Company: NSTS
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001437749-25-009831
Chunk: 495

Company: NSTS Bancorp, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1B
Chunk 495
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 and multi-family residential loans.
    Commercial real estate and multi-family residential lending involve a greater degree of risk than one- to four-family residential lending. These risks include larger loans to individual borrowers and loan payments that are dependent upon the successful operation of the project or the borrower’s business. These risks can be affected by supply and demand conditions of rental housing units, office and retail space and other commercial space in the project’s market area. We attempt to minimize these risks for loans we originate by soliciting loans from businesses with existing operating performance. We also use conservative debt coverage ratios in our underwriting, and periodically monitor the operation of the business or project and the physical condition of the property.
    
   Construction lending is generally originated with a loan-to-value ratio, based on the estimated cost to construct, less than or equal to 80%. Additionally, the construction loan terms generally include interest only payments for the first 18 months. The overall costs of construction, building material supply chain and health of the economy, including housing prices, will have an effect on the credit quality in this segment. 

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    Consumer Loans Loans in this segment are generally to individuals and are supported by non-real estate collateral, such as deposit accounts and personal property. Unsecured loans are also included in this segment. Repayment is dependent on the credit quality of the individual borrower or borrowers.
    
   The qualitative factors applied to 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 lending policies and procedures, including changes in underwriting standards and collections, charge-offs and recovery practices; 
  ●   changes in international, national, regional and local conditions; 
 ● changes in the experience, depth and ability of lending management;
 ● changes in the volume and severity of past due loans and other similar loan conditions;
 ● changes in the nature and volume of the loan portfolio and terms of loans;
 ● the existence and effect of any concentrations of credit and changes in the levels of such concentrations;
 ● effects of other external factors, such as competition, legal or regulatory factors, on the level of estimated credit losses;
 ● changes in the quality of our loan review functions; and
 ● changes in the value of underlying collateral for collateral dependent loans.

   The impact of