NSTS Bancorp, Inc.
For the period ended Jun 30, 2026. Filed Aug 13, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 13, 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-Q
Period ended 2026-03-31; filed 2026-05-14.
0001437749-26-017061
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-13.
0001437749-26-027675
Item 2. 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 67 previous paragraphs and 74 current paragraphs.
36 unchanged; 26 reworded; 10 added; 5 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 35 previous and 44 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 (10)
Current report
Proposed Merger with Brookfield Bancshares, Inc.
Current report
As previously disclosed, on May 12, 2026, Brookfield Bancshares, Inc. ("Parent") and the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which (1) the Company will merge with and into a newly formed Delaware corporation and wholly owned subsidiary of Parent, BRKD Merger Sub Inc. ("Parent Merger Sub"), with the Company as the surviving corporation (the "Merger') and (2) immediately following the Merger, the Company will be merged with and into Parent, with Parent surviving the merger (the "Second Merger"). Following the Second Merger, the Bank will become a wholly owned subsidiary of Parent. The Bank will continue to operate under its existing name and federal savings association charter as a subsidiary of Parent.
Current report
Under the terms of the Merger Agreement, each share of common stock, par value $0.01 per share, of the Company (“Company Stock”) that is issued and outstanding at the effective time of the Merger (the “Effective Time”), will be converted into the right to receive cash in an aggregate amount equal to $73,662,000 (the “Merger Consideration”), or approximately $14.28 per share of outstanding Company Stock, calculated based on fully diluted shares net of ESOP shares repurchased upon the repayment of the loan. In addition, all shares of restricted stock of the Company granted under the NSTS Bancorp, Inc. 2023 Equity Incentive Plan (the “Plan”), whether or not vested, will vest at the Effective Time and be entitled to receive the Merger Consideration. All stock options granted under the Plan, whether or not vested, will vest at the Effective Time and be entitled to receive a cash payment equal to the difference between the option’s exercise price and the per share Merger Consideration, to be paid out of the aggregate Merger Consideration.
Current report
Consummation of the Merger is subject to certain conditions, including, among others, approval of the Merger and the Merger Agreement by the Company’s stockholders, the receipt of all required regulatory approvals and expiration of applicable waiting periods, accuracy of specified representations and warranties of each party, the performance in all material respects by each party of its obligations under the Merger Agreement, and the absence of any injunctions or other legal restraints. The transaction is anticipated to close in the fourth quarter of 2026.
Current report
General. During the quarter ended June 30, 2026, the Company announced three major events which resulted in additional non-interest expenses, as well as the receipt of non-interest income. On April 7, 2026, the Bank's President and CEO, Mr. Nathan Walker, passed away. Due to the passing of Mr. Walker, stock options to purchase 51,000 shares of the Company's common stock and 20,400 shares of restricted stock previously awarded to Mr. Walker under the 2023 Equity Plan vested during the quarter ended June 30, 2026, pursuant to the terms of the 2023 Equity Plan. The early vesting of the stock options and restricted stock awards resulted in an additional expense of $134,000 and $141,000, respectively, during the quarter ended June 30, 2026. Additionally, the Bank received a BOLI death benefit payout, which resulted in $918,000 non-interest income and $5,000 interest income during the quarter.
Current report
On May 12, 2026, the Company entered into the Merger Agreement, pursuant to which the Bank will become a wholly-owned subsidiary of Brookfield Bancshares, Inc. Refer to the above section titled "Proposed Merger with Brookfield Bancshares, Inc." for additional information. Merger transaction related expenses totaling $611,000 for the three months ended June 30, 2026, and $658,000 for the six months ended June 30, 2026, were recorded. These transaction expenses include fees and expenses for legal and accounting services, as well as financial advisory services which included the receipt of a fairness opinion in connection with the proposed transaction.
Current report
As part of the proposed merger transaction, the parties agreed that, on or prior to the closing of the merger, the Bank would divest of its mortgage lending division, Oak Leaf Community Mortgage ("OLCM"), which operated in three locations in the north and western suburbs of Chicago. Accordingly, on June 1, 2026, the Bank divested OLCM. The Bank incurred non-interest expenses totaling $42,000, including severance pay and fees for legal services, during the three and six months ended June 30, 2026, in connection with the divestiture. Additionally, the Bank received $17,000 in non-interest income as a result of the transfer of certain assets utilized by OLCM, including certain real estate leases, third party vendor contracts, trademark rights and other information technology assets to an unaffiliated national mortgage lender. A substantial majority of the 16 OLCM employees were hired by that mortgage lender.
Current report
Average interest-earning assets of $250.1 million for the six months ended June 30, 2026 decreased $10.2 million compared to $260.3 million for the six months ended June 30, 2025. The decrease in average earning assets was driven by a decrease in interest-bearing deposits at other banks, resulting from a decrease in average deposit balances and other borrowings during the period. The average outstanding balance of loans, net decreased, from $134.4 million for the six months ended June 30, 2025, to $131.2 million for the six months ended June 30, 2026. The average yield earned on those loans outstanding decreased five basis points to 5.30% for the six months ended June 30, 2026. This decrease is driven by the reversal of accrued interest on four loans that were moved to non-accrual during the period.
Current report
For the quarter ended June 30, 2026 compared to the same period ended June 30, 2025, noninterest income increased $758,000 to $1.5 million. For the six months ended June 30, 2026 compared to the six months ended June 30, 2025, noninterest income increased $1.1 million to $2.1 million. The increase is primarily driven by the BOLI death benefit received during the three and six months ended June 30, 2026 in relation to the passing of Mr. Walker. Additionally, during the three months ended June 30, 2026, the gain on sale of mortgage loans decreased in comparison to the three months ended June 30, 2025. The decrease was driven by the reduction in loan originations and loan staff during the three months ended June 30, 2026 as a result of the OLCM divestiture during the period. During the six months ended June 30, 2026, the gain on sale of mortgage loans increased in comparison to the same period ended June 30, 2025, which was driven by an increase in mortgage loans sold to other community banks, primarily during the first three months of 2026.
Current report
Noninterest expenses increased $698,000 for the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. Noninterest expenses increased $745,000 for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increases in noninterest expenses were primarily driven by the merger related transaction expenses incurred during the period. Additionally, salaries and employee benefits increased as a result of the vesting of the restricted stock awards and stock options related to the passing of Mr. Walker. There was a partial offset to the increase in salaries and employee benefits as a result of the departure of many of the OLCM employees, primarily on June 1, 2026. During the six months ended June 30, 2025, the Bank experienced an ATM loss of $40,000 due to a robbery, resulting in a reduction in deposit expenses for the same period ended June 30, 2026. Data processing expenses increased for the three and six months ended June 30, 2026 compared to the same periods ended June 30, 2025 due to the addition of fraud monitoring software. Advertising expenses reduced during both the three and six months ended June 30, 2026 compared to the same periods ended June 30, 2025 as less advertising for OLCM was undertaken in 2026 with the divestiture of OLCM.
Removed paragraphs (5)
Previous report
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,
Previous report
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 report
For the quarter ended March 31, 2026 compared to the same period ended March 31, 2025, noninterest income increased $321,000 to $655,000. The increase was driven by an increase in the gain on sale of mortgage loans during the quarter ended March 31, 2026. The increase in gain on sale of mortgages was primarily the result of an overall increase in total mortgage loans originated for sale during the period. During the quarter ended March 31, 2026, we sold 63 loans totaling $23.2 million for a gain on sale of $475,000. During the quarter ended March 31, 2025, we sold 31 loans totaling $9.9 million for a gain on sale of $189,000. The increase in other noninterest income is driven by the increase in subserviced loans. During the fourth quarter of 2025, the Bank began subservicing approximately 200 additional loans, resulting in subservicing fees totaling $36,000 during the first quarter of 2026.
Previous report
Noninterest expenses increased $47,000 for the quarter ended March 31, 2026, compared to the quarter ended March 31, 2025. The increase in noninterest expenses was primarily driven by increases in salaries and employee benefits and data processing related expenses, partially offset by a decrease in professional services. Salaries and employee benefits increased approximately 5.1%, driven by general cost of living and merit increases for our employees and increases in employee health and wellness costs. The increase in data processing costs was driven by system upgrades. The reduction in professional services expenses was driven by a $40,000 reduction in legal costs during the first quarter of 2026 compared to 2025. Additional legal billings were incurred during the first quarter of 2025 associated with the passing of Director Bond.
Previous report
Escrow deposits. Escrow deposits increased $1.1 million to $2.7 million at March 31, 2026 compared to $1.6 million at December 31, 2025. The increase in escrow deposits is due to timing of escrow receipts and disbursements. Cook County, Illinois, one of the Bank's primary lending areas, had property taxes due in December 2025, resulting in a large escrow disbursement at the end of 2025.
Reworded paragraphs (26)
Previous 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, 2026 and as compared to our financial condition as of December 31, 2025, and our results of operations for the three months ended March 31, 2026 and 2025. 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 June 30, 2026 and as compared to our financial condition as of December 31, 2025, and our results of operations for the three and six months ended June 30, 2026 and 2025. 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. 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”).
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. 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 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, 2026 and 2025, 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 and six months ended June 30, 2026 and 2025, 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 months ended March 31, 2026 and 2025
Current wording
COMPARISON OF OPERATING RESULTS FOR THE three and six months ended June 30, 2026 and 2025
Previous wording
General. For the quarter ended March 31, 2026, we had a net loss of $39,000, compared to a net loss of $328,000 for the quarter ended March 31, 2025. The change is due to an increase in noninterest income primarily stemming from an increase in the gain on loans held for sale.
Current wording
For the quarter ended June 30, 2026, we had a net loss of $204,000, compared to a net loss of $258,000 for the quarter ended June 30, 2025. For the six months ended June 30, 2026, we had a net loss of $243,000, compared to a net loss of $586,000 for the six months ended June 30, 2025. The decreases in net loss are due to an increase in noninterest income related to the BOLI death benefit, which was partially offset by the increase in non-interest expenses, specifically the salaries and employee benefits associated with the vesting of Mr. Walker's restricted stock awards and stock options, and the merger related transaction expenses.
Previous wording
***Net Interest Income.***Net interest income increased $26,000, to $1.9 million for quarter ended March 31, 2026. Our interest rate spread increased to 2.42% for the quarter ended March 31, 2026 from 2.23% for the quarter ended March 31, 2025. Our net interest margin increased to 2.98% for the quarter ended March 31, 2026 compared to 2.82% for the quarter ended March 31, 2025. The increase in interest rate spread and margin is driven by a reduction of higher cost other borrowings.
Current wording
***Net Interest Income.***Net interest income decreased $62,000, to $1.7 million for quarter ended June 30, 2026. Our interest rate spread increased to 2.21% for the quarter ended June 30, 2026 from 2.19% for the quarter ended June 30, 2025. Our net interest margin increased slightly to 2.78% for the quarter ended June 30, 2026 compared to 2.77% for the quarter ended June 30, 2025. The slight increase in interest rate spread and margin is driven by a modest reduction of higher cost other borrowings.
Previous wording
Average interest-earning assets of $248.9 million for the quarter ended March 31, 2026 decreased $11.0 million compared to $259.9 million for the quarter ended March 31, 2025. The decrease in average earning assets was driven by a decrease in interest-bearing deposits at other banks, resulting from a decrease in average deposit balances during the period. The average outstanding balance of loans, net remained relatively flat, going from $133.9 million for the quarter ended March 31, 2025 to $133.2 million for the quarter ended March 31, 2026. The average yield earned on those loans outstanding increased 8 basis points to 5.46% for the quarter ended March 31, 2026. 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.
Current wording
Average interest-earning assets of $251.3 million for the quarter ended June 30, 2026 decreased $9.4 million compared to $260.7 million for the quarter ended June 30, 2025. The decrease in average earning assets was driven by a decrease in interest-bearing deposits at other banks, resulting from a decrease in average deposit balances and other borrowings during the period. The average outstanding balance of loans, net decreased, from $134.9 million for the quarter ended June 30, 2025, to $129.3 million for the quarter ended June 30, 2026. The average yield earned on those loans outstanding decreased 19 basis points to 5.13% for the quarter ended June 30, 2026. This decrease is driven by the reversal of accrued interest on four loans that were moved to non-accrual during the period.
Previous wording
The cost of interest-bearing liabilities decreased 26 basis points for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025. This shift is primarily attributable to higher rates offered on time deposits that ran through 2024 and into 2025. Many of the matured time deposits originated during this period were renewed at lower offering rates.
Current wording
The cost of interest-bearing liabilities decreased 25 basis points for the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025. This shift is primarily attributable to higher rates offered on time deposits that ran through 2025 and into 2026. Many of the matured time deposits originated during this period were renewed at lower offering rates. Additionally the reduction is due to the bank having no other borrowings outstanding for the quarter ended June 30, 2026, compared to an average balance of $4.4 million outstanding during the quarter ended June 30, 2025.
Previous wording
Provision for Credit Losses. During the quarter ended March 31, 2026, we recorded a reversal of provision for credit losses of $26,000 comprised of a $33,000 reversal of provision for credit losses on loans and $7,000 of provision for credit losses related to unfunded commitments. During the quarter ended March 31, 2025, we recorded a reversal of provision for credit losses of $37,000, comprised of a $45,000 reversal of provision for credit losses on loans and $8,000 in provision for credit losses related to unfunded commitments, including loans committed for origination.
Current wording
Provision for Credit Losses. During the quarter ended June 30, 2026, we recorded a provision for credit losses of $1,000 comprised of a $1,000 provision for credit losses related to unfunded commitments. During the quarter ended June 30, 2025, we recorded a provision for credit losses of $57,000, comprised of a $44,000 provision for credit losses on loans and $13,000 in provision for credit losses related to unfunded commitments, including loans committed for origination. During the six months ended June 30, 2026, we recorded a reversal of provision for credit losses of $25,000 comprised of a $33,000 reversal of provision for credit losses on loans and $7,000 of provision for credit losses related to unfunded commitments. During the six months ended June 30, 2025, we recorded a provision for credit losses of $20,000, comprised of a $1,000 reversal of provision for credit losses on loans and $21,000 in provision for credit losses related to unfunded commitments, including loans committed for origination.
Previous wording
***Provision for Income Tax Expense.***There was no provision for income tax expense recorded during the three months ended March 31, 2026 and 2025. Management estimates a taxable net loss for the year ended December 31, 2026 due to non-taxable income, such as income on tax exempt municipal securities and BOLI.
Current wording
***Provision for Income Tax Expense.***There was no provision for income tax expense recorded during the three and six months ended June 30, 2026 and 2025. Management estimates a taxable net loss for the year ended December 31, 2026 due to non-taxable income, such as income on tax exempt municipal securities and BOLI.
Previous wording
Total Assets*.* Total assets increased $3.7 million to $270.3 as of March 31, 2026 compared to $266.6 million at December 31, 2025. The increase was driven by an increase in cash and cash equivalents as a result of an increase in deposits and escrow deposits.
Current wording
Total Assets*.* Total assets increased $3.3 million to $269.9 million as of June 30, 2026 compared to $266.6 million at December 31, 2025. The increase was driven by an increase in cash and cash equivalents as a result of an increase in deposits.
Previous wording
Cash and cash equivalents. Cash and cash equivalents increased $9.4 million to $43.4 million as of March 31, 2026, from $34.0 million at December 31, 2025. The increase was driven by an increase in total deposits and escrow deposits during the period and a reduction in loans held for sale and securities available for sale. 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 $13.5 million to $47.5 million as of June 30, 2026, from $34.0 million at December 31, 2025. The increase was driven by an increase in total deposits during the period and a reduction in loans held for sale and securities available for sale. 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 $76.7 million as of March 31, 2026, compared to $78.7 million at December 31, 2025. There were no purchases or sales of securities available for sale during the period. During the three months ended March 31, 2026, the Bank received principal payments of $1.6 million, had net premium amortization and discount accretion of $108,000 and had an increase in the unrealized loss on the portfolio of $279,000.
Current wording
Securities Available for Sale. Securities available-for-sale decreased to $74.6 million as of June 30, 2026, compared to $78.7 million at December 31, 2025. There were no purchases or sales of securities available for sale during the period. During the six months ended June 30, 2026, the Bank received principal payments and maturities of $3.6 million, recognized net premium amortization and discount accretion of $209,000 and an increase in the unrealized loss on the portfolio of $308,000.
Previous wording
As of March 31, 2026, the securities available for sale portfolio included an unrealized loss position of $8.3 million, or 9.8% 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 June 30, 2026, the securities available for sale portfolio included an unrealized loss position of $8.4 million, or 10.1% 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 decreased $2.7 million to $1.8 million at March 31, 2026 compared to $4.5 million at December 31, 2025. The change in loans held for sale is the result of timing of originations and sales of loans. On average, the Bank holds loans held for sale less than 30 days.
Current wording
***Loans held for sale.***Our loans held for sale decreased $3.1 million to $1.4 million at June 30, 2026 compared to $4.5 million at December 31, 2025. The change in loans held for sale is the result of timing of originations and sales of loans. On average, the Bank holds loans held for sale less than 30 days. The divestiture of OLCM resulted in less originations made during the three months ended June 30, 2026, resulting in less loans held for sale at the end of the quarter.
Previous wording
Loans, net. Our loans, net, decreased by $988,000 to $127.6 million at March 31, 2026 compared to $128.6 million at December 31, 2025. The Bank originated $7.7 million in loans to be held in the portfolio during the three months ended March 31, 2026, transferred $2.5 million of loans to held for sale, and had loan principal payments and payoffs of $6.2 million.
Current wording
Loans, net. Our loans, net, decreased by $2.1 million to $126.5 million at June 30, 2026 compared to $128.6 million at December 31, 2025. The Bank originated $16.6 million in loans to be held in the portfolio during the six months ended June 30, 2026, transferred $5.3 million of loans to held for sale, and had loan principal payments and payoffs of $13.4 million.
Previous wording
As of March 31, 2026, the allowance for credit losses on loans (“ACL”) totaled $1.1 million, with a net change of approximately $33,000 during the three months ended March 31, 2026. There was minimal change in the ACL as a percentage of total loans. As of March 31, 2026, there were three loans individually assessed, of which none had credit losses identified. The Bank actively monitors the loan portfolio for signs of weakening credit quality, noting as of March 31, 2026 the portfolio remains of high quality with limited credit concerns.
Current wording
As of June 30, 2026, the allowance for credit losses on loans (“ACL”) totaled $1.1 million, with a net change of approximately $33,000 during the six months ended June 30, 2026. There was minimal change in the ACL as a percentage of total loans. As of June 30, 2026, there were six loans individually assessed, of which none had credit losses identified. The Bank actively monitors the loan portfolio for signs of weakening credit quality, and believes that even with the increase in non-accrual loans as of June 30, 2026, the portfolio remains of high quality with limited credit concerns.
Previous wording
Deposits. Total deposits increased $2.4 million to $183.9 million at March 31, 2026 compared to $181.5 million at December 31, 2025. The increase was driven by an increase in time deposits. The Bank continues to run a 13 month time deposit special to assist in retaining the previous time deposit specials as those mature. Management continues to actively monitor the deposit balances and interest rates offered to maintain an adequate level of liquidity.
Current wording
Deposits. Total deposits increased $2.6 million to $184.1 million at June 30, 2026 compared to $181.5 million at December 31, 2025. The increase was driven by an increase in time deposits. The Bank continues to run a 13 month time deposit special to assist in retaining the previous time deposit specials as those mature. Management continues to actively monitor the deposit balances and interest rates offered to maintain an adequate level of liquidity.
Previous wording
Total Equity. Total equity remained flat. The increase in the unrealized loss position of the securities available for sale portfolio was offset by an increase in additional paid in capital and a decrease in the unallocated common shares held by the ESOP. The changes in the additional paid in capital and unallocated common shares held by the ESOP were related to benefit plan expenses and commitments of allocations within the ESOP.
Current wording
Total Equity. Total equity remained roughly flat. The increases in the unrealized loss position of the securities available for sale portfolio and the net loss were offset by an increase in additional paid in capital and a decrease in the unallocated common shares held by the ESOP. The changes in the additional paid in capital and unallocated common shares held by the ESOP were related to benefit plan expenses and commitments of allocations within the ESOP.
Previous wording
The following table sets forth certain information with respect to our nonperforming assets.
Current wording
The following table sets forth certain information with respect to our nonperforming assets. The increase in nonaccrual loans is the result of four loans moving to non-accrual during the six-months ended June 30, 2026. The Bank analyzed each of the loans moved to non-accrual and received appraisals for the underlying properties. Management believes there is no credit loss identified as of June 30, 2026.
Previous wording
The allowance for credit losses on loans as a percentage of total loans was 0.85% and 0.87% as of March 31, 2026 and December 31, 2025, respectively.
Current wording
The allowance for credit losses on loans as a percentage of total loans was 0.86% and 0.87% as of June 30, 2026 and December 31, 2025, 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 uncommitted, unsecured line of credit with BMO Harris Bank. At March 31, 2026, we had the capacity to borrow approximately $74.5 million from the FHLB of Chicago. At March 31, 2026, we had no outstanding borrowings.
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 uncommitted, unsecured line of credit with BMO Harris Bank. At June 30, 2026, we had the capacity to borrow approximately $74.0 million from the FHLB of Chicago. At June 30, 2026, we had no outstanding borrowings.
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 (used in) operating activities was $5.5 million and $(2.7) million for the three months ended March 31, 2026 and 2025, respectively. The change was driven by a transfer of loans to loans held for sale and subsequently sold in the first quarter of 2026, resulting in additional cash provided by operating activities. Net cash provided by investing activities, which consists primarily of net change in loans receivable and net change in investment securities, was $351,000 and $2.4 million for the three months ended March 31, 2026 and 2025, respectively, with the decrease in cash provided in 2026 driven by increased cash used for the loan portfolio. Net cash provided by financing activities, consisting primarily of the activity in deposit accounts was $3.5 million and $4.2 million for the three months ended March 31, 2026 and 2025, 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 (used in) operating activities was $8.4 million and $(2.0) million for the six months ended June 30, 2026 and 2025, respectively. The change was driven by a transfer of loans to loans held for sale and subsequently sold in the first half of 2026, resulting in additional cash provided by operating activities. Net cash provided by (used in) investing activities, which consists primarily of net change in loans receivable and net change in investment securities, was $2.3 million and $(1.7) million for the six months ended June 30, 2026 and 2025, respectively, with the increase in cash provided in 2026 driven by proceeds from the BOLI death benefit. Net cash provided by (used in) financing activities, consisting primarily of the activity in deposit accounts was $2.8 million and $(2.3) million for the six months ended June 30, 2026 and 2025, respectively. The change was driven by the repayment of the FHLB Advance in the six months ended June 30, 2025 that did not reoccur during the same period ended June 30, 2026.
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 March 31, 2026, totaled $69.2 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.
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 June 30, 2026, totaled $68.0 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.
Previous wording
As of March 31, 2026, 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 24.93% and 24.32% at March 31, 2026 and December 31, 2025, respectively.
Current wording
As of June 30, 2026, 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. However, in November 2025, the OCC and the FDIC jointly issued a proposal to reduce the minimum leverage ratio for opting-in banks from 9% to 8%, effective July 1, 2026. North Shore Trust and Savings’ Tier 1 capital to Average Assets was 25.48% and 24.32% at June 30, 2026 and December 31, 2025, respectively.
Previous wording
Commitments. At March 31, 2026, we had $2.6 million of outstanding commitments to originate loans. Our total letters and lines of credit and unused lines of credit totaled $6.5 million at March 31, 2026. 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, 2026.
Current wording
Commitments. At June 30, 2026, we had $2.9 million of outstanding commitments to originate loans. Our total letters and lines of credit and unused lines of credit totaled $5.8 million at June 30, 2026. 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 June 30, 2026.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Net interest income decreased $36,000, to $3.6 million for six months ended June 30, 2026. Our interest rate spread increased to 2.31% for the six months ended June 30, 2026 from 2.20% for the six months ended June 30, 2025. Our net interest margin increased to 2.88% for the six months ended June 30, 2026 compared to 2.80% for the six months ended June 30, 2025. The increase in interest rate spread and margin is driven by a reduction of higher cost other borrowings.
Current report — wording carried from elsewhere
The cost of interest-bearing liabilities decreased 26 basis points for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This shift is primarily attributable to higher rates offered on time deposits that ran through 2025 and into 2026. Many of the matured time deposits originated during this period were renewed at lower offering rates. Additionally the reduction is due to the bank having no other borrowings outstanding for the six months ended June 30, 2026, compared to an average balance of $4.7 million outstanding during the six months ended June 30, 2025.