Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

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 Annual Report on Form 10-K and in the Company's Prospectus.

Critical Accounting Policies and Use of Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with U.S. GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an "emerging growth company," we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

The following represent our critical accounting policies:

Allowance for Credit Losses on Loans.The allowance for credit losses ("ACL") is an estimate of expected credit losses on the loans held for investment, and unfunded loan commitments. The ACL is calculated according to GAAP standards and is maintained by management at a level believed adequate to absorb estimated credit losses that are expected to occur within the existing loan portfolio through their contractual terms. The ACL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on loans. The determination of our allowance for credit losses is considered a critical accounting estimate by management because of the high degree of judgment involved in determining qualitative loss factors, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded allowance for credit losses. While management utilizes its best judgment and information available, the ultimate adequacy of the ACL is dependent upon a variety of factors beyond the Company's direct control, including, but not limited to, the performance of the loan portfolio, consideration of current economic trends, changes in interest rates and property values, estimated losses on pools of homogeneous loans based on an analysis that uses historical loss experience for prior periods that are determined to have like characteristics with the current period such as pre-recessionary, recessionary, or recovery periods, portfolio growth and concentration risk, management and staffing changes, the interpretation of loan risk classifications by regulatory authorities and other credit market factors. While each component of the ACL is determined separately, the entire balance is available for the entire loan portfolio.

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The ACL methodology consists of measuring loans on a collective (pool) basis when similar risk characteristics exist. The Company has identified three loan portfolios and measures the ACL using the Scaled CECL Allowance for Losses Estimator ("SCALE") method. The loan portfolios are real estate; commercial installment; and consumer. The SCALE method uses publicly available data from call reports to derive the initial proxy expected lifetime loss rates. This proxy expected lifetime loss rates are then adjusted for bank-specific facts and circumstances to arrive at the final ACL estimate that adequately reflects the Company's loss history and credit risk within our portfolio.

The qualitative factors considered for each loan portfolio consist of the impact of other internal and external qualitative and credit market factors as assessed by management through a detailed loan review, ACL analysis and credit discussions. These internal and external qualitative and credit market factors include:

The impact of the above-listed internal and external qualitative and credit market risk factors is assessed within predetermined ranges to adjust the ACL totals calculated.

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In addition to the pooled analysis performed for the majority of our loan and commitment balances, we also review those loans that have collateral dependency or nonperforming status which requires a specific review of that loan, per our individually analyzed CECL calculations.

Loans are charged off against the ACL when management believes the uncollectibility of a loan balance is confirmed, while recoveries of amounts previously charged-off are credited to the ACL. Approved releases from previously established ACL reserves authorized under our ACL methodology also reduce the ACL. Additions to the ACL are established through the provision for credit losses on loans, which is charged to expense.

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Our ACL methodology is intended to reflect all loan portfolio risk, but management recognizes the inability to accurately depict all future credit losses in a current ACL estimate, as the impact of various factors cannot be fully known. Accrued interest receivable on loans is excluded from the amortized cost basis of financing receivables for the purpose of determining the allowance for credit losses.

Income Taxes.Deferred tax assets and liabilities have been determined using the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the current enacted tax rates, which will be in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Provision (benefit) for deferred taxes is the result of changes in the deferred tax assets and liabilities.

The Company may also recognize a liability for unrecognized tax benefits from uncertain tax positions. Unrecognized tax benefits represent the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured in the financial statements. Interest and penalties related to unrecognized tax benefits are classified as income taxes.

Debt Securities.Debt securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available-for-sale when they might be sold before maturity. Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income or loss, net of tax. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives or earliest call date of the debt securities, as applicable. Gains and losses on the sales of debt securities are recorded on the trade date and determined using the specific-identification method.

For held-to-maturity debt securities in an unrealized loss position, the Company evaluates the securities individually to determine whether the decline in fair value below amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors, such as market interest rate fluctuations.

In evaluating securities held-to-maturity for potential impairment, the Company considers many factors, including the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and its ability and intent to hold the security for a period of time sufficient for a recovery in value. The Company also considers the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies.

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Accrued interest receivable on securities held-to-maturity is excluded from the amortized cost basis of those securities for the purpose of determining the allowance for credit losses.

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will sell, the security before recovery of its amortized cost basis. If either of the aforementioned criteria exists, the Company will record an ACL related to securities available-for-sale with an offsetting entry to the provision for credit losses on securities on the statements of income. If neither of these criteria exists, the Company will evaluate the securities individually to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors, such as market interest rate fluctuations.

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In evaluating securities available-for sale for potential impairment, the Company considers many factors, including the financial condition and near-term prospects of the issuer, which for debt securities considers external credit ratings and recent downgrades; and its ability and intent to hold the security for a period of time sufficient for a recovery in value. The Company also considers the extent to which the securities are issued by the federal government or its agencies, and any guarantee of issued amounts by those agencies. The amount of the impairment related to other factors is recognized in other comprehensive income (loss).

Accrued interest receivable on securities available-for-sale is excluded from the amortized cost basis of those securities for the purpose of determining the allowance for credit losses.

Through December 31, 2025, declines in fair value of debt securities that are deemed to be other than temporary, if applicable, are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers the length of time and the extent to which fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

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Our accounting and financial reporting policies conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable based upon the information available. These estimates and assumption 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.

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

Total Assets. Total assets decreased $2.3 million, or 0.9%, to $271.0 million at December 31, 2025 from $273.3 million at December 31, 2024. The change was primarily the result of a $3.6 million decrease in our net deferred tax asset and $3.1 million decrease in total investment securities, offset by a $3.1 million increase in portfolio loans and a $879,000 increase in Federal Home Loan Bank stock.

Cash and Cash Equivalents and Time Deposits with Other Financial Institutions.Total cash and due from banks and time deposits with other financial institutions increased $85,000, or 1.5% to $5.8 million at December 31, 2025 from $5.7 million at December 31, 2024. Positive cash flow from investing activities was $1.9 million was which

was offset by a $1.7 million decrease in cash flow from operating activities and a $105,000 decrease in cash flow from financing activities.

Securities Available-for-Sale.Securities available-for-sale decreased $517,000 or 2.3%, to $22.3 million at December 31, 2025 from $22.8 million at December 31, 2024. The decrease was primarily due to principal paydowns of $1.9 million on mortgage-backed securities and other security maturities. The unrealized loss of the portfolio declined $1.3 million to $2.6 million on December 31, 2025 compared to $3.9 million on December 31, 2024 due to a decline in interest rates. The proceeds from principal paydowns and security maturities are utilized to manage liquidity and support loan growth.

Securities Held-to-Maturity.Securities held-to-maturity decreased $2.6 million or 6.6%, to $36.4 million at December 31, 2025 from $39.0 million at December 31, 2024. The decrease in securities held-to-maturity was due to maturities of $3.8 million, offset by $1.1 million in amortization of unrealized losses and discounts.

Loans, net.Loans, net increased $3.1 million, or 1.6%, to $189.4 million at December 31, 2025 from $186.3 million at December 31, 2024. Home equity loans and lines of credit and construction loans increased $840,000 and $5.4 million, respectively, to $8.9 million and $12.2 million at December 31, 2025, respectively, as a result of loan production exceeding payoffs and amortization. These increases were partially offset by decreases in one-to-four family, multi-family and commercial real estate, marine and recreational, and other consumer loans of $405,000, $854,000, $907,000 and $1.0 million respectively, to $129.7 million, $3.0 million, $30.2 million and $3.2 million at December 31, 2025, respectively.

Deposits. Total deposits decreased $14.3 million or 6.2% to $217.3 million at December 31, 2025 from $231.5 million at December 31, 2024. Non-interest bearing deposits decreased $1.8 million, or 18.7%, to $7.7 million at December 31, 2025 from $9.5 million at December 31, 2024. Total interest-bearing deposits, other than time deposits, decreased approximately $14.3 million, or 12.8%, to $97.4 million at December 31, 2025, from $111.7 million at December 31, 2024. The decline is related to a $9.4 million reduction in interest-bearing brokered demand deposits and an overall decline in savings and money market account balances experienced during the year. Certificates of deposits increased $1.8 million, or 1.7%, to $112.1 million at December 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. Total borrowings increased $14.2 million or 58.5% to $38.4 million at December 31, 2025 from $24.2 million at December 31, 2024. The increase in borrowings were utilized to offset deposit declines and to fund loan growth.

Stockholders' Equity.Total stockholders' equity decreased $2.4 million, or 15.4%, to $13.2 million at December 31, 2025 from $15.6 million at December 31, 2024, due to a $4.1 million decrease in retained earnings resulting from the net loss incurred for the year ended December 31, 2025. The decrease was partially offset by $1.7 million in other comprehensive income for the year ended December 31, 2025

Comparison of Operating Results for the year Ended December 31, 2025 and 2024

Net Income/(Loss).We recorded a net loss of $4.1 million for the year ended December 31, 2025, compared to a net loss of $1.7 million for the year ended December 31, 2024, which is an increase of $2.4 million, or 140.9%. The increase in our net loss year-over-year resulted primarily from a $3.5 million increase in the provision for income taxes and $224,000 increase in noninterest expense, partially offset by a $1.3 million increase in net interest income and a $60,000 increase in our noninterest income.

Interest Income.Interest income increased $1.4 million, or 14.2%, to $11.1 million for the year ended December 31, 2025 from $9.7 million for the year ended December 31, 2024, primarily due to a $1.3 million increase in interest and fees on loans. The increase in interest and fees on loans was primarily due to an increase of 34 basis points in the weighted average yield on the loan portfolio to 5.05% for the year ended December 31, 2025 from 4.71% for the year ended December 31, 2024 and an increase of $14.4 million in the average balance of the loan portfolio to $194.5

million for the year ended December 31, 2025 from $180.1 million for the year ended December 31, 2024, reflecting the increased rates on originations and adjustable rate loans as well as the growth in the home equity loans and lines of credit and construction loans portfolios.

Interest Expense.Total interest expense increased $137,000, or 2.2%, to $6.5 million for the year ended December 31, 2025 from $6.4 million for the year ended December 31, 2024. Interest expense on deposits decreased $225,000, or 4.3%, to $5.0 million for the year ended December 31, 2025 from $5.2 million for the year ended December 31, 2024, due primarily to a decrease in the weighted average rate paid on certificates of deposit of 34 basis points to 4.03% for the year ended December 31, 2025 from 4.37% for the year ended December 31, 2024 combined with a $4.2 million decline in the average balance of non-maturity interest-bearing deposits during 2025.

Interest expense on borrowed funds increased $353,000 or 31.1%, to $1.5 million for the year ended December 31, 2025 from $1.1 million for the year ended December 31, 2024. The rate paid on borrowed funds decreased 56 basis points to 3.92% for the year ended December 31, 2025 from 4.48% for the year ended December 31, 2024 while the average balance of borrowed funds increased $13.0 million, or 50.4%, to $39.0 million for the year ended December 31, 2025 from $26.0 million for the year ended December 31, 2024. The increase in the average balance was generally related to the measured use of borrowings to offset deposit outflows and to support the increase in the loan portfolio.

Net Interest Income.Net interest income increased $1.2 million, or 36.8%, to $4.6 million for the year ended December 31, 2025 from $3.4 million for the year ended December 31, 2024, primarily due to an increase in the interest rate spread to 1.65% for the year ended December 31, 2025 from 1.29% for the year ended December 31, 2024 and an increase in the net interest margin to 1.74% for the year ended December 31, 2025, from 1.35% for the year ended December 31, 2024. The increases in the interest rate spread and the net interest margin were primarily due to an increase of 31 basis points in the weighted average yield on our interest earning assets and decrease of 5 basis points on our weighted average cost of interest-bearing liabilities, partially offset by an increase of $11.0 million in average interest-bearing liabilities.

Provision for Credit Losses.Based on management's analysis of the adequacy of the ACL and unfunded loan commitments, a net provision of $131,000 comprising of a provision of $82,000 to the ACL for loans and a provision of $49,000 for unfunded loan commitments was recorded for the year ended December 31, 2025, compared to provisions of $85,000 to the ACL and $82,000 unfunded loan commitments for the same period in 2024. The $36,000 decrease in provision expense is primarily due to a mix change in our loan portfolio and an analysis of current credit characteristics in conjunction with loss history of the loan portfolio and peer group loss data.

Noninterest Income.Noninterest income increased $60,000 or 3.5%, to $1.8 million for the year ended December 31, 2025 from $1.7 million for the year ended December 31, 2024. The increase resulted primarily from an increase of $210,000 to $605,000 in total mortgage banking income, and an increase of $32,000 to $512,000 in other income. The increase in other income was driven primarily by an increase of $49,000 reciprocal deposit fee income and $13,000 in insurance agency income offset by a $26,000 decrease in consumer loan related application, late, and gap insurance fees. These increases to noninterest income were offset by a $187,000 decrease in the gain on interest rate swap and $16,000 decline in deposit account service charges and interchange income. The table below sets forth our noninterest income for the years ended December 31, 2025 and 2024:

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Noninterest Expense.Noninterest expense increased $224,000, or 3.1%, to $7.6 million for the year ended December 31, 2025 from $7.3 million for the year ended December 31, 2024. Salaries and related benefits increased $88,000, or 2.1%, to $4.3 million at December 31, 2025 primarily due to higher employee salary expense and related benefits due to market factors. Data processing expense increased $34,000, or 3.1% totaling $1.1 million at December 31, 2025 primarily due to general activity increases. Other expense increased $193,000, or 21.4% primarily due to a $173,000 increase in accounting, legal and shareholder services professional fees. Partially offsetting these increases was a decrease of $43,000 in net occupancy expense due to closing of two branch locations, $34,000 decrease in loss on sale and disposal of fixed assets related to a 2024 branch closing, and a $38,000 decrease in advertising expense due to reduced activity. The table below sets forth our noninterest expense for the year ended December 31, 2025 and 2024:

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Income Tax Expense.Our provision for income taxes increased $3.6 million to $2.9 million for the year ended December 31, 2025, from a benefit of $736,000 for the year ended December 31, 2024 due to the recording of a $3.3 million valuation against our deferred tax asset and a $306,000 decrease in the income tax benefit related to a reduction in the loss before provision for (benefit from) income taxes.

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.

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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.

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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 quarterly, or more frequently when necessary, is comprised of our President/Chief Executive Officer, Senior Vice President of Finance, Vice President of Lending and Vice President of Member Relations, and reports to the full board of directors on at least an annual 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 quarterly, 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 2024, 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. Over the last year, 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:

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 December 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.

The table above indicates that at December 31, 2025, we would have experienced a 3.02% increase in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 0.82% decrease 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 December 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.

The table above indicates that at December 31, 2025, we would have experienced a 18.19% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 19.98% increase in EVE in the event of an instantaneous parallel 200 basis point decrease in market interest rates.

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 2024, 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 December 31, 2025, we had outstanding advances of $38.4 million from the FHLB. At December 31, 2025, we had unused borrowing capacity of $26.9 million from the FHLB. At December 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 December 31, 2025 we had an unsecured $6.0 million federal funds line of credit with a correspondent bank. We have not drawn against the Discount Window or the federal funds 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 consolidated statements of cash flows for the year ended December 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 December 31, 2025 and December 31, 2024, we had a net worth ratio of 4.89% and 5.67%, respectively.

At December 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 December 31, 2025, we had Tier 1 capital equal to 6.1% of total average assets, total risk-based capital equal to 11.6% of risk-weighted assets and a net worth ratio of 4.89%. 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%.

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 December 31, 2025, we had outstanding commitments to extend credit of $23.8 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 December 31, 2025 totaled $90.4 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 an annual basis. Our expected losses related to the unfunded commitments as of December 31, 2025 were estimated to be $131,000 and recorded a reserve of $131,000 as of December 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.