12.ESOP

In conjunction with the Conversion, the Bank established an Employee Stock Ownership Plan (“ESOP”) for the exclusive benefit of eligible employees. The Bank makes annual contributions to the ESOP in amounts as defined by the plan document. These contributions are used to pay debt service. Certain ESOP shares are pledged as collateral for debt. As the debt is repaid, shares are released from collateral and allocated to active participants, based on the proportion of debt service paid in the year. Shares allocated to participants are vested by 100% after five years of service, and credit is given for years of service with Hoyne Savings Bank prior to the adoption of the ESOP. Participants will also become fully vested in the case of death, disability or retirement.

In connection with the Company’s initial public stock offering, the ESOP borrowed $6.48 million from the Company for the purpose of purchasing shares of the Company’s common stock. A total of 647,755 shares were purchased with the loan proceeds. Accordingly, common stock acquired by the ESOP is shown as a reduction of stockholder’s equity. The loan is expected to be repaid over a period of up to 25 years.

A partial annual contribution to the ESOP was made during the year ended December 31, 2025, as loan payments are made annually on December 31^st of each year. Compensation expense is recognized over the service period based on the average fair value of the shares and totaled approximately $103,000 and $196,000 for the three and six months ended June 30, 2026, respectively. The following table presents share information held by the ESOP:

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