Company: NSTS
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001437749-25-026943
Chunk: 9

Company: NSTS Bancorp, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 8
Chunk 9
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 Liabilities on the Consolidated Balance Sheets. The net provision for credit losses for the three and six months ended  June 30, 2025 in the table above excludes a provision for credit losses of $13,000 and $21,000, respectively, related to off balance sheet exposures. The net provision for credit losses for the three and six months ended  June 30, 2024 in the table above excludes a provision for credit losses of $33,000 and $31,000, respectively, related to off balance sheet exposures.

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   As of  June 30, 2025, there were two collateral dependent loan totaling $287,000 in the one to four-family residential loan segment. These loans are collateralized by residential real estate and have no ACL as of  June 30, 2025. There were no other collateral dependent loans as of  June 30, 2025. There were no collateral dependent loans as of  December 31, 2024. 
    
   The Bank evaluates collectability based on payment activity and other factors. The Bank uses a graded loan rating system as a means of identifying potential problem loans, as follows:
    
   Pass
   Loans in these categories are performing as expected with low to average risk.
    
   Special Mention
   Loans in this category are internally designated by management as “watch loans.” These loans are starting to show signs of potential weakness and are closely monitored by management.
    
   Substandard
   Loans in this category are internally designated by management as “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the paying capacity of the obligors or the current net worth of the collateral pledged. Substandard loans present a distinct possibility that the Bank will sustain losses if such weaknesses are not corrected.
    
   Doubtful
   Loans classified as doubtful have all the weaknesses inherent in those designated as “substandard” with the added characteristic that the weaknesses  may make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.
    
   On an annual basis, or more often if needed, the Bank formally reviews the ratings on commercial loans. In addition, the Bank performs an independent review of a significant portion of the commercial loan portfolio. Management uses the results of the independent review as part of its annual review process.

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   The following tables present the credit risk profile of the Company's loan