# EWSB Bancorp, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [EWSB Bancorp, Inc.](/companies/ewsb.md) (CIK 2013792)
- Form: 10-Q
- Filed: 2025-05-14
- Accepted by EDGAR: May 14, 2025, 16:06 ET
- Period: 2025-03-31
- Accession: 0001558370-25-007741
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/2013792/000155837025007741/ewsb-20250331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/2013792/000155837025007741/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | −$227.5k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$568.6k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.81 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.81 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 702,823 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$853.1k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $46.2k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $1.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-03-31 | $277.4m | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $261.7m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $27.8m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-03-31 | $15.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 40,853 characters.

### General

Management’s discussion and analysis is intended to enhance your understanding of our financial condition and results of operations. The financial information in this section is derived from the accompanying financial statements. You should read the financial information in this section in conjunction with the business and financial information contained in this Quarterly Report on Form 10-Q and in EWSB Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024.

### Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “could,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “intend,” “target” 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;
- statements regarding the quality of our loan portfolio; and
- estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations 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. We are under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this prospectus.

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:

- our ability to manage our vulnerability to interest rates;
- general economic conditions, either nationally or in our market areas, that are worse than expected including as a result of employment levels and labor shortages, and the effects of inflation, a potential recession or slowed economic growth caused by supply chain disruptions, tariffs or otherwise;
- inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments, including our mortgage servicing rights asset, or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;
- changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;
- our ability to comply with the confidential memorandum of understanding (“MOU”) with the Wisconsin Department of Financial Institutions (the “Department”) and the Federal Deposit Insurance Corporation (the “FDIC”);
- changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
- our ability to access cost-effective funding;
- fluctuations in real estate values and residential real estate market conditions;
- demand for loans and deposits in our market area;
- our ability to execute on our business strategies, including increasing our loan originations;
- competition among depository and other financial institutions;
- 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 the quality or composition of our loan or investment portfolios;
- technological changes that may be more difficult or expensive than expected;
- the inability of third-party providers to perform as expected;
- a failure or breach of our operational or security systems or infrastructure, including cyberattacks;
- our ability to manage market risk, credit risk and operational risk;
- 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 or the Public Company Accounting Oversight Board;
- our ability to attract and retain key employees; and
- changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

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 law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to 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.

### Critical Accounting Policies and Use of Critical Accounting Estimates

Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. As of March 31, 2025, there have been no material changes to our critical accounting policies as compared to the critical accounting policies disclosed under “Management’s Discussion and Analysis of Financial Condition and Results of

Operations-Critical Accounting Policies” in EWSB Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024.

### Comparison of Financial Condition at March 31, 2025 and December 31, 2024

***Total Assets.*** Total assets increased $4.1 million, or 1.5%, to $277.4 million at March 31, 2025 from $273.3 million at December 31, 2024. The change was primarily the result of a $3.6 million increase in portfolio loans and a $520,000 increase in total investment securities.

***Cash and Cash Equivalents and Time Deposits with Other Financial Institutions.*** Total cash and due from banks and time deposits with other financial institutions decreased $63,000, or 1.1% to $5.6 million at March 31, 2025 from $5.7 million at December 31, 2024. The change was related to general business activity.

***Securities Available-for-Sale.*** Securities available-for-sale increased $223,000, or 1.0%, to $23.0 million at March 31, 2025 from $22.8 million at December 31, 2024. The increase was primarily due to a $515,000 increase in the market value of the portfolio due to a decrease in market interest rates during the three months ended March 31, 2025 offset by principal paydowns of $284,000 on mortgage-backed securities. The proceeds from principal paydowns are utilized to manage liquidity and support loan growth.

***Securities Held-to-Maturity.*** Securities held-to-maturity increased $296,000, or 0.8%, to $39.3 million at March 31, 2025 from $39.0 million at December 31, 2024. The increase in securities held-to-maturity was due to $296,000 in amortization of unrealized losses and discounts.

***Loans, net.*** Loans, net increased $3.6 million, or 1.9%, to $190.0 million at March 31, 2025 from $186.4 million at December 31, 2024. Construction, one- to four-family, commercial, multi-family, and home equity loans and lines of credit increased $2.4 million, $1.5 million, $133,000, $121,000, and $68,000, respectively, to $9.1 million, $131.6 million, $3.6 million, $1.4 million, and $8.1 million at March 31, 2025, respectively, as a result of loan production exceeding payoffs and amortization. These increases were partially offset by decreases to marine and recreational, commercial real estate, and other consumer loans of $265,000, $243,000, and $118,000 respectively, to $30.9 million, $2.3 million, and $4.1 million at March 31, 2025, respectively.

***Deposits.*** Total deposits increased $127,000 or 0.1% to $231.6 million at March 31, 2025, from $231.5 million at December 31, 2024. Non-interest bearing deposits decreased $1.2 million, or 12.4%, to $8.3 million at March 31, 2025, from $9.5 million at December 31, 2024. Total interest-bearing deposits, other than time deposits, decreased approximately $541,000 million, or 0.5%, to $111.2 million at March 31, 2025, from $111.8 million at December 31, 2024. Certificates of deposits increased $1.8 million, or 1.7%, to $112.1 million at March 31, 2025, from $110.3 million at December 31, 2024. The deposit mix changes were consistent with industry trends as consumers continue to transition to higher yielding term deposits due to the interest rate environment.

***Borrowings.*** We had $27.8 million of borrowings at March 31, 2025 as compared to $24.2 million at December 31, 2024. The increase of $3.6 million in FHLB borrowings were used to fund portfolio loans during the three months ended March 31, 2025.

***Stockholders’ Equity.*** Total stockholders’ equity remained consistent at $15.6 million at March 31, 2025 from and December 31, 2024. Accumulated other comprehensive loss decreased $561,000 due to an increase in the market value of the investment portfolio related to a decline in market interest rates which was offset by a decrease in retained earnings of $569,000 which resulted from the net loss incurred for the three months ended March 31, 2025.

### Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024

***Net Income/(Loss).*** We recorded a net loss of $569,000 for the three months ended March 31, 2025, compared to a net loss of $377,000 for the three months ended March 31, 2024, a change of $191,000 year-over-year. The increase in our net loss year-over-year resulted primarily from a $148,000 decrease in noninterest income and an increase of $136,000 in noninterest expense offset by a $28,000 increase in net interest income and a $65,000 increase in the income tax benefit.

***Interest Income.*** Interest income increased $302,000, or 13.1%, to $2.6 million for the three months ended March 31, 2025, from $2.3 million for the three months ended March 31, 2024, due to a $306,000 increase in interest and fees on loans. The increase in interest and fees on loans was primarily due to an increase of 37 basis points in the weighted average yield on the loan portfolio to 4.92% for the three months ended March 31, 2025, from 4.55% for the same period in 2024. Interest income on securities and other investments decreased $4,000 to $316,000 for the three months ended March 31, 2025 primarily due to a $2.0 million decrease in average balance of investment securities year-over-year. The average balance decrease was primarily related to security maturities.

***Interest Expense.*** Total interest expense increased $164,000, or 11.1%, to $1.6 million for the three months ended March 31, 2025, from $1.5 million for the three months ended March 31, 2024. Interest expense on deposits increased $164,000, or 13.5%, to $1.4 million for the three months ended March 31, 2025 from $1.2 million for the three months ended March 31, 2024. This increase was due primarily to an increase in the weighted average rate paid on certificates of deposit of 16 basis points to 4.35% for the three months ended March 31, 2025 from 4.19% for the three months ended March 31, 2024, combined with an increase in the average balance of such deposits of $4.5 million year-over-year and a $3.4 million decrease in the average balance of lower-cost money market accounts year-over-year.

Interest expense on borrowed funds remained consistent at $262,000 for the three months ended March 31, 2025 and 2024. The rate paid on borrowed funds declined 41 basis points to 4.12% for the three months ended March 31, 2025, from 4.53% for the three months ended March 31, 2024 while the average balance of borrowed funds increased $2.4 million, or 10.4%, to $25.8 million for the three months ended March 31, 2025 from $23.4 million for the three months ended March 31, 2024. The increase in the average balance was generally related to the measured use of borrowings to support the increase in the loan portfolio.

***Net Interest Income.*** Net interest income increased $139,000, or 16.9%, to $963,000 for the three months ended March 31, 2025 from $824,000 for the three months ended March 31, 2024, primarily due to an increase in the interest rate spread to 1.46% for the three months ended March 31, 2025 from 1.33% for the three months ended March 31, 2024 and an increase in the net interest margin to 1.51% for the three months ended March 31, 2025, from 1.35% for the three months ended March 31, 2024. The increases in the interest rate spread and the net interest margin were primarily due to an increase in the weighted average yield on loans partially offset by rates paid on interest-bearing deposits.

***Provision for Credit Losses.*** Based on management’s analysis of the adequacy of the ACL and unfunded loan commitments, a provision of $64,000 was made to the ACL and $46,000 to the ACL for unfunded loan commitments for the three months ended March 31, 2025. No provisions were made to the ACL or the ACL for unfunded loan commitments for the three months ended March 31, 2024. The adequacy of the ACL and provision expense is based on an analysis of current credit characteristics in conjunction with loss history of the loan portfolio and peer group loss data.

***Noninterest Income.*** Noninterest income declined $148,000, or 31.7%, to $320,000 for the three months ended March 31, 2025 from $469,000 for the three months ended March 31, 2024. The change resulted primarily from a non-recurring $86,000 gain on an interest rate swap recognized in 2024 with no such gain recognized in the 2025 period, a $56,000 decline in other noninterest income related to reduced activity in investment management services and insurance agency business lines and reciprocal deposit fee income, and a $17,000 decline in mortgage banking activity. These declines in non-interest income were offset by an increase of $8,000 in bank owned life insurance income and a $4,000 increase in service charges on deposit accounts. The table below sets forth our noninterest income for the quarter ended March 31, 2025 and 2024:

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2025 | ​ | ​ ​ 2024 | ​ ​ ​ | ​ ​ ​ ​ Change Amount | ​ ​ ​ ​ ​ Percent |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Service charges on deposit accounts | ​ | $14,582 | ​ | $10,380 | ​ | $4,202 | 40.5% |
| Interchange income | ​ | 56,354 | ​ | 57,139 | ​ | (785) | (1.4)% |
| Mortgage banking income | ​ | 51,606 | ​ | 63,845 | ​ | (12,239) | (19.2)% |
| Gain on sale of mortgage loans | ​ | ​ 45,561 | ​ | ​ 50,721 | ​ | ​ (5,160) | (10.2) ​ |
| Increase in cash value of life insurance | ​ | 62,225 | ​ | 54,201 | ​ | 8,024 | 14.8% |
| Gain on interest rate swap | ​ | ​ — | ​ | 86,290 | ​ | (86,290) | (100.0)% |
| Other | ​ | 90,014 | ​ | 146,183 | ​ | (56,169) | (38.4)% |
| Total noninterest income | ​ | $320,342 | ​ | $468,759 | ​ | $(148,417) | (31.7)% |

***Noninterest Expense.*** Noninterest expense increased $136,000, or 7.4%, to $2.0 million for the three months ended March 31, 2025 from $1.8 million for the three months ended March 31, 2024. Professional services fees increased $100,000 related to audit, accounting, legal and other professional services. Salary and benefit expenses increased $75,000 due to additional salary expense and benefits including expenses related to the ESOP. These increases were offset by decreases of $22,000 in FDIC insurance premiums, $14,000 in advertising, and $5,000 in net occupancy expenses. The table below sets forth our noninterest expense for the three months ended March 31, 2025 and 2024:

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ ​ ​ Change Amount | ​ ​ ​ ​ ​ Percent |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Salaries and related benefits | ​ | $1,106,569 | ​ | $1,031,442 | ​ | $75,127 | 7.3% |
| Occupancy expense, net | ​ | 167,974 | ​ | 173,109 | ​ | (5,135) | (3.0)% |
| Data processing | ​ | 274,338 | ​ | 271,410 | ​ | 2,928 | 1.1% |
| Advertising | ​ | 27,982 | ​ | 41,689 | ​ | (13,707) | (32.9)% |
| FDIC insurance premiums | ​ | 56,626 | ​ | 79,007 | ​ | (22,381) | (28.3)% |
| Other | ​ | 335,036 | ​ | 236,137 | ​ | 98,899 | 41.9% |
| Total noninterest expense | ​ | $1,968,525 | ​ | $1,832,794 | ​ | $135,731 | 7.4% |

***Income Tax Expense.*** Our benefit for income taxes increased $65,000 to a benefit of $227,000 for the three months ended March 31, 2025, from a benefit of $162,000 for the three months ended March 31, 2024 due to an increase in loss before income taxes.

During 2025, management continues to assess the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated is the cumulative taxable loss incurred over the three-year period ended March 31, 2025. Such objective evidence limits the ability to fully consider other subjective evidence, such as our projections for future growth and taxable income and requires management to also consider available tax planning strategies. The Company does not have a valuation allowance as of December 31, 2024, and no valuation allowance was considered necessary as of March 31, 2025. The amount of the deferred tax asset considered realizable, however, could be adjusted, and a valuation allowance recorded, if estimates of future taxable income during the carryforward period are reduced or if further objective negative evidence in the form of cumulative loss is present and additional weight cannot be given to subjective evidence such as our projections for growth.

***Average Balances and Yields.*** The following tables set forth average balance sheets, average yields and costs, and certain other information at the dates and for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. Average yields include the effect of net deferred fee income, discounts and premiums that are amortized or accreted to interest income or interest expense. Average balances are calculated using daily average balances. Non-accrual loans are included in the computation of average balances only. Average loan balances exclude any loans held for sale.

*(Dollars in thousands)*

| ​ ​ ​ ​ ​ ​ ​ Interest-earning assets: | ​ ​ ​ ​ ​ | ​ ​ ​ For the Three Months Ended March 31, 2025 Average Outstanding ​ Balance ​ ​ ​ | ​ ​ ​ ​ ​ ​ Interest ​ ​ | ​ ​ ​ | ​ ​ ​ ​ ​ Average ​ Yield/Rate ​ ​ | ​ ​ ​ 2024 Average Outstanding ​ Balance ​ ​ ​ | ​ ​ ​ ​ ​ ​ Interest ​ ​ | ​ ​ ​ | ​ ​ ​ Average Yield/Rate ​ ​ |
| --- | --- | ---: | ---: | --- | ---: | ---: | ---: | --- | ---: |
| Loans (1) | ​ | $188,789 ​ | $2,288 |  | 4.92% | $175,147 ​ | $1,982 |  | 4.55% |
| Securities available for sale | ​ | 22,911 ​ | 130 |  | 2.30% | 23,755 ​ | 140 |  | 2.37% |
| Securities held to maturity | ​ | 39,106 ​ | 135 |  | 1.40% | 40,156 ​ | 137 |  | 1.37% |
| Cash, cash equivalents and other interest-earning assets | ​ | 5,709 ​ | 51 |  | 3.62% | 6,171 ​ | 43 |  | 2.80% |
| Total interest-earning assets | ​ | $256,515 ​ | $2,604 |  | 4.12% | $245,229 ​ | $2,302 |  | 3.78% |
| Noninterest-earning assets | ​ | $18,327 ​ | ​ ​ |  | ​ | $17,909 ​ |  |  | ​ |
| Total assets | ​ | $274,842 ​ | ​ ​ |  | ​ | $263,138 ​ |  |  | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Interest-bearing liabilities:** | ​ | ​ |  |  | ​ | ​ |  |  | ​ |
| Interest-bearing demand deposits | ​ | $36,104 ​ | $67 |  | 0.75% | $33,629 ​ | $8 |  | 0.10% |
| Savings deposits | ​ | 30,268 ​ | 4 |  | 0.05% | 28,568 ​ | 4 |  | 0.06% |
| Money market | ​ | 46,824 ​ | 107 |  | 0.93% | 50,183 ​ | 87 |  | 0.70% |
| Certificates of deposit | ​ | 111,860 ​ | 1,201 |  | 4.35% | 107,243 ​ | 1,116 |  | 4.19% |
| Total interest-bearing deposits | ​ | $225,056 ​ | $1,379 |  | 2.48% | $219,623 ​ | $1,215 |  | 2.23% |
| Borrowed funds | ​ | 25,783 ​ | 262 |  | 4.12% | 23,353 ​ | 263 |  | 4.53% |
| Total interest-bearing liabilities | ​ | $250,839 ​ | $1,641 |  | 2.65% | $242,976 ​ | $1,478 |  | 2.45% |
| Noninterest-bearing demand deposits | ​ | 8,461 ​ | ​ ​ |  | ​ | 7,917 ​ | ​ ​ |  | ​ |
| Other noninterest-bearing liabilities | ​ | 1,766 ​ | ​ ​ |  | ​ | 1,875 ​ | ​ ​ |  | ​ |
| Total liabilities | ​ | 261,066 ​ | ​ ​ |  | ​ | 252,768 ​ | ​ ​ |  | ​ |
| Total equity | ​ | 13,776 ​ | ​ ​ |  | ​ | 10,370 ​ | ​ ​ |  | ​ |
| Total liabilities and equity | ​ | $274,842 ​ | ​ ​ |  | ​ | $263,138 ​ | ​ ​ |  | ​ |
| Net interest income | ​ | ​ ​ ​ | $963 |  | ​ | ​ ​ ​ | $824 |  | ​ |
| Net interest rate spread (2) | ​ | ​ ​ | ​ | ​ | 1.46% | ​ |  |  | 1.33% |
| Net interest-earning assets (3) | ​ | $5,676 ​ | ​ ​ | ​ | ​ ​ | $2,253 ​ |  |  | ​ ​ |
| Net interest margin (4) | ​ | ​ ​ | ​ | ​ | 1.51% | ​ |  |  | 1.35% |
| Average interest-earning assets to interest-bearing liabilities | ​ | 102.3% | ​ | ​ | ​ ​ | 100.9% |  |  | ​ |

(1) Net deferred fee income included in interest earned on loans totaled $81,000 for the three months ended March 31, 2025 and $44,000 for the three months ended March 31, 2024.

(2) Net interest rate spread represents the difference between the weighted average earned yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

***Rate/Volume Analysis.*** The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.

| ​ ​ ​ ​ ​ ​ ​ Interest-earning assets: | ​ ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2025 vs. 2024 ​ ​ Increase (Decrease) Due to Volume ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Rate ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Total Increase (Decrease) ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Loans | ​ | $165 | ​ | $141 | ​ | $306 |
| Securities available-for-sale | ​ | (5) | ​ | (5) | ​ | (10) |
| Securities held-to-maturity | ​ | (4) | ​ | 2 | ​ | (2) |
| Cash, cash equivalents and other interest-earning assets | ​ | (4) | ​ | 12 | ​ | 8 |
| Total interest-earning assets | ​ | 152 | ​ | 150 | ​ | 302 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Interest-bearing liabilities:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest-bearing demand deposits | ​ | 5 | ​ | 54 | ​ | 59 |
| Savings deposits | ​ | — | ​ | — | ​ | — |
| Money market | ​ | (8) | ​ | 28 | ​ | 20 |
| Certificates of deposit | ​ | 50 | ​ | 35 | ​ | 85 |
| Total interest-bearing deposits | ​ | 47 | ​ | 117 | ​ | 164 |
| Borrowed funds | ​ | 25 | ​ | (26) | ​ | (1) |
| Total interest-bearing liabilities | ​ | 72 | ​ | 91 | ​ | 163 |
| Change in net interest income | ​ | $80 | ​ | $59 | ​ | $139 |

### Management of Market Risk

***General.*** Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset Liability Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. The Asset Liability Committee, which is a management-level committee, meets at least quarterly, or more frequently when necessary, is comprised of our President/Chief Executive Officer, Vice President of Lending and Vice President of Member Relations, and reports to the full board of directors on at least a quarterly basis. The Asset Liability Committee is responsible for recommending to the board of directors policies and procedures regarding asset/liability management, while it is the responsibility of the board of directors to determine whether to adopt such policies and procedures. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

Management of interest rate risk is one of the Bank’s highest priorities. In 2023, the Bank adopted a new asset/liability management policy and revamped its interest rate risk management processes and procedures to reduce interest rate risk exposure. Since then, the Bank has refined the input assumptions and various other input and output metrics, such as deposit decay rates, to enhance modeling accuracy. The Bank has also instituted education and training processes to provide management with information regarding emerging market forces and asset/liability-related management issues, practices and governance. Through these and other enhancements, we have significantly improved our ability to manage our interest rate risk and minimize the exposure of our earnings and capital to changes in interest rates. Pursuant to our new asset/liability management policy, we are seeking to implement the following strategies to further improve the management of our interest rate risk:

- maintaining capital levels that exceed the thresholds for well-capitalized status under federal regulations;
- maintaining a prudent level of liquidity, including through maintaining a portfolio of cash, short-term investments or investments with amortizing features;
- originating shorter term or adjustable-rate loans for portfolio, which have become somewhat more attractive to many borrowers in the current rate environment, and selling the majority of our longer term, fixed-rate residential loans;
- attempting to increase the balances of core deposits, which are less sensitive to interest rate fluctuations;
- managing our utilization of wholesale funding with borrowings from the FHLB in a prudent manner;
- managing the terms of our certificates of deposit; and
- emphasizing asset quality to maximize the level of interest-earning assets.

Shortening the average term of our interest-earning assets by increasing our investments in shorter term assets, as well as originating loans with variable interest rates, helps to match the maturities and interest rates of our assets and liabilities better, thereby reducing the exposure of our net interest income to changes in market interest rates.

***Net Interest Income.*** We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the U.S. Treasury yield curve increases or decreases instantaneously by various basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100-basis point increase in the “Change in Interest Rates” column below.

The following table sets forth, as of March 31, 2025, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the U.S. Treasury yield curve.

*At March 31, 2025*

*(Dollars in thousands)*

| ​ Change in Interest Rates (basis points) (1) | ​ | ​ ​ Net Interest Income Year 1 Forecast | ​ ​ ​ Year 1 Change from Level |
| ---: | --- | ---: | ---: |
| 300 | ​ | $3,141 | (22.12)% |
| 200 | ​ | 3,431 | (14.93)% |
| 100 | ​ | 3,737 | (7.34)% |
| Level | ​ | 4,033 | —% |
| (100) | ​ | 4,388 | 8.80% |
| (200) | ​ | 4,737 | 17.46% |
| (300) | ​ | 5,082 | 26.01% |

(1) Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that at March 31, 2025, we would have experienced a 14.93% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 17.46% increase in net interest income in the event of an instantaneous parallel 200 basis point decrease in market interest rates.

***Economic Value of Equity.*** We also compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the U.S. Treasury yield curve increases instantaneously by 100, 200 and 300 basis point increments or decreases instantaneously by 100, 200 and 300 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The following table sets forth, as of March 31, 2025, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the U.S. Treasury yield curve.

*At March 31, 2025*

*(Dollars in thousands)*

| ​ ​ Change in Interest Rates (basis points) (1) | ​ ​ ​ | ​ ​ ​ ​ Estimated EVE (2) | ​ ​ ​ | ​ ​ Estimated Increase (Decrease) in EVE Amount | ​ ​ ​ Percent |
| ---: | --- | ---: | --- | ---: | ---: |
| 300 | ​ | $8,102 | ​ | $(8,369) | (50.81)% |
| 200 | ​ | 10,944 | ​ | (5,527) | (33.56)% |
| 100 | ​ | 14,119 | ​ | (2,352) | (14.28)% |
| Level | ​ | 16,471 | ​ | n/a | —% |
| (100) | ​ | 21,056 | ​ | 4,585 | 27.84% |
| (200) | ​ | 24,764 | ​ | 8,293 | 50.35% |
| (300) | ​ | 28,416 | ​ | 11,945 | 72.52% |

(1) Assumes an immediate uniform change in interest rates at all maturities.

(2) EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4) EVE ratio represents EVE divided by the present value of assets.

The table above indicates that at March 31, 2025, we would have experienced a 33.56% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 50.35% increase in EVE in the event of an instantaneous parallel 200 basis point decrease in market interest rates. The change in EVE that we would experience in the event of an instantaneous parallel 200 basis point increase and decrease in market interest rates is outside of the limits set forth in the Bank’s asset/liability management policy. While the Bank has developed policies and procedures that it believes will help reduce its interest rate exposure, any targeted improvement is expected to be realized gradually given the constraints imposed by the Bank’s current balance sheet composition and capital structure as well as regulatory requirements.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The net interest income and net economic value tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.

Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, mortgage servicing rights, deposits and borrowings.

### Liquidity and Capital Resources

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. In 2023, the Bank developed and implemented an improved process to project the sources and uses of funds over short- and long-term horizons, and, in concert with our asset/liability management policy, implemented guidelines to better identify potential funding gaps. Further, we have established an early warning system for measuring and monitoring liquidity, including through the establishment of early warning indicators.

Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We are also able to borrow from the FHLB. At March 31, 2025, we had outstanding advances of $27.8 million from the FHLB. At March 31, 2025, we had unused borrowing capacity of $43.7 million from the FHLB. At March 31, 2025, we also had a $25.0 million available line of credit with the Discount Window at the Federal Reserve Bank of Chicago. In addition, at March 31, 2025 we had a $6.0 million line of credit with a correspondent bank. We have not drawn against the Discount Window or the line of credit.

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 from operating activities, investing activities, and financing activities. For additional information, see the condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 included as part of the consolidated financial statements appearing elsewhere in this filing.

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. Based on our deposit retention experience and current pricing strategy and regulatory restrictions, we anticipate that a significant portion of maturing time deposits will be retained, and that we can supplement our funding with borrowings in the event that we allow these deposits to run off at maturity.

As a Wisconsin-chartered savings bank, we must maintain a net worth ratio of 6.0% (with “net worth ratio” defined under Wisconsin law as the Bank’s total liabilities subtracted from its total assets, plus unallocated general loan loss reserves, all divided by the Bank’s total assets). At March 31, 2025 and December 31, 2024, we had a net worth ratio of 5.64% and 5.67%, respectively.

At March 31, 2025 and December 31, 2024, our capital levels at the Bank level exceeded the levels required to be technically considered “well capitalized” under federal regulatory capital regulations. However, we operate under an MOU with the Department and the FDIC pursuant to which, among other things, we have agreed to achieve and maintain Tier 1 capital and total risk-based capital ratio levels above that which are required under federal regulatory capital regulations and a net worth ratio (as defined under Wisconsin law) of 6.0%. At March 31, 2025, we had Tier 1 capital equal to 6.6% of total average assets, total risk-based capital equal to 11.8% of risk-weighted assets and a net worth ratio of 5.64%. At December 31, 2024, we had Tier 1 capital equal to 6.9% of total average assets, total risk-based capital equal to 12.5% of risk-weighted assets and a net worth ratio of 5.67%. Our net worth ratio for purposes of compliance with Wisconsin law is calculated differently from the federal regulatory capital regulations in that it reflects the impact of the Bank’s unallocated general loan loss reserves. The Bank’s unallocated general loan loss reserves do not impact the calculation of the federal regulatory capital ratios.

The net proceeds contributed to the Bank from the stock offering completed on September 20, 2024, have significantly increased our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including funding loans. Our financial condition and results of operations will be enhanced by the net proceeds from the offering, which will increase our net interest-earning assets and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the offering, as well as other factors associated with the offering, our return on equity may be adversely affected for a period of time following the offering. This could negatively affect the trading price of our shares of common stock.

### Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

***Commitments.*** As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At March 31, 2025, we had outstanding commitments to extend credit of $29.1 million. We anticipate that we will have sufficient funds available to meet our current lending commitments. Certificates of deposit that are scheduled to mature in one year or less from March 31, 2025 totaled $86.3 million. Management expects that a substantial portion of these time deposits will be retained. However, if a substantial portion of these time deposits is not retained, we may utilize advances from the FHLB or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Our off-balance sheet credit exposures are limited to unfunded loan commitments primarily related to residential real estate loans. The unfunded commitments are evaluated on a quarterly basis. Our losses related to the unfunded commitments as of March 31, 2025 were estimated to be $128,000. We have provisioned for this exposure and recorded a reserve of $128,000 as of March 31, 2025.

***Contractual Obligations.*** In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating contracts for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

## Controls and procedures

As filed, 869 characters.

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2025. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Registrant’s disclosure controls and procedures were effective.

During the quarter ended March 31 2025, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Filed May 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-007741. Last ingested by Listed: Oct 24, 2026, 15:06 ET. No prices; not investment advice.