Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Qmay contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, but rather are statements based on management's current expectations regarding its business strategies and their intended results and IF Bancorp, Inc.'s ("the Company") future performance.

Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions.

Management's ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on our actual results include, but are not limited to, general economic conditions, changes in the interest rate environment, the imposition of tariffs or other domestic or international governmental policies and retaliatory responses, legislative or regulatory changes that may adversely affect our business, the effects of the federal government shutdown, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets and changes in the quality or composition of the Association's loan or investment portfolios.

Additional factors that may affect our results are discussed under "Item 1A.-Risk Factors", in the Company's Annual Report on Form 10-Kfor the year ended June 30, 2025, and the Company's other filings with the Securities and Exchange Commission ("SEC"). These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. IF Bancorp, Inc. assumes no obligation to update any forward-looking statement, except as may be required by law.

Overview

On July 7, 2011, we completed our initial public offering of common stock in connection with the Association's mutual-to-stockconversion, selling 4,496,500 shares of common stock at $10.00 per share, including 384,900 shares sold to the Association's employee stock ownership plan, and raising approximately $45.0 million of gross proceeds. We also established a charitable foundation, Iroquois Federal Foundation, to which we contributed 314,755 shares of our common stock. As of September 30, 2025, the Company had repurchased 1,674,479 shares of common stock under stock repurchase plans.

The Company is a savings and loan holding company and is subject to regulation by the Board of Governors of the Federal Reserve System. The Company's business activities are limited to oversight of its investment in the Association.

The Association is primarily engaged in providing a full range of banking and mortgage services to individual and corporate customers within a 100-mileradius of its locations in Watseka, Danville, Clifton, Hoopeston, Savoy, Champaign, and Bourbonnais, Illinois and Osage Beach, Missouri. The principal activity of the Association's wholly owned subsidiary, L.C.I. Service Corporation, is the sale of property and casualty insurance. The Association is subject to regulation by the Office of the Controller of the Currency and the Federal Deposit Insurance Corporation.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans, investment securities and other interest-earning assets, and the interest paid on our interest-bearing liabilities, consisting primarily of savings and transaction accounts, certificates of deposit, and Federal Home Loan Bank of Chicago ("FHLB Chicago") advances. Our results of operations also are affected by our provision for credit losses, noninterest income and noninterest expense. Noninterest income consists primarily of customer service fees, brokerage commission income, insurance commission income, net realized gains on loan sales, mortgage banking income, and income on bank-owned life insurance. Noninterest expense consists primarily of compensation and benefits, occupancy and equipment, data processing, professional fees, marketing, office supplies, federal deposit insurance premiums, and foreclosed assets. Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Our net interest rate spread (the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities) was 2.64% and 1.93% for the three months ended September 30, 2025 and 2024, respectively. Net interest income increased to $6.2 million for the three months ended September 30, 2025 from $4.8 million for the three months ended September 30, 2024.

Our emphasis on conservative loan underwriting has historically resulted in relatively low levels of non-performingassets. Our non-performingloans totaled $1.0 million, or 0.2% of total loans at September 30, 2025 and $46,000, or less than 0.1% of total loans at June 30, 2025. Our non-performingassets totaled $1.1 million, or 0.1% of total assets at September 30, 2025, and $211,000, or less than 0.1% of total assets at June 30, 2025.

At September 30, 2025, the Association was categorized as "well capitalized" under federal regulations.

Our net income for the three months ended September 30, 2025 was $1.4 million, compared to a net income of $633,000 for the three months ended September 30, 2024. The increase in net income was due to an increase in net interest income and a decrease in provision for credit losses, partially offset by a decrease in noninterest income and an increase in noninterest expense.

Management's discussion and analysis of the financial condition and results of operations at and for three months ended September 30, 2025 and 2024 is intended to assist in understanding the financial condition and results of operations of the Association. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Critical Accounting Policies

We define critical accounting policies as those policies that require management to exercise significant judgment or discretion or make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income. We consider the following to be our critical accounting policies.

Allowance for Credit Losses. The Company believes the allowance for credit losses for loans is the critical accounting policy that requires the most significant judgments and assumptions used in the preparation of the consolidated financial statements. The allowance for credit losses for loans represents the best estimate of losses inherent in the existing loan portfolio. An estimate of potential losses inherent in the loan portfolio are determined and an allowance for those losses is established by factors considered by the Company during the evaluation of the overall adequacy of the allowance which include historical net loan losses, the level and composition of nonaccrual, past due and loan modifications with borrowers experiencing financial difficulty, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.

The Company utilizes a current expected credit loss ("CECL") methodology which relies on segmenting the loan portfolio into pools with similar risks, tracking the performance of the pools over time, and using the data to determine pool loss experience. Based on our estimate of the level of allowance for credit losses required, we record a provision for credit losses as a charge to earnings to maintain the allowance for credit losses at an appropriate level. The allowance for credit losses on most loans is measured on a collective (pool) basis for loans with similar risk characteristics. The Company estimates the appropriate level of allowance for credit losses for certain collateral-dependent loans by evaluating them individually. The Company also uses the CECL model to calculate the allowance for credit losses on off-balancesheet credit exposures, such as undrawn amounts on lines of credit. While the allowance for credit losses on loans is reported as a contra-asset asset for loans, the allowance for credit losses on off-balancesheet credit exposures is reported as a liability.

The allowance for credit losses is evaluated on a regular basis by management and reflects consideration of all significant factors that affect the collectability of the loan portfolio. This evaluation is inherently subjective as it requires estimates that are subject to significant revision as more information becomes available. Actual loan losses may be significantly more than the allowance for credit losses we have established which could have a material negative effect on our financial results.

Income Tax Accounting.The provision for income taxes is based upon income in our condensed consolidated financial statements, rather than amounts reported on our income tax return. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on our deferred tax assets and liabilities is recognized as income or expense in the period that includes the enactment date. Under U.S. generally accepted accounting principles, a valuation allowance is required to be recognized if it is more likely than not that a deferred tax asset will not be realized. The determination as to whether we will be able to realize the deferred tax assets is highly subjective and dependent upon judgment concerning our evaluation of both positive and negative evidence, our forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. Positive evidence includes the existence of taxes paid in available carryback years as well as the probability that taxable income will be generated in future periods, while negative evidence includes any cumulative losses in the current year and prior two years and general business and economic trends. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. Any required valuation allowance would result in additional income tax expense in the period and could have a significant impact on our future earnings. Positions taken in our tax returns may be subject to challenge by the taxing authorities upon examination. The benefit of an uncertain tax position is initially recognized in the financial statements only when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. Differences between our position and the position of tax authorities could result in a reduction of a tax benefit or an increase to a tax liability, which could adversely affect our future income tax expense.

The One Big Beautiful Bill Act ("OBBBA")was enacted on July 4, 2025. Among other things, the new law makes permanent certain expiring business tax provisions of the Tax Cuts and Jobs Act. These include provisions which allow businesses to immediately expense, for tax purposes, the cost of new investments in certain qualified depreciable assets and the cost of qualified domestic research and development. The OBBBA also imposes a floor on tax deductions taken on charitable contributions. Further, the OBBBA significantly changes U.S. tax law related to foreign operations and certain tax credits. The full impact of the bill is being analyzed by the Company and could have an impact on income tax expense in future periods.

There were no material changes to the critical accounting policies disclosed in the Company's Annual Report on Form 10-Kfor the fiscal year ended June 30, 2025.

Comparison of Financial Condition at September 30 and June 30, 2025

Total assets decreased $25.3 million, or 2.9%, to $862.3 million at September 30, 2025 from $887.7 million at June 30, 2025. The decrease was primarily due to a $14.3 million decrease in net loans and a $12.1 million decrease in cash and cash equivalents, partially offset by a $2.1 million increase in investment securities. 

Net loans receivable decreased by $14.3 million, or 2.3%, to $619.3 million at September 30, 2025, from $633.6 million at June 30, 2025. The decrease in net loans receivable during this period was due primarily to a $7.8 million, or 6.2% decrease in multi-family loans, a $5.5 million, or 2.7%, decrease in commercial real estate loans, a $2.9 million, or 12.7%, decrease in construction loans, a $718,000, or 0.8%, decrease in commercial business loans, and a $128,000, or 1.2%, decrease in home equity lines of credit, partially offset by a $2.6 million, or 1.5%, increase in one-to four-family mortgage loans, and a $9,000, or 0.2%, increase in consumer loans.

Investment securities, consisting entirely of available-for-salesecurities, increased $2.1 million, or 1.1%, to $189.8 million at September 30, 2025 from $187.8 million at June 30, 2025. We had no securities held to maturity at September 30, 2025 or June 30, 2025.

Between June 30, 2025, and September 30, 2025, accrued interest receivable increased $148,000 to $3.7 million, while deferred income taxes decreased $752,000 to $7.9 million, Federal Home Loan Bank ("FHLB") stock decreased $330,000 to $4.8 million, premises and equipment decreased $116,000 to $10.1 million, and foreclosed assets held for sale decreased $125,000 to $40,000. The increase in accrued interest receivable was the result of an increase in average yield on interest earning assets while the decrease in deferred income taxes was mostly due to a decrease in unrealized losses on available-for-salesecurities. The decrease in FHLB stock was due to a repurchase of excess stock by FHLB Chicago. The decrease in premises and equipment was the result of ordinary depreciation and the decrease in foreclosed assets held for sale was the result of the sale of property.

At September 30, 2025, our investment in bank-owned life insurance was $15.5 million, an increase of $118,000 from $15.3 million at June 30, 2025. We invest in bank-owned life insurance to provide us with a funding source for our benefit plan obligations. Bank-owned life insurance also generally provides us with noninterest income that is non-taxable.Federal regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for credit losses, which totaled $24.9 million at September 30, 2025.

Deposits decreased $41.0 million, or 5.7%, to $680.3 million at September 30, 2025 from $721.3 million at June 30, 2025. Noninterest bearing demand accounts decreased $69.2 million, or 66.3%, to $35.2 million, while certificates of deposit, excluding brokered certificates of deposit, increased $6.9 million, or 2.4%, to $290.3 million, savings, NOW, and money market accounts combined increased $22.9 million, or 7.5%, to $326.6 million, and brokered certificates of deposit decreased $1.5 million, or 5.0%, to $28.2 million. The large decrease in noninterest bearing demand accounts was mostly due to approximately $59.3 million in deposits from a public entity that collects real estate taxes that were withdrawn during the three months ended September 30, 2025, when tax monies were distributed. Repurchase agreements decreased $665,000, or 3.5%, to $18.1 million at September 30, 2025 from $18.8 million at June 30, 2025. Borrowings consisted of advances from the Federal Home Loan Bank of Chicago, which increased $15.0 million to $69.1 million at September 30, 2025 from $54.1 million at June 30, 2025. 

Accrued interest payable decreased $49,000, or 2.6%, to $1.8 million at September 30, 2025 from $1.9 million at June 30, 2025, while advances from borrowers for taxes and insurance decreased $291,000, or 29.9%, to $681,000 at September 30, 2025 from $972,000 at June 30, 2025, allowance for credit losses on off-balancesheet credit exposures increased $23,000 to $98,000 at September 30, 2025 from $75,000 at June 30, 2025, and other liabilities decreased $1.0 million, or 15.8%, to $5.5 million at September 30, 2025 from $6.6 million at June 30, 2025. The decrease in accrued interest payable was mostly due to a decrease in both the yield and average balance of interest-bearing liabilities. The decrease in advances from borrowers for taxes and insurance was attributable to the timing of the payment of real estate taxes and insurance, the increase in the allowance for credit losses on off-balancesheet credit exposures was due to increases in loans with unfunded balances without the Bank's ability to cancel on demand, and the increase in other liabilities was mostly due to a fluctuation in items in process.

Total equity increased $2.7 million, or 3.3%, to $84.5 million at September 30, 2025 from $81.8 million at June 30, 2025. Equity increased primarily due to an increase of $1.8 million in accumulated other comprehensive income (loss), net of tax, net income of $1.4 million and ESOP and stock equity plan activity of $167,000, partially offset by the accrual of approximately $670,000 in dividends to our stockholders. The increase in accumulated other comprehensive income (loss) was primarily due to decrease in unrealized depreciation on available-for-salesecurities, net of tax.

Comparison of Operating Results for the Three Months Ended September 30, 2025 and 2024

General.Net income increased $759,000 to $1.4 million for the three months ended September 30, 2025 from $633,000 for the three months ended September 30, 2024. The increase was primarily due to an increase in net interest income and a credit to the provision for credit losses, partially offset by a decrease in noninterest income, and an increase in noninterest expenses.

Net Interest Income. Net interest income increased by $1.4 million, or 28.3%, to $6.2 million for the three months ended September 30, 2025 from $4.8 million for the three months ended September 30, 2024. The increase was due to an increase of $179,000 in interest income and a decrease of $1.2 million in interest expense. Our net interest margin increased by 70 basis points to 2.97% for the three months ended September 30, 2025 compared to 2.27% for the three months ended September 30, 2024, while our interest rate spread increased by 71 basis points to 2.64% for the three months ended September 30, 2025 compared to 1.93% for the three months ended September 30, 2024. A $28.7 million, or 3.8%, decrease in the average balance of interest-bearing liabilities was partially offset by a $16.5 million, or 2.0%, decrease in the average balance of interest-earning assets.

Interest and Dividend Income. Interest income increased by $179,000, or 1.6%, to $11.1 million for the three months ended September 30, 2025, from $10.9 million for the three months ended September 30, 2024. The increase in interest income was primarily due to a $10,000 increase in interest income on loans, a $81,000 increase in interest income on securities and an $88,000 increase in other interest income. The increase in interest income on loans resulted from a 19 basis point, or 3.2%, increase in the average yield on loans to 6.02% for the three months ended September 30, 2025, from 5.83% for the three months ended September 30, 2024, mostly offset by a $19.7 million, or 3.0%, decrease in the average balance of loans to $630.1 million for the three months ended September 30, 2025, from $649.8 million for the three months ended September 30, 2024. Interest on securities increased $81,000, or 6.4%, as a result of a 17 basis point, or 6.4%, increase in the average yield on securities to 2.86% for the three months ended September 30, 2025 from 2.69% for the three months ended September 30, 2024, while the average balance of securities was $189.8 million for both the three months ended September 30, 2025 and 2024.

Interest Expense. Interest expense decreased $1.2 million, or 19.4%, to $4.9 million for the three months ended September 30, 2025, from $6.1 million for the three months ended September 30, 2024. The decrease was due to both a decrease in the average cost of interest-bearing liabilities and by a decrease in the average balance of interest-bearing liabilities.

Interest expense on interest-bearing deposits decreased by $655,000, or 13.8%, to $4.1 million for the three months ended September 30, 2025 from $4.8 million for the three months ended September 30, 2024. This decrease was due to a 42 basis point, or 14.1%, decrease in the average cost of interest bearing deposits to 2.56% for the three months ended September 2025, from 2.98% for the three months ended September 30, 2024, partially offset by a $302,000, or 0.1% increase in the average balance of interest-bearing deposits to $639.3 million for the three months ended September 30, 2025 from $639.0 million for the three months ended September 30, 2024.

Interest expense on borrowings, including FHLB advances, repurchase agreements and other borrowings, decreased $528,000, or 39.4%, to $811,000 for the three months ended September 30, 2025, from $1.3 million for the three months ended September 30, 2024. This decrease was due to a decrease in the average balance of borrowings to $90.7 million for the three months ended September 30, 2025 from $119.7 million for the three months ended September 30, 2024, and an 89 basis point decrease in the average cost of such borrowings to 3.58% for the three months ended September 30, 2025 from 4.47% for the three months ended September 30, 2024.

Provision (Credit) for Credit Losses. We establish provisions for credit losses, which are charged to operations in order to maintain the allowance for credit losses at a level we consider necessary to absorb potential credit losses inherent in our loan portfolio. We recorded a credit for credit losses of $42,000 for the three months ended September 30, 2025, which includes a credit for credit losses on loans of $65,000 and a provision for credit losses on off-balancesheet credit exposures of $23,000, compared to a provision for credit losses of $382,000 for the three months ended September 30, 2024, which includes a provision for credit losses on loans of $377,000 and a provision for credit losses on off-balance

sheet credit exposures of $5,000. The allowance for credit losses on loans was $6.5 million, or 1.04% of total loans, at September 30, 2025, compared to $7.5 million, or 1.14% of total loans at September 30, 2024, and $6.6 million, or 1.04% of total loans, at June 30, 2025. During the three months ended September 30, 2025, a net loss of $71,000 was recorded, while during the three months ended September 30, 2024, a net loss of $404,000 was recorded.

The following table sets forth information regarding the allowance for credit losses and nonperforming assets at the dates indicated:

Noninterest Income. Noninterest income decreased $266,000, or 18.9%, to $1.1 million for the three months ended September 30, 2025 from $1.4 million for the three months ended September 30, 2024. The decrease was primarily due to an increase in net realized loss on sale of available-for-salesecurities and a decrease in other noninterest income, partially offset by an increase in brokerage commissions, an increase in mortgage banking income (loss), net, and an increase in gain on sale of loans. For the three months ended September 30, 2025, net realized losses on sale of available-for-salesecurities increased by $43,000 to a loss of $114,000, and other noninterest income decreased by $417,000 to $344,000, while brokerage commissions increased by $20,000 to $198,000, mortgage banking income (loss), net increased $128,000 to $86,000 and gain (loss) on sale of loans increased by $19,000 to $116,000 from the three months ended September 30, 2024. The increase in net realized loss on sale of available-for-salesecurities was due to more securities sold at a net loss in the three months ended September 30, 2025, while the decrease in other income was due to the receipt of an insurance settlement filed as a result of HELOC check fraud in the three months ended September 30 2024. The increase in mortgage banking income (loss), net and the gain on sale of loans was a result of an increase in the valuation of mortgage servicing rights and an increase in loan servicing fees in the three months ended September 30, 2025, while the increase in brokerage commissions was due to the result of an increase in mutual fund commissions and management fees.

Noninterest Expense.Noninterest expense increased $467,000, or 9.3%, to $5.5 million for three months ended September 30, 2025 from $5.0 million for the three months ended September 30, 2024. Compensation and benefits increased $312,000, or 10.2%, equipment expense increased $24,000, or 4.1%, and loss on sale of foreclosed assets, net increased $97,000. These increases were partially offset by a $43,000, or 32.6%, decrease in federal deposit insurance. Compensation and benefits increased due to normal salary increases, annual incentive plan increases and increased medical costs, equipment expense increased due to an increase in the cost of core processing, and the loss on sale of foreclosed assets, net increased since we sold property at a loss in the three months ended September 30, 2025. Our federal deposit insurance premium decreased due to a decrease in the quarterly assessment multiplier as a result of improvement in the sum of financial ratio contributions to assessment rate.

Income Tax Expense. We recorded a provision for income tax of $512,000 for the three months ended September 30, 2025, compared to a provision for income tax of $218,000 for the three months ended September 30, 2024, reflecting effective tax rates of 26.9% and 25.6%, respectively.

Asset Quality

At September 30, 2025, our non-accrualloans totaled $1.0 million, which consisted of one-to four-family loan in the amount of $254,000, two commercial real estate loans totaling $626,000, three commercial loans totaling $122,000, and one consumer loan for $15,000.

At September 30, 2025 we had no loans that were delinquent 90 days or greater and still accruing interest.

At September 30, 2025, loans classified as substandard equaled $6.0 million. Loans classified as substandard consisted of $424,000 in one-to four-family loans, $223,000 in multi-family loans, $2.0 million in commercial real estate loans, $3.4 million in commercial business loans and $15,000 in consumer loans. No loans were classified as doubtful or loss at September 30, 2025.

At September 30, 2025, loans designated as watch equaled $584,000 and consisted of $348,000 in one-to four-family loans, $170,000 in commercial real estate loans, and $66,000 in commercial business loans.

Loan Modifications with Borrowers Experiencing Financial Difficulty.The Company made no loan modifications for borrowers with financial difficulties in the three months ended September 30, 2025 or 2024.

Foreclosed Assets.At September 30 2025, we had $40,000 in foreclosed assets and at June 30, 2025, we had $165,000 in foreclosed assets. Foreclosed assets at both September 30 2025 and June 30, 2025 consisted of one-to four-family residential real estate.

Allowance for Credit Loss Activity

The Company regularly reviews its allowance for credit losses and adjusts its balance based on management's analysis of the loan portfolio, the amount of non-performingand classified loans, as well as general economic conditions. Although the Company maintains its allowance for credit losses at a level that it considers sufficient to provide for losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the allowance for credit losses is subject to review by regulatory agencies, which can order the establishment of additional loss provisions. The following table summarizes changes in the allowance for credit losses over the three-month periods ended September 30, 2025 and 2024:

The allowance for credit losses has been calculated based upon an evaluation of pertinent factors underlying the various types and quality of the Company's loans. Management considers such factors as the repayment status of a loan, the estimated net fair value of the underlying collateral, the borrower's intent and ability to repay the loan, local economic conditions, and the Company's historical loss ratios. We maintain the allowance for credit losses through the provisions for credit losses that we charge to income. We charge losses on loans against the allowance for credit losses when we believe the collection of loan principal is unlikely. The allowance for credit losses decreased $136,000, or 2.1%, to $6.5 million at September 30, 2025 from $6.6 million at June 30, 2025. This slight decrease in the allowance for credit losses on loans was made to bring the allowance for credit losses on loans to a level that represents the Company's best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the loans.

Within each pool, risk elements are evaluated that have specific impacts to the borrowers within the pool. These, along with the general risks and events, and the specific lending policies and procedures by loan type, are analyzed to estimate the qualitative factors used to adjust the historical loss rates. Factors considered by the Company during the evaluation of the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and troubled debt restructurings, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. Management reviews economic factors including the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, increased operating costs for businesses, and increased levels of unemployment and bankruptcy impacting consumer's ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the reserve, and management has included a qualitative factor within the ACL. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.

While management believes that our asset quality remains strong, it recognizes that, due to the continued growth in the loan portfolio and the potential changes in market conditions, our level of nonperforming assets and resulting charge-offs may fluctuate. Higher levels of net charge-offs requiring additional provisions for credit losses could result. Although management uses the best information available, the level of the allowance for credit losses remains an estimate that is subject to significant judgment and short-term change.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan sales and repayments, advances from the Federal Home Loan Bank of Chicago, and maturities of securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. Our Asset/Liability Management Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists to meet the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. For the three months ended September 30, 2025 and the year ended June 30, 2025, our liquidity ratio averaged 25.0% and 24.1% of our total assets, respectively. We believe that we had enough sources of liquidity to satisfy our short- and long-term liquidity needs as of September 30, 2025.

We regularly monitor and adjust our investments in liquid assets based upon our assessment of: (i) expected loan demand; (ii) expected deposit flows; (iii) yields available on interest-earning deposits and securities; and (iv) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits and short- and medium-term securities.

Our most liquid assets are cash and cash equivalents. The levels of these assets are affected by our operating, financing, lending and investing activities during any given period. At September 30, 2025, cash and cash equivalents totaled $8.0 million. Interest-earning time deposits which can offer additional sources of liquidity, totaled $250,000 at September 30, 2025.

Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Condensed Consolidated Statement of Cash Flows included in our financial statements. Net cash provided by (used in) operating activities was $(539,000) and $2.2 million for the three months ended September 30, 2025 and 2024, respectively. Net cash provided by (used in) investing activities consisted primarily of proceeds from the sales, maturities, pay downs of available-for-salesecurities, partially offset by disbursements for loan originations and the purchase of securities. Net cash provided by (used in) investing activities was $15.4 million and $(4.0) million for the three months ended September 30, 2025 and 2024, respectively. Net cash provided by (used in) financing activities consisted primarily of the activity in deposit accounts, FHLB advances and other borrowings. The net cash provided by (used in) financing activities was $(27.0) million and $90,000 for the three months ended September 30, 2025 and 2024, respectively.

The Company must also maintain adequate levels of liquidity to ensure the availability of funds to satisfy loan commitments. The Company anticipates that it will have sufficient funds available to meet its current commitments principally through the use of current liquid assets and through its borrowing capacity discussed above. The following table summarizes these commitments at September 30, 2025 and June 30, 2025.

At September 30, 2025, certificates of deposit due within one year of September 30, 2025 totaled $284.4 million, or 41.8% of total deposits. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before September 30, 2026. It is our intention as we continue to grow our commercial real estate portfolio, to emphasize lower cost deposit relationships with these commercial loan customers and thereby replace the higher cost certificates with lower cost deposits. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements, which provide an additional source of funds, exist with FHLB Chicago, the Federal Reserve Discount Window, and CIBC Bank USA. At September 30, 2025, our borrowings consisted of $69.1 million in FHLB advances. At September 30, 2025, we had the ability to borrow up to an additional $52.1 million from FHLB Chicago, we had $14.0 million available from CIBC Bank, and also had the ability to borrow $33.8 million from the Federal Reserve Bank of Chicago based on current collateral pledged.

The Association is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by regulators that if undertaken, could have a direct material effect on the Association's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines involving quantitative measures of the Association's assets, liabilities, and certain off-balance-sheetitems as calculated under regulatory accounting practices. The Association's capital amounts, and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.

The Basel III regulatory capital framework (the "Basel III Capital Rules") adopted by U.S. federal regulatory authorities, among other things, (i) establish the capital measure called "Common Equity Tier 1" ("CET1"), (ii) specify that Tier 1 capital consist of CET1 and "Additional Tier 1 Capital" instruments meeting stated requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) set forth the acceptable scope of deductions/adjustments to the specified capital measures.

In addition, to avoid restrictions on capital distributions, including dividend payments and stock repurchases, or discretionary bonus payments to executives, a covered banking organization must maintain a "capital conservation buffer" of 2.5% on top of its minimum risk-based capital requirements. This buffer must consist solely of Tier 1 Common Equity and the buffer applies to all three measurements: Common Equity Tier 1, Tier 1 capital and total capital.

As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies were required to develop a "Community Bank Leverage Ratio" (the ratio of a bank's tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A "qualifying community bank" that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered "well capitalized" under Prompt Corrective Action statutes. The Community Bank Leverage Ratio is currently set at 9%. The Association opted into the Community Bank Leverage Ratio in 2020.

As of September 30, 2025, the Association met all capital adequacy requirements to which it is subject and was categorized as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the Association's prompt corrective action category. The Association's Community Bank Leverage Ratio is presented in the table below.

Average Balances and Yields

The following tables set forth average balance sheets, average yields and costs, and certain other information at and for the periods indicated. Yields and costs are annualized. Tax-equivalentyield adjustments have not been made for tax-exemptsecurities. All average balances are based on month-endbalances, which management deems to be representative of the operations of the Company. Non-accrualloans were included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to the changes due to rate and the changes due to volume in proportion to the relationship of the absolute dollar amounts of change in each.