NSTS Bancorp, Inc.
For the period ended Dec 31, 2025. Filed Mar 27, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 27, 2026
NSTS$14.26+0.5%Stored close · as of Sep 30, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-28.
0001437749-25-009831
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-27.
0001437749-26-010098
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 59 previous paragraphs and 59 current paragraphs.
26 unchanged; 30 reworded; 3 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Total Assets*.*Total assets decreased $12.1 million to $266.6 million as of December 31, 2025 compared to $278.7 million at December 31, 2024. The decrease was driven by a reduction in total deposits held at the bank, reducing cash and cash equivalents. Additionally, loans, net decreased.
Current report
Noninterest expenses increased $593,000 for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase in noninterest expenses was primarily driven by increases in salaries and employee benefits. The average number of employees increased to 51 for the year ended December 31, 2025 compared to 50 for the year ended December 31, 2024. The increase in salaries and employee benefits primarily stemmed from a 4% increase in salaries recognized during the year. Additionally, the Bank was able to defer more compensation expense related to loan originations for the year ended December 31, 2024 due to a larger number of loans originated for the loan portfolio. These costs are then amortized as a yield adjustment over the life of the loans. The Bank recognized an 11% increase in employee health insurance costs during the year as well as a 15% increase in 401K employer contributions. We believe that our ability to attract and retain top quality employees is a key to our future success. We continue to elevate individuals from within the organization into new roles.
Current report
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).”The pronouncement requires public entities to disclose additional information about specific expense categories in the notes to the financial statements. The guidance is effective for public business entities for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is assessing ASU 2024-03 and its impact on its Consolidated Financial Statements and disclosures, and does not expect the amendments to have a material impact to the annual financial statements of the Company.
Removed paragraphs (3)
Previous report
Total Assets*.*Total assets increased $21.9 million to $278.7 million as of December 31, 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.
Previous report
On November 27, 2023, the FASB issued ASU 2023-07, "Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures", intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Provisions in the amendment include: (1) Requirement that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss (collectively referred to as the "significant expense principle"); (2) Requirement that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss; (3) Requirement that a public entity provide all annual disclosures about a reportable segment's profit or loss and assets currently required by ASC 280 in interim periods; (4) Clarification that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity's consolidated financial statements; (5) Requirement that a public entity disclose the title and position of the CODM and explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources; and (6) Requirement that a public entity that has a single reportable segment provide all the disclosures by the amendments in the update and all existing segment disclosures in ASC 280.
Previous report
The amendments in the update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. For public business entities, amendments in the update should be applied retrospectively to all periods presented in the financial statements, and upon transition the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company adopted this standard effective January 1, 2024, and did not have a material impact on the consolidated financial statements.
Reworded paragraphs (30)
Previous wording
North Shore Trust and Savings is a community-oriented savings institution headquartered in Waukegan, Illinois. Our business strategy is to continually enhance our products and services with a focus on one- to four- family residential first mortgage loans, and to maintain our holdings of commercial real estate and multi-family residential real estate loans. Our traditional lending market is centered in our retail branch area of Lake County, Illinois and has expanded to counties in the greater Chicagoland area in Illinois as well as Kenosha County in Wisconsin. We currently operate three full-service banking offices in Lake County, Illinois and three loan production offices in Chicago, Plainfield and Aurora, Illinois. Our primary sources of funds consist of attracting deposits from the general public and using those funds along with funds from the FHLB of Chicago and other sources to originate loans to our customers and invest in securities. As of December 31, 2024, we had total assets of$278.7 million, including$130.4 million in net loans and$71.2 million of securities available for sale, total deposits of $190.2 million and total equity of$76.5 million. For the year ended December 31, 2024, we had a net loss of $789,000 compared to a net loss of $4.0 million for the year ended December 31, 2023.
Current wording
North Shore Trust and Savings is a community-oriented savings institution headquartered in Waukegan, Illinois. Our business strategy is to continually enhance our products and services with a focus on one- to four- family residential first mortgage loans, and to maintain our holdings of commercial real estate and multi-family residential real estate loans. Our traditional lending market is centered in our retail branch area of Lake County, Illinois and has expanded to counties in the greater Chicagoland area in Illinois as well as Kenosha County in Wisconsin. We currently operate three full-service banking offices in Lake County, Illinois and three loan production offices in Chicago, Plainfield and Aurora, Illinois. Our primary sources of funds consist of attracting deposits from the general public and using those funds along with funds from the FHLB of Chicago and other sources to originate loans to our customers and invest in securities. As of December 31, 2025, we had total assets of$266.6 million, including$128.6 million in net loans and$78.7 million of securities available for sale, total deposits of $181.5 million and total equity of$80.0 million. For the year ended December 31, 2025, we had a net loss of $386,000 compared to a net loss of $789,000 for the year ended December 31, 2024.
Previous wording
Our results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on our loan and investment portfolios and interest expense on deposits and borrowings. Our net interest income is largely determined by our net interest spread, which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, and the relative amounts of interest-earning assets and interest-bearing liabilities. Results of operations are also affected by our provisions for credit losses, fee income and other noninterest income and noninterest expense. Noninterest expense principally consists of compensation, office occupancy and equipment expense, data processing, advertising and business promotion and other expenses. We expect that our noninterest expenses will increase as we grow and expand our operations. Our results of operations and financial condition are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, changes in accounting guidance, government policies and actions of regulatory authorities.
Current wording
Our results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on our loan and investment portfolios and interest expense on deposits and borrowings. Our net interest income is largely determined by our net interest spread, which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, and the relative amounts of interest-earning assets and interest-bearing liabilities. Results of operations are also affected by our provisions for credit losses, fee income and other noninterest income and noninterest expense. Noninterest expense principally consists of compensation, office occupancy and equipment expense, data processing, advertising and business promotion and other expenses. Our results of operations and financial condition are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, changes in accounting guidance, government policies and actions of regulatory authorities.
Previous wording
Allowance for Credit Losses. On January 1, 2023, we adopted the new CECL accounting methodology which requires entities to estimate and recognize an allowance for lifetime expected credit losses for loans and other financial assets measured at amortized cost. The accounting estimates relating to the allowance for credit losses is a “critical accounting policy” as:
Current wording
Allowance for Credit Losses. The Current Expected Credit Losses ("CECL") accounting methodology requires entities to estimate and recognize an allowance for lifetime expected credit losses for loans and other financial assets measured at amortized cost. The accounting estimates relating to the allowance for credit losses is a “critical accounting policy” as:
Previous wording
Cash and cash equivalents. Cash and cash equivalents increased $22.1 million to $53.5 million as of December 31, 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. Additionally, the Bank sold $5.9 million of loans on December 30, 2024, resulting in an increase in cash held as of 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 to fund loan demand. Management continues to actively monitor our liquidity position on a daily basis and maintains levels of liquid assets deemed adequate.
Current wording
Cash and cash equivalents. Cash and cash equivalents decreased $19.5 million to $34.0 million as of December 31, 2025, from $53.5 million at December 31, 2024. The decrease was driven by a reduction in total deposits, as well as purchases of securities available-for-sale throughout the year ended December 31, 2025. Additionally, the cash and cash equivalents balance at December 31, 2024 was higher due to timing of a loan sale, and cash coming in at the end of the year. Currently, the Bank holds a majority of the cash on hand at the Federal Reserve Bank of Chicago to keep the funds available to fund loan demand. Management continues to actively monitor our liquidity position on a daily basis and maintains levels of liquid assets deemed adequate.
Previous wording
***Securities Available for Sale.***Securities available-for-sale decreased to $71.2 million as of December 31, 2024, compared to $82.1 million at December 31, 2023. There were no purchases or sales of securities available-for-sale during the year ended December 31, 2024. During the year ended December 31, 2024, the Bank received principal payments of $5.5 million, had maturities of $4.3 million, had net premium amortization and discount accretion of $515,000 and had an increase in the unrealized loss on the portfolio of $535,000.
Current wording
***Securities Available for Sale.***Securities available-for-sale increased to $78.7 million as of December 31, 2025, compared to $71.2 million at December 31, 2024. The Bank purchased $10.8 million of securities available-for-sale during the year ended December 31, 2025. There were no sales of securities available-for-sale during the year ended December 31, 2025. During the year ended December 31, 2025, the Bank received principal payments of $5.8 million, had maturities of $1.1 million, had net premium amortization and discount accretion of $461,000 and had a decrease in the unrealized loss on the portfolio of $4.0 million. During the year the Bank purchased U.S. Treasury securities to replace the previously matured securities.
Previous wording
As of December 31, 2024, the securities available for sale portfolio included an unrealized loss position of $12.0 million, or 14.5% 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 December 31, 2025, the securities available for sale portfolio included an unrealized loss position of $8.1 million, or 9.3% 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.
Previous wording
***Loans held for sale.***Our loans held for sale increased $838,000 to $1.2 million at December 31, 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 year ended December 31, 2024, the Bank originated $45.6 million in loans held for sale.
Current wording
***Loans held for sale.***Our loans held for sale increased $3.3 million to $4.5 million at December 31, 2025 compared to $1.2 million at December 31, 2024. During the year ended December 31, 2025, the Bank originated $70.9 million in loans held for sale, transferred $7.8 million in loans to held for sale from the portfolio, and sold $75.5 million in loans held for sale.
Previous wording
***Loans, net.***Our loans, net, increased by $9.8 million to $130.4 million at December 31, 2024 compared to $120.6 million at December 31, 2023. The Bank originated $43.2 million in loans to be held in the portfolio during the year ended December 31, 2024 and had loan principal payments and payoffs and changes to deferred fees and costs of $25.0 million. In an effort to continue to grow loan originations, the Bank hired three additional mortgage loan originators during the year ended December 31, 2024. The Bank sold $8.4 million in loans that were originally held in the portfolio to local community banks.
Current wording
***Loans, net.***Our loans, net, decreased by $1.8 million to $128.6 million at December 31, 2025 compared to $130.4 million at December 31, 2024. The Bank originated $36.5 million in loans to be held in the portfolio during the year ended December 31, 2025 and had loan principal payments and payoffs and changes to deferred fees and costs of $30.5 million. In an effort to continue to grow loan originations, the Bank hired two additional mortgage loan originators during the year ended December 31, 2025. The Bank sold $7.8 million in loans that were originally held in the portfolio to local community banks.
Previous wording
As of December 31, 2024, the allowance for credit losses on loans (“ACL”) totaled $1.2 million, an increase of $25,000 compared to December 31, 2023. The increase in the ACL is driven by an increase in the portfolio loan balances, partially offset by a reduction in proxy expected lifetime loss rates due to high credit quality of the portfolio and positive economic factors such as a lower inflation rate and stable unemployment rates. As of December 31, 2024, there were no loans individually assessed and no loans were rated substandard or watch. As of December 31, 2024, the Bank has no non-accrual loans and two loans past due greater than 30 days. The Bank actively monitors the loan portfolio for signs of weakening credit quality, noting as of December 31, 2024 the portfolio remains of high quality with limited credit concerns.
Current wording
As of December 31, 2025, the allowance for credit losses on loans (“ACL”) totaled $1.1 million, a decrease of $73,000 compared to December 31, 2024. The decrease in the ACL is driven by a decrease in the portfolio loan balances and a reduction in proxy expected lifetime loss rates due to high credit quality of the portfolio and positive economic factors such as a stable inflation and unemployment rates. As of December 31, 2025, there were two loans individually assessed, both of which had no allowance for credit losses. As of December 31, 2025, the Bank has two non-accrual loans and two loans past due greater than 30 days. The Bank actively monitors the loan portfolio for signs of weakening credit quality, noting as of December 31, 2025 the portfolio remains of high quality with limited credit concerns.
Previous wording
***Deposits.***Total deposits increased $21.4 million to $190.2 million at December 31, 2024 compared to $168.8 million at December 31, 2023. The increase in deposits is primarily within the time deposit accounts as the Bank continued to offer a competitive CD special during the year ended December 31, 2024. Based on current offering rates in our market area and our current deposit pricing strategy, as well as our strong historical deposit retention, management anticipates that a significant portion of maturing time deposits will be retained. Management continues to actively monitor the deposit balances and interest rates offered to maintain an adequate level of liquidity.
Current wording
***Deposits.***Total deposits decreased $8.7 million to $181.5 million at December 31, 2025 compared to $190.2 million at December 31, 2024. $3.3 million of the decrease was the result of maturities of time deposits that did not renew at the then offered rate. During the year ended December 31, 2025, the Bank saw increased competition in the time deposit market, primarily stemming from specials offered by credit unions in the market area. Additionally, money market and savings accounts decreased $3.2 million and $2.9 million, respectively during the year ended December 31, 2025. A portion of this decrease was driven by one large estate account that moved money in 2025, due to distributions of the estate. Non-interest bearing checking accounts increased $1.4 million for the year ended December 31, 2025. Based on current offering rates in our market area and our current deposit pricing strategy, as well as our strong historical deposit retention, management anticipates that a portion of the maturing time deposits will not renew, however a significant portion of maturing time deposits will be retained. Management continues to actively monitor the deposit balances and interest rates offered to maintain an adequate level of liquidity.
Previous wording
***Other Borrowings.***As of December 31, 2024, the Bank has $5.0 million in outstanding advances from FHLB Chicago with a term of 24 months at 4.78%, that is scheduled to mature in June 2025. No additional borrowings were made during the year ended December 31, 2024.
Current wording
***Other Borrowings.***As of December 31, 2025, the Bank has no outstanding advances from FHLB Chicago, nor any additional borrowings outstanding. The Bank paid off the advance from FHLB Chicago totaling $5.0 million, in June 2025 that was outstanding as of December 31, 2024.
Previous wording
***Total Equity.***Total equity decreased $1.0 million to $76.5 million at December 31, 2024. The decrease is primarily due to an increase in the unrealized loss position on the securities available-for-sale portfolio, a reduction in retained earnings due to a net loss during the year and an increase in treasury stock as a result of stock repurchases completed during the year ended December 31, 2024.
Current wording
***Total Equity.***Total equity increased $3.5 million to $80.0 million at December 31, 2025. The increase is primarily due to a decrease in the unrealized loss position on the securities available-for-sale portfolio and an increase in additional paid-in capital as stock compensation continues to vest. These increases were offset by a decrease in retained earnings as a result of a net loss during the year.
Previous wording
General. For the year ended December 31, 2024, we had a net loss of $789,000, compared to a net loss of $4.0 million for the year ended December 31, 2023. The decrease in net loss for the year-ended December 31, 2024 is primarily due to a loss on sale of securities and a valuation allowance on the deferred tax assets recognized in 2023 which did not occur in 2024. Additionally, net interest income after provision for credit losses increased $946,000, and the gain on sale of loans increased $1.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. However, the increase in noninterest expenses of $1.9 million during year ended December 31, 2024 compared to December 31, 2023 partially offsets the decrease in net loss.
Current wording
General. For the year ended December 31, 2025, we had a net loss of $386,000, compared to a net loss of $789,000 for the year ended December 31, 2024. The decrease in net loss for the year-ended December 31, 2025 is primarily attributable to an increase in net interest income, an increase in noninterest income, and a reversal of provision for credit losses.
Previous wording
***Net Interest Income.***Net interest income increased $841,000, to $7.1 million for year ended December 31, 2024 compared to $6.2 million for the year ended December 31, 2023. Our interest rate spread decreased to 2.29% for the year ended December 31, 2024 from 2.33% for the year ended December 31, 2023. Our net interest margin increased to 2.86% for the year ended December 31, 2024 compared to 2.64% for the year ended December 31, 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 $402,000, to $7.5 million for year ended December 31, 2025 compared to $7.1 million for the year ended December 31, 2024. Our interest rate spread increased to 2.31% for the year ended December 31, 2025 from 2.29% for the year ended December 31, 2024. Our net interest margin increased to 2.91% for the year ended December 31, 2025 compared to 2.86% for the year ended December 31, 2024. The increases are driven by an increase in yields earned on loans, driving an overall increase in yields on interest-earning assets.
Previous wording
Average interest-earning assets of $247.2 million for the year ended December 31, 2024 increased $11.9 million compared to $235.3 million for the year ended December 31, 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 year and reduction in investment securities. The average outstanding balance of loans, net increased to $133.2 million for the year ended December 31, 2024, an increase of $25.8 million from $107.4 million for the year ended December 31, 2023. Additionally, the average yield earned on those loans outstanding increased 103 basis points to 5.09% for the year ended December 31, 2024. This increase is a result of an overall increase in market rates on mortgage loans originated during 2024, as well as 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 $256.8 million for the year ended December 31, 2025 increased $9.6 million compared to $247.2 million for the year ended December 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 year and reduction in investment securities. The average outstanding balance of loans, net increased to $136.8 million for the year ended December 31, 2025, an increase of $3.6 million from $133.2 million for the year ended December 31, 2024. Additionally, the average yield earned on those loans outstanding increased 36 basis points to 5.45% for the year ended December 31, 2025. This increase is a result of 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 liabilities increased 93 basis points for the year ended December 31, 2024 compared to the year ended December 31, 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 9 basis points for the year ended December 31, 2025 compared to the year ended December 31, 2024. The net increase in our funding costs was primarily due to a shift in our deposit balances, with an increased percentage of the total portfolio being related to higher-rate time deposits compared to core deposits.
Previous wording
Provision for Credit Losses. During the year ended December 31, 2024, we recorded a provision for credit losses of $71,000, comprised of $25,000 provision for credit losses on loans and $46,000 provision for credit losses related to unfunded commitments.
Current wording
Provision for Credit Losses. During the year ended December 31, 2025, we recorded a reversal of provision for credit losses of $(192,000), comprised of $(172,000) reversal of provision for credit losses on loans and $(20,000) reversal provision for credit losses related to unfunded commitments.
Previous wording
For the year ended December 31, 2024 compared to the same period ended December 31, 2023, noninterest income increased $3.1 million to $1.9 million. The increase was driven by an increase in the gain on sale of mortgage loans and no loss on sale of securities during the year ended December 31, 2024. Gain on sale of mortgage loans increased $1.2 million, from $32,000 to $1.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. 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 year ended December 31, 2024, we sold 199 loans totaling $53.1 million for a gain on sale of $1.2 million. 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 $8.4 million, for a total gain on sale of $352,000. 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 year ended December 31, 2025 compared to the same period ended December 31, 2024, noninterest income increased $331,000 to $2.3 million. The increase was driven by an increase in the gain on sale of mortgage loans. 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 year ended December 31, 2025, we sold 244 loans totaling $75.5 million for a gain on sale of $1.6 million. During the year ended December 31, 2024, we sold 199 loans totaling $53.1 million for a gain on sale of $1.2 million. Included in the number and amount of loans sold during the periods were loans sold that were originated as held for investment, but subsequently sold to local community banks, totaling $7.8 million, for a total gain on sale of $321,000, and $8.4 million, for a total gain on sale of $352,000, for the years ended December 31, 2025 and 2024, respectively.
Previous wording
Noninterest expenses increased $1.8 million for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase in noninterest expenses was primarily driven by increases in salaries and employee benefits. The average number of employees increased to 50 for the year ended December 31, 2024 compared to 39 for the year ended December 31, 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 year 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 year. 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
Marketing and advertising costs decreased during 2025 as a result of marketing initiatives in 2024 that did not continue into 2025. 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. Loan expenses increased as a result of an increase in loan originations during the year. Equipment and occupancy costs increased as a result of various maintenance projects that were completed in 2025 for the three full service branches.
Previous wording
***Provision for Income Tax Expense.***During the year ended December 31, 2024, the Bank recorded no income tax expense. The change in valuation allowance of $389,000 was offset by an equal deferred tax benefit.
Current wording
***Provision for Income Tax Expense.***During the year ended December 31, 2025, the Bank recorded no income tax expense. The increase in valuation allowance of $196,000 was offset by an equal deferred tax benefit.
Previous wording
Federal net operating losses as of December 31, 2024 are $6.7 million, of which $1.3 million is subject to expire in 2027, the remainder does not expire. During the year ended December 31, 2024, management assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing net operating losses. A significant piece of objective negative evidence evaluated is the cumulative taxable loss incurred over the four-year period ended December 31, 2024. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2024, a full valuation allowance of $2.5 million, against the net deferred tax assets has been recorded. Additionally, due to the uncertainty that the Bank will be able to generate future state taxable income sufficient to utilize the net operating loss carryforwards, a full valuation allowance of $515,000 has been recorded on the related deferred tax asset.
Current wording
Federal net operating losses as of December 31, 2025 are $7.4 million, of which $1.3 million is subject to expire in 2027, the remainder does not expire. State net operating losses as of December 31, 2025 are $6.1 million and will begin expiring in 2026. During the year ended December 31, 2025, management assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing net operating losses. A significant piece of objective negative evidence evaluated is the cumulative taxable loss incurred over the four-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2025, a valuation allowance of $3.2 million, against the net deferred tax assets has been recorded.
Previous wording
There were no uncertain tax positions outstanding as of December 31, 2024 and 2023. As of December 31, 2024, tax years remaining open for State of Illinois and Wisconsin were 2020 through 2023. Federal tax years that remained open were 2021 through 2023. As of December 31, 2024, there were also no unrecognized tax benefits that are expected to significantly increase or decrease within the next twelve months.
Current wording
There were no uncertain tax positions outstanding as of December 31, 2025 and 2024. Asof December 31, 2025, tax years remaining open for State of Illinois and Wisconsin were 2021 through 2024. Federal tax years that remained open were 2022 through 2024. As of December 31, 2025, there were also no unrecognized tax benefits that are expected to significantly increase or decrease within the next twelve months.
Previous wording
The table above indicates that as of December 31, 2024, in the event of an immediate and sustained 300 basis point increase in interest rates, our net interest income for the twelve months ending December 31, 2025 would be expected to increase by $173,000, or 2.5% to $7.1 million.
Current wording
The table above indicates that as of December 31, 2025, in the event of an immediate and sustained 300 basis point increase in interest rates, our net interest income for the twelve months ending December 31, 2025 would be expected to increase by $63,000, or 0.8% to $7.5 million.
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 the sale and maturities of securities. We also have the ability to borrow from the FHLB of Chicago and a $10.0 million unsecured Fed Funds facility with BMO Harris Bank. The Bank is eligible to borrow up to a total of$78.1 million and$77.2 million at December 31, 2024 and 2023, respectively, which would be collateralized by$103.8 million and$102.6 million of first mortgage loans under a blanket lien arrangement at December 31, 2024 and 2023, respectively. Additionally, we had no outstanding balance 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 the sale and maturities of securities. We also have the ability to borrow from the FHLB of Chicago and a $10.0 million unsecured Fed Funds facility with BMO Harris Bank. The Bank is eligible to borrow up to a total of$79.1 million and$78.1 million at December 31, 2025 and 2024, respectively, which would be collateralized by$105.1 million and$103.8 million of first mortgage loans under a blanket lien arrangement at December 31, 2025 and 2024, respectively. Additionally, we had no outstanding balance 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 $9.4 million and $431,000 for the years ended December 31, 2024 and 2023, respectively. Net cash (used in) or provided by investing activities, which consists primarily of net change in loans receivable and net change in investment securities, was $(8.2) million and $25.0 million for the years ended December 31, 2024 and 2023, respectively. Net cash provided by (used in) financing activities, consisting primarily of the activity in deposit accounts and FHLB of Chicago advances, was $20.8 million and $(7.1) million for the years ended December 31, 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 provided by operating activities was $4.1 million and $9.4 million for the years ended December 31, 2025 and 2024, respectively. Net cash used in investing activities, which consists primarily of net change in loans receivable and net change in investment securities, was $9.8 million and $8.2 million for the years ended December 31, 2025 and 2024, respectively. Net cash (used in) provided by financing activities, consisting primarily of the activity in deposit accounts and FHLB of Chicago advances, was $(13.7) million and $20.8 million for the years ended December 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 December 31, 2024, totaled $63.6 million. While we historically have experienced strong deposit retention, many of the new time deposits were brought in with a growth pricing strategy. As such, we expect a decrease in the time deposits as these mature during 2025. 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 December 31, 2025, totaled $64.3 million. While we historically have experienced strong deposit retention, many of the new time deposits were brought in with a growth pricing strategy. As such, we expect a decrease in the time deposits as these mature during 2026. 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 December 31, 2024, North Shore Trust and Savings was well capitalized under the regulatory framework for prompt corrective action. During the year ended December 31, 2020, North Shore Trust and Savings 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 23.53% and 24.72% at December 31, 2024 and 2023, respectively.
Current wording
As of December 31, 2025, North Shore Trust and Savings was well capitalized under the regulatory framework for prompt corrective action. North Shore Trust and Savings’ Tier 1 capital to Average Assets was 24.32% and 23.53% at December 31, 2025 and 2024, respectively.
Previous wording
Commitments. At December 31, 2024, we had $1.1 million of outstanding commitments to originate loans. Our total letters and lines of credit and unused lines of credit totaled $9.0 million at December 31, 2024. 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 December 31, 2024.
Current wording
Commitments. At December 31, 2025, we had $1.6 million of outstanding commitments to originate loans. Our total letters and lines of credit and unused lines of credit totaled $7.2 million at December 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 December 31, 2025.
Previous wording
On December 14, 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation, and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments require that all entities disclose on an annual basis the following information about income taxes paid: (1) The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes, and (2) The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amendments also require that all entities disclose the following information: (1) Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and (2) Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company will adopt this ASU for the reporting period beginning January 1, 2025, and does not expect the amendments to have a material impact to the financial statements of the Company.
Current wording
On December 14, 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation, and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments require that all entities disclose on an annual basis the following information about income taxes paid: (1) The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes, and (2) The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amendments also require that all entities disclose the following information: (1) Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and (2) Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. The Company adopted this standard effective for its fiscal year ended December 31, 2025, and did not have a material impact on the consolidated financial statements.
Previous wording
In March 2024, the FASB issued ASU No. 2024-01, “Compensation—Stock Compensation (Topic 718): Scope Applications of Profits Interests and Similar Awards” (ASU 2024-01). ASU 2024-01 adds an example to Topic 718 which illustrates how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as share-based payment arrangements under Topic 718 or under other U.S. GAAP. ASU 2024-01 is effective for annual periods beginning after December 15, 2025, although early adoption is permitted. Upon adoption, ASU 2024-01 is not expected to have an impact on the Company’s consolidated balance sheets or consolidated statements of income.
Current wording
In March 2024, the FASB issued ASU No. 2024-01, “Compensation—Stock Compensation (Topic 718): Scope Applications of Profits Interests and Similar Awards” (ASU 2024-01). ASU 2024-01 adds an example to Topic 718 which illustrates how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as share-based payment arrangements under Topic 718 or under other U.S. GAAP. ASU 2024-01 is effective for annual periods beginning after December 15, 2025, although early adoption is permitted. Upon adoption, ASU 2024-01 is not expected to have an impact on the Company’s consolidated balance sheets or consolidated statements of operations.