Company: NSTS
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001437749-25-009831
Chunk: 1158

Company: NSTS Bancorp, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 9C
Chunk 1158
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 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 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.
    
   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, totaling $560,000 and $392,000 as of  December 31, 2024 and 2023, respectively, is excluded from the amortized cost basis of financing receivables for the purpose of