IF Bancorp(IROQ) - 2025 Q4 - Annual Report

PART I Covers the company's business operations, risk factors, and regulatory environment ITEM 1. BUSINESS IF Bancorp, Inc. is a Maryland corporation serving as the holding company for Iroquois Federal Savings and Loan Association. The company primarily engages in deposit-taking and investing in various mortgage, commercial, and consumer loans, alongside offering insurance and financial services through subsidiaries. It operates across seven full-service banking offices in Illinois and a loan production office in Missouri. The company's strategy involves increasing commercial real estate, multi-family, and commercial business loans, which generally offer higher returns and shorter durations - IF Bancorp, Inc. is the holding company for Iroquois Federal Savings and Loan Association, a federally chartered savings association headquartered in Watseka, Illinois[15] - The Association's primary business involves taking deposits and investing them in various loan types, including one- to four-family residential, multi-family, commercial real estate, commercial business, construction, land development, and consumer loans[17] - In addition to traditional banking, the company offers property and casualty insurance through L.C.I. Service Corporation and other financial services via Iroquois Financial, a division of Iroquois Federal[20] Consolidated Financial Highlights (June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | | :--------------------- | :------------- | :------------- | | Consolidated Assets | $887.7 million | $887.7 million | | Consolidated Deposits | $721.3 million | $727.2 million | | Consolidated Equity | $81.8 million | $73.9 million | General Business Overview Provides an overview of the company's core business and strategic direction Available Information Details where public information about the company can be accessed Market Area and Demographics Describes the company's operational market and demographic characteristics Competition Analyzes the competitive landscape within the company's market Lending Activities Details the company's various loan products and lending practices Loan Portfolio Composition Presents the breakdown of the company's loan portfolio by type Loan Portfolio Composition (June 30, 2025 vs. 2024) | Loan Type | June 30, 2025 (Amount) | June 30, 2025 (Percent) | June 30, 2024 (Amount) | June 30, 2024 (Percent) | | :------------------------ | :--------------------- | :---------------------- | :--------------------- | :---------------------- | | One- to four-family | $178,979 | 27.97% | $177,263 | 27.42% | | Multi-family | $126,127 | 19.71% | $126,031 | 19.50% | | Commercial | $201,550 | 31.50% | $200,017 | 30.94% | | Home equity lines of credit | $10,487 | 1.64% | $9,859 | 1.53% | | Construction | $22,927 | 3.58% | $33,708 | 5.21% | | Commercial Business | $93,961 | 14.68% | $91,784 | 14.20% | | Consumer | $5,855 | 0.92% | $7,727 | 1.20% | | Total Loans | $639,886 | 100.00% | $646,389 | 100.00% | Loan Portfolio Maturities and Yields Outlines the maturity schedule and yield characteristics of the loan portfolio Loan Portfolio Maturities (June 30, 2025) | Due During the Years Ending June 30, | One- to four-family residential | Multi-family real estate | Commercial real estate | Home equity lines of credit | Construction | Commercial | Consumer | Total | | :----------------------------------- | :------------------------------ | :----------------------- | :--------------------- | :-------------------------- | :----------- | :--------- | :------- | :---------- | | 2026 | $18,443 | $35,906 | $99,234 | $1,413 | $2,722 | $72,686 | $909 | $231,313 | | 2027 | $21,517 | $43,504 | $37,072 | $596 | $6,155 | $2,441 | $1,058 | $112,343 | | 2028 to 2029 | $53,830 | $27,098 | $38,599 | $2,094 | $12,062 | $7,977 | $2,509 | $144,169 | | 2030 to 2034 | $20,271 | $19,619 | $18,958 | $1,236 | $625 | $10,857 | $1,379 | $72,945 | | 2035 to 2039 | $6,362 | — | $1,144 | $4,100 | — | — | — | $11,606 | | 2040 and beyond | $58,556 | — | $6,543 | $1,048 | $1,363 | — | — | $67,510 | | Total | $178,979 | $126,127 | $201,550 | $10,487 | $22,927 | $93,961| $5,855| $639,886| One- to Four-Family Residential Mortgage Loans Focuses on the company's residential mortgage lending activities Commercial Real Estate and Multi-family Real Estate Loans Describes lending in commercial and multi-family real estate sectors Home Equity Lines of Credit Details the company's home equity line of credit offerings Commercial Business Loans Covers the company's commercial business loan portfolio Construction Loans Explains the company's construction loan activities Consumer Loans Describes the company's consumer loan products Loan Originations, Purchases, Participations, Sales and Servicing Outlines processes for loan origination, acquisition, and servicing Loan Approval Procedures and Authority Details the company's loan approval processes and authorization levels Non-performing and Problem Assets Addresses assets with impaired credit quality and potential issues Non-Performing Assets Provides a breakdown of assets not generating expected income Non-Performing Assets (June 30, 2025 vs. 2024) | Category | June 30, 2025 (Amount) | June 30, 2024 (Amount) | | :--------------------------------------------------------------------- | :--------------------- | :--------------------- | | Total non-accrual loans | $17 | $150 | | Total loans delinquent 90 days or greater and still accruing | $29 | $23 | | Total non-performing loans | $46 | $173 | | Performing loan modifications for borrowers with financial difficulties | — | $385 | | Total other real estate owned and foreclosed assets | $165 | — | | Total non-performing assets | $211 | $173 | | Non-performing loans to total loans | 0.01% | 0.03% | | Non-performing assets to total assets | 0.02% | 0.02% | Loan Modifications Discusses changes made to loan terms for financially distressed borrowers - The Company had no loan modifications for borrowers experiencing financial difficulties at June 30, 2025, a decrease from $385,000 at June 30, 2024[80] Gross Interest Income from Loan Modifications (FY2025 vs. FY2024) | Metric | FY2025 (Amount) | FY2024 (Amount) | | :------------------------------------------------------------------------------------------------- | :-------------- | :-------------- | | Gross interest income if performing per original terms | $38,000 | $29,000 | | Interest income recognized on modified loans | $38,000 | $29,000 | Delinquent Loans Reports on loans that are past due on payments Delinquent Loans (June 30, 2025 vs. 2024) | Delinquency Period | June 30, 2025 (Amount) | June 30, 2024 (Amount) | | :----------------- | :--------------------- | :--------------------- | | 60 to 89 Days | $856 | $238 | | 90 Days or Greater | $46 | $173 | | Total Loans | $902 | $411 | - Total delinquent loans increased by $491,000 to $902,000 at June 30, 2025, primarily due to increases in one- to four-family loans, commercial real estate loans, and commercial business loans[83] Real Estate Owned and Foreclosed Assets Details properties acquired through foreclosure or similar actions - Foreclosed assets increased to $165,000 at June 30, 2025, from no foreclosed assets at June 30, 2024, consisting entirely of one- to four-family residential real estate[84] Classification of Assets Categorizes assets based on their credit risk and quality Classified and Watch Assets (June 30, 2025 vs. 2024) | Category | June 30, 2025 (Amount) | June 30, 2024 (Amount) | | :-------------------- | :--------------------- | :--------------------- | | Substandard | $7,437 | $3,165 | | Doubtful | — | — | | Loss | — | — | | Total classified assets | $7,437 | $3,165 | | Watch | $226 | $72 | | Total criticized assets | $7,663 | $3,237 | - Substandard assets at June 30, 2025, included $202,000 in one- to four-family residential mortgage loans, $225,000 in multi-family loans, $1.3 million in commercial real estate loans, $5.5 million in commercial business loans, $17,000 in consumer loans, and $165,000 in foreclosed residential properties[89] Other Credit Risk Identifies additional credit-related risks beyond classified assets - The company retains servicing on $98.7 million of loans sold under the MPF Original Program, with a maximum potential credit risk of approximately $2.3 million[91] Allowance for Credit Losses Explains the reserve set aside for potential loan losses Allowance for Credit Losses Activity Summarizes changes in the allowance for credit losses over time Allowance for Credit Losses Activity (FY2025 vs. FY2024) | Metric | FY2025 (Amount) | FY2024 (Amount) | | :-------------------------- | :-------------- | :-------------- | | Balance at beginning of period | $7,499 | $7,139 | | Total charge-offs | $(549) | $(49) | | Total recoveries | $355 | $259 | | Net recoveries (charge-offs) | $(194) | $210 | | Provision (credit) for credit losses | $(678) | $150 | | Balance at end of period| $6,627 | $7,499 | | Net charge-offs (recoveries) to average loans outstanding | 0.03% | (0.03)% | | Allowance for credit losses to non-performing loans at end of period | 14,406.52% | 4,329.57% | | Allowance for credit losses to total loans at end of period | 1.04% | 1.16% | Allocation of Allowance for Credit Losses Shows how the allowance for credit losses is distributed across loan categories Allocation of Allowance for Credit Losses by Loan Category (June 30, 2025 vs. 2024) | Loan Category | June 30, 2025 (ACL) | June 30, 2025 (% of Total Loans) | June 30, 2024 (ACL) | June 30, 2024 (% of Total Loans) | | :------------------------ | :------------------ | :------------------------------- | :------------------ | :------------------------------- | | One- to four-family | $1,475 | 28.0% | $1,774 | 27.4% | | Multi-family | $1,513 | 19.7% | $1,764 | 19.5% | | Commercial | $2,252 | 31.5% | $2,358 | 31.0% | | Home equity lines of credit | $144 | 1.6% | $148 | 1.5% | | Construction | $206 | 3.6% | $337 | 5.2% | | Commercial Business | $985 | 14.7% | $1,053 | 14.2% | | Consumer | $52 | 0.9% | $65 | 1.2% | | Total | $6,627 | 100.0% | $7,499 | 100.0% | - The allowance for credit losses decreased by $872,000 (11.6%) to $6.6 million at June 30, 2025, from $7.5 million at June 30, 2024, attributed to reduced loan growth and an upgrade in a loan relationship's risk rating[112] Investments Details the company's investment portfolio and strategies Portfolio Maturities and Yields Presents the maturity profile and returns of the investment portfolio Investment Securities Portfolio Maturities and Yields (June 30, 2025) | Category | One Year or Less (Amortized Cost) | One Year or Less (Weighted Average Yield) | One Year through Five Years (Amortized Cost) | One Year through Five Years (Weighted Average Yield) | Five Years through Ten Years (Amortized Cost) | Five Years through Ten Years (Weighted Average Yield) | More than Ten Years (Amortized Cost) | More than Ten Years (Weighted Average Yield) | Total Securities (Amortized Cost) | Total Securities (Fair Value) | Total Securities (Weighted Average Yield) | | :-------------------------------------------------------------------- | :-------------------------------- | :---------------------------------------- | :------------------------------------------- | :--------------------------------------------------- | :-------------------------------------------- | :---------------------------------------------------- | :----------------------------------- | :------------------------------------------- | :-------------------------------- | :---------------------------- | :---------------------------------------- | | U.S. government, federal agency and government sponsored enterprises | $— | —% | $1,986 | 1.60% | $— | —% | $— | —% | $1,986 | $1,812 | 1.60% | | U.S. government sponsored mortgage-backed securities | $3,955 | 3.28% | $35,223 | 3.04% | $70,038 | 2.01% | $83,045 | 2.83% | $192,261 | $171,079 | 2.58% | | Small Business Administration | $— | —% | $1,134 | 2.86% | $4,964 | 2.50% | $8,796 | 1.86% | $14,894 | $13,114 | 2.15% | | State and political subdivisions | $— | —% | $662 | 4.15% | $1,086 | 4.31% | $— | —% | $1,748 | $1,748 | 4.25% | | Total | $3,955 | 3.28% | $39,005 | 2.89% | $76,088 | 1.91% | $91,841 | 2.56% | $210,889 | $187,753 | 2.40% | Sources of Funds Identifies the primary sources of funding for the company's operations Deposits Provides an overview of the company's deposit base by type and maturity Average Total Deposit Accounts by Type (FY2025 vs. FY2024) | Deposit Type | FY2025 (Average Balance) | FY2025 (Percent) | FY2025 (Weighted Average Rate) | FY2024 (Average Balance) | FY2024 (Percent) | FY2024 (Weighted Average Rate) | | :------------------------ | :----------------------- | :--------------- | :----------------------------- | :----------------------- | :--------------- | :----------------------------- | | Noninterest bearing demand | $47,674 | 6.97% | —% | $51,894 | 7.55% | —% | | Interest-bearing checking or NOW | $102,462 | 14.98% | 0.15% | $102,926 | 14.96% | 0.15% | | Savings accounts | $56,030 | 8.20% | 0.30% | $60,550 | 8.80% | 0.61% | | Money market accounts | $158,797 | 23.22% | 2.78% | $161,591 | 23.49% | 2.99% | | Certificates of deposit | $318,849 | 46.63% | 4.12% | $310,866 | 45.20% | 3.96% | | Total deposits | $683,812 | 100.00% | 2.61% | $687,827 | 100.00% | 2.57% | Uninsured Certificates of Deposit Maturity (June 30, 2025) | Maturity Period | Amount (In thousands) | | :------------------------------ | :-------------------- | | Three months or less | $17,951 | | Over three months through six months | $8,723 | | Over six months through 12 months | $27,658 | | Over 12 months | $1,040 | | Total | $55,372 | Borrowings Details the company's various borrowing arrangements and capacities - At June 30, 2025, the company had access to an additional $62.7 million from FHLB-Chicago, $14.0 million from a correspondent bank, and $35.3 million from the Federal Reserve Discount Window[133] Personnel Outlines information regarding company personnel Subsidiaries Describes the company's subsidiary entities and their operations REGULATION AND SUPERVISION Covers the regulatory framework governing the company's operations Federal Banking Regulation Details the federal regulations applicable to banking activities Federal Reserve System Explains the role of the Federal Reserve System in the company's operations Other Regulations Addresses additional regulatory requirements impacting the company Holding Company Regulations Outlines regulations specific to the company as a holding company Federal Securities Laws Covers compliance with federal securities laws ITEM 1A. RISK FACTORS The company faces several key risks, including increased credit risk from its growing commercial real estate, multi-family, and commercial business loan portfolios, which are more sensitive to economic downturns. Funding sources may be insufficient for future growth, and loan participations carry higher risks due to limited control. Insufficient allowance for credit losses and stringent capital requirements could negatively impact earnings and dividend capacity. Operational risks, cyber-attacks, and system failures pose threats to operations and reputation. Furthermore, changes in interest rates, economic conditions, inflation, and regulatory policies could adversely affect profitability and financial stability - The company intends to increase its commercial real estate, multi-family, and commercial business loans, which generally carry higher credit risk due to larger balances and dependence on property/business operations[189] - Reliance on FHLB-Chicago advances, brokered certificates of deposit, and repurchase agreements for funding may increase, and adverse conditions could limit access or increase costs, impacting profitability[190] - Loan participations, especially outside the primary market, carry higher risk due to reliance on lead lenders for monitoring, potentially increasing non-performing loans and decreasing earnings[191] - Non-performing assets totaled $211,000 at June 30, 2025, and an increase could reduce net income, require higher reserves, and divert management resources[193] - The allowance for credit losses (ACL) was 1.04% of total loans at June 30, 2025, and if insufficient, additions would decrease net income, with regulatory reviews potentially mandating increases[195] - The company is subject to stringent capital requirements, including a capital conservation buffer, which may limit dividends and share repurchases if not met[198] - Cyber-attacks, system failures, and security breaches pose significant operational risks, potentially leading to financial loss, regulatory action, and reputational damage[201][205][208] - Interest rate changes significantly impact net interest income; a decline in rates could reduce asset yields faster than liability costs, while rising rates could increase liability costs faster than asset yields[210] - Economic slowdowns, particularly in local markets, could increase loan delinquencies, problem assets, and reduce demand for services, adversely affecting business[211][213] - Elevated inflation could negatively affect business customers' ability to repay loans and increase the company's operating costs[214] - Declines in the value of investment securities, especially due to market factors, could adversely affect earnings, capital, and liquidity[215] - Monetary policies of the Federal Reserve Board and extensive government regulations (e.g., USA PATRIOT Act, Bank Secrecy Act) can significantly impact operations, compliance costs, and growth[216][222][223] Operational Risks Identifies risks related to internal processes, people, and systems Market and Industry Risks Addresses risks stemming from market conditions and industry trends ITEM 1B. UNRESOLVED STAFF COMMENTS There are no unresolved staff comments to report ITEM 1C. CYBERSECURITY The Company maintains an Information Security Program (ISP) based on the NIST Cybersecurity Framework, implementing various controls like computer scanning, intrusion prevention, and access controls. The ISP is reviewed annually, and the Board of Directors actively oversees cybersecurity risk tolerance, receiving annual reports from the Information Security Officer. Despite these measures, the threat of cyber-attacks remains severe, though to date, risks have not materially affected the Company - The Company's Information Security Program (ISP) is based on the National Institute of Standards and Technology Cybersecurity Framework[227] - Controls include computer scanning, intrusion prevention, firewalls, end-point detection, data loss prevention, access controls, penetration testing, and security monitoring[228] - The Board of Directors actively reviews and approves the ISP and receives annual reports on cybersecurity matters[229] - To date, risks from cybersecurity threats have not materially affected the Company[229] ITEM 2. PROPERTIES The Company operates from a main office, six branch offices, an administrative office, and a data center in Illinois, along with a loan production office in Missouri. The net book value of premises, land, and equipment was $10.2 million at June 30, 2025. Most facilities are owned, with one data center leased until March 31, 2028 - The Company operates from a main office, six branch offices, an administrative office, and a data center in Illinois, and a loan production office in Missouri[231] - The net book value of premises, land, and equipment was $10.2 million at June 30, 2025[231] Company Properties (June 30, 2025) | Location | Year Opened | Owned/Leased | | :------------------------------------- | :---------- | :------------------------------ | | Main Office: 201 East Cherry Street, Watseka, Illinois | 1964 | Owned | | Branches: 619 North Gilbert Street, Danville, Illinois | 1973 | Owned | | Branches: 175 East Fourth Avenue, Clifton, Illinois | 1977 | Owned | | Branches: 655 South Dixie Highway, Hoopeston, Illinois | 2023 | Owned | | Branches: 108 Arbours Drive, Savoy, Illinois | 2014 | Owned | | Branches: 421 Brown Boulevard, Bourbonnais, Illinois | 2017 | Owned | | Branches: 2411 Village Green Place, Champaign, Illinois| 2018 | Owned | | Loan Production Office: 3535 Highway 54, Osage Beach, Missouri | 2006 | Owned | | Administrative Office: 204 East Cherry Street, Watseka, Illinois | 2001 | Owned | | Data Center: 183 Bethel Drive, Bourbonnais, Illinois | 2019 | Leased (expires March 31, 2028) | ITEM 3. LEGAL PROCEEDINGS The Company is not currently a party to any pending legal proceedings that are expected to have a material adverse effect on its financial condition, results of operations, or cash flows - The Company is not a party to any pending legal proceedings that are believed to have a material adverse effect on its financial condition, results of operations, or cash flows[233] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the Company PART II Covers market information, financial performance, and internal controls ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is listed on the Nasdaq Capital Market under the symbol "IROQ." As of September 1, 2025, there were 298 holders of record. The Company paid dividends of $0.20 per share in October 2023, April 2024, October 2024, and April 2025. Future dividend payments are subject to various factors, including financial condition, capital requirements, and regulatory limitations. No share repurchases occurred during the quarter ended June 30, 2025, and no active stock repurchase plan is in place - The Company's common stock is listed on the Nasdaq Capital Market under the trading symbol "IROQ"[236] - As of September 1, 2025, there were 298 holders of record of the Company's common stock[236] Dividends Paid Per Share | Period | Dividend Per Share | | :----------- | :----------------- | | October 2023 | $0.20 | | April 2024 | $0.20 | | October 2024 | $0.20 | | April 2025 | $0.20 | - No share repurchases occurred during the quarter ended June 30, 2025, and the Company does not have an active stock repurchase plan[239] ITEM 6. [RESERVED] This item is reserved and contains no information ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The Company's financial performance is primarily driven by net interest income, which increased by 17.4% to $20.8 million in FY2025. Net income significantly rose by 140.4% to $4.3 million in FY2025, attributed to higher net interest income, increased noninterest income, and a decrease in credit loss provisions. Total assets remained stable at $887.7 million, while total equity increased by 10.7% to $81.8 million. The Company maintains strong asset quality with low non-performing assets and is well-capitalized under regulatory guidelines - The Company's assets grew to $887.7 million at June 30, 2025, from $377.2 million at June 30, 2009, primarily through increased investment securities and loan growth[241] - Net interest income increased by $3.1 million, or 17.4%, to $20.8 million for the year ended June 30, 2025, from $17.7 million for the year ended June 30, 2024[271] - Net income for the year ended June 30, 2025, was $4.3 million, a 140.4% increase from $1.8 million for the year ended June 30, 2024[245][270] - Non-performing assets remained low at $211,000, or 0.1% of total assets, at June 30, 2025[245] Overview Provides a high-level summary of the company's financial performance Critical Accounting Policies Highlights key accounting policies requiring significant judgment Selected Financial Data Presents a summary of key financial metrics over multiple periods Selected Financial Condition Data (June 30, 2025 vs. 2024 vs. 2023) | Metric | 2025 (In thousands) | 2024 (In thousands) | 2023 (In thousands) | | :-------------------------------------- | :------------------ | :------------------ | :------------------ | | Total assets | $887,659 | $887,745 | $848,976 | | Cash and cash equivalents | $20,092 | $9,571 | $10,988 | | Investment securities available for sale | $187,753 | $190,475 | $201,299 | | Loans receivable, net | $633,603 | $639,297 | $587,457 | | Deposits | $721,258 | $727,177 | $735,314 | | Federal Home Loan Bank of Chicago advances | $54,124 | $32,999 | $19,500 | | Total equity | $81,837 | $73,916 | $71,753 | Selected Operating Data (FY2025 vs. FY2024 vs. FY2023) | Metric | 2025 (In thousands) | 2024 (In thousands) | 2023 (In thousands) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | | Interest income | $43,417 | $40,984 | $32,072 | | Interest expense | $22,603 | $23,255 | $10,075 | | Net interest income | $20,814 | $17,729 | $21,997 | | Provision (credit) for credit losses | $(701) | $32 | $(228) | | Noninterest income | $4,944 | $4,386 | $4,069 | | Noninterest expense | $20,542 | $19,728 | $20,034 | | Net income | $4,304 | $1,790 | $4,660 | Selected Financial Ratios (FY2025 vs. FY2024 vs. FY2023) | Ratio | 2025 | 2024 | 2023 | | :---------------------------------------- | :------ | :------ | :------ | | Return on average assets | 0.49% | 0.20% | 0.56% | | Return on average equity | 5.52% | 2.54% | 6.56% | | Interest rate spread | 2.13% | 1.78% | 2.62% | | Net interest margin | 2.47% | 2.10% | 2.80% | | Efficiency ratio | 79.75% | 89.21% | 76.86% | | Non-performing assets to total assets | 0.02% | 0.02% | 0.02% | | Non-performing loans to total loans | 0.01% | 0.03% | 0.02% | | Allowance for credit losses to total loans | 1.04% | 1.16% | 1.20% | | Community Bank Leverage Ratio (Company) | 10.7% | 10.1% | 10.5% | | Community Bank Leverage Ratio (Association) | 10.0% | 9.2% | 9.5% | Comparison of Financial Condition at June 30, 2025 and June 30, 2024 Analyzes changes in the company's financial position between two fiscal years - Total assets remained stable at $887.7 million at June 30, 2025, compared to June 30, 2024[261] - Cash and cash equivalents increased by $10.5 million to $20.1 million at June 30, 2025[262] - Net loans receivable decreased by $5.7 million (0.9%) to $633.6 million, primarily due to a $10.8 million decrease in construction loans and a $1.9 million decrease in consumer loans, partially offset by increases in other loan categories[263] - Deposits decreased by $5.9 million (0.8%) to $721.3 million, with decreases in savings, NOW, money market accounts, and non-brokered certificates of deposit, partially offset by an increase in noninterest-bearing demand accounts and brokered certificates of deposit[266] - Total equity increased by $7.9 million (10.7%) to $81.8 million, driven by net income and an increase in accumulated other comprehensive income (loss) due to decreased unrealized depreciation on available-for-sale securities[268] Comparison of Operating Results for the Years Ended June 30, 2025 and 2024 Compares the company's operational performance across two fiscal years Net Interest Income Examines the primary driver of the company's profitability from lending - Net interest income increased by $3.1 million (17.4%) to $20.8 million for FY2025, driven by a $2.4 million increase in interest and dividend income and a $652,000 decrease in interest expense[271] - The interest rate spread increased by 35 basis points to 2.13%, and the net interest margin increased by 37 basis points to 2.47% for FY2025[271] Interest and Dividend Income Details income generated from interest-earning assets - Interest and dividend income increased by $2.4 million (5.9%) to $43.4 million for FY2025, primarily due to an 8.0% increase in interest on loans[272] - The average yield on loans increased by 36 basis points to 5.81% for FY2025[272] Interest Expense Analyzes costs associated with interest-bearing liabilities - Interest expense decreased by $652,000 (2.8%) to $22.6 million for FY2025, due to a seven basis point decrease in the cost of interest-bearing liabilities to 3.01%[273] - Interest expense on borrowings decreased by $864,000 (15.4%) to $4.7 million, with a 55 basis point decrease in the average cost of borrowings to 4.15%[275] Provision for Credit Losses Discusses the expense or credit related to potential loan defaults - The Company recorded a total credit for credit losses of $701,000 for FY2025, compared to a provision of $32,000 for FY2024[276] - Non-performing loans decreased to $46,000 at June 30, 2025, from $173,000 at June 30, 2024[276] - Net charge-offs of $194,000 were recognized in FY2025, contrasting with $210,000 in net recoveries in FY2024[276] Noninterest Income Covers income generated from non-lending activities - Noninterest income increased by $558,000 (12.7%) to $4.9 million for FY2025, driven by increases in customer service fees, insurance commissions, brokerage commissions, and other noninterest income[278] - Other noninterest income increased by $457,000 to $1.7 million, largely due to an insurance settlement for HELOC check fraud[278] Noninterest Expense Details operational costs not directly related to interest - Noninterest expense increased by $814,000 (4.1%) to $20.5 million for FY2025, primarily due to higher compensation and benefits ($1.2 million increase), equipment expense, and professional services[279] - Federal deposit insurance premium decreased by $98,000 (17.1%) due to an improved assessment multiplier[279] Income Tax Expense Reports on the company's tax obligations and effective tax rates - Income tax expense was $1.6 million for FY2025, compared to $565,000 for FY2024, reflecting effective tax rates of 27.2% and 24.00%, respectively[280] Asset Quality and Allowance for Credit Losses Assesses the health of the loan portfolio and adequacy of loss reserves Average Balances and Yields Presents average asset and liability balances with their respective yields Average Balances, Interest, and Yields/Rates (FY2025 vs. FY2024) | Category | FY2025 Average Outstanding Balance | FY2025 Interest | FY2025 Yield/Rate | FY2024 Average Outstanding Balance | FY2024 Interest | FY2024 Yield/Rate | | :-------------------------------------- | :--------------------------------- | :-------------- | :---------------- | :--------------------------------- | :-------------- | :---------------- | | Interest-earning assets: | | | | | | | | Total loans | $647,588 | $37,628 | 5.81% | $638,754 | $34,826 | 5.45% | | Total securities | $186,539 | $5,124 | 2.75% | $193,896 | $5,542 | 2.86% | | Total interest-earning assets | $843,945 | $43,417 | 5.14% | $843,702 | $40,984 | 4.86% | | Interest-bearing liabilities: | | | | | | | | Total interest-bearing deposits | $636,138 | $17,865 | 2.81% | $635,933 | $17,653 | 2.78% | | Borrowings and repurchase agreements | $114,236 | $4,738 | 4.15% | $119,099 | $5,602 | 4.70% | | Total interest-bearing liabilities | $750,374 | $22,603 | 3.01% | $755,032 | $23,255 | 3.08% | | Net interest income | | $20,814 | | | $17,729 | | | Net interest rate spread | | | 2.13% | | | 1.78% | | Net interest margin | | | 2.47% | | | 2.10% | Rate/Volume Analysis Analyzes the impact of interest rate and volume changes on net interest income Effects of Changing Rates and Volumes on Net Interest Income (FY2025 vs. FY2024) | Category | Increase (Decrease) Due to Volume (In thousands) | Increase (Decrease) Due to Rate (In thousands) | Total Increase (Decrease) (In thousands) | | :---------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------- | | Interest-earning assets: | | | | | Loans | $485 | $2,317 | $2,802 | | Securities | $(208) | $(210) | $(418) | | Other | $(74) | $123 | $49 | | Total interest-earning assets | $203 | $2,230 | $2,433 | | Interest-bearing liabilities: | | | | | Total interest-bearing deposits | $213 | $(1) | $212 | | Federal Home Loan Bank advances | $(224) | $(640) | $(864) | | Total interest-bearing liabilities | $(11) | $(641) | $(652) | | Change in net interest income | $214 | $2,871 | $3,085 | Management of Market Risk Describes strategies for managing exposure to market fluctuations Interest Rate Risk Analysis Evaluates the impact of interest rate changes on earnings and equity Earnings at Risk (June 30, 2025) | Change in Interest Rates (basis points) | One Year (% Change in Net Interest Income) | Two Years (% Change in Net Interest Income) | | :-------------------------------------- | :----------------------------------------- | :------------------------------------------ | | +400 | 0.56 | 3.36 | | +300 | 0.52 | 2.76 | | +200 | 0.48 | 2.02 | | +100 | 0.32 | 1.11 | | 0 | | | | -100 | (2.47) | (3.38) | | -200 | (2.93) | (4.87) | | -300 | (2.25) | (5.27) | | -400 | 0.01 | (4.07) | Net Economic Value of Equity (NEVE) at Risk (June 30, 2025) | Change in Interest Rates (basis points) | Estimated NEVE (In thousands) | % Change NEVE | | :-------------------------------------- | :---------------------------- | :------------ | | +400 | $111,526 | (6.63) | | +300 | $113,103 | (5.31) | | +200 | $114,794 | (3.90) | | +100 | $117,008 | (2.05) | | 0 | $119,451 | | | -100 | $120,541 | 0.91 | | -200 | $122,226 | 2.32 | | -300 | $123,057 | 3.02 | | -400 | $123,476 | 3.37 | Liquidity and Capital Resources Assesses the company's ability to meet obligations and maintain capital levels - The Company's liquidity ratio averaged 24.1% of total assets for FY2025, down from 25.9% in FY2024[295] - Cash and cash equivalents totaled $20.1 million at June 30, 2025[297] - Certificates of deposit due within one year totaled $272.6 million, representing 37.8% of total deposits at June 30, 2025[298] - Iroquois Federal exceeded all regulatory capital requirements at June 30, 2025, and is considered "well capitalized"[303] Off-Balance Sheet Arrangements and Aggregate Contractual Obligations Details commitments not recorded on the balance sheet and future obligations Recent Accounting Pronouncements Discusses the impact of newly issued accounting standards Impact of Inflation and Changing Prices Analyzes how inflation and price changes affect the company's financials ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information regarding quantitative and qualitative disclosures about market risk is incorporated by reference from Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operation" ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA This section presents the audited consolidated financial statements of IF Bancorp, Inc. for the years ended June 30, 2025 and 2024, including balance sheets, statements of income, comprehensive income, stockholders' equity, and cash flows, along with detailed notes. The independent auditor, Forvis Mazars, LLP, issued an unqualified opinion on these statements, highlighting the Allowance for Credit Losses as a critical audit matter due to its subjective nature - The consolidated financial statements for IF Bancorp, Inc. as of and for the years ended June 30, 2025 and 2024, are presented[341] - Forvis Mazars, LLP issued an unqualified opinion on the consolidated financial statements[341] - The valuation of the Allowance for Credit Losses (ACL) was identified as a critical audit matter due to the high degree of subjectivity in management's estimates[348][349] Report of Independent Registered Public Accounting Firm Presents the auditor's opinion on the financial statements Critical Audit Matter Highlights key audit areas requiring significant auditor judgment Consolidated Balance Sheets Presents a snapshot of the company's assets, liabilities, and equity Consolidated Balance Sheets (June 30, 2025 vs. 2024) | Assets (in thousands) | 2025 | 2024 | | :---------------------------------------------------------------------------------------------------------------- | :-------- | :-------- | | Cash and cash equivalents | $20,092 | $9,571 | | Available-for-sale securities | $187,753 | $190,475 | | Loans, net of allowance for credit losses | $633,603 | $639,297 | | Federal Home Loan Bank stock, at cost | $5,174 | $4,499 | | Bank-owned life insurance | $15,348 | $14,892 | | Deferred income taxes | $8,656 | $10,483 | | Total assets | $887,659| $887,745| | Liabilities (in thousands) | | | | Total deposits | $721,258 | $727,177 | | Federal Home Loan Bank advances | $54,124 | $32,999 | | Other borrowings | — | $25,250 | | Total liabilities | $805,822| $813,829| | Stockholders' Equity (in thousands) | | | | Common stock | $33 | $33 | | Additional paid-in capital | $52,329 | $51,913 | | Retained earnings | $46,894 | $43,876 | | Accumulated other comprehensive loss, net of tax | $(16,264) | $(20,559) | | Total stockholders' equity | $81,837 | $73,916| | Total liabilities and stockholders' equity | $887,659| $887,745| Consolidated Statements of Income Reports on the company's revenues, expenses, and net income over a period Consolidated Statements of Income (FY2025 vs. FY2024) | (in thousands) | 2025 | 2024 | | :-------------------------------------------- | :-------- | :-------- | | Interest Income | $43,417 | $40,984 | | Interest Expense | $22,603 | $23,255 | | Net Interest Income | $20,814 | $17,729 | | Provision (Credit) for Credit Losses | $(701) | $32 | | Net Interest Income After Provision (Credit) for Credit Losses | $21,515 | $17,697 | | Noninterest Income | $4,944 | $4,386 | | Noninterest Expense | $20,542 | $19,728 | | Income Before Income Tax Expense | $5,917 | $2,355 | | Provision for Income Taxes | $1,613 | $565 | | Net Income | $4,304| $1,790| | Earnings Per Share: Basic | $1.37 | $0.57 | | Earnings Per Share: Diluted | $1.37 | $0.57 | | Dividends Paid Per Share | $0.40 | $0.40 | Consolidated Statements of Comprehensive Income Details all changes in equity during a period, including unrealized gains/losses Consolidated Statements of Comprehensive Income (FY2025 vs. FY2024) | (in thousands) | 2025 | 2024 | | :------------------------------------------------------------------------------------------------------------ | :-------- | :-------- | | Net Income | $4,304 | $1,790 | | Other Comprehensive Income: | | | | Unrealized appreciation on available-for-sale securities, net of taxes | $4,176 | $947 | | Less: reclassification adjustment for realized losses included in net income, net of taxes | $(51) | — | | Change in post-retirement health plan gains and losses, net of taxes | $68 | $142 | | Other comprehensive income, net of tax | $4,295| $1,089| | Comprehensive Income | $8,599| $2,879| Consolidated Statements of Stockholders' Equity Shows changes in equity accounts over a period Consolidated Statements of Stockholders' Equity (FY2025 vs. FY2024) | (in thousands) | Balance, July 1, 2023 | Balance, June 30, 2024 | Balance, June 30, 2025 | | :-------------------------------------------- | :-------------------- | :--------------------- | :--------------------- | | Common Stock | $33 | $33 | $33 | | Additional Paid-In Capital | $51,543 | $51,913 | $52,329 | | Unearned ESOP Shares | $(1,540) | $(1,347) | $(1,155) | | Retained Earnings | $43,365 | $43,876 | $46,894 | | Accumulated Other Comprehensive Income (Loss) | $(21,648) | $(20,559) | $(16,264) | | Total Stockholders' Equity | $71,753 | $73,916 | $81,837 | | Net income | | $1,790 | $4,304 | | Other comprehensive income | | $1,089 | $4,295 | | Dividends on common stock | | $(1,279) | $(1,286) | | ESOP shares earned | | $303 | $421 | Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows (FY2025 vs. FY2024) | (in thousands) | 2025 | 2024 | | :-------------------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $6,761 | $2,283 | | Net cash provided by (used in) investing activities | $14,063 | $(39,753) | | Net cash provided by (used in) financing activities | $(10,303) | $36,053 | | Increase (Decrease) in Cash and Cash Equivalents | $10,521 | $(1,417) | | Cash and Cash Equivalents, End of Year | $20,092 | $9,571 | Notes to Financial Statements Provides detailed explanations and additional information for financial statement items Note 1: Nature of Operations and Summary of Significant Accounting Policies Describes the company's business and key accounting principles Note 2: Securities Details the company's investment securities portfolio Available-for-sale Securities (June 30, 2025 vs. 2024) | Category | June 30, 2025 (Amortized Cost) | June 30, 2025 (Fair Value) | June 30, 2024 (Amortized Cost) | June 30, 2024 (Fair Value) | | :-------------------------------------------------------------------- | :----------------------------- | :------------------------- | :----------------------------- | :------------------------- | | U.S. Government and federal agency and Government sponsored enterprises | $1,986 | $1,812 | $6,979 | $6,609