Company: NSTS
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001437749-25-009831
Chunk: 361

Company: NSTS Bancorp, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 16
Chunk 361
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 sale impairment   101   101 
 Unrealized loss on securities available-for-sale   3,431   3,279 
 Federal net operating loss carryforwards   1,405   1,042 
 Other   7   15 
 State net operating loss carryforwards   515   532 
 Gross deferred tax assets   6,620   6,045 
 Valuation allowance   (3,050)  (2,661)
 Net deferred tax assets   3,570   3,384 
 Deferred tax liabilities         
 FHLB stock dividends   (101)  (101)
 Accumulated depreciation   (38)  (4)
 Deferred tax liabilities   (139)  (105)
 Net deferred tax asset  $3,431  $3,279 

   The Bank does not expect the total amount of unrecognized tax benefits to change significantly in the next twelve months. Gross Federal net operating losses (NOL) as of  December 31, 2024 and 2023 are $6.7 million, and $5.0 million, respectively. A portion of the Federal NOL, related to charitable contributions, totaling $1.3 million, as of  December 31, 2024, will expire in 2027. The remainder of the Federal NOL does not expire. During 2024, management assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated is the cumulative taxable loss incurred over the four-year period ended  December 31, 2024. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.
    
   On the basis of this evaluation, as of  December 31, 2024, a valuation allowance of $2.5 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. 
    
   NOL carryforwards for state income tax purposes were approximately $5.4 million and $5.6 million at  December 31, 2024 and 2023, respectively, and will begin expiring in 2025. Due to the uncertainty that the Bank will be able to generate future state taxable income sufficient to utilize the net operating loss carryforwards, a full valuation allowance