Company: NSTS
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001437749-25-034806
Chunk: 92

Company: NSTS Bancorp, Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Item 1
Chunk 92
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 2025 compared to 49 for the quarter ended September 30, 2024. The increase in data processing costs was driven by system upgrades. Advertising expenses were higher during the previous year as the Bank was building the brand awareness surrounding Oak Leaf Community Mortgage, powered by North Shore Trust and Savings.

Noninterest expenses increased $609,000 for the nine months ended September 30, 2025, compared to the same period ended September 30, 2024. The increase in noninterest expenses was primarily driven by increases in salaries and employee benefits, data processing related expenses, loan expenses and deposit expenses.  The average number of employees increased to 52 for the nine months ended September 30, 2025 compared to 49 for the nine months ended September 30, 2024. The increase in headcount is based on additional loan officers brought in during 2024 and 2025. The increase in data processing costs was driven by system upgrades. Loan expenses increased as a result of an increase in loan originations during the period as well as a provision for recourse reserve related to the loans sold into the secondary market due to an increase in the volume of loans sold over the past 4 quarters. Deposit expenses increased as a result of ATM losses totaling $40,000 due to an ATM robbery.

Provision for Income Tax Expense. There was no provision for income tax expense recorded during the three and nine months ended September 30, 2025 and 2024. Management estimates a taxable net loss for the year ended December 31, 2025 due to non-taxable income, such as income on tax exempt municipal securities and BOLI.

During the quarter ended September 30, 2025, management assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing net operating losses. A significant piece of objective negative evidence evaluated is the cumulative taxable loss incurred over the three-year period ended September 30, 2025. 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 September 30, 2025, management maintained the valuation allowance against the federal net operating losses and net deferred tax assets to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted.

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COMPARISON OF FINANCIAL CONDITION AT September