EWSB US Equity☆

Item 7. 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

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 December 31, 2024, 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” in our Prospectus.

Comparison of Financial Condition at December 31, 2024 and December 31, 2023

Total Assets. Total assets increased $10.7 million, or 4.0%, to $273.3 million at December 31, 2024 from $262.6 million at December 31, 2023. The change was primarily the result of a $12.0 million increase in portfolio loans offset by a $2.2 million decrease 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 $419,000, or 6.9% to $5.7 million at December 31, 2024 from $6.1 million at December 31, 2023. The change was related to general business activity.

Securities Available-for-Sale. Securities available-for-sale decreased $1.1 million or 4.8%, to $22.8 million at December 31, 2024 from $23.9 million at December 31, 2023. The decrease was primarily due to principal paydowns of $1.1 million on mortgage-backed securities. The unrealized loss of the portfolio on December 31, 2024 and December 31, 2023 was consistent at $3.9 million. The proceeds from principal paydowns are utilized to manage liquidity and support loan growth.

Securities Held-to-Maturity. Securities held-to-maturity decreased $1.1 million or 3.4%, to $39.0 million at December 31, 2024 from $40.1 million at December 31, 2023. The decrease in securities held-to-maturity was due to maturities of $2.3 million, offset by $1.2 million in amortization of unrealized losses and discounts.

Loans, net. Loans, net increased $12.0 million, or 6.9%, to $186.4 million at December 31, 2024 from $174.3 million at December 31, 2023. One- to four-family, home equity loans and lines of credit, construction, and marine and recreational vehicles, and other consumer loans increased $7.8 million, $1.9 million, $2.8 million, $350,000, and

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$174,000, respectively, to $130.1 million, $8.1 million, $6.8 million, $31.2 million, and $4.2 million at December 31, 2024, respectively, as a result of loan production exceeding payoffs and amortization. These increases were partially offset by decreases to commercial and multifamily of $40,000 and $860,000 respectively, to $3.9 million and $3.5 million at December 31, 2024, respectively.

Deposits. Total deposits increased $1.1 million or 0.5% to $231.5 million at December 31, 2024 from $230.5 million at December 31, 2023. Non-interest bearing deposits decreased $789,000, or 7.7%, to $9.5 million at December 31, 2024 from $10.3 million at December 31, 2023. Total interest-bearing deposits, other than time deposits, decreased approximately $3.9 million, or 3.4%, to $111.8 million at December 31, 2024, from $115.7 million at December 31, 2023. We acquired $9.4 million in interest-bearing brokered demand deposits in 2024 which partially offset the decline in savings and money market account balances experienced during the year. Certificates of deposits increased $5.8 million, or 5.5%, to $110.3 million at December 31, 2024, from $104.5 million at December 31, 2023. 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 $5.2 million or 33.0% to $24.2 million at December 31, 2024 from $19.0 million at December 31, 2023. The increase in borrowings were utilized to fund loan growth.

Stockholders’ Equity. Total stockholders’ equity increased $4.1 million, or 35.5%, to $15.6 million at December 31, 2024 from $11.5 million at December 31, 2023, due to net proceeds of $5.5 million from the stock offering and other comprehensive income of $810,000. These increases were partially offset by a decrease in retained earnings of $1.7 million, which resulted from the net loss incurred for the year ended December 31, 2024 and the $500,000 value of the unallocated common shares held by the ESOP.

Comparison of Operating Results for the year Ended December 31, 2024 and 2023

Net Income/(Loss). We recorded a net loss of $1.7 million for the year ended December 31, 2024, compared to a net loss of $935,000 for the year ended December 31, 2023, which is an increase of $755,000, or 80.7%. The increase in our net loss year-over-year resulted primarily from a decrease in net interest income and increase in noninterest expense, partially offset by an increase in our noninterest income.

Interest Income. Interest income increased $806,000, or 9.0%, to $9.7 million for the year ended December 31, 2024 from $8.9 million for the year ended December 31, 2023, primarily due to a $913,000 increase in interest and fees on loans. The increase in interest and fees on loans was primarily due to an increase of 45 basis points in the weighted average yield on the loan portfolio to 4.71% for 2024 from 4.26% for 2023 and an increase of $2.2 million in the average balance of the loan portfolio to $180.1 million for the year ended December 31, 2024 from $177.9 million for the year ended December 31, 2023, reflecting the increased rates on originations and adjustable rate loans as the growth in the one- to four-family, home equity loans and lines of credit, construction, and marine and recreational vehicles, and other consumer portfolios.

Interest Expense. Total interest expense increased $2.0 million, or 46.3%, to $6.4 million for the year ended December 31, 2024 from $4.4 million for the year ended December 31, 2023. Interest expense on deposits increased $1.6 million, or 43.9%, to $5.2 million for the year ended December 31, 2024 from $3.6 million for the year ended December 31, 2023, due primarily to an increase in the weighted average rate paid on certificates of deposit of 129 basis points to 4.37% for the year ended December 31, 2024 from 3.08% for the year ended December 31, 2023 combined with an increase in the average balance of such deposits of $7.3 million during 2024.

Interest expense on borrowed funds increased $429,000 or 58.2%, to $1.2 million for the year ended December 31, 2024 from $737,000 for the year ended December 31, 2023. The rate paid on borrowed funds increased 87 basis points to 4.47% for the year ended December 31, 2024 from 3.60% for the year ended December 31, 2023 while the average balance of borrowed funds increased $5.5 million, or 26.9%, to $26.0 million for the year ended December 31, 2024 from $20.5 million for the year ended December 31, 2023. 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.

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Net Interest Income. Net interest income decreased $1.2 million, or 26.4%, to $3.4 million for the year ended December 31, 2024 from $4.5 million for the year ended December 31, 2023, primarily due to a decrease in the interest rate spread to 1.29% for the year ended December 31, 2024 from 1.79% for the year ended December 31, 2023 and a decrease in the net interest margin to 1.35% for the year ended December 31, 2024, from 1.82% for the year ended December 31, 2023. The decreases in the interest rate spread and the net interest margin were primarily due to an increase in the rates paid on interest-bearing liabilities in conjunction with an increase in other borrowings, partially offset by a 34 basis point increase in the weighted average yield on our interest earning assets.

Provision for Credit Losses. Based on management’s analysis of the adequacy of the ACL and unfunded loan commitments, a net provision of $167,000 comprising of a provision of $85,000 to the ACL for loans and a provision of $82,000 for unfunded loan commitments was recorded for the year ended December 31, 2024, compared to a provision of $145,000 to the ACL for the same period in 2023. The $22,000 increase in provision expense is primarily due to the increase in outstanding loan balances along with 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 $216,000, or 14.9%, to $1.7 million for the year ended December 31, 2024 from $1.4 million for the year ended December 31, 2023. The increase resulted primarily from a $271,000 gain on an interest rate swap in place during 2024, an increase of $41,000 to $395,000 in total mortgage banking income, and an increase of $178,000 to $480,000 in other income driven primarily by an increase of $131,000 in investment and insurance income. These increases were offset by nonrecurring gains of $208,000 on the sale of office properties and equipment resulting from the sale of one of our branch offices and a $71,000 gain on sale of land for sale occurring in the year ended December 31, 2023. The table below sets forth our noninterest income for the years ended December 31, 2024 and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended ​ ​ ​ ​

​ ​ December 31, ​ Change

​

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Noninterest Expense. Noninterest expense increased $88,000, or 1.2%, to $7.3 million for the year ended December 31, 2024 from $7.2 million for the year ended December 31, 2023. Salaries and related benefits increased $249,000, or 6.3%, to $4.2 million at December 31, 2024 primarily due to higher employee salary expense and related benefits due to market factors. Data processing expense increased $136,000 to $1.1 million at December 31, 2024 primarily due to implementation of additional network management services and general activity increases. Partially offsetting these increases was a decrease of $262,000 in other noninterest expense to $900,000 at December 31, 2024. The decrease in other noninterest expense was due in large part to a total of $241,000 expensed in 2023 related to the proposed acquisition of another mutual institution that was later terminated. The table below sets forth our noninterest expense for the year ended December 31, 2024 and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended ​ ​ ​ ​

​ ​ December 31, ​ Change

​

Income Tax Expense. Our benefit for income taxes increased $339,000 to a benefit of $736,000 for the year ended December 31, 2024, from a benefit of $398,000 for the year ended December 31, 2023 due to an increase in loss before income taxes.

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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.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ For the Year Ended December 31,

​ Average ​ ​ ​ ​ Average ​ ​ ​

​ ​ Outstanding ​ ​ ​ ​ Average ​ Outstanding ​ ​ ​ ​ Average

​ Balance Interest Yield/Rate Balance Interest Yield/Rate

​ ​ (Dollars in thousands)

Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noninterest-earning assets $ 16,322 ​ ​ ​ ​ $ 17,529 ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest-bearing liabilities: ​ ​ ​ ​ ​

Noninterest-bearing demand deposits ​ 9,781 ​ ​ ​ ​ 9,584 ​ ​ ​ ​

Other noninterest-bearing liabilities ​ 1,225 ​ ​ ​ ​ 1,331 ​ ​ ​ ​

Total liabilities and equity $ 266,738 ​ ​ ​ ​ $ 269,259 ​ ​ ​ ​

Net interest income ​ ​ ​ ​ $ 3,373 ​ ​ ​ ​ $ 4,583 ​

Net interest rate spread (2) ​ ​ ​ ​ ​ 1.29 % ​ 1.79 %

Net interest-earning assets (3) $ 5,949 ​ ​ ​ ​ ​ ​ $ 4,132 ​ ​ ​

Net interest margin (4) ​ ​ ​ ​ ​ 1.35 % ​ 1.82 %

​

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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.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ Year Ended December 31,

​ ​ ​ ​ ​ ​ ​ ​ Total

​ ​ Increase (Decrease) Due to ​ Increase

​ Volume Rate (Decrease)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest-earning assets: ​ ​ ​

Securities available-for-sale ​ (64) ​ (76) ​ (140)

Securities held-to-maturity ​ 4 ​ (8) ​ (4)

Cash, cash equivalents and other interest-earning assets ​ (20) ​ 56 ​ 36

Total interest-earning assets ​ 14 ​ 791 ​ 805

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest-bearing demand deposits ​ — ​ 37 ​ 37

Savings deposits ​ (2) ​ (1) ​ (3)

Money market ​ (85) ​ — ​ (85)

Total interest-bearing liabilities ​ 335 ​ 1,680 ​ 2,015

Change in net interest income ​ $ (321) ​ $ (889) ​ $ (1,210)

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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 a 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.

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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:

● 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.

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The following table sets forth, as of December 31, 2024, 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.

​ ​ ​ ​ ​ ​ ​

Change in Interest Rates Net Interest Income Year 1 Year 1 Change from

(basis points) (1) Forecast Level

(Dollars in thousands)

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

The table above indicates that at December 31, 2024, we would have experienced a 1.31% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 8.77% 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 December 31, 2024, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the U.S. Treasury yield curve.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ Estimated Increase

Change in Interest Rates ​ Estimated ​ (Decrease) in EVE

(basis points) (1) EVE (2) Amount Percent

(Dollars in thousands)

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

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

The table above indicates that at December 31, 2024, we would have experienced a 31.46% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 53.62% increase in EVE in the event of an instantaneous parallel 200 basis point decrease in market interest rates.

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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, 2024, we had outstanding advances of $24.2 million from the FHLB. At December 31, 2024, we had unused borrowing capacity of $43.3 million from the FHLB. At December 31, 2024, 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, 2024 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 consolidated statements of cash flows for the year ended December 31, 2024 and 2023 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, 2024 and December 31, 2023, we had a net worth ratio of 5.67% and 4.50%, respectively.

At December 31, 2024 and December 31, 2023, 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

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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, 2024, we had Tier 1 capital equal to 7.2% of total average assets, total risk-based capital equal to 13.0% of risk-weighted assets and a net worth ratio of 5.67%. At December 31, 2023, we had Tier 1 capital equal to 6.3% of total average assets, total risk-based capital equal to 11.9% of risk-weighted assets and a net worth ratio of 4.5%. 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 December 31, 2024, we had outstanding commitments to extend credit of $25.6 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, 2024 totaled $90.0 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, 2024 were estimated to be $82,000 and have provisioned for this exposure and recorded a reserve of $82,000 as of December 31, 2024.

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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable, as the Company is a smaller reporting company.

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Item 8. Financial Statements and Supplementary Data

​

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF EWSB BANCORP, INC

​

2024 and 2023 Consolidated Financial Statements ​

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 166) 51

Consolidated Balance Sheets for the year ended December 31, 2024 and 2023 52

Notes to Consolidated Financial Statements 58

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

EWSB Bancorp, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of EWSB Bancorp, Inc. and its subsidiary (the “Company”) as of December 31, 2024 and 2023; the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the two years in the period ended December 31, 2024; and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Plante & Moran, PLLC

We have served as the Company’s auditor since 2023.

Cleveland, Ohio

March 21, 2025

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EWSB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets

​ ​ ​ ​ ​ ​ ​

​ December 31,

Assets ​ ​ ​ ​

Time deposits with other financial institutions ​ ​ 4,498,778 ​ 4,497,669

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Liabilities and Equity ​ ​ ​

Deposits: ​ ​ ​

Advance payments by borrowers for taxes and insurance ​ ​ 485,212 ​ 280,026

Accrued interest payable and other liabilities ​ ​ 1,474,341 ​ 1,252,482

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Equity: ​ ​ ​

Additional paid-in capital ​ ​ 5,472,763 ​ ​ —

Accumulated other comprehensive income (loss) ​ ​ (6,852,253) ​ (7,662,149)

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

​

See accompanying notes to consolidated financial statements.

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EWSB BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Operations

​ ​ ​ ​ ​ ​ ​

​ Year Ended December 31,

Interest income: ​ ​ ​ ​

Securities: ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Interest expense: ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Noninterest income: ​ ​ ​ ​

Service charges on deposit accounts ​ ​ 74,470 ​ ​ 53,291

Increase in cash value of life insurance ​ ​ 236,677 ​ ​ 212,118

Gain on interest rate swap ​ ​ 271,057 ​ ​ —

Gain (loss) on sale and disposal of fixed assets ​ ​ (34,050) ​ ​ 207,738

Gain on sale of other real estate owned ​ ​ — ​ ​ 71,012

​ ​ ​ ​ ​ ​ ​

​

See accompanying notes to consolidated financial statements.

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EWSB BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Operations Continued

​ ​ ​ ​ ​ ​ ​

​ Year Ended December 31,

Noninterest expense: ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Provision for (benefit from) income taxes ​ ​ (736,086) ​ ​ (397,557)

Basic and diluted earnings per share ​ $ (8.62) ​ ​ n/a

Weighted average shares outstanding ​ ​ 197,223 ​ ​ n/a

​

See accompanying notes to consolidated financial statements.

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EWSB BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income (Loss)

​ ​ ​ ​ ​ ​ ​

​ Year Ended December 31,

Other comprehensive income (loss), before tax: ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Other comprehensive income (loss), before tax ​ ​ 1,102,350 ​ ​ 2,113,273

​ ​ ​ ​ ​ ​ ​

Other comprehensive income (loss), net of tax ​ ​ 809,896 ​ ​ 1,552,623

​ ​ ​ ​ ​ ​ ​

​

See accompanying notes to consolidated financial statements.

​

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Consolidated Statements of Changes in Equity

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unallocated ​ Accumulated ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Other ​ ​ ​

Net income (loss) ​ ​ — ​ — ​ — ​ (935,240) ​ — ​ — ​ (935,240)

Other comprehensive income (loss) ​ ​ — ​ — ​ — ​ — ​ — ​ 1,552,623 ​ 1,552,623

Other comprehensive income (loss) ​ ​ — ​ — ​ — ​ — ​ — ​ 809,896 ​ 809,896

​

See accompanying notes to consolidated financial statements.

​

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Consolidated Statements of Cash Flows

​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

Cash flows from operating activities: ​ ​ ​ ​ ​ ​

Provision for (benefit from) deferred taxes ​ ​ (761,172) ​ ​ (397,582)

Net loss (gain) on sale of other real estate owned ​ ​ — ​ ​ (71,012)

Increase in cash surrender value of life insurance ​ ​ (236,677) ​ ​ (212,118)

ESOP expense ​ ​ 28,385 ​ ​ —

Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​

Accrued interest receivable and other assets ​ ​ 98,161 ​ ​ 20,160

Accrued interest payable and other liabilities ​ ​ 140,315 ​ ​ 267,654

Net cash flows used in operating activities ​ ​ (2,223,726) ​ ​ (1,480,820)

​ ​ ​ ​ ​ ​ ​

Cash flows from investing activities: ​ ​ ​ ​

Proceeds from maturities of certificates of deposit ​ ​ — ​ ​ 200,000

Purchase of office properties and equipment ​ ​ (105,913) ​ ​ (30,386)

Proceeds from sale of office properties and equipment ​ ​ — ​ ​ 151,573

Proceeds from sale of land held for sale ​ ​ — ​ ​ 118,418

Proceeds from sale of repossessed assets ​ ​ — ​ ​ 71,012

​ ​ ​ ​ ​ ​ ​

Cash flows from financing activities: ​ ​ ​ ​

Proceeds from notes payable ​ ​ — ​ ​ 400,000

Principal payments on notes payable ​ ​ (400,000) ​ ​ —

Net increase/(decrease) from FHLB advances activity ​ ​ 5,570,000 ​ ​ 9,530,000

Proceeds from issuance of common stock, net of costs ​ ​ 5,478,242 ​ ​ —

Loan to ESOP ​ ​ (526,780) ​ ​ —

​ ​ ​ ​ ​ ​ ​

Net change in cash and cash equivalents ​ ​ (420,075) ​ ​ (1,533,694)

Cash and cash equivalents at beginning of period ​ ​ 1,608,709 ​ ​ 3,142,403

​ ​ ​ ​ ​ ​ ​

Supplemental cash flow information: ​ ​ ​ ​

Cash paid during the period for: ​ ​ ​ ​

Taxes ​ $ — ​ $ —

​

See accompanying notes to consolidated financial statements.

​

​

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Notes to Consolidated Financial Statements

Note 1: Summary of Significant Accounting Policies

Organization

EWSB Bancorp, Inc. (the “Company”), a Maryland corporation and registered bank holding company, was formed to serve as the holding company for East Wisconsin Savings Bank (the “Bank”), upon conversion of Wisconsin Mutual Bancorp, MHC to the stock form of organization, which was completed on September 20, 2024. In connection with the conversion, the Company sold 752,538 shares of common stock, par value $0.01, including 52,678 shares sold to the Bank’s Employee Stock Ownership Plan, at $10.00 per share in its subscription offering for gross proceeds (before deducting offering expenses) of approximately $7.5 million. Shares of the Company’s common stock began trading on September 24, 2024 on the OTCQB Market under the trading symbol “EWSB”.

The Bank provides a variety of financial services to individual and corporate customers. The Bank operates as a full-service financial institution with a primary market area including, but not limited to, east central Wisconsin. The Company is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities.

Principles of Consolidation

The financial statements include the accounts of EWSB Bancorp, Inc. and its subsidiary, East Wisconsin Savings Bank. All significant intercompany balances and transactions have been eliminated.

Useof Estimates in Preparation of Financial Statements

The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The determination of the allowance for credit losses and valuation allowance on deferred tax assets are particularly subject to change in the near term. Actual results may differ from these estimates.

​

​​

Cash and Cash Equivalents

​

For purposes of reporting cash flows in the financial statements, cash and cash equivalents include cash on hand and interest-bearing and non-interest-bearing deposits in other financial institutions.

Time Deposits with Other Financial Institutions

​

Time deposits with other financial institutions are carried at cost with maturities of 90 days or more from the balance sheet date and will mature within four years.

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.

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Transfers of investments into the held to maturity category from the available for sale category are made at fair value at the date of transfer. The net unrealized gains (losses), net of tax, are retained in other comprehensive income, and the carrying value of the held to maturity securities are amortized over the life of the securities in a manner consistent with the amortization of a premium or discount.

​

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recognized through a valuation allowance by charges to earnings. Realized gains and losses on the sale of loans held for sale are determined using the specific-identification method.

Mortgage loans held for sale are generally sold with servicing rights retained. The carrying value of mortgage loans sold is reduced by the amount allocated to the servicing right. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

​

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for credit losses, and any deferred fees or costs on originated loans. Interest on loans is accrued and credited to income based on the unpaid principal balance. Accrued interest receivable totaled $535,196 and $472,368 on December 31, 2024 and 2023, respectively and is reported in accrued interest receivable and other assets on the consolidated balance sheets and is excluded from the estimate of credit losses. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. Accrual of interest income on all loans is discontinued and the respective loan is placed on non-accrual status at the time it is 90 days delinquent. Past-due status is based on the contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Non-accrual loans are individually evaluated for impairment. The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication the borrower may be unable to make payments as they become due.

All interest accrued but not received for loans placed on non-accrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Concentration of Credit Risk

Most of the Company’s business activity is with customers located in Outagamie County and the Fox River Valley located in eastern Wisconsin. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy in the Outagamie County and contiguous geographic areas.

​

Allowance for Credit Losses

​

The allowance for credit losses (“ACL”) is an estimate of expected credit losses on the loans held for investment, held-to-maturity debt securities, unfunded loan commitments and available for sale debt securities portfolios.

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Allowance for Credit Losses on Loans

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. Determination of the ACL is inherently subjective in nature since it requires significant estimates and management judgment and includes a level of imprecision given the difficulty of identifying and assessing the factors impacting loan repayment and estimating the timing and amount of 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.

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 commercial and commercial real estate; residential real estate; and consumer. The SCALE method uses publicly available data from call reports to derive the initial proxy expected lifetime loss rates. The 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:

● changes in the experience, depth and ability of lending management;

● changes in the nature and volume of the loan portfolio and terms of loans;

● changes in the quality of our loan review functions; and

● changes in the value of underlying collateral for collateral dependent loans.

​

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.

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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The Company’s 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.

Allowance for Credit Losses on Unfunded Loan Commitments

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk by a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The ACL related to off-balance sheet credit exposures is estimated at each balance sheet date under the CECL model. The estimate for ACL on unfunded loan commitments includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

Allowance for Credit Losses on Held to Maturity Debt Securities

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

In evaluating securities held to maturity for potential credit loss, 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.

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.

Allowance for Credit Losses on Securities Available for Sale

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 income statement. If neither of these criteria exist, the Company will evaluate the securities individually to determine whether the decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors, such as market interest rate fluctuations.

In evaluating securities available for sale for potential credit loss, 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 credit loss 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.

Servicing Rights

Whan mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gain of sales of mortgage loans. Fair value is based on market prices for comparable

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mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported within mortgage banking income on the income statement. The fair values of servicing rights are subject to significant fluctuations resulting from changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported on the income statement as mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal and are recorded as income when earned. Servicing fees totaled $166,466 and $150,572 for the years ended December 31, 2024 and 2023, respectively. Late fees and ancillary fees related to loan servicing are not material.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

​

Other Real Estate Owned

Assets are initially recorded at market value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of deed in lieu of foreclosure or through similar legal agreement. These assets are subsequently accounted for at lower of cost or market value less estimated costs to sell. The cost of carrying the assets and any decrease in market value occurring after the transfer date are charged to operating expenses as incurred. The Company had no repossessed assets at December 31, 2024 and 2023.

Land Held for Sale

Property owned by the Company for which its intended use has changed from operating purpose to being sold is transferred at the lower of cost or market value less estimated costs to sell. The cost of carrying the property and any decrease in market value after the transfer date are charged to operating expenses as incurred.

Office Properties and Equipment

Land is carried at cost. Office properties and equipment are stated at cost less accumulated depreciation. Buildings and components and furniture, fixtures and equipment are depreciated using the straight-line method over the useful lives of the respective assets. Maintenance and repair costs are charged to expense as incurred.

​

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Federal Home Loan Bank ("FHLB") Stock

​

FHLB stock is carried at cost which approximates fair value. The Company is required to hold the stock as a member of the FHLB and transfer of the stock is substantially restricted. The stock is pledged as collateral for outstanding FHLB advances. FHLB stock is evaluated for impairment on an annual basis.

​

Cash Value of Life Insurance

The Company has purchased life insurance policies on certain key employees. The life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value.

Loan Commitments and Related Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

​

Derivatives

At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge’), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Changes in the fair value of derivatives not designated or that do not qualify for hedge accounting are reported currently in earnings, as non-interest income.

​

Accrued settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Accrued settlements on derivatives not designated or that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

​

The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

​

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or

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losses that were accumulated in the other comprehensive income are amortized into earnings over the same periods in which the hedged transaction will affect earnings.

​

The Company is exposed to losses if a counterparty fails to make its payments under contract in which the Company is in the net receiving position. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements. The contract to which the Company is a party settles monthly.

​

Advertising

Advertising costs are expensed as incurred.

​

Revenue from Contracts with Customers

The core revenue recognition principle requires the Company to recognize revenue to depict the transfer of services or products to customers in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those services or products recognized as performance obligations are satisfied. The guidance includes a five-step model to apply to revenue recognition, consisting of the following: (1) identify the contract with a customer; (2) identify the performance obligation(s) within the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligation(s) within the contract; and (5) recognize revenue when (or as) the performance obligation(s) are/is satisfied.

​

The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Since performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying revenue recognition that significantly affects the determination of the amount and timing of revenue from contracts with customers.

​

The following significant revenue-generating transactions are within the scope of Accounting Standards Codification ("ASC") 606, which are presented in the consolidated statements of income as components of noninterest income:

​

Service charges on deposit accounts – The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, such as ATM use fees, wires, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly service charges and maintenance fees, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs as this corresponds with the Company’s performance obligation.

Interchange fees – Customers use a bank-issued debit card to purchase goods and services, and the Company earns interchange fees on those transactions, typically a percentage of the sale amount of the transaction. The Company is considered an agent with respect to these transactions. Interchange fee payments received are recognized as income daily, concurrently with the transaction processing services provided to the cardholder through the payment networks. There are no contingent debit card interchange fees recorded by the Company that could be subject to a claw-back in future periods.

Net gain (loss) on sales of office properties and equipment and repossessed assets – The Company records a gain or loss from the sale of assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed and transfer of control is completed. When the Company finances the sale to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether the Company expects to collect substantially all of the transaction price. Once these criteria are met, the asset is derecognized and the gain or loss on the sale is recognized. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if the financing does not include market terms.

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​

Income Taxes

Deferred taxes are recognized using the asset/liability method. Deferred tax assets are recognized for deductible temporary differences, operating loss, and tax credit carryforwards; deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the difference between the financial statement amounts of existing assets and liabilities and their respective tax bases. 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. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

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.

​

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other comprehensive income (loss). The Company's accumulated other comprehensive income (loss) is comprised of the unrealized gains and losses on securities available for sale and held to maturity, net of tax, and is shown as a separate component of equity.

​

m

​

Earnings per Share

Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. ESOP shares committed to be released are considered to be outstanding for purposes of the earnings per share computation. ESOP shares that have been legally released, but that relate to employee services rendered during an accounting period (interim or annual) ending before the related debt service payment is made are considered committed to be released. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares have been issued, as well as any adjustments to income that would result from assumed issuance.

Operating Segments

On November 27, 2023, the FASB issued ASU 2023-07, “Segment Reporting (ASC280): Improvements to Reportable Segment Disclosures”, intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Provisions in the amendment include: (1) Requirement that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provide to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”); (2) Requirement that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of it composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss; (3) Requirement that a public entity provide all

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annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280 in interim periods; (4) Clarification that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements; (5) Requirement that a public entity disclose the titles and position of the CODM and explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources; and (6) Requirement that a public entity that has a single reportable segment provide all the disclosures by the amendments in the update and all existing segment disclosures in ASC 280.

​

The amendments in the update are effective for the fiscal years beginning after December 15, 2023, including interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. For public business entities, amendments in the update should be applied retrospectively to all periods presented in the financial statements, and upon transition the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company adopted this standard effective January 1, 2024, and it did not have a material impact on the consolidated financial statements.

​

While the chief operating decision-makers monitor revenue streams of the various products and services, operations are managed, and financial performance is evaluated on a Company-wide basis. Discrete financial information is not available other than on a Company-wide basis. Accordingly, all financial service operations are considered by management to be aggregated in one reportable operating segment.

​

Recent Accounting Pronouncements

​

The following is a summary of a recent accounting pronouncement that could potentially affect the Company:

​

ASU 2023-09 – On December 14, 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The amendments requires that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation, and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments require that all entities disclose on an annual bases the following information about income taxes paid: (1) The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes, and (2) The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amendments also require that all entities disclose the following information: (1) Income (or loss) from continuing operations before income tax expense (or benefit) disaggregate between domestic and foreign, and (2) Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state and foreign. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company will adopt this ASU for the reporting period beginning January 1, 2025, and does not expect the amendment to have a material impact to the financial statements of the Company.

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Note 2: Debt Securities

Our debt securities portfolio consists of an available for sale (“AFS”) and a held to maturity (“HTM”) securities portfolio, both of which represent interest earning debt securities.

Debt Securities AFS

The following table summarizes the amortized cost and estimated fair value of securities available for sale on December 31, 2024 and 2023, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss):

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ Gross Gross ​ ​

​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated

​ ​ Cost ​ Gains ​ (Losses) ​ Fair Value

Securities available for sale: ​ ​ ​ ​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ Gross Gross ​ ​

​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated

​ ​ Cost ​ Gains ​ (Losses) ​ Fair Value

December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Securities available for sale: ​ ​ ​ ​

​

There were no sales of securities available for sale during the years ended December 31, 2024 and 2023.

The following tables show the fair value and gross unrealized losses of available for sale debt securities in an unrealized loss position at December 31, 2024 and 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Less Than 12 Months ​ 12 Months or More ​ Total

​ ​ ​ Estimated ​ ​ Unrealized ​ Estimated ​ Unrealized ​ Estimated ​ Unrealized

​ ​ ​ Fair Value ​ ​ Loss ​ Fair Value ​ Loss ​ Fair Value ​ Loss

Securities available for sale: ​ ​ ​ ​ ​ ​

​

​

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​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Less Than 12 Months ​ 12 Months or More ​ Total

​ ​ Estimated ​ Unrealized ​ Estimated ​ Unrealized ​ Estimated ​ Unrealized

​ ​ Fair Value ​ Loss ​ Fair Value ​ Loss ​ Fair Value ​ Loss

Securities available for sale: ​ ​ ​ ​ ​ ​

​

At December 31, 2024, 51 debt securities designated as AFS are in an unrealized loss position. Based on our analysis of these securities, the decline in value is unrelated to credit loss and is related to changes in market interest rates since purchase, and therefore, changes in value for securities are included in other comprehensive income. In analyzing whether unrealized losses on debt securities are not related to credit losses, management takes into consideration, as applicable, whether the securities are issued by a governmental body or agency, whether the rating agency has downgraded the securities, industry analysts’ reports, the financial condition and performance of the issuer, and the quality of any underlying assets or credit enhancements. Market valuations and credit loss analysis on assets in the AFS securities portfolio are reviewed and monitored on an annual basis. None of the investments in our AFS securities portfolio were past due as of December 31, 2024. Management has the ability and intent to hold the securities for the foreseeable future and no declines are deemed to be related to credit losses; therefore, no provision for expected credit losses or allowance is carried for the AFS portfolio.

The following is a summary of amortized cost and estimated fair value of debt securities by contractual maturity as of December 31, 2024. Contractual maturities will differ from expected maturities for mortgage-backed securities because borrowers may have the right to call or prepay obligations without penalties.

​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ Estimated

Available-for-sale ​ Amortized Cost ​ Fair Value

​ ​ ​ ​ ​ ​ ​

​

Debt Securities HTM

The following table summarizes the amortized cost and estimated fair value of securities held to maturity at December 31, 2024 and 2023, and the corresponding amounts of gross unrealized gains and losses.

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ Gross Gross ​ ​

​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated

December 31, 2024 ​ Cost ​ Gains ​ Losses ​ Fair Value

Securities held to maturity: ​ ​ ​ ​

​

​

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​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ Gross Gross ​ ​

​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated

December 31, 2023 ​ Cost ​ Gains ​ Losses ​ Fair Value

Securities held to maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

Investment securities classified as HTM are recorded at amortized cost subject to measurement of credit losses on financial instruments, also known as Current Expected Credit Losses (“CECL”). This methodology consists of measuring the value of investments on a collective basis when similar risk characteristics exist. Our investment policy requires securities designated as HTM to carry an explicit or implicit guarantee of the United States Government (i.e., issued by the U.S. Treasury and federal agencies of the United States). Market valuations and credit loss analysis on assets in the HTM securities portfolio are reviewed and monitored on an annual basis. None of the investments in our HTM securities portfolio were past due as of December 31, 2024. An allowance for credit losses (“ACL”) is not calculated or recorded based on the implied guarantee of these securities.

The following table summarizes the remaining contractual principal maturities of investment securities classified as HTM as of December 31, 2024. For United States agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain United States agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity.

​

​ ​ ​ ​ ​ ​ ​

​ ​ Amortized ​ Estimated

Held-to-maturity ​ Cost ​ Fair Value

​

​

​

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Note 3: Loans and Allowance for Credit Losses

A summary of loans by major category as of December 31, 2024 and 2023 is a follows:

​

​ ​ ​ ​ ​ ​ ​

Real estate: ​ ​ ​ ​ ​ ​

Consumer: ​ ​ ​

​ ​ ​ ​ ​ ​

​

Changes in the allowance for the year ended December 31, 2024, are as follows:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the year ended December 31, 2024

​ ​ Beginning ​ Provision for ​ ​ ​ ​ ​ ​ ​ Ending

​ ​ Balance ​ Credit Loss ​ Charge-offs ​ ​ Recoveries ​ Balance

Real estate: ​ ​ ​ ​ ​

Consumer: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

​

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Changes in the allowance for the year ended December 31, 2023, are as follows:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the year ended December 31, 2023

​ ​ Beginning ​ Impact of ​ Provision for ​ ​ ​ ​ ​ ​ ​ Ending

Real estate: ​ ​ ​ ​ ​ ​ ​

Consumer: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

The ACL on loans excludes $81,544 of allowance for unfunded commitments as of December 31, 2024 and is recorded within accrued interest payable and other liabilities on the Consolidated Balance Sheets. A provision for credit loss on unfunded loan commitments of $81,544 was made for the year ended December 31, 2024. There was no ACL on unfunded commitments as of December 31, 2023.

As of December 31, 2024, there were two collateral dependent loans totaling $12,704 in the other consumer loan segment. These loans were secured by automobiles and do not have a specific allocation to the ACL as of December 31, 2024. There were no other collateral dependent loans as of December 31, 2024.

As of December 31, 2023, there was one collateral dependent loan totaling $9,889 in the marine and recreational loan segment. This loan was collateralized by a licensed recreational vehicle and had $4,889 in the ACL as of December 31, 2023. There were no other collateral dependent loans as of December 31, 2023.

The Company regularly evaluates various attributes of loans to determine the appropriateness of the allowance for credit losses. The credit quality indicators monitored differ depending on the class of loan.

Multi-family, commercial real estate, and commercial installment loans are generally evaluated using the following internally prepared ratings:

One to four family residential, home equity, equity line of credit, construction, marine and recreational, and other consumer loans are generally evaluated based on whether the loan is performing according to the contractual terms of the loan.

​

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The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category and year of origination at December 31, 2024 and 2023.

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Total Loans by Origination Year

At December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​

Real estate ​ ​ ​ ​ ​ ​ ​ ​

One to four family residential ​ ​ ​ ​ ​ ​ ​ ​

Non performing ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Home equity ​ ​ ​ ​ ​ ​ ​ ​

Non performing ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Equity line of credit ​ ​ ​ ​ ​ ​ ​ ​

Performing ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 5,823,673 ​ $ 5,823,673

Non performing ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Construction ​ ​ ​ ​ ​ ​ ​ ​

Non performing ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Multi-family ​ ​ ​ ​ ​ ​ ​ ​

Special mention ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Substandard ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Commercial ​ ​ ​ ​ ​ ​ ​ ​

Special mention ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Substandard ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Doubtful ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ —

Commercial installment ​ ​ ​ ​ ​ ​ ​ ​