Hoyne Bancorp, Inc.: Form 10-Q for the period ended Jun 30, 2026

This discussion and analysis is intended to assist in the understanding of our financial performance through a discussion of our financial condition as of June 30, 2026 (unaudited) and as compared to our financial condition as of December 31, 2025 and our results of operations for the three and six month periods ended June 30, 2026 and 2025 (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 10-Q.

Forward Looking Statements

This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

• statements of our goals, intentions and expectations;
• statements regarding our business plans, prospects, growth and operating strategies; and
• statements regarding the quality of our loan and investment portfolios.

These forward-looking statements are based on current beliefs and expectations of our 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.

• estimates of our risks and future costs and benefits;
• general economic conditions, either nationally or in our market areas, that are different than expected;
• changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for credit losses;
• our ability to access cost-effective funding;
• major catastrophes such as tornadoes, floods or other natural disasters, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies;
• further data processing and other technological changes that may be more difficult or expensive than expected;
• success or consummation of new business initiatives may be more difficult or expensive than expected;
• the inability of third-party service providers to perform;
• 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 continue to implement our business strategies;
• competition among depository and other financial institutions;
• inflation and changes in the interest rate environment that reduce our margins and yields, reduce the fair value of financial instruments or reduce the origination levels in our lending business, or increase the level of defaults, losses and prepayments on loans;
• adverse changes in the securities markets;
• changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
• our ability to manage market risk, credit risk and operational risk in the current economic conditions;
• our ability to enter new markets successfully and capitalize on growth opportunities;
• our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;
• 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 Boards, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;
• geopolitical tensions that could affect economic activity or specific industry sectors;
• our ability to hire and retain key employees; and
• our compensation expense associated with equity allocated or awarded to our employees

Overview

Hoyne Bancorp, Inc. (the “Company”, and together with Hoyne Savings Bank, “we” or “us”) is a Delaware corporation which was incorporated in June 2025.

On December 3, 2025, Hoyne Bancorp, Inc. became the holding company for Hoyne Savings Bank (the “Bank”) when Hoyne Savings MHC completed its conversion into the stock holding company form of organization. In connection with the conversion, the Company sold 7,935,000 shares of common stock at a price of $10.00 per share, for gross proceeds of $79.4 million. The Company also contributed 161,938 shares of common stock and $250,000 in cash to Hoyne Charitable Foundation, Inc. Shares of the Company’s common stock began trading on December 4, 2025, on the Nasdaq Capital Market under the trading symbol “HYNE”.

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 June 30, 2026, we had total assets of $480.0 million, including $282.3 million in net loans and $100.9 million of investment securities available-for-sale, and investment securities held-to-maturity of $25.9 million, total deposits of $312.6 million and total stockholders’ equity of

$161.1 million. For the three months ended June 30, 2026, we had a net income of $96,000 compared to a net income of $118,000 for the three months ended June 30, 2025. For the six months ended June 30, 2026, we had a net loss of $22,000 compared to a net loss of $47,000 for the six months ended June 30, 2025.

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. We expect that our noninterest expenses will increase as we continue to grow and expand our operations. In addition, our compensation expense will increase due to the new stock benefit plans we intend to implement in the next 12 to 18 months. 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.

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 have opted 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.

Of the significant accounting policies used in the preparation of our consolidated financial statements, we have identified certain items as critical accounting policies based on the associated estimates, assumptions, judgements and complexity. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Comparison of Financial Condition as of June 30, 2026 and December 31, 2025

Total Assets. Total assets decreased $9.4 million or 1.9% to $480.0 million as of June 30, 2026 compared to $489.4 million as of December 31, 2025. The decrease resulted primarily from decreases in cash and cash equivalents of $22.2 million, investment securities available-for-sale of $5.8 million, and investment securities held to maturity of $2.5 million. These decreases were offset by increases in loans receivable, net of $14.3 million, Bank Owned Life Insurance of $5.4 million, and other assets of $1.1 million.

Cash and Cash Equivalents. Cash and cash equivalents decreased $22.2 million, or 46.7%, to $25.4 million as of June 30, 2026 compared to $47.6 million as of December 31, 2025. The decrease was primarily the result of funding commercial loan originations and purchasing additional BOLI to enhance the yield on interest earning assets.

Investment Securities Available-for-Sale. Investment securities available-for-sale decreased $5.8 million, or 5.4%, to $100.9 million as of June 30, 2026, from $106.7 million as of December 31, 2025 as a result of maturities and paydowns. The resulting liquidity was used to fund loan portfolio originations.

Investment Securities Held-to-Maturity. Investment securities held-to-maturity decreased $2.5 million, or 8.6%, to $25.9 million as of June 30, 2026, from $28.4 million as of December 31, 2025 as a result of maturities and paydowns. The liquidity from the decrease was used to fund the increase in our loan portfolio.

Other Assets. Other assets increased $1.1 million, or 65.4%, to $2.9 million as of June 30, 2026 from $1.7 million as of December 31, 2025. The increase was primarily due to an increase in other investments purchased to enhance the yield on interest earning assets.

Loans Receivable, Net. Loans receivable, net increased $14.3 million, or 5.4%, to $282.2 million as of June 30, 2026, from $267.9 million as of December 31, 2025. The increase includes $28.6 million in net commercial loan growth offset by a $13.8 million decrease in one to four residential loans and participations.

Allowance for Credit Losses. As of June 30, 2026, the allowance for credit losses on loans (“ACL”) increased $270,000 or 10.1%, to $3.0 million as of June 30, 2026, from $2.7 million as of December 31, 2025, due to an increase in the provision for credit loss as a result of the growth in the commercial loan portfolio.

Bank Owned Life Insurance. Bank Owned Life Insurance increased $5.4 million, or 36.2%, to $20.3 million as of June 30, 2026, from $14.9 million as of December 31, 2025, due primarily to the purchase of additional policies to enhance the yield on interest earning assets.

Premises and Equipment, Net. Premises and equipment, net decreased $83,000, or 1.1%, to $7.3 million as of June 30, 2026 from $7.4 million as of December 31, 2025, due primarily to depreciation expense.

Deposits. Deposits decreased $9.0 million, or 2.8%, to $312.6 million as of June 30, 2026 from $321.6 million as of December 31, 2025. The decrease was due to a decline of $18.8 million in passbook accounts and certificates of deposit offset by an increase of $9.8 million in NOW and money market accounts.

Total Stockholders’ Equity. Total stockholders’ equity for the first six months of 2026 decreased $223,000, or 0.1%, to $161.1 million from $161.4 million as of December 31, 2025. The decrease was due primarily to an increase in accumulated other comprehensive loss of $397,000 during the first six months of 2026 due to interest rate environment.

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 earned from average interest-earning assets and the resulting yields, as well as the interest expense paid on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. All average balances are based on daily balances.

(Dollars in thousands)

(Dollars in thousands)

(1) Certificate of Deposit Account Registry Service (“CDARS”) added to certificates of deposit.

(2) Equals the difference between the yield on average interest-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)

Comparison of Operating Results for Three and Six Months Ended June 30, 2026 and June 30, 2025

General. For the three months ended June 30, 2026 compared to the same period in 2025, net income decreased $22,000, or 18.6%, to net income of $96,000 compared to a net income of $118,000 for the same period in 2025. The primary reason for the decrease in net income was an increase of $1.3 million in total noninterest expense, offset by an increase of $414,000 in interest income, an increase of $179,000 in noninterest income, a decrease of $650,000 in interest expense, and a decrease in tax expense of $22,000. For the six months ended June 30, 2026 compared to the same period in 2025, net loss decreased by $25,000, or 46.8%, to a net loss of $22,000 compared to a net loss of $47,000 for the same period in 2025. The primary reason for the decrease in net loss was an increase of $890,000 in interest income, a decrease of $1.3 million in interest expense, and an increase of $260,000 in noninterest income offset by an increase of $2.4 million in noninterest expense.

Interest Income. Interest income increased $414,000, or 8.3%, to $5.4 million for the three months ended June 30, 2026 compared to $5.0 million for the same period in 2025. The increase in interest income was due to a $626,000 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 $114,000 decrease in interest income on investment securities due to a decrease in balances as a result of maturities and paydowns. Other interest income decreased by $98,000 due to lower average yields on cash and cash equivalents. The excess liquidity generated from the decrease in investment securities and cash account balances was used to fund the growth in the commercial loan portfolio. Interest income increased $890,000, or 9.1%, to $10.7 million for the six months ended June 30, 2026, compared to $9.8 million for the same period in 2025. The increase in interest income for the six month period was due to a $1.1 million increase in interest income on loans receivable in the commercial loan portfolio. The increase was partially offset by $237,000 decrease in interest income on investments due to a decrease in balances as a result of maturities and paydowns. Other interest income decreased by $13,000 due to lower average yields on cash and cash equivalents.

Interest Expense on Deposits. Interest expense on deposits decreased $650,000, or 40.1%, to $983,000 for the three months ended June 30, 2026, compared to $1.6 million for the three months ended June 30, 2025. The decrease was primarily caused by the decrease in the amount of deposits and in interest rates. Interest expense on deposits decreased $1.3 million, or 38.3%, to $2.0 million for the six months ended June 30, 2026, compared to $3.3 million for the six months ended June 30, 2025. The decrease was primarily similarly caused by the decrease in deposits and interest rates.

Provision for Credit Losses. The provision for credit losses was flat at $135,000 for both the three months ended June 30, 2026 and 2025, and at $270,000 for both the six months ended June 30, 2026 and 2025. The additional provision expense was recorded primarily due to the growth in the loan portfolio.

Noninterest Income. Noninterest income increased $179,000, or 82.1%, to $397,000 for the three months ended June 30, 2026, compared to $218,000 for the three months ended June 30, 2025. The increase was due primarily to the increase in customer service fees due to commercial loan fees and BOLI income. Noninterest income increased $260,000, or 62.5%, to $676,000 for the six months ended June 30, 2026 compared to $416,000 for the six months ended June 30, 2025. The increase was primarily due to the increase in customer service fees due to commercial loan fees and BOLI income.

Noninterest Expense. Noninterest expense increased $1.3 million, or 39.5%, to $4.5 million for the three months ended June 30, 2026 compared to $3.2 million for the three months ended June 30, 2025. The increase was primarily caused by the increase in compensation due to annual raises and bonuses, audit, consulting and legal expenses. Noninterest expense increased $2.4 million, or 35.8%, to $9.1 million for the six months ended June 30, 2026, compared to $6.7 million for the six months ended June 30, 2025. The increase was primarily caused by the increase in compensation, audit, consulting and legal expenses.

Tax Expense (benefit). Tax expense (benefit) decreased $22,000, or 30.5%, to $50,000 for the three months ended June 30, 2026, from $72,000 for the same period in 2025. The major factor in the decrease was the lower net income between the periods. Tax benefit increased $1,000, or 20.0%, to a benefit of $6,000 for the six months ended June 30, 2026, from a benefit of $5,000 for the same period in 2025, primarily as a result of the lower net loss between the periods.

Liquidity and Capital Resources

We maintain 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 and Bankers Bank. As of June 30, 2026, we had no outstanding FHLB advances, and had the capacity to borrow approximately $57.9 million from the FHLB of Chicago and $23.0 million from Bankers Bank.

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 ($1.3 million) and $2.7 million for the six months ended June 30, 2026 and 2025, respectively. Net cash provided by (used in) investing activities, which consists primarily of changes in loans receivable, was ($11.9 million) and $5.8 million for the six months ended June 30, 2026 and 2025, respectively. Net cash provided by (used in) financing activities, which primarily consists of changes in deposits, was ($9.0 million) and $18,000 for the six months ended June 30, 2026 and 2025, 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 June 30, 2026, the Bank was considered well capitalized under the regulatory framework for prompt corrective action. During the year ended December 31, 2023, the 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. The Bank’s Tier 1 capital to average assets for the leverage ratio was 27.3% and 24.8% as of June 30, 2026 and December 31, 2025, respectively. Additionally, as of June 30, 2026, the Bank exceeded all applicable regulatory capital requirements, including the Tier 1 leverage capital level by $85.3 million, or 18.3%.

Off-Balance Sheet Arrangements. As of June 30, 2026, we had $71.7 million of outstanding commitments to originate loans. We had unfunded construction loans as of June 30, 2026 of $12.9 million. Certificates of deposit that are scheduled to mature in less than one year from June 30, 2026, totaled $138.2 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits are 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 June 30, 2026.

(Dollars in thousands)

Contractual Cash Obligations. The following table summarizes our contractual cash obligations as of June 30, 2026.

(Dollars in thousands)

Impact of Inflation and Changing Prices

The consolidated financial statements and related financial data presented herein 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 our 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 June 30, 2026 and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.

(Dollars in thousands)

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 June 30, 2026.

(Dollars in thousands)

The table above indicates that as of June 30, 2026, in the event of an immediate and sustained 300 basis point increase in interest rates, our net interest income for the twelve months ending June 30, 2027 would be expected to decrease by $1.0 million, or 5.2% to $18.8 million.

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 Securities and Exchange Commission (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 Company’s management, 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 June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.