10-K: Hoyne Bancorp Returns to Profit, Boosted by Stock Offering

Hoyne Bancorp, Inc. reported a net income of $233,000 for the year ended December 31, 2025, following its conversion to a stock form of ownership and successful $79.4 million stock offering.

Summary

• Hoyne Bancorp, Inc. completed its conversion to a stock form of ownership on December 3, 2025, and became a savings and loan holding company.
• The company sold 7,935,000 shares of common stock at $10.00 per share in its subscription offering, generating gross proceeds of approximately $79.4 million and net proceeds of $75.7 million after offering expenses.
• Net income for the year ended December 31, 2025, was $233,000, a significant improvement from a net loss of $2.0 million in 2024.
• Total assets increased by $39.9 million (8.9%) to $489.4 million as of December 31, 2025.
• Net loans increased by $27.0 million (11.2%) to $267.9 million, driven by growth in the commercial loan portfolio.
• Total deposits decreased by $35.7 million (10.0%) to $321.6 million, primarily due to a $31.6 million decrease in higher-cost certificates of deposit.
• Total equity increased by $75.6 million (88.0%) to $161.4 million, largely due to the net capital raised from the initial public offering.
• A material weakness in internal control over financial reporting was identified related to deferred tax assets and stock issuance accounting, but management believes it has been remediated as of the filing date.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing positively due to the successful conversion and capital raise, strong financial performance turnaround to net income, and significant improvements in asset quality and key profitability metrics like net interest margin.

Positives

• Achieved a net income of $233,000 in 2025, reversing a $2.0 million net loss in 2024.
• Successfully completed a stock offering, raising approximately $79.4 million in gross proceeds and $75.7 million net, significantly bolstering equity.
• Total assets grew by 8.9% to $489.4 million in 2025, indicating overall balance sheet expansion.
• Net loans increased by 11.2% to $267.9 million, reflecting successful efforts to grow the higher-yielding commercial loan portfolio.
• Non-accruing loans decreased significantly from $1.661 million in 2024 to $444,000 in 2025, demonstrating improved asset quality.
• Total classified loans decreased from $7.621 million in 2024 to $3.238 million in 2025, indicating a reduction in problem assets.
• Non-performing loans as a percentage of total loans outstanding improved from 0.67% in 2024 to 0.16% in 2025.
• Non-performing assets as a percentage of total assets improved from 0.40% in 2024 to 0.24% in 2025.
• Allowance for credit losses increased to $2.682 million in 2025 from $2.126 million in 2024, reflecting prudent provisioning for loan portfolio growth.
• Net interest income increased by $4.367 million, or 44.9%, to $14.081 million in 2025.
• Interest rate spread improved from 2.09% in 2024 to 2.98% in 2025, indicating better management of interest-earning assets and interest-bearing liabilities.
• Net interest margin improved from 2.38% in 2024 to 3.24% in 2025.
• Hoyne Savings Bank is well-capitalized, with a Tier 1 leverage capital level of 24.8% as of December 31, 2025, exceeding the 9.0% well-capitalized requirement by 15.8% or $80.6 million.
• Established an Employee Stock Ownership Plan (ESOP) for employees and contributed to Hoyne Charitable Foundation, Inc., enhancing employee benefits and community engagement.

Negatives

• Total deposits decreased by $35.7 million (10.0%) in 2025, primarily due to a $31.6 million decrease in higher-cost certificates of deposit, indicating potential funding challenges.
• Investment securities available-for-sale decreased by $9.9 million (8.5%) to $106.7 million, and investment securities held-to-maturity decreased by $5.7 million (16.6%) to $28.4 million, as liquidity was used to fund loan growth.
• Bank Owned Life Insurance decreased by $2.1 million (12.0%) to $14.9 million, with liquidity from this decrease also used to fund the loan portfolio.
• Identified a material weakness in internal control over financial reporting related to deferred tax assets and stock issuance accounting, which required remediation efforts.
• The company's net interest income is expected to decrease by $266,000 (1.5%) in the event of an immediate and sustained 300 basis point increase in interest rates for the twelve months ending December 31, 2026, indicating interest rate sensitivity.

Risks

• General economic conditions, nationally or in market areas, that are different than expected.
• Changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for credit losses.
• Ability to access cost-effective funding.
• Major catastrophes such as tornadoes, floods or other natural disasters, and their related disruption to economic activity and financial markets.
• Further data processing and other technological changes that may be more difficult or expensive than expected.
• Success or consummation of new business initiatives may be more difficult or expensive than expected.
• The inability of third-party service providers to perform.
• Fluctuations in real estate values and both residential and commercial real estate market conditions.
• Demand for loans and deposits in the market area.
• Ability to continue to implement business strategies.
• Competition among depository and other financial institutions.
• Inflation and changes in the interest rate environment that reduce margins and yields, reduce the fair value of financial instruments, reduce origination levels, or increase defaults, losses, and prepayments on loans.
• Adverse changes in the securities markets.
• Changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements.
• Ability to manage market risk, credit risk and operational risk in the current economic conditions.
• Ability to enter new markets successfully and capitalize on growth opportunities.
• Ability to successfully integrate any acquired assets, liabilities, customers, systems and management personnel.
• Changes in consumer spending, borrowing and savings habits.
• Changes in accounting policies and practices.
• Geopolitical tensions that could affect economic activity or specific industry sectors.
• Ability to hire and retain key employees.
• Compensation expense associated with equity allocated or awarded to employees.
• Risks associated with Bank Owned Life Insurance (BOLI), including the failure of insurance companies, changes in favorable tax treatment, or crediting rates not comparable to market interest rates.
• Cybersecurity risks, including internal vulnerabilities, sophisticated attacks, and the need for robust security controls and business continuity programs.
• Potential for future adjustments to the allowance for credit losses if economic and other conditions differ substantially from management's assumptions.
• Regulatory reviews by the FDIC and IDFPR may require adjustments to the allowance for credit losses.
• Investments in mortgage-backed securities involve risks related to actual prepayments being greater than estimated, reinvestment risk, and market value sensitivity to interest rates.
• Holding interest-bearing deposits at financial institutions with balances above the FDIC's per account insurance limit of $250,000.
• Dependence on dividends from Hoyne Savings Bank for cash flow, which are subject to regulatory limitations.
• Potential for a substantial portion of maturing certificates of deposit not being retained, which may necessitate FHLB advances or higher interest rates on deposits.
• The potential issuance of preferred stock, which could have priority over common stock with respect to dividends and liquidation, and could dilute voting strength or impede takeovers.
• Exclusive forum provisions in the Certificate of Incorporation may limit stockholders' choice of forum for certain legal actions.

Future Outlook

Hoyne Bancorp, Inc. expects its noninterest expenses to increase with growth and operational expansion, particularly due to new stock benefit plans. The company plans to continue increasing its emphasis on commercial real estate loans to improve its interest rate risk profile and achieve higher yields. Management anticipates that a substantial portion of maturing certificates of deposit will be renewed, but may utilize FHLB advances or raise interest rates if retention is insufficient. The company is also likely to add personnel in the future to fully implement its business strategy.

Management Comments

• Our 138-year history operating in this market has provided us with a familiarity of our local communities and customer base.
• We are focusing on increasing our origination of commercial real estate (including commercial construction) and commercial and industrial loans and, to a lesser extent, home equity loans and consumer loans, and other collateral and unsecured personal loans.
• We plan to increase our emphasis on commercial real estate loans as they generally have shorter terms to maturity, improving Hoyne Savings Bank's interest rate risk profile, and provide higher yields than one to four residential mortgage loans.
• One of our key objectives has been, and continues to be, maintaining a high level of asset quality.
• Management believes that the material weakness identified above is the result of deficiencies related to certain one-time events and the specific accounting treatment of these items in connection with the Company's stock offering and conversion in 2025.
• Management has undertaken steps to enhance its financial reporting controls and procedures, and continues to seek to enhance its financial and accounting expertise, supplemented by additional resources as needed. As a result, the Company believes that the material weakness identified and described above has been remediated as of the date of the filing of this Annual Report.

Industry Context

StockSavvy.ai notes that Hoyne Bancorp's strategic shift towards commercial real estate and industrial loans aligns with a broader trend among community banks seeking higher yields and improved interest rate risk profiles compared to traditional residential mortgage lending. The successful mutual-to-stock conversion and capital raise provide a strong foundation for growth and potential acquisitions in a consolidating banking market, particularly within the competitive Chicago MSA. The reported net income and improved asset quality metrics are positive indicators in a challenging interest rate environment, though deposit retention remains a key focus for many regional institutions.

Comparison to Industry Standards

• Hoyne Bancorp's Tier 1 leverage capital ratio of 24.8% as of December 31, 2025, significantly exceeds the 9.0% required for a 'well-capitalized' institution under the Community Bank Leverage Ratio Framework (CBLRF), indicating a very strong capital position compared to industry benchmarks.
• The reduction in non-performing loans to 0.16% of total loans outstanding in 2025 from 0.67% in 2024 demonstrates asset quality improvement that compares favorably to many regional banks, which often face higher non-performing asset ratios during economic shifts.
• The increase in net interest margin to 3.24% in 2025 from 2.38% in 2024 suggests effective interest rate management, potentially outperforming some peers struggling with rising funding costs.

Corporate Governance

Legal Proceedings

• Not presently involved in any legal proceedings of a material nature. From time to time, subject to various legal actions arising in the normal course of business, but resolution is not expected to have a material adverse effect on financial condition, results of operations or cash flows.

Related Party Transactions

• Loans to directors and executive officers and their affiliates totaled $302,416 at December 31, 2025, down from $313,288 in 2024.
• Aggregate deposits from directors and executive officers and their affiliates amounted to approximately $2.9 million at December 31, 2025, up from $2.0 million in 2024.
• Hoyne Savings Bank has an agreement with Hoyne Bancorp, Inc. to provide administrative support services for compensation not less than fair market value, totaling $658,000 for the year ended December 31, 2025.
• Hoyne Savings Bank and Hoyne Bancorp, Inc. have an agreement for allocating and reimbursing consolidated tax liability.

Stakeholder Impact

• Shareholders: Benefited from the successful stock offering and the company's return to net income, as well as improved asset quality and capital position. The establishment of an ESOP and charitable foundation also impacts shareholder value and corporate image.
• Employees: Benefited from the establishment of an Employee Stock Ownership Plan (ESOP) and continued competitive wages and benefits, fostering retention.
• Customers: Continue to be served by a community-oriented savings bank with a diversified loan portfolio and optimized branch network.
• Community: Benefited from the establishment and contribution to the Hoyne Charitable Foundation, Inc., and ongoing community involvement.
• Regulators: The company's strong capital position and compliance with regulatory requirements, despite a material weakness in internal controls (now remediated), demonstrate adherence to supervisory standards.

Next Steps

• Continue to implement business strategies, including increasing emphasis on commercial real estate and commercial and industrial loans.
• Assess management and staffing needs, potentially adding personnel to support business expansion.
• Monitor liquidity levels to fund deposit outflows, repay borrowings, and meet loan commitments.
• Evaluate the allowance for credit losses quarterly, considering economic conditions and loan portfolio performance.
• Address potential interest rate sensitivity, as a 300 basis point increase could decrease net interest income by 1.5%.
• Hold the 2026 annual meeting of stockholders on May 28, 2026.
• File the definitive proxy statement for the 2026 Annual Meeting of Stockholders no later than 120 days after the fiscal year end.

Key Dates

Recommendation

The successful mutual-to-stock conversion and significant capital raise provide a strong foundation for future growth and strategic initiatives. The company's return to net income, substantial improvement in asset quality metrics (lower non-accruing and classified loans), and enhanced net interest margin indicate effective management and a positive operational trajectory. The strong capital position, significantly exceeding regulatory requirements, provides resilience and flexibility. While deposit outflows and interest rate sensitivity are noted, the overall financial health and strategic direction suggest a favorable outlook for long-term investors.

Keywords

Banking, Financial Services, SEC Filing, 10-K, Hoyne Bancorp, Hoyne Savings Bank, Stock Offering, Net Income, Assets, Loans, Deposits, Equity, Commercial Real Estate, Commercial Lending, Mortgage Lending, Asset Quality, Non-performing Loans, Allowance for Credit Losses, Interest Rate Risk, Liquidity, Capital Resources, Corporate Governance, Cybersecurity, Illinois, Nasdaq