Financial Analysis

The following table presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the years ended June 30, 2025 and 2024: At or For the Year Ended June 30, 2025 2024 (In Thousands) Noninterest Income In-scope of Topic 606: Debit card interchange fees $ 644 $ 619 ATM surcharge income 105 98 Service fees on deposit accounts 819 807 Loss on sale of real estate (265 ) (415 ) Noninterest Income (in-scope of Topic 606) 1,303 1,109 Noninterest Income (out-of-scope of Topic 606) 702 475 Total Noninterest Income $ 2,005 $ 1,584

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Note 13. Stock-Based Compensation Stock Incentive Plans On November 12, 2014, the stockholders of the Company approved the adoption of the Companys 2014 Stock Incentive Plan (the 2014 Stock Incentive Plan) for the benefit of employees and non-employee directors as an incentive to contribute to the success of the Company and to reward employees for outstanding performance and the attainment of targeted goals. The 2014 Stock Incentive Plan covers a total of 300,000 shares (as adjusted), of which no more than 75,000 shares (as adjusted), or 25% of the plan, may be share awards. The balance of the plan is reserved for stock option awards which would total 225,000 (as adjusted) stock options assuming all the stock awards are issued. All incentive stock options granted under the 2014 Stock Incentive Plan are intended to comply with the requirements of Section 422 of the Internal Revenue Code. On January 31, 2024, the Company granted a total of 4,000 stock options to a key employee vesting ratably over three years commencing February 1, 2024. On July 24, 2024, the Company granted a total of 1,600 plan share awards and 23,000 stock options to directors, officers and key employees vesting ratably over five years. The 2014 Stock Incentive Plan cost is recognized over the five year vesting period. The 2014 Stock Incentive Plan terminated on August 13, 2024, however, the 1,600 plan share awards and 155,600 outstanding options as of June 30, 2025 will remain in effect for the remainder of …

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Note 18. Fair Value Disclosures The following disclosure is made in accordance with the requirements of ASC 825, Financial Instruments . Financial instruments are defined as cash and contractual rights and obligations that require settlement, directly or indirectly, in cash. In cases where quoted market prices are not available, fair values have been estimated using the present value of future cash flows or other valuation techniques. The results of these techniques are highly sensitive to the assumptions used, such as those concerning appropriate discount rates and estimates of future cash flows, which require considerable judgment. Accordingly, estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current settlement of the underlying financial instruments. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. These disclosures should not be interpreted as representing an aggregate measure of the underlying value of the Company. The following methods and assumptions were used by the Company in estimating fair values of financial instruments: Cash and Cash Equivalents The carrying amount approximates the fair value of cash and cash equivalents. Investment Securities Fair values for investment securities, including mortgage-backed securities, are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted m …

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Note 10. Income Taxes The Company and its subsidiary file consolidated federal income tax returns. The current provision for federal and state income taxes is calculated on pretax accounting income adjusted by items considered to be permanent differences between book and taxable income. Income tax expense for the years ended June 30, 2025 and 2024 is summarized as follows: 2025 2024 (In Thousands) Current $ 929 $ 354 Deferred (163 ) 122 Total $ 766 $ 476 The effective federal income tax rate for the years ended June 30, 2025 and 2024 was 16.5% and 11.7%, respectively. Reconciliations of income tax expense at the statutory rate to the Companys effective rates are as follows: 2025 2024 (In Thousands) Computed at Expected Statutory Rate $ 977 $ 854 Non-Taxable Income (44 ) (43 ) Equity Compensation - 6 Other (167 ) (341 ) Provision for Income Tax Expense $ 766 $ 476 At June 30, 2025 and 2024, temporary differences between the financial statement carrying amount and tax bases of assets that gave rise to deferred tax recognition were related to the effect of loan bad debt deduction differences for tax and book purposes, deferred stock option compensation, and supplemental employee retirement benefits. The deferred tax expense or benefit related to securities available-for-sale has no effect on the Companys income tax provision since it is charged or credited to the Companys other comprehensive income or loss equity component. The net deferred income tax asset and liability consist …

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Recent Accounting Pronouncements ASU 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued ASU 2016-13 which requires earlier measurement of credit losses and enhances disclosures. The main objective of ASU 2016-13 is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The Company formed a cross-functional working group, who have worked through an implementation plan which includes assessment, review and documentation of various aspects of the implementation plan. After significant evaluation of approved methodologies, the Company determined to utilize a third-party vendor model, in which a weighted average remaining maturity methodology was appropriate for the size and complexity of the Company. ASU 2016-13 is effective for the Company for annual and interim periods beginning on July 1, 2023. The Company adopted ASU 2016-13 in the first quarter of fiscal 2024. The adoption of the ASU 2016-13 resulted in an increase in the allowance for credit losses as a result of changing from an incurred loss model, which encompasses allowances for current known and inherent losses within the portfolio, to an expected loss model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Upon adopt …

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Note 11. Employee Benefit Plans Effective November 15, 2004, the Bank adopted the Home Federal Bank Employees Savings and Profit Sharing Plan and Trust . This plan complies with the requirements of Section 401(k) of the Internal Revenue Code. Those eligible for this defined contribution plan must have completed twelve months of full time service and attained age 21. For calendar 2025, participating employees may make elective salary reduction contributions of up to $23,500 of their eligible compensation. The Bank will contribute a basic safe harbor contribution of 3% of participant plan salary and will match 100% of the first 4% of plan salary elective deferrals. The Bank is also permitted to make discretionary contributions to be allocated to participant accounts. Pension costs, including administrative fees, attributable to the Banks 401(k) safe harbor plan for the years ended June 30, 2025 and 2024 were $261,000 and $224,000, respectively. During fiscal year 2011, the Company established a Survivor Benefit Plan for the benefit of selected executives. The purpose of the plan is to provide benefits to designated beneficiaries, if a participant dies while employed by the Company. The plan is considered an unfunded plan for tax and ERISA purposes, and all obligations arising under the plan are payable from the general assets of the Company. At June 30, 2025 and 2024, there were no obligations requiring accrual for this plan. The Bank adopted a Supplemental Executive Retirement …

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Note 15. Related Party Events In the ordinary course of business, the Bank makes loans to its directors and officers. These loans are made on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers and do not involve more than normal credit risk or present other unfavorable features. An analysis of the activity in loans made to such borrowers (both direct and indirect), including lines of credit, is summarized as follows for the years ended June 30, 2025 and 2024: 2025 2024 (In Thousands) Balance Beginning of Year $ 4,300 $ 4,398 Additions 674 1,124 Principal Payments (591 ) (1,222 ) Balance End of Year $ 4,383 $ 4,300 Deposits from related parties held by the Bank at June 30, 2025 and 2024 amounted to $3.3 million and $3.7 million, respectively. …

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Note 21. Revenue Recognition In accordance with Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services that are promised within each contract and identifies those that contain performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. All of the Companys revenue from contracts with custo …

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Note 20. Subsequent Events In accordance with FASB ASC 855, Subsequent Event s , the Company has determined there have been no subsequent events that have occurred after June 30, 2025, through the date of the financial statements, that would require disclosure.

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6. Stock-Based Compensation Stock Incentive Plans On November 12, 2014, the stockholders of the Company approved the adoption of the Companys 2014 Stock Incentive Plan (the 2014 Stock Incentive Plan). On January 31, 2024, the Company granted 4,000 stock options to a key employee, vesting ratably over three years commencing February 1, 2024. On July 24, 2024, the Company granted 1,600 plan share awards and a total of 23,000 stock options to directors, officers and key employees vesting ratably over five years. The 2014 Stock Incentive Plan cost is recognized over the five-year vesting period. A total of 117,600 stock options granted on October 26, 2015, that were due to expire on October 26, 2025, were exercised in October 2025. The 2014 Stock Incentive Plan terminated on August 13, 2024; however, the 1,280 unvested plan share awards and 36,000 outstanding options as of December 31, 2025, will remain in effect for the remainder of their five-year vesting and original ten-year terms, respectively. On November 13, 2019, the stockholders of the Company approved the adoption of the Companys 2019 Stock Incentive Plan (the 2019 Stock Incentive Plan). On July 24, 2024, the Company granted 1,600 stock options to a key employee vesting ratably over five years. The 2019 Stock Incentive Plan costs are recognized over the five-year vesting period. As of December 31, 2025, there are no plan share awards and 800 stock options available for future grant under the 2019 Stock Incentive Plan. T …

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8. Fair Value Disclosures The following disclosure is made in accordance with the requirements of ASC 825, Financial Instruments . Financial instruments are defined as cash and contractual rights and obligations that require settlement, directly or indirectly, in cash. In cases where quoted market prices are not available, fair values have been estimated using the present value of future cash flows or other valuation techniques. The results of these techniques are highly sensitive to the assumptions used, such as those concerning appropriate discount rates and estimates of future cash flows, which require considerable judgment. Accordingly, estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current settlement of the underlying financial instruments. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. These disclosures should not be interpreted as representing an aggregate measure of the underlying value of the Company. The following methods and assumptions were used by the Company in estimating fair values of financial instruments: Cash and Cash Equivalents The carrying amount approximates the fair value of cash and cash equivalents. Investment Securities Fair values for investment securities, including mortgage-backed securities, are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market …

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9. Leases A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches with terms extending through 2058. Substantially all of the Companys leases are classified as operating leases, and therefore, were previously not recognized on the Companys consolidated statements of condition. Right-of-use (ROU) assets and corresponding lease liabilities are recognized on the consolidated statements of condition under other assets and other accrued expenses and liabilities, respectively. At December 31, 2025 and June 30, 2025, the carrying amounts of the ROU assets and corresponding lease liabilities were as follows: (In Thousands) December 31, 2025 June 30, 2025 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Other Assets $ 792 $ 799 Total Lease Right-of-Use Assets $ 792 $ 799 Lease Liabilities Operating lease liabilities Other Accrued Expenses and Liabilities $ 854 $ 856 Total Lease Liabilities $ 854 $ 856 The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Companys lease agreements often include one or more options to renew at the Companys discretion. If at lease …

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Recent Accounting Pronouncements FASB ASC Topic 280 Segment Reporting: Improvements to Reportable Segments Disclosures Update No. 2023-07 ( ASU 2023-07 ). ASU 2023 - 07 became effective for the Company for the fiscal year ended June 30, 2025 and is being applied in interim periods beginning after June 30, 2025. ASU 2023 - 07 requires public entities to disclose the title and position of the entitys CODM and an explanation of how the CODM utilizes the reported measures of profit or loss to assess segment performance and allocate resources, significant segment expenses, an amount and description for other segment items, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis. ASU 2023 - 07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of segment profit or loss, provided that certain criteria are met. The adoption of ASU 2023 - 07 did not have a material impact on the Companys consolidated financial statements. …

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7. Related Party Transactions In the ordinary course of business, the Bank makes loans to its directors and officers. These loans are made on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers and do not involve more than normal credit risk or present other unfavorable features. Certain directors and executive officers were indebted to the Bank in the approximate aggregate amount of $4.612 million and $4.383 million at December 31, 2025 and June 30, 2025.

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