basis points decreaseincrease in the average costbalance of interest-bearingcommercial liabilities.real estate loans, partially offset by loan repayments and one- to four-family residential real estate loan sales. The netaverage interestyield marginearned on the loan portfolio increased by 11five basis points to 3.36%5.95% for the three months ended MarchJune 31,30, 2026 from 3.25%5.90% for the three months ended MarchJune 31,30, 2025.

Income TaxInterest Expense. Income taxInterest expense decreased $22,000,$6,000, or 75.9%,0.4%, to $7,000$1.4 million for the three months ended MarchJune 31,30, 2026 as compareddue to income tax expense of $29,000 for the three months ended March 31, 2025. Thea decrease in income taxinterest expense resultedon fromFHLB theand decreaseother in income before taxes.borrowings.

Comparison at or for the three months ended MarchJune 31,30, 2026 and 2025. The market value of assets under management was $254.9$238.5 million at MarchJune 31,30, 2026 as compared to $223.1$249.9 million at MarchJune 31,30, 2025. ThisThe increasedecrease was due to continued organic acquisition of newin assets under management combinedwas withprimarily anattributable increase into the market valuewithdrawal of approximately $38.0 million of client assets underfollowing management.the termination of a client relationship during the three months ended June 30, 2026.

Income related to our wealth management business segment, which we record as non-interest income, increased $38,000,$5,000, or 16.4%,2.0%, to $270,000$253,000 for the three months ended MarchJune 31,30, 2026 as compared to $232,000$248,000 for the three months ended MarchJune 31,30, 2025. The increase was mainly due to the impact of changes in equity markets and the interest rate environment during the three months ended MarchJune 31,30, 2026 as compared to the same prior year period.

Expenses related to our wealth management business segment, which we record as non-interest expense, increased $43,000,$21,000, or 24.6%,11.5%, to $218,000$203,000 for the three months ended MarchJune 31,30, 2026 as compared to $175,000$182,000 for the three months ended MarchJune 31,30, 2025. The increase was due to the continued growth in our operations and an increase in compensation expense.

Loans modified for borrowers experiencing financial difficulties occur when we grant borrowers favorable loan modifications that we would not consider but for economic or legal reasons pertaining to the borrower’s financial difficulties. These concessions typically include a modification of loan terms such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date, or possibly a partial forgiveness of the principal amount due. We identify loans for potential modifications related to borrowers experiencing financial difficulty primarily through direct communication with the borrower and evaluation of the borrower’s financial statements, revenue projections, tax returns and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, and negative trends may result in a payment default in the near future. Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months. We did not modify any loans to borrowers experiencing financial difficulty during the three or six months ended MarchJune 31,30, 2026. We closely monitor the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts. Loans modified to borrowers experiencing financial difficulty did not have payment default during the three or six months ended MarchJune 31,30, 2026 and all such loans were current as of MarchJune 31,30, 2026.

Non-accrual loans decreased by $553,000,$518,000, or 18.0%,16.9%, to $2.5$2.6 million at MarchJune 31,30, 2026 as compared to $3.1 million at December 31, 2025, primarily due to a decrease in one- to four family residential loans as twothree loans transitioned to accrual status and two loans were charged off during the threesix months ended MarchJune 31,30, 2026.

The following table sets forth our amounts of classified loans and loans designated as special mention as of MarchJune 31,30, 2026 and December 31, 2025 in our commercial real estate and commercial and industrial loan portfolios. All other loans are assigned a “pass” rating until the loan becomes 90 days past due at which time it is either downgraded to “non-performing” status or charged off. Generally loans 90 days or more past due are placed on non-accrual status.

At MarchJune 31,30, 2026, a loan relationship consisting of one commercial real estate loan totaling $576,000 and seven commercial and industrial loans totaling $506,000 were upgraded from special mention to pass, offset by two newly classifiedcriticized special mention loans that were downgraded from pass during the threesix months ended MarchJune 31,30, 2026 as compared to December 31, 2025. A commercial real estate loan totaling $115,000 and a commercial and industrial loan totaling $147,000 were downgraded to substandard from pass during the six months ended June 30, 2026 as compared to December 31, 2025.

Loans that have similar risk characteristics are evaluated on a collective basis for the purposes of establishing the allowance for credit losses. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are also not included in the collective evaluation. During the three months ended June 30, 2026, individually evaluated loans were also expanded to include commercial loans that were risk rated special mention along with loans risk rated substandard. A collateral-dependent asset is a financial asset for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower, based on management’s assessment, is experiencing financial difficulty. The allowance for credit loss for a collateral dependentcollateral-dependent financial asset is measured using the fair value of collateral. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.