NSTS Bancorp, Inc.

Previous wording

This section is intended to assist in the understanding of our financial performance through a discussion of our financial condition as of September 30, 2024 and as compared to our financial condition as of December 31, 2023, and our results of operations for the three and nine months ended September 30, 2024 and 2023. This section should be read in conjunction with the unaudited interim consolidated financial statements and notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

This section is intended to assist in the understanding of our financial performance through a discussion of our financial condition as of March 31, 2025 and as compared to our financial condition as of December 31, 2024, and our results of operations for the three months ended March 31, 2025 and 2024. This section should be read in conjunction with the unaudited interim consolidated financial statements and notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

North Shore Trust and Savings, a federally-chartered stock savings institution, was established in 1921 as North Shore Building and Loan, an Illinois-chartered institution. The Bank is a wholly owned subsidiary of NSTS Bancorp, Inc., and operates as a traditional savings institution focused primarily on serving the banking needs of customers in our market area of Lake County, Illinois and adjacent communities. We operate from our headquarters and main banking office in Waukegan, Illinois, as well as two additional full-service branch offices located in Waukegan and Lindenhurst, Illinois, respectively. During the third quarter of 2023, we added additional loan production offices in Aurora and Plainfield, Illinois to complement the existing loan production office in Chicago, Illinois. Our primary business activity is attracting deposits from the general public and using those funds to originate one- to four-family residential mortgage loans and purchase investments. We are subject to comprehensive regulation and examination by the Office of the Comptroller of the Currency (the “OCC”).

Current wording

North Shore Trust and Savings, a federally-chartered stock savings institution, was established in 1921 as North Shore Building and Loan, an Illinois-chartered institution. The Bank is a wholly owned subsidiary of NSTS Bancorp, Inc., and operates as a traditional savings institution focused primarily on serving the banking needs of customers in our market area of Lake County, Illinois and adjacent communities. We operate from our headquarters and main banking office in Waukegan, Illinois, as well as two additional full-service branch offices located in Waukegan and Lindenhurst, Illinois, respectively. We also have three loan production offices in Chicago, Aurora and Plainfield, Illinois. Our primary business activity is attracting deposits from the general public and using those funds to originate one- to four-family residential mortgage loans and purchase investments. We are subject to comprehensive regulation and examination by the Office of the Comptroller of the Currency (the “OCC”).

Previous wording

Our principal business consists of originating loans for one- to four-family residential properties, multi-family and non-owner occupied commercial real estate loans, and to a lesser extent home equity loans and lines of credit, construction loans, and other consumer loans in the market areas surrounding our branch footprint. We also established a loan production office in Chicago, Illinois in 2016 to originate loans outside of our branch network in a more densely populated metropolitan area, which we believe benefits us geographically. To complement the existing offices, during the third quarter of 2023, we established two additional loan production offices in Aurora and Plainfield, Illinois to expand our loan originations within the Chicagoland area. The lending teams operating in the Aurora and Plainfield, Illinois loan production offices originate as Oak Leaf Community Mortgage, a division of North Shore Trust and Savings. We attract retail deposits from the general public in the areas surrounding our main office and branches, offering a wide variety of deposit products. We also invest in investment securities. Our revenues are derived primarily from interest on loans, noninterest income from the sale of one- to four-family residential mortgage loans in the secondary market and interest on investments. Our primary sources of funds are deposits, and principal and interest payments on loans and securities.

Current wording

Illinois. We are also an active originator of residential home loans in Lake County, Illinois as well as other counties in the greater Chicagoland area, as well as Kenosha County in Wisconsin. We established a loan production office in Chicago, Illinois in 2016 and two additional loan production offices in Aurora and Plainfield, Illinois in 2023, to originate loans outside of our branch network in a more densely populated metropolitan area, which we believe benefits us geographically. The lending team originates loans as Oak Leaf Community Mortgage, powered by North Shore Trust and Savings.

Previous wording

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated unaudited interim financial statements for the three and nine months ended September 30, 2024 and 2023, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results could differ from these estimates.

Current wording

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated unaudited interim financial statements for the three months ended March 31, 2025 and 2024, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results could differ from these estimates.

Previous wording

COMPARISON OF OPERATING RESULTS FOR THE Three and** Nine MONTHS ENDED September 30, 2024 and 2023**

Current wording

COMPARISON OF OPERATING RESULTS FOR THE three months ended March 31, 2025 and 2024

Previous wording

General. For the three months ended September 30, 2024, we had a net loss of $171,000, compared to a net loss of $232,000 for the three months ended September 30, 2023. For the nine months ended September 30, 2024, we had a net loss of $743,000, compared to a net loss of $188,000 for the nine months ended September 30, 2023. The decrease in net loss for the three-month period is primarily attributable to an increase in noninterest income, specifically related to the gain on sale of mortgages. The increase in net loss, for the nine-month period is primarily attributable to an increase in noninterest expenses related to the continued investment in people and processes with the expansion of the mortgage lending team, Oak Leaf Community Mortgage. This increase is partially offset by an increase in noninterest income specifically related to the gain on loans held for sale and an increase in net interest income driven by increased interest income on loans and interest income on funds held at the Federal Reserve Bank of Chicago.

Current wording

General. For the quarter ended March 31, 2025, we had a net loss of $328,000, compared to a net loss of $246,000 for the quarter ended March 31, 2024. The increase in net loss for the quarter ended March 31, 2025 is due an increase in noninterest expenses, partially offset by an increase in net interest income.

Previous wording

Net interest income increased $591,000, to $5.3 million for the nine months ended September 30, 2024 compared to $4.7 million for the nine months ended September 30, 2023. Our interest rate spread decreased to 2.35% for the nine months ended September 30, 2024 from 2.42% for the same period ended September 30, 2023. Our net interest margin increased to 2.90% for the nine months ended September 30, 2024 compared to 2.67% for the nine months ended September 30, 2023. The decrease in interest rate spread is driven by an increased average balance of higher earning interest-bearing liabilities, specifically interest-bearing deposits, as a percentage of total assets. The increase in the interest margin is driven by an increase in yields earned on loans and interest-bearing deposits in other banks.

Current wording

***Net Interest Income.***Net interest income increased $126,000, to $1.9 million for quarter ended March 31, 2025 compared to $1.7 million for the quarter ended March 31, 2024. Our interest rate spread decreased to 2.23% for the quarter ended March 31, 2025 from 2.31% for the quarter ended March 31, 2024. Our net interest margin remained at 2.82% for the quarters ended March 31, 2025 and 2024. The decrease in interest rate spread is driven by an increased average balance of higher earning interest-bearing liabilities, specifically interest-bearing deposits, as a percentage of total assets.

Previous wording

Average interest-earning assets of $244.6 million for the nine months ended September 30, 2024 increased $8.8 million compared to $235.9 million for the same period ending September 30, 2023. The increase in average earning assets was driven by an increase in loans and interest-bearing deposits at other banks, funded by an increase in average deposit balances during the period and reduction in investment securities. The average outstanding balance of loans, net increased to $131.8 million for the nine-month period ended September 30, 2024, an increase of $26.7 million from $105.1 million for the nine months ended September 30, 2023. Additionally, the average yield earned on those loans outstanding increased 109 basis points to 5.05% for the nine months ended September 30, 2024. This increase is a result of an overall increase in market rates on mortgage loans originated during 2024, as well as an increased loan demand for specialty portfolio products which are originated at higher interest rates and with additional origination fees.

Current wording

Average interest-earning assets of $259.9 million for the quarter ended March 31, 2025 increased $18.2 million compared to $241.7 million for the quarter ended March 31, 2024. The increase in average earning assets was driven by an increase in loans and interest-bearing deposits at other banks, funded by an increase in average deposit balances during the period and reduction in investment securities. The average outstanding balance of loans, net increased to $133.9 million for the quarter ended March 31, 2025, an increase of $8.6 million from $125.3 million for the quarter ended March 31, 2024. Additionally, the average yield earned on those loans outstanding increased 67 basis points to 5.38% for the quarter ended March 31, 2025. This increase is a result of an overall increase in market rates on mortgage loans originated during 2024 and still in our portfolio, as well as an increased loan demand for specialty portfolio products which are originated at higher interest rates and with additional origination fees.

Previous wording

The cost of interest-bearing deposits increased 89 basis points for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The net increase in our funding costs was primarily due to an increase in rates offered on time deposit accounts to remain competitive with the local market.

Current wording

The cost of interest-bearing liabilities increased 33 basis points for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024. The net increase in our funding costs was primarily due to an increase in rates earned on time deposit accounts to remain competitive with the local market. The average yield on time deposits for the quarter ended March 31, 2025 was 3.48%. Over the next 12 months $52.2 million of time deposits with rates greater than 3.0% are scheduled to mature.

Previous wording

Provision for Credit Losses. For the three months ended September 30, 2024 and 2023, a provision for credit losses was recorded based on the current allowance for credit loss ("ACL") assessment. During the three months ended September 30, 2024, we recorded a provision for credit losses of $20,000, comprised of $4,000 in provision for credit losses to loans and $16,000 in provision for credit losses related to unfunded commitments, including loans committed for origination. During the three months ended September 30, 2023, we recorded a provision for credit losses of $50,000, comprised of $51,000 in provision for credit losses on loans and a $1,000 reversal of provision of credit losses related to unfunded commitments. During the nine months ended September 30, 2024, we recorded a provision for credit losses of $142,000, comprised of $95,000 provision for credit losses on loans and $47,000 provision for credit losses related to unfunded commitments. During the nine months ended September 30, 2023, we recorded a provision for credit losses of $52,000, comprised of $53,000 provision for credit losses on loans and a $1,000 reversal of provision of credit losses related to unfunded commitments.

Current wording

Provision for Credit Losses. During the quarter ended March 31, 2025, we recorded a reversal of provision for credit losses of $37,000, comprised of $45,000 reversal of provision for credit losses on loans and $8,000 provision for credit losses related to unfunded commitments.

Previous wording

Gain on sale of mortgages increased $268,000 for the three months ended September 30, 2024 compared to 2023. Gain on sale of mortgage loans increased $682,000, from $13,000 to $695,000 for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increases in gain on sale of mortgages were primarily the result of an overall increase in total mortgage loans originated during the period. During the nine months ended September 30, 2024, we sold 125 loans totaling $33.3 million for a gain on sale of $695,000. Included in the number and amount of loans sold during the period were loans sold that were originated as held for investment, but subsequently sold to local community banks, totaling $2.5 million, for a total gain on sale of $79,000. Management continues to look for opportunities and markets to sell loans as we continue to see increased loan production compared to prior years.

Current wording

For the quarter ended March 31, 2025 compared to the same period ended March 31, 2024, noninterest income increased $22,000 to $334,000. The increase was driven by an increase in the gain on sale of mortgage loans during the quarter ended March 31, 2025. Gain on sale of mortgage loans increased $33,000, from $156,000 to $189,000 for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024. The increase in gain on sale of mortgages was primarily the result of an overall increase in total mortgage loans originated during the period. During the quarter ended March 31, 2025, we sold 31 loans totaling $9.9 million for a gain on sale of $189,000. During the quarter ended March 31, 2024, we sold 26 loans totaling $6.3 million for a gain on sale of $156,000. Management continues to look for opportunities and markets to sell loans as we continue to see increased loan production compared to prior years.

Previous wording

Noninterest expenses increased $451,000 for the three months ended September 30, 2024, compared to the same period ended September 30, 2023. Noninterest expenses increased $1.8 million for the nine months ended September 30, 2024, compared to the same period ended September 30, 2023. For both the three- and nine-month periods, the increase in noninterest expenses was primarily driven by increases in salaries and employee benefits. The average number of employees increased to 49 for the nine months ended September 30, 2024 compared to 37 for the nine months ended September 30, 2023. The increase in headcount is based on the addition of the Oak Leaf Community Mortgage team brought on during the fourth quarter of 2023 as well as additional hires during 2024 to supplement the lending team as operations continue to expand. Additionally, the Company implemented the 2023 Equity Incentive Plan on June 15, 2023, and began recognizing expenses associated with this plan in June 2023, as such expenses were higher for the periods ended 2024 compared to 2023. Marketing and advertising costs increased during 2024 as a result of an increased focus on lending operations and related marketing to our new lending area, Will County, Illinois. Data processing expenses increased as we have continued to invest in systems and processes to improve the lending experience for our customers as well as implement efficiencies within our internal processes. Additionally, certain data processing expenses are based on per employee costs, which increased due to an increase in headcount. Loan expenses increased as a result of an increase in loan originations during the periods. Equipment and occupancy costs increased as a result of two additional loan production office rental agreements in place during 2024 that were not in place during the first nine months of 2023. Management intends to continue to invest in the people and processes in place to achieve efficiencies as loan production continues to grow.

Current wording

Noninterest expenses increased $266,000 for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024. The increase in noninterest expenses was primarily driven by increases in salaries and employee benefits and loan expenses. The average number of employees increased to 52 for the quarter ended March 31, 2025 compared to 46 for the quarter ended March 31, 2024. The increase in headcount is based on additional hires during 2024 to supplement the lending team as operations continue to expand. Loan expenses increased as a result of an increase in loan originations during the periods. Additionally, the Bank recorded a provision for recourse reserve related to the loans sold into the secondary market due to an increase in the volume of loans sold over the past 4 quarters.

Previous wording

***Provision for Income Tax Expense (Benefit).***There was no provision for income tax expense recorded during the three and nine months ended September 30, 2024. Management estimates a taxable net loss for the year ended December 31, 2024 due to non-taxable income, such as income on tax exempt municipal securities and BOLI.

Current wording

***Provision for Income Tax Expense (Benefit).***There was no provision for income tax expense recorded during the three months ended March 31, 2025 and 2024. Management estimates a taxable net loss for the year ended December 31, 2025 due to non-taxable income, such as income on tax exempt municipal securities and BOLI.

Previous wording

Total Assets*.*Total assets increased $11.7 million to $268.4 million as of September 30, 2024 compared to $256.8 million at December 31, 2023. The increase was driven by an increase in loans, net, funded by an increase in time deposits and a reduction in securities available for sale due to maturities and principal payments of securities.

Current wording

Total Assets*.*Total assets increased $4.0 million to $282.7 million as of March 31, 2025 compared to $278.7 million at December 31, 2024. The increase was driven by an increase in cash and cash equivalents, funded by an increase in demand and NOW checking accounts.

Previous wording

Cash and cash equivalents. Cash and cash equivalents increased $3.2 million to $34.6 million as of September 30, 2024, from $31.4 million at December 31, 2023. The increase in cash was driven by an increase in time deposits during the same period and principal payments received on securities available for sale. Currently, the Bank holds a majority of the cash on hand at the Federal Reserve Bank of Chicago, earning 4.90%, to keep the funds available for increasing loan demand. Management continues to actively monitor our liquidity position on a daily basis and maintain levels of liquid assets deemed adequate.

Current wording

Cash and cash equivalents. Cash and cash equivalents increased $4.0 million to $57.5 million as of March 31, 2025, from $53.5 million at December 31, 2024. The increase in cash was driven by an increase in the demand and NOW checking accounts. During the quarter ended March 31, 2025, the Bank received a large deposit into a customer account that is expected to be partially withdrawn prior to the end of the year. Currently, the Bank holds a majority of the cash on hand at the Federal Reserve Bank of Chicago, earning 4.40%, to keep the funds available for increasing loan demand. Management continues to actively monitor our liquidity position on a daily basis and maintain levels of liquid assets deemed adequate.

Previous wording

Securities Available for Sale. Securities available-for-sale decreased to $75.2 million as of September 30, 2024, compared to $82.1 million at December 31, 2023. There were no purchases or sales of securities available-for-sale during the nine months ended September 30, 2024. During the nine months ended September 30, 2024, the Bank received principal payments of $4.2 million, had maturities of $4.3 million, had net premium amortization and discount accretion of $393,000 and had a decrease in the unrealized loss on the portfolio of $2.0 million.

Current wording

Securities Available for Sale. Securities available-for-sale decreased to $70.3 million as of March 31, 2025, compared to $71.2 million at December 31, 2024. There were no purchases or sales of securities available-for-sale during the quarter ended March 31, 2025. During the quarter ended March 31, 2025, the Bank received principal payments of $1.3 million, had maturities of $1.0 million, had net premium amortization and discount accretion of $121,000 and had a decrease in the unrealized loss on the portfolio of $1.5 million.

Previous wording

As of September 30, 2024, the securities available for sale portfolio included an unrealized loss position of $9.6 million, or 11.3% of the total book value of the portfolio. Management monitors the portfolio for credit losses and believes that the decline in value does not presently represent realized losses and is due to market volatility and increased market interest rates. While the Bank does not currently intend to sell securities in a loss position, management may consider the opportunity to reposition the investment securities portfolio in the future.

Current wording

As of March 31, 2025, the securities available for sale portfolio included an unrealized loss position of $10.5 million, or 13.0% of the total book value of the portfolio. Management monitors the portfolio for credit losses and believes that the decline in value does not presently represent realized losses and is due to market volatility and increased market interest rates. While the Bank does not currently intend to sell securities in a loss position, management may consider the opportunity to reposition the investment securities portfolio in the future.

Previous wording

***Loans held for sale.***Our loans held for sale increased $2.7 million to $3.1 million at September 30, 2024 compared to $380,000 at December 31, 2023. With the addition of Oak Leaf Community Mortgage during the late third and early fourth quarters of 2023, and the related increase in loan originations, management has increased the proportion of loan originations held for sale to the secondary market. During the nine months ended September 30, 2024, the Bank originated $33.6 million in loans held for sale.

Current wording

***Loans held for sale.***Our loans held for sale increased $1.4 million to $2.6 million at March 31, 2025 compared to $1.2 million at December 31, 2024. The increase was primarily due to timing of originations and sales. The Bank originated $1.2 million of loans held for sale on March 31, 2025, which were subsequently sold on April 8, 2025. During the quarter ended March 31, 2025, the Bank originated $11.3 million in loans held for sale.

Previous wording

Loans, net. Our loans, net, increased by $13.2 million to $133.8 million at September 30, 2024 compared to $120.6 million at December 31, 2023. The Bank originated $38.6 million in loans to be held in the portfolio during the nine months ended September 30, 2024 and had loan principal payments and payoffs of $22.8 million. The Bank continues to focus lending efforts on one- to four-family residential properties, which has seen the largest increase in balances during the nine months ended September 30, 2024. Additionally, the balance of construction loans has decreased from December 31, 2023 to September 30, 2024, however, the current available balance on construction loans is $3.4 million as of September 30, 2024 and is expected to be drawn upon within the next 12 months. In an effort to continue to grow loan originations, the Bank hired three additional mortgage loan originators during the nine months ended September 30, 2024. The Bank sold $2.5 million in loans that were originally held in the portfolio to local community banks.

Current wording

Loans, net. Our loans, net, decreased by $116,000 to $130.2 million at March 31, 2025 compared to $130.4 million at December 31, 2024. The Bank originated $6.0 million in loans to be held in the portfolio during the quarter ended March 31, 2025 and had loan principal payments and payoffs of $6.0 million. In an effort to continue to grow loan originations, the Bank hired one additional mortgage loan originator during the quarter ended March 31, 2025 and has hired another mortgage loan originator that started in April 2025.

Previous wording

As of September 30, 2024, the allowance for credit losses (“ACL”) which includes the allowance for credit losses on loans, and the allowance for credit losses on off-balance sheet exposures (recorded in Other Liabilities), totaled $1.3 million, an increase of $95,000 compared to December 31, 2023. The increase in the ACL is driven by an increase in the portfolio loan balances. As of September 30, 2024, there were no loans individually assessed and no loans were rated substandard or watch. As of September 30, 2024, the Bank has no non-accrual loans and two loan past due greater than 30 days. The Bank actively monitors the loan portfolio for signs of weakening credit quality, noting as of September 30, 2024 the portfolio remains of high quality with limited credit concerns. As of September 30, 2024, the balance of unfunded commitments increased as a result of an increase in the HELOCs and construction loans originated during the first nine months of 2024 and not yet drawn upon as well as in loans committed for origination.

Current wording

As of March 31, 2025, the allowance for credit losses on loans (“ACL”) totaled $1.2 million, a decrease of $45,000 compared to December 31, 2024. The decrease in the ACL is driven by a reduction in proxy rates and positive economic factors such as a lower inflation rate and stable unemployment rates. As of March 31, 2025, there were two loans individually assessed, of which neither had credit losses identified. As of March 31, 2025, the Bank had one non-accrual loan and three loans past due greater than 30 days. The Bank actively monitors the loan portfolio for signs of weakening credit quality, noting as of March 31, 2025 the portfolio remains of high quality with limited credit concerns.

Previous wording

Total Equity. Total equity increased $891,000 to $78.4 million at September 30, 2024. The increase is primarily due to a decrease in the unrealized loss position on the securities available-for-sale portfolio. The decrease in the unrealized loss position of $1.4 million, net of the related tax effect, is due to changes in market interest rates. Additionally, the Bank began repurchasing treasury stock during the second quarter 2024, resulting in an additional $411,000 of treasury stock as of September 30, 2024, compared to December 31, 2023.

Current wording

Total Equity. Total equity increased $1.0 million to $77.5 million at March 31, 2025. The increase is primarily due to a decrease in the unrealized loss position on the securities available-for-sale portfolio during the quarter ended March 31, 2025 and partially offset by the net loss.

Previous wording

The following table sets forth certain information with respect to our nonperforming assets. The decrease in non-accrual loans from December 31, 2023 to September 30, 2024 was the result of payoffs or payment requirements met bringing the loans off of non-accrual as of September 30, 2024.

Current wording

The following table sets forth certain information with respect to our nonperforming assets. The increase in non-accrual loans from December 31, 2024 to March 31, 2025 was the result of one loan moving to non-accrual during the period.

Previous wording

The allowance for credit losses on loans as a percentage of total loans as of September 30, 2024 was 0.95%. The allowance for loan losses as a percentage of total loans at December 31, 2023 was 0.97%.

Current wording

The allowance for credit losses on loans as a percentage of total loans was 0.88% and 0.92% as of March 31, 2025 and December 31, 2024, respectively.

Previous wording

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 of Chicago and a $10.0 million unsecured Fed Funds line of credit with BMO Harris Bank. At September 30, 2024, we had one outstanding advance from the FHLB of Chicago totaling $5.0 million and had the capacity to borrow approximately $78.1 million additional from the FHLB of Chicago. Additionally, we had no outstanding balance under our $10.0 million federal funds line of credit with BMO Harris Bank.

Current wording

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 of Chicago and a $10.0 million unsecured Fed Funds line of credit with BMO Harris Bank. At March 31, 2025, we had one outstanding advance from the FHLB of Chicago totaling $5.0 million and had the capacity to borrow approximately $74.1 million additional from the FHLB of Chicago. Additionally, we had no outstanding balance under our $10.0 million federal funds line of credit with BMO Harris Bank.

Previous wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $74,000 and $363,000 for the nine months ended September 30, 2024 and 2023, respectively. Net cash (used in) provided by investing activities, which consists primarily of net change in loans receivable and net change in investment securities, was $(7.0) million and $7.4 million for the nine months ended September 30, 2024 and 2023, respectively, with the increase in cash used in 2024 driven by the increase in the portfolio loans. Net cash provided by (used in) financing activities, consisting primarily of the activity in deposit accounts was $10.2 million and $(10.2) million for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash (used in) provided by operating activities was $(2.7) million and $92,000 for the three months ended March 31, 2025 and 2024, respectively. Net cash provided by (used in) investing activities, which consists primarily of net change in loans receivable and net change in investment securities, was $2.4 million and $(5.0) million for the three months ended March 31, 2025 and 2024, respectively, with the decrease in cash used in 2025 driven by a decrease in the the loan portfolio. Net cash provided by financing activities, consisting primarily of the activity in deposit accounts was $4.2 million and $9.9 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Time deposits that are scheduled to mature in less than one year from September 30, 2024, totaled $54.0 million. Based on our deposit retention experience and current pricing strategy we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize FHLB of Chicago advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Current wording

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Time deposits that are scheduled to mature in less than one year from March 31, 2025, totaled $65.2 million. Based on our deposit retention experience and current pricing strategy we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize FHLB of Chicago advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Previous wording

As of September 30, 2024, the Bank was well capitalized under the regulatory framework for prompt corrective action. During the year ended December 31, 2020, the Bank elected to begin using the CBLR. Under CBLR, if a qualifying depository institution or depository institution holding company elects to use such measure, such institution or holding company will be considered well capitalized if its ratio of Tier 1 capital to average total consolidated assets (i.e., leverage ratio) exceeds 9%, subject to a limited two quarter grace period, during which the leverage ratio cannot go 100 basis points below the then applicable threshold, and will not be required to calculate and report risk-based capital ratios. North Shore Trust and Savings’ Tier 1 capital to Average Assets was 23.96% and 24.72% at September 30, 2024 and December 31, 2023, respectively.

Current wording

As of March 31, 2025, the Bank was well capitalized under the regulatory framework for prompt corrective action. During the year ended December 31, 2020, the Bank elected to begin using the CBLR. Under CBLR, if a qualifying depository institution or depository institution holding company elects to use such measure, such institution or holding company will be considered well capitalized if its ratio of Tier 1 capital to average total consolidated assets (i.e., leverage ratio) exceeds 9%, subject to a limited two quarter grace period, during which the leverage ratio cannot go 100 basis points below the then applicable threshold, and will not be required to calculate and report risk-based capital ratios. North Shore Trust and Savings’ Tier 1 capital to Average Assets was 23.11% and 23.53% at March 31, 2025 and December 31, 2024, respectively.

Previous wording

Commitments. The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans at September 30, 2024.

Current wording

Commitments. At March 31, 2025, we had $1.7 million of outstanding commitments to originate loans. Our total letters and lines of credit and unused lines of credit totaled $9.5 million at March 31, 2025. The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans at March 31, 2025.

Previous wording

Contractual Cash Obligations. The following table summarizes our contractual cash obligations at September 30, 2024.

Current wording

Cash Obligations. The following table summarizes our cash obligations at March 31, 2025.