Hoyne Bancorp, Inc.: Form 10-Q for the period ended Sep 30, 2025
Filed with the SEC on Nov 13, 2025 and accepted by EDGAR at Nov 13, 2025, 16:38 ET.
Management's discussion and analysis
As filed, 42,664 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
This discussion and analysis is intended to assist in the understanding of our financial performance through a discussion of our financial condition as of September 30, 2025 (unaudited) and as compared to our financial condition as of December 31, 2024 (audited) and our results of operations for the nine and three month periods ended September 30, 2025 and 2024 (unaudited). This section should be read in conjunction with the unaudited consolidated financial statements and notes thereto appearing in Part 1 Item 1 of this Quarterly Report on Form 10Q and the Prospectus.
Forward Looking Statements
Certain statements in this Quarterly Report on Form 10-Q that are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words “may”, “will”, “should”, “could”, “would”, “plan”, “potential”, “estimate”, “project”, “believe”, “intend”, “anticipate”, “expect”, “target”, and similar expressions.
Forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase in the level of defaults, losses and prepayments on loans we have made; adverse changes in the securities or secondary mortgage markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums; changes in monetary or fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; a failure or breach of our operational or security systems or infrastructure, including cyber-attacks; the inability of third party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related there to; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission (the “Commission”) or the public accounting oversight board; our ability to retain key employees; and our compensation expense associated with equity allocation or awarded our employees.
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Overview
Hoyne Bancorp, Inc. (the “Company”, and together with Hoye Savings, MHC, Hoyne Financial Corporation and Hoyne Savings Bank, “we” or “us”) is a Delaware corporation which was incorporated in June 2025 and has not engaged in any business to date. Upon completion of the Conversion (as described below), we will own all of the issued and outstanding stock of Hoyne Savings Bank (the “Bank”). After the conversion is complete, we will be authorized to pursue other business activities permitted by applicable laws and regulations.
Currently, Hoyne Savings Bank is a wholly-owned subsidiary of Hoyne Financial Corporation, which is in turn a wholly-owned subsidiary of Hoyne Savings, MHC. Hoyne Savings, MHC’s primary asset is its investment in Hoyne Financial Corporation, and Hoyne Financial Corporation’s primary asset is its investment in Hoyne Savings Bank. Hoyne Savings, MHC, and Hoyne Financial Corporation are not otherwise engaged in any material operating activities.
Hoyne Savings Bank is an Illinois-chartered savings bank which was originally organized in 1887 as Hoyne Building and Loan Homestead Association and is headquartered in Chicago, Illinois. We originate commercial real estate (including commercial construction), commercial and industrial, and one to four residential mortgage loans and, to a lesser extent, home equity loans. We currently operate six full- service banking offices and one loan production office in Cook County, Illinois.
Our primary sources of funds consist of attracting deposits from the general public and using those funds and other sources to originate loans to our customers and invest in securities. As of September 30, 2025, we had total assets of $454.8 million, including $249.4 million in net loans and $108.8 million of investment securities available-for-sale, and investment securities held-to-maturity of $29.8 million, total deposits of $356.8 million and total equity of $90.1 million. For the nine months ended September 30, 2025, we had a net income of $31,000 compared to a net loss of $1.5 million for the nine months ended September 30, 2024.
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 loan 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. After the conversion, we expect that our noninterest expenses will increase as we grow and expand our operations. In addition, our compensation expense will increase due to the new stock benefit plans we intend to implement. See “Pro Forma Data.” 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.
Conversion of Hoyne Savings, MHC
Pursuant to the terms of Hoyne Savings, MHC’s plan of conversion, Hoyne Savings, MHC will convert from the mutual holding company to the stock holding company corporate structure (the “Conversion”). Upon completion of the Conversion, Hoyne Savings, MHC, and Hoyne Financial Corporation will cease to exist, and Hoyne Savings Bank will be a wholly0owned subsidiary of the Company. At present, all depositors and certain borrowers as of a specified eligibility date have voting rights in Hoyne Savings, MHC as to all matters requiring member approval. Upon completion of the Conversion, depositors and those certain borrowers as of a specified eligibility date of Hoyne Savings Bank will cease to have any voting right in Hoyne Savings, MHC, and all voting rights in Hoyne Savings, MHC will be vested in the Company as the sole stockholder of Hoyne Savings Bank. The Stockholders of the Company will possess exclusive voting rights and rights to the Company’s stock.
Business Strategy
Our goal is to position Hoyne Bancorp, Inc. to prosper in an evolving financial services landscape and enhance our position as one of the leading community banking institutions in our local market. We intend to continue to provide a broad array of banking services while growing our presence in our market and expanding our franchise. In recent years, we have focused on, and invested in, our technology and infrastructure to improve our delivery channels and create competitive products and services, a strong workforce, and an enhanced awareness of our commercial banking brand in our market area. As a result, we believe we are well positioned to capitalize on the opportunities available in our market by focusing on the business strategies outlined in the Prospectus.
Critical Accounting Policies
The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared to conform with generally accepted in the United States of America (“U.S. GAAP”) and to general practices within the banking industry. The preparation of the financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented. The Jumpstart Our Business Startups Act of 2012 contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.
The following accounting policies comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.
Allowance for Credit Losses. The allowance for credit losses is the estimated amount considered necessary to cover expected, but unconfirmed credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for credit losses which is charged against income. In determining the allowance for credit losses, we make significant estimates and have identified this policy as one of our most critical accounting policies.
We perform a quarterly evaluation of the allowance for credit losses. Our determination of the adequacy of the allowance for credit losses is based on the assessment of the expected credit losses on loans over the expected life of the loans. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.
In accordance with the provisions of the accounting standards under CECL, we estimate the allowance for credit losses balance using relevant available information from both internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience of a defined peer group, by affiliate, paired with economic forecasts, provide the basis for the quantitatively modeled estimates of expected credit losses. We adjust our quantitative model, as necessary, to reflect conditions not already considered by the quantitative model. These adjustments are commonly known as the qualitative factors.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. We use the average historical loss method to measure the quantitative portion of the allowance for credit losses over the forecast and reversion periods.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When we determine that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.
Prior to January 1, 2023, we calculated the allowance for loan losses under the probable incurred methodology. Using this methodology, the analysis had two components, specific and general allowances. The specific percentage allowance was for unconfirmed losses related to loans that were determined to be impaired. Impairment was measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. If the fair value of the loan was less than the loan’s carrying value, a charge was recorded for the difference.
Comparison of Financial Condition as of September 30, 2025 and December 31, 2024
Total Assets. Total assets increased $5.3 million or 1.2% to $454.8 million as of September 30, 2025 compared to $449.5 million as of December 31, 2024. The increase resulted primarily from increases in cash and cash equivalents of $11.6 million, real estate owned of $729,000, loans receivable, net of $8.5 million and other assets of $1.3 million. These increases were offset by decreases in certificates of deposit of $480,000, investment securities available- for-sale of $7.7 million, investment securities held-to-maturity of $4.2 million, premises and equipment, net of $419,000 and BOLI of $2.2 million.
Cash and Cash Equivalents. Cash and cash equivalents increased $11.6 million, or 75.7%, to $26.9 million as of September 30, 2025 compared to $15.3 million as of December 31, 2024. The increase reflects management’s intention to increase liquidity to expand the commercial loan portfolio.
Certificates of Deposit. Certificates of deposit decreased $480,000, or 35.6%, to $870,000 as of September 30, 2025 compared to $1.4 million as of December 31, 2024. The decrease in certificates of deposit was the result of funding loan originations.
Investment Securities Available-for-Sale. Investment securities available-for-sale decreased $7.7 million, or 6.6%, to $108.8 million as of September 30, 2025 from $116.5 million as of December 31, 2024. The liquidity from the decrease was used to fund the increase in our loan portfolio.
Investment Securities Held-to-Maturity. Investment securities held-to-maturity decreased $4.2 million, or 12.4%, to $29.8 million as of September 30, 2025 from $34.0 million as of December 31, 2024. The liquidity from the decrease was used to fund the increase in our loan portfolio.
Real Estate Owned. Real estate owned increased $729,000, or 525.2%, to $868,000 as of September 30, 2025 from $139,000 as of December 31, 2024. The increase was due to the transfer to real estate owned of the closed 63rd Street branch location that is held for sale.
Loans Receivable, Net. Loans receivable, net increased $8.5 million, or 3.5%, to $249.4 million from $240.9 million as of December 31, 2024. The increase reflects the emphasis to increase the commercial loan portfolio during the first nine months of 2025.
Premises and Equipment, Net. Premises and equipment, net decreased $419,000 or 5.4% to $7.3 million during the first nine months of 2025 from $7.7 million as of December 31, 2024 due primarily to the branch closing discussed under “Real Estate Owned.”
Deposits. Deposits remained relatively unchanged during the first nine months of 2025 at $356.8 million from $357.3 million as of December 31, 2024.
Total Equity. Total equity for the first nine months of 2025 increased $4.3 million, or 5.0%, to $90.1 million from $85.8 million as of December 31, 2024. The increase was due primarily to a decrease in accumulated other comprehensive loss of $4.3 million during the first nine months of 2025.
Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. All average balances are based on daily balances. The table also reflects the yields on Hoyne Savings Bank’s interest-earning assets and costs of interest-bearing liabilities for the periods shown.
(Dollars in thousands)
| Interest-earning assets: | | For the Three Months Ended September 30, 2025 Average Outstanding Balance | Interest | | Average Yield/ Rate | 2024 Average Outstanding Balance | Interest | | Average Yield/ Rate |
|---|---|---|---|---|---|---|---|---|---|
| Loans, net | $249,620 | $3,991 | 6.39% | $207,941 | $2,867 | 5.51% | |||
| Certificates of deposit with other financial institutions | | 870 | 5 | 2.30% | 1,350 | 7 | 2.07% | ||
| Interest-bearing cash and cash equivalents | | 24,329 | 233 | 3.83% | 23,825 | 306 | 5.14% | ||
| Investment securities available-for-sale | | 109,635 | 585 | 2.13% | 126,028 | 750 | 2.38% | ||
| Investment securities held-to-maturity | | 30,253 | 160 | 2.12% | 40,580 | 240 | 2.37% | ||
| FHLB of Chicago stock | | 1,166 | 15 | 5.15% | 1,166 | 15 | 5.15% | ||
| Bankers’ Bank Stock | | 992 | 11 | | 4.44% | — | — | | —% |
| Total interest-earning assets | | 416,865 | 5,000 | 4.80% | 400,890 | 4,185 | 4.17% | ||
| Noninterest-earning assets | | 36,512 | | | 37,321 | | |||
| Total assets | | $453,377 | | | $438,211 | | |||
| Interest-bearing liabilities: | | | | | | ||||
| Savings accounts | | 94,569 | 62 | 0.26% | 100,834 | 53 | 0.21% | ||
| Checking accounts | | 50,168 | 1 | 0.01% | 44,019 | 8 | 0.07% | ||
| Money market accounts | | 17,102 | 61 | 1.43% | 16,191 | 48 | 1.19% | ||
| Certificates of deposit(1) | | 194,144 | 1,462 | 3.01% | 184,736 | 1,699 | 3.68% | ||
| Total interest-bearing deposits | | $355,983 | $1,586 | 1.78% | $345,780 | $1,808 | 2.09% | ||
| Total interest-bearing liabilities | | 355,983 | 1,586 | 1.78% | 345,780 | 1,808 | 2.09% | ||
| Noninterest-bearing liabilities | | 7,989 | | | 5,588 | | |||
| Total liabilities | | $363,972 | | | $351,368 | | |||
| Equity | | 89,405 | | | 86,843 | | |||
| Total liabilities and equity | | $453,377 | | | $438,211 | | |||
| Net interest income | | | 3,414 | | | 2,377 | | ||
| Interest rate spread(2) | | | | 3.02% | | 2.08% | |||
| Net interest-earning assets(3) | | 60,882 | | | 55,110 | | |||
| Net interest margin(4) | | | | 3.27% | | 2.36% | |||
| Average interest-earning assets to average-interest bearing liabilities | | 117.10% | | | 115.94% | |
(Dollars in thousands)
| Interest-earning assets: | | For the Nine Months Ended September 30, 2025 Average Outstanding Balance | Interest | | Average Yield/ Rate | 2024 Average Outstanding Balance | Interest | | Average Yield/ Rate |
|---|---|---|---|---|---|---|---|---|---|
| Loans, net | $245,958 | $11,638 | 6.31% | $202,522 | $8,083 | 5.32% | |||
| Certificates of deposit with other financial institutions | | 977 | 14 | 1.91% | 1,350 | 25 | 2.47% | ||
| Interest-bearing cash and cash equivalents | | 26,416 | 696 | 3.51% | 25,683 | 798 | 4.14% | ||
| Investment securities available-for-sale | | 112,748 | 1,851 | 2.19% | 128,978 | 2,392 | 2.47% | ||
| Investment securities held-to-maturity | | 31,641 | 520 | 2.19% | 47,986 | 890 | 2.47% | ||
| FHLB of Chicago stock | | 1,166 | 45 | 5.15% | 1,166 | 48 | 5.49% | ||
| Bankers’ Bank Stock | | 992 | 11 | 1.48% | — | — | —% | ||
| Total interest-earning assets | | 419,898 | 14,775 | 4.69% | 407,685 | 12,236 | 4.00% | ||
| Noninterest-earning assets | | 36,732 | | | 35,344 | | |||
| Total assets | | $456,630 | | | $443,029 | | |||
| Interest-bearing liabilities: | | | | | | ||||
| Savings accounts | | 97,755 | 205 | 0.28% | 103,906 | 173 | 0.22% | ||
| Checking accounts | | 49,270 | 4 | 0.01% | 43,503 | 21 | 0.06% | ||
| Money market accounts | | 17,319 | 183 | 1.41% | 17,206 | 133 | 1.03% | ||
| Certificates of deposit(1) | | 196,837 | 4,492 | 3.04% | 185,545 | 5,055 | 3.63% | ||
| Total interest-bearing deposits | | 361,181 | 4,884 | 1.80% | 350,160 | 5,382 | 2.05% | ||
| Total interest-bearing liabilities | | 361,181 | 4,884 | 1.80% | 350,160 | 5,382 | 2.05% | ||
| Noninterest-bearing liabilities | | 7,372 | | | 6,615 | | |||
| Total liabilities | | 368,553 | | | 356,775 | | |||
| Equity | | 88,077 | | | 86,254 | | |||
| Total liabilities and equity | | $456,630 | | | $443,029 | | |||
| Net interest income | | | 9,891 | | | | 6,854 | | |
| Interest rate spread(2) | | | | 2.89% | | | 1.95% | ||
| Net interest-earning assets(3) | | 58,717 | | | | 57,525 | | | |
| Net interest margin(4) | | | | 3.14% | | | 2.24% | ||
| Average interest-earning assets to average-interest bearing liabilities | | 116.26% | | | | 116.43% | | | |
(1) Certificate of Deposit Account Registry Service (“CDARS”) added to certificates of deposit.
(2) Equals the difference between the yield on average earning-assets and the cost of average interest-bearing liabilities.
(3) Equals total interest-earning assets less total interest-bearing liabilities.
(4) Equals net interest income divided by total interest-earning assets.
Rate/Volume Analysis. The following table shows the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities affected our interest income and expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in rate, which is the change in rate multiplied by prior year volume, and (2) changes in volume, which is the change in volume multiplied by prior year rate. The combined effect of changes in both rate and volume has been allocated proportionately to the change due to rate and the change due to volume.
(Dollars in thousands)
| Interest-earning assets: | | Three Months Ended September 30, 2025 vs. 2024 Increase (Decrease) Due to Volume | | Rate | | Total Increase (Decrease) | | Nine Months Ended September 30, 2025 vs. 2024 Increase (Decrease) Due to Volume | | Rate | | Total Increase (Decrease) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loans | | $627 | | $497 | | $1,124 | | $1,903 | | $1,652 | | $3,555 |
| Certificates of deposit with other financial institutions | | (3) | | 1 | | (2) | | (6) | | (5) | | (11) |
| Interest-bearing cash and cash equivalents | | 7 | | (80) | | (73) | | 24 | | (126) | | (102) |
| Investment securities available-for-sale | | (91) | | (74) | | (165) | | (285) | | (256) | | (541) |
| Investment securities held-to-maturity | | (57) | | (23) | | (80) | | (278) | | (92) | | (370) |
| FHLB of Chicago stock and Bankers’ Bank stock | | 12 | | (1) | | 11 | | 14 | | (6) | | 8 |
| Total interest-earning assets | | $495 | | $320 | | $815 | | $1,372 | | $1,167 | | $2,539 |
| Interest-bearing liabilities: | | | | | | | ||||||
| Savings accounts | | (3) | | 12 | | 9 | | (10) | | 42 | | 32 |
| Checking accounts | | 1 | | (8) | | (7) | | 3 | | (20) | | (17) |
| Money market accounts | | 3 | | 10 | | 13 | | 1 | | 49 | | 50 |
| Certificates of deposit | | 92 | | (329) | | (237) | | 337 | | (900) | | (563) |
| Total interest-bearing liabilities | | $93 | | $(315) | | $(222) | | $331 | | $(829) | | $(498) |
| Change in net interest income | | $402 | | $635 | | $1,037 | | $1,041 | | $1,996 | | $3,037 |
Comparison of Operating Results for Three Months Ended September 30, 2025 and September 30, 2024
General. For the three months ended September 30, 2025 compared to the same period in 2024, net loss decreased $467,000 or 117.5%, to a net income of $70,000 for the three months ended September 30, 2025 compared to a net loss of $397,000 for the same period in 2024. The primary reasons for the increase in net income was an increase of $815,000 in total interest income and a decrease in interest expense on deposits of $222,000 offset by a decrease of $50,000 in noninterest income, an increase of $230,000 in noninterest expense and an increase of $18,000 in provision for credit losses.
Interest Income. Interest income increased $815,000, or 19.5%, to $5.0 million for the three months ended September 30, 2025 compared to $4.2 million for the same period in 2024. The increase in interest income was due to an $1.1 million increase in interest income on loans receivable as a result of the growth in the commercial loan portfolio. The increase was partially offset by a $245,000 decrease in interest income on investment securities due to a decrease in account balances. Other interest income decreased by $65,000. The excess liquidity generated from the decrease in investment and cash account balances was used to fund the growth in the commercial loan portfolio
Interest Expense on Deposits. Interest expense on deposits decreased $222,000, or 12.3%, to $1.6 million for the three months ended September 30, 2025 compared to $1.8 million for the three months ended September 30, 2024. The decrease was primarily caused by lower interest rates on certain accounts as deposits remained relatively unchanged.
Provision for Credit Losses. The provision for credit losses increased $18,000, or 15.4%, to $135,000 for the three months ended September 31, 2025 from $117,000 for the same period in 2024. The increase was related to the increase in the commercial loan portfolio.
Tax Expense (benefit). Tax expense (benefit) decreased $272,000, or 110.3%, to an income tax expense of $26,000 for the three months ended September 30, 2025, from a $247,000 income tax benefit for the same period in 2024. The major factor in the decrease was the net income before taxes for the three months ended September 30, 2025 compared to the same period in 2024.
Comparison of Operating Results for Nine Months Ended September 30, 2025 and September 30, 2024
General. For the nine months ended September 30, 2025 compared to the same period in 2024, net loss decreased $1.6 million or 102.0%, to a net income of $31,000 for the nine months ended September 30, 2025 compared to a net loss of $1.5 million for the same period in 2024. The primary reasons for the decrease in net loss was an increase of $2.5 million in total interest income and a decrease in interest expense on deposits of $498,000 offset by an increase of $498,000 in noninterest expense.
Interest Income. Interest income increased $2.5 million, or 20.7%, to $14.7 million for the nine months ended September 30, 2025 compared to $12.2 million for the same period in 2024. The increase in interest income was due to a $3.6 million increase in interest income on loans receivable as a result of the growth in the commercial loan portfolio. The increase was partially offset by a $911,000 decrease in interest income on investment securities due to a decrease in account balances and a $106,000 decrease in other interest income. The excess liquidity generated from the decrease in investment and cash account balances was used to fund the growth in the commercial loan portfolio.
Interest Expense on Deposits. Interest expense on deposits decreased $498,000, or 9.2%, to $4.9 million for the nine months ended September 30, 2025 compared to $5.4 million for the nine months ended September 30, 2024. The decrease was primarily caused by lower interest rates on certain accounts as deposits remained relatively unchanged.
Noninterest Expense. Noninterest expense increased $498,000, or 5.2%, to $10.1 million for the nine months ended September 30, 2025 compared to $9.6 million for the nine months ended September 30, 2024. Compensation expense increased $292,000 from the same period in 2024 primarily due to staffing requirements in various areas of the bank and the increased focus on the commercial lending area. Other expenses increased $788,000 from the same period in 2024 primarily due to increases in software costs of $130,000 for upgrades to bank functions, professional fees of $420,000 due to the use of consultants in key bank areas and dues and subscriptions of $130,000 for monthly usage and maintenance of said software.
Tax Expense (benefit). Tax expense (benefit) decreased $800,000 or 101.6% to an income tax expense of $12,000 for the nine months ended September 30, 2025 compared to an income tax benefit of $788,000 for the same period in 2024.The major factor in the decrease was the net income before taxes for the nine months ended September 30, 2025 compared to the same period in 2024.
Liquidity and Capital Resources
Hoyne Savings Bank maintains levels of liquid assets deemed adequate by management. We adjust our liquidity levels to fund deposit outflows, repay our borrowings, and to fund loan commitments. We also adjust liquidity, as appropriate, to meet asset and liability management objectives.
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. As of September 30, 2025, we had no outstanding advances from the FHLB of Chicago, and had the capacity to borrow approximately $67.6 million from the FHLB of Chicago.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.
Our cash flows are comprised of three primary classifications: cash flows provided by (used in) operating activities, investing activities, and financing activities. Net cash provided by (used in) operating activities was ($25,000) and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively. Net cash provided by (used in) investing activities, which consists primarily of change in loans receivable, was $11.1 million and $5.2 million for the nine months ended September 30, 2025 and 2024, respectively. Net cash provided by (used in) by financing activities, which primarily consists of change in deposits, was $509,000 and ($10.3) million for the nine months ended September 30, 2025 and 2024, respectively.
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 short-term and long-term funding commitments.
Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of certificates of deposit will be retained. In addition, we participate in the IntraFi network, which includes CDARS as an alternate source of funding with agreed upon interest rates.
As of September 30, 2025, Hoyne Savings Bank was well capitalized under the regulatory framework for prompt corrective action. During the year ended December 31, 2023, Hoyne Savings Bank elected to begin using the Community Bank Leverage Ratio Framework (the “CBLRF”). Under CBLRF, 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 9.0% 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. Hoyne Savings Bank’s Tier 1 capital to average assets for the leverage ratio was 20.2% and 19.9% as of September 30, 2025 and December 31, 2024, respectively. Additionally, as of September 30, 2025, we exceeded all of our regulatory capital requirements with a Tier 1 leverage capital level by $40.0 million, or 11.2%.
Off-Balance Sheet Arrangements. As of September 30, 2025, we had $26.8 million of outstanding commitments to originate loans. Our total letters and lines of credit and unused lines of credit totaled $9.1 million as of September 30, 2025. We had unfunded construction loans as of September 30, 2025 of $15.0 million. Certificates of deposit that are scheduled to mature in less than one year from September 30, 2025, totaled $152.5 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize FHLB of Chicago advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
Commitments. The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans as of September 30, 2025.
(Dollars in thousands)
| | | Total Amounts Committed at September 30, 2025 | | Amount of Commitment Expiration – Per Period To One Year | | One to Three Years | | Three to Five Years | | After Five Years |
|---|---|---|---|---|---|---|---|---|---|---|
| Unused lines of credit | | $9,064 | | $1,426 | | $138 | | $4,665 | | $2,835 |
| Commitments to originate loans | 26,830 | 26,830 | — | — | — | |||||
| Unfunded construction loans | 15,055 | 7,013 | 5,546 | 1,417 | 1,079 | |||||
| Total commitments | | $50,949 | | $35,269 | | $5,684 | | $6,082 | | $3,914 |
Contractual Cash Obligations. The following table summarizes our contractual cash obligations as of September 30, 2025.
(Dollars in thousands)
| | | Total at September 30, 2025 | Payments Due by Period To One Year | | One to Three Years | | Three to Five Years | | After Five Years |
|---|---|---|---|---|---|---|---|---|---|
| Certificates of deposit | | $166,880 | $152,547 | | $13,188 | | $1,145 | | $— |
| Total contractual obligations(1) | | $166,880 | $152,547 | | $13,188 | | $1,145 | | $— |
(1) Does not include CDARS, totaling $25.7 million.
Impact of Inflation and Changing Prices
The consolidated financial statements and related financial data presented herein regarding Hoyne Savings Bank have been prepared in accordance with U.S. GAAP, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, virtually all of our assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on Hoyne Savings Bank’s performance than does the effect of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, since such prices are affected by inflation to a larger extent than interest rates.
Exposure to Changes in Interest Rates
Our ability to maintain net interest income depends upon our ability to earn a higher yield on interest- earning assets than the rates we pay on deposits and borrowings. Our interest-earning assets consist primarily of securities available-for-sale and primarily one to four family, residential, commercial real estate (including commercial construction) and commercial and industrial loans, which have fixed and variable rates of interest. Consequently, our ability to maintain a positive spread between the interest earned on assets and the interest paid on deposits and borrowings can be adversely affected when market rates of interest rise.
Net Portfolio Value Analysis. Our interest rate sensitivity is monitored by management through the use of models which generate estimates of the change in its net portfolio value analysis (“NPV”) over a range of interest rate scenarios. NPV represents the market value of portfolio equity, which is different from book value, and is equal to the market value of assets minus the market value of liabilities (that is, the difference between incoming and outgoing discounted cash flows of assets and liabilities) with adjustments made for off-balance sheet items. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. Management reviews the quarterly reports from third-party industry sources, which show the impact of changing interest rates on net portfolio value. The following table sets forth our NPV as of September 30, 2025 and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.
(Dollars in thousands)
| Change in Interest Rates in Basis Points (Rate Shock) | | Net Portfolio Value Amount | | $ Change | % Change | NPV as % of Portfolio Value of Assets NPV Ratio | Change |
|---|---|---|---|---|---|---|---|
| 300bp | | $195,691 | | $(31,264) | (13.8)% | 43.5% | (6.9)% |
| 200 | | 205,859 | | (21,096) | (9.3)% | 45.7% | (4.7)% |
| 100 | | 216,317 | | (10,638) | (4.7)% | 48.1% | (2.3)% |
| Static | | 226,955 | | | | ||
| (100) | | 237,850 | | 10,895 | 4.8% | 52.8% | 2.4% |
| (200) | | 248,841 | | 21,886 | 9.6% | 55.3% | 4.9% |
| (300) | | 258,150 | | 31,195 | 13.7% | 57.3 | 6.9% |
Net Interest Income Analysis. In addition to modeling changes in NPV, we also analyze potential changes to net interest income (“NII”) for a twelve-month period under rising and falling interest rate scenarios. The following table shows our NII model as of September 30, 2025.
(Dollars in thousands)
| Change in Interest Rates in Basis Points (Rate Shock) | | Net Interest Income | | $ Change | % Change |
|---|---|---|---|---|---|
| 300bp | | $12,115 | | $(1,852) | (13.3)% |
| 200 | | 12,768 | | (1,199) | (8.6)% |
| 100 | | 13,386 | | (581) | (4.2)% |
| Static | | 13,967 | | | |
| (100) | | 14,336 | | 369 | 2.6% |
| (200) | | 14,454 | | 487 | 3.5% |
| (300) | | 14,702 | | 735 | 5.3 |
The table above indicates that as of September 30, 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 September 30, 2026 would be expected to decrease by $1.9 million, or 13.3% to $12.1 million.
Market risk
As filed, 248 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
The information called for by this Item 3 is set forth in Item 2 under the captions “Liquidity and Capital Resources”, “Impact of Inflations and Changes in Prices” and “Exposure to Changes in Interest Rates” and is incorporated herein by reference.
Controls and procedures
As filed, 1,070 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
We maintain disclosure controls and procedures that are designed to provide assurance that the information required to be disclosed in the reports files or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Commission. An evaluation of the effectiveness of our disclosure controls and procedures at the end of the period covered by this report was carried out under the supervision and with the participation of the management of Hoyne Savings, MHC, including our Chief Executive Officer and Chief Financial Officer. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of such period.
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Risk factors
As filed, 146 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
There were no material changes to the risk factors relevant to our operations as described in the Prospectus beginning on page 15, “Risk Factors.”
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2025-09-30. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Income tax | 3 months2025-07-01 to 2025-09-30 | $25.5k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months2025-01-01 to 2025-09-30 | $12.4k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2025-07-01 to 2025-09-30 | $70.1k | us-gaap:NetIncomeLoss |
| Net income | 9 months2025-01-01 to 2025-09-30 | $31.1k | us-gaap:NetIncomeLoss |
| Operating cash flow | 9 months2025-01-01 to 2025-09-30 | −$25.0k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months2025-01-01 to 2025-09-30 | $438.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Total assets | At period end2025-09-30 | $454.8m | us-gaap:Assets |
| Total liabilities | At period end2025-09-30 | $364.6m | us-gaap:Liabilities |
| Shareholders' equity | At period end2025-09-30 | $90.1m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0001104659-25-111398. Last ingested by Listed: Nov 11, 2026, 00:15 ET. Listed shows no prices and gives no investment advice.