Hoyne Bancorp Inc.
05/12/2026 | Press release | Distributed by Public on 05/12/2026 11:57
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
This discussion and analysis is intended to assist in the understanding of our financial performance through a discussion of our financial condition as of March 31, 2026 (unaudited) and as compared to our financial condition as of December 31, 2025 (audited) and our results of operations for the three month periods ended March 31, 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 March 31, 2026, we had total assets of $477.2 million, including $288.6 million in net loans and $103.7 million of investment securities available-for-sale, and investment securities held-to-maturity of $27.2 million, total deposits of $312.0 million and total stockholders' equity of $161.1 million. For the three months ended March 31, 2026, we had a net loss of $118,000 compared to a net loss of $166,000 for the three months ended March 31, 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.
The following accounting policies comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.
Allowance for Credit Losses. The allowance for credit losses is the estimated amount considered necessary to cover expected, but unconfirmed credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for credit losses which is charged against income. In determining the allowance for credit losses, we make significant estimates and have identified this policy as one of our most critical accounting policies.
We perform a quarterly evaluation of the allowance for credit losses. Our determination of the adequacy of the allowance for credit losses is based on the assessment of the expected credit losses on loans over the expected life of the loans. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.
In accordance with the provisions of the accounting standards under CECL, we estimate the allowance for credit losses balance using relevant available information from both internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience of a defined peer group, by affiliate, paired with economic forecasts, provide the basis for the quantitatively modeled estimates of expected credit losses. We adjust our quantitative model, as necessary, to reflect conditions not already considered by the quantitative model. These adjustments are commonly known as the qualitative factors.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. We use the average historical loss method to measure the quantitative portion of the allowance for credit losses over the forecast and reversion periods.
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. When we determine that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.
Comparison of Financial Condition as of March 31, 2026 and December 31, 2025
Total Assets. Total assets decreased $12.2 million or 2.5% to $477.2 million as of March 31, 2026 compared to $489.4 million as of December 31, 2025. The decrease resulted primarily from decreases in cash and cash equivalents of $34.1 million, investment securities available-for-sale of $3.0 million, and investment securities held to maturity of $1.2 million. These decreases were offset by increases in loans receivable, net of $20.7 million, and Bank Owned Life Insurance of $5.2 million.
Cash and Cash Equivalents. Cash and cash equivalents decreased $34.1 million, or 71.7%, to $13.5 million as of March 31, 2026 compared to $47.6 million as of December 31, 2025. The decrease was primarily the result of funding loan originations and purchasing additional BOLI.
Investment Securities Available-for-Sale. Investment securities available-for-sale decreased $3.0 million, or 2.8%, to $103.7 million as of March 31, 2026 from $106.7 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.
Investment Securities Held-to-Maturity. Investment securities held-to-maturity decreased $1.2 million, or 4.2%, to $27.2 million as of March 31, 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.
Loans Receivable, Net. Loans receivable, net increased $20.7 million, or 7.7%, to $288.6 million as of March 31, 2026 from $267.9 million as of December 31, 2025. The increase reflects the continued emphasis on growing the commercial loan portfolio.
Allowance for Credit Losses. As of March 31, 2026, the allowance for credit losses on loans ("ACL") increased $135,000 or 5.0%, to $2.8 million as of March 31, 2026 from $2.7 million as of December 31, 2025, due to an increase in the provision as a result of the growth in the loan portfolio.
Bank Owned Life Insurance. Bank Owned Life Insurance increased $5.2 million, or 34.7%, to $20.1 million as of March, 31, 2026 from $14.9 million as of December 31, 2025, due primarily to the purchase of additional policies.
Premises and Equipment, Net. Premises and equipment, net decreased $111,000, or 1.5%, to $7.3 million as of March, 31, 2026 from $7.4 million as of December 31, 2025, due primarily to depreciation.
Deposits. Deposits decreased $9.6 million, or 3.0%, to $312.0 million as of March 31, 2026 from $321.6 million as of December 31, 2025 due to the maturity of certificates of deposit that did not renew due to the interest rate environment.
Total Stockholders' Equity. Total stockholders' equity for the first three months of 2026 decreased $283,000, or 0.2%, 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 $257,000 during the first three months of 2026 due to the rate environment for available-for-sale assets.
Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest earned from average interest-earning assets and the resulting yields,
as well as the interest expense paid on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. All average balances are based on daily balances.
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For the Three months ended March 31, |
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2026 |
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2025 |
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Average |
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Average |
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Average |
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Average |
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Outstanding |
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Yield/ |
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Outstanding |
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Yield/ |
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Balance |
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Interest |
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Rate |
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Balance |
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Interest |
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Rate |
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(Dollars in thousands) |
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Interest-earning assets: |
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Loans, net |
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$ |
278,975 |
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$ |
4,235 |
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6.07 |
% |
$ |
242,987 |
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$ |
3,621 |
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5.96 |
% |
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Certificates of deposit with other financial institutions |
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870 |
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5 |
2.30 |
% |
1,190 |
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7 |
2.35 |
% |
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Interest-bearing cash and cash equivalents |
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32,557 |
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304 |
3.73 |
% |
27,046 |
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203 |
3.00 |
% |
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Investment securities available-for-sale |
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105,296 |
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549 |
2.09 |
% |
116,257 |
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644 |
2.22 |
% |
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Investment securities held-to-maturity |
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27,573 |
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144 |
2.09 |
% |
33,046 |
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183 |
2.22 |
% |
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FHLB of Chicago stock |
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1,166 |
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14 |
4.80 |
% |
1,166 |
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15 |
5.15 |
% |
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Bankers' Bank Stock |
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992 |
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4 |
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1.61 |
% |
992 |
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4 |
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1.61 |
% |
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Total interest-earning assets |
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447,429 |
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5,255 |
4.69 |
% |
422,684 |
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4,677 |
4.43 |
% |
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Noninterest-earning assets |
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38,927 |
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38,672 |
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Total assets |
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$ |
486,356 |
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$ |
461,356 |
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Interest-bearing liabilities: |
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Savings accounts |
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89,458 |
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54 |
0.24 |
% |
101,340 |
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73 |
0.29 |
% |
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Checking accounts |
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56,418 |
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1 |
0.01 |
% |
48,297 |
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2 |
0.02 |
% |
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Money market accounts |
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16,412 |
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70 |
1.71 |
% |
17,232 |
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55 |
1.28 |
% |
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Certificates of deposit(1) |
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156,555 |
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926 |
2.37 |
% |
199,947 |
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1,535 |
3.07 |
% |
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Total interest-bearing deposits |
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$ |
318,843 |
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$ |
1,051 |
1.32 |
% |
$ |
366,816 |
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$ |
1,665 |
1.82 |
% |
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Total interest-bearing liabilities |
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318,843 |
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1,051 |
1.32 |
% |
366,816 |
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1,665 |
1.82 |
% |
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Noninterest-bearing liabilities |
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6,235 |
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7,204 |
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Total liabilities |
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$ |
325,078 |
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$ |
374,020 |
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Stockholders' Equity |
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161,278 |
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87,336 |
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Total liabilities and stockholders' equity |
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$ |
486,356 |
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$ |
461,356 |
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Net interest income |
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4,204 |
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3,012 |
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Interest rate spread(2) |
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3.37 |
% |
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2.61 |
% |
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Net interest-earning assets(3) |
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$ |
128,586 |
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$ |
55,868 |
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Net interest margin(4) |
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3.76 |
% |
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2.85 |
% |
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Average interest-earning assets to average-interest bearing liabilities |
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140.33 |
% |
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115.23 |
% |
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| (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.
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Three Months Ended |
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March 31, 2026 vs. 2025 |
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Increase |
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Total |
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(Decrease) |
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Increase |
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Due to |
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(Decrease) |
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Volume |
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Rate |
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(Dollars in thousands) |
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Interest-earning assets: |
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Loans |
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$ |
547 |
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$ |
67 |
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$ |
614 |
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Certificates of deposit with other financial institutions |
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(2) |
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- |
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(2) |
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Interest-bearing cash and cash equivalents |
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46 |
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55 |
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101 |
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Investment securities available-for-sale |
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(59) |
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(36) |
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(95) |
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Investment securities held-to-maturity |
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(29) |
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(10) |
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(39) |
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FHLB of Chicago stock and Bankers' Bank stock |
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- |
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(1) |
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(1) |
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Total interest-earning assets |
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$ |
503 |
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$ |
75 |
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$ |
578 |
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Interest-bearing liabilities: |
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Savings accounts |
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(8) |
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(11) |
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(19) |
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Checking accounts |
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1 |
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(2) |
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(1) |
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Money market accounts |
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(2) |
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17 |
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15 |
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Certificates of deposit |
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(297) |
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(312) |
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(609) |
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Total interest-bearing liabilities |
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$ |
(306) |
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$ |
(308) |
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$ |
(614) |
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Change in net interest income |
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$ |
809 |
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$ |
383 |
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$ |
1,192 |
Comparison of Operating Results for Three Months Ended March 31, 2026 and March 31, 2025
General. For the three months ended March 31, 2026 compared to the same period in 2025, net loss decreased $48,000, or 28.7%, to a net loss of $118,000 for the three months ended March 31, 2026 compared to a net loss of $166,000 for the same period in 2025. The primary reasons for the decrease in net loss was an increase of $578,000 in total interest income and a decrease in interest expense on deposits of $614,000, offset by a decrease of $20,000 in noninterest income and an increase of $1.1 million in noninterest expense.
Interest Income. Interest income increased $578,000, or 12.3%, to $5.3 million for the three months ended March 31, 2026 compared to $4.7 million for the same period in 2025. The increase in interest income was due to a $614,000 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 $134,000 decrease in interest income on investment securities due to a decrease in account balances as a result of maturities and paydowns. Other interest income increased by $98,000. 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 Expense on Deposits. Interest expense on deposits decreased $614,000, or 36.2%, to $1.1 million for the three months ended March 31, 2026 compared to $1.7 million for the three months ended March 31, 2025. The decrease was primarily caused by the decrease in deposits as interest rates remained relatively unchanged.
Provision for Credit Losses. The provision for credit losses was flat at $135,000 for both the three months ended March 31, 2026 and 2025.
Noninterest Expense. Noninterest expense increased $1.1 million, or 32.3%, to $4.5 million for the three months ended March 31, 2026 compared to $3.4 million for the three months ended March 31, 2025. The increase was primarily
caused by the increase in compensation expense due to the payment of additional bonuses and compensation adjustments during the quarter.
Tax Expense (benefit). Tax expense (benefit) decreased $21,000, or 27.3%, to $56,000 for the three months ended March 31, 2026, from $77,000 for the same period in 2025. The major factor in the decrease was 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. As of March 31, 2026, we had no outstanding advances from the FHLB of Chicago, and had the capacity to borrow approximately $65.7 million from the FHLB of Chicago.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.
Our cash flows are comprised of three primary classifications: cash flows provided by (used in) operating activities, investing activities, and financing activities. Net cash provided by (used in) operating activities was ($821,000) and $905,000 for the three months ended March 31, 2026 and 2025, respectively. Net cash provided by (used in) investing activities, which consists primarily of change in loans receivable, was ($22.1 million) and $2.3 million for the three months ended March 31, 2026 and 2025, respectively. Net cash provided by (used in) financing activities, which primarily consists of change in deposits, was ($11.2 million) and $12.6 million for the three months ended March 31, 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 March 31, 2026, Hoyne Savings Bank was considered well capitalized under the regulatory framework for prompt corrective action. During the year ended December 31, 2023, Hoyne Savings Bank elected to begin using the Community Bank Leverage Ratio Framework (the "CBLRF"). Under CBLRF, if a qualifying depository institution or depository institution holding company elects to use such measure, such institution or holding company will be considered well capitalized if its ratio of Tier 1 capital to average total consolidated assets (i.e., leverage ratio) exceeds 9.0% subject to a limited two-quarter grace period, during which the leverage ratio cannot go 100 basis points below the then- applicable threshold, and will not be required to calculate and report risk-based capital ratios. Hoyne Savings Bank's Tier 1 capital to average assets for the leverage ratio was 27.8% and 24.8% as of March 31, 2026 and December 31, 2025, respectively. Additionally, as of March 31, 2026, we exceeded all of our regulatory capital requirements with a Tier 1 leverage capital level by $90.0 million, or 18.8%.
Off-Balance Sheet Arrangements. As of March 31, 2026, we had $57.5 million of outstanding commitments to originate loans. We had unfunded construction loans as of March 31, 2026 of $14.0 million. Certificates of deposit that are scheduled to mature in less than one year from March 31, 2026, totaled $147.4 million. Management expects that a
substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize FHLB of Chicago advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
Commitments. The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans as of March 31, 2026.
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Total |
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Amounts |
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Amount of Commitment Expiration - Per Period |
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Committed at |
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One to |
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Three to |
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|
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|
|
March 31, |
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To One |
|
Three |
|
Five |
|
After Five |
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|
|
2026 |
|
Year |
|
Years |
|
Years |
|
Years |
|||||
|
|
|
(Dollars in thousands) |
|||||||||||||
|
Unused lines of credit |
|
$ |
11,873 |
|
$ |
1,542 |
|
$ |
1,681 |
|
$ |
5,969 |
|
$ |
2,681 |
|
Commitments to originate loans |
|
57,463 |
|
57,463 |
|
- |
|
- |
|
- |
|||||
|
Unfunded construction loans |
|
13,950 |
|
5,573 |
|
6,816 |
|
591 |
|
970 |
|||||
|
Total commitments |
|
$ |
83,286 |
|
$ |
64,578 |
|
$ |
8,497 |
|
$ |
6,560 |
|
$ |
3,651 |
Contractual Cash Obligations. The following table summarizes our contractual cash obligations as of March 31, 2026.
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Payments Due by Period |
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Total at |
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One to |
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Three to |
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|
||||
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|
|
March 31, |
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To One |
|
Three |
|
Five |
|
After Five |
|||||
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|
|
2026 |
|
Year |
|
Years |
|
Years |
|
Years |
|||||
|
|
|
(Dollars in thousands) |
|||||||||||||
|
Certificates of deposit |
|
$ |
155,080 |
$ |
147,369 |
|
$ |
7,066 |
|
$ |
645 |
|
$ |
- |
|
|
Total contractual obligations |
|
$ |
155,080 |
$ |
147,369 |
|
$ |
7,066 |
|
$ |
645 |
|
$ |
- |
|
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 March 31, 2026 and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.
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NPV as % of |
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Portfolio Value of |
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|
|
Net Portfolio Value |
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Assets |
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Change in Interest Rates in Basis Points (Rate Shock) |
|
Amount |
|
$ Change |
|
% Change |
|
NPV Ratio |
|
Change |
|||
|
|
|
(Dollars in thousands) |
|||||||||||
|
300bp |
|
$ |
130,410 |
|
$ |
(19,758) |
(13.2) |
% |
27.5 |
% |
(4.2) |
% |
|
|
200 |
|
137,100 |
|
(13,068) |
(8.7) |
% |
29.0 |
% |
(2.7) |
% |
|||
|
100 |
|
143,725 |
|
(6,443) |
(4.3) |
% |
30.3 |
% |
(1.4) |
% |
|||
|
Static |
|
150,168 |
|
|
|
|
|
|
|
||||
|
(100) |
|
157,025 |
|
6,857 |
4.6 |
% |
33.1 |
% |
1.4 |
% |
|||
|
(200) |
|
161,771 |
|
11,603 |
7.7 |
% |
34.2 |
% |
2.5 |
% |
|||
|
(300) |
|
164,867 |
|
14,699 |
9.8 |
% |
34.8 |
% |
3.1 |
% |
|||
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 March 31, 2026.
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|
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|
|
|
|
|
Change in Interest Rates in Basis Points (Rate Shock) |
|
Net Interest Income |
|
$ Change |
|
% Change |
|||
|
|
|
(Dollars in thousands) |
|||||||
|
300bp |
|
$ |
17,606 |
|
$ |
(1,175) |
(6.3) |
% |
|
|
200 |
|
18,031 |
|
(750) |
(4.0) |
% |
|||
|
100 |
|
18,421 |
|
(360) |
(1.9) |
% |
|||
|
Static |
|
18,781 |
|
|
|
|
|||
|
(100) |
|
19,219 |
|
438 |
2.3 |
% |
|||
|
(200) |
|
19,110 |
|
329 |
1.8 |
% |
|||
|
(300) |
|
18,096 |
|
(685) |
(3.6) |
% |
|||
The table above indicates that as of March 31, 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 March 31, 2027 would be expected to decrease by $1.2 million, or 6.3% to $17.6 million.
Hoyne Bancorp Inc. published this content on May 12, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 12, 2026 at 17:57 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]