What changed in this filing

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Item 1A. Risk Factors

2026-02-20 compared with 2025-02-20 · 51 added, 17 removed, 198 unchanged (26% of the section changed)

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Additionally, decreases in tenant occupancy may also have a negative effect on the ability of borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings.

If our regulators impose limitations on our commercial real estate lending activities, earnings could be adversely affected.

In 2006, the federal bank regulatory agencies (collectively, the “Agencies”) issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”).

Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure may receive increased supervisory scrutiny where total non-owner occupied CRE loans, including loans secured by apartment buildings, investor CRE and construction and land loans, represent 300% or more of an institution’s total risk-based capital and the outstanding balance of the CRE loan portfolio has increased by 50% or more during the preceding 36 months.

The Consolidated Company’s non-owner occupied CRE level equaled 447% of total risk-based capital at December 31, 2024.

If our regulators were to impose restrictions on the amount of CRE loans we can hold in our portfolio, or require higher capital ratios as a result of the level of CRE loans held, our earnings would be adversely affected.

The performance of our multi-family real estate loans could be adversely impacted by regulation.

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, utilities, taxes, maintenance, etc.).

For example, the New York City Rent Guidelines Board established the maximum rent increase on certain apartments at 2.75% for a one-year lease and 5.25% for a two-year lease, beginning on or after October 1, 2024 and through September 30, 2025, and while the overall inflation rate increased at a greater rate.

For example, the New York City Rent Guidelines Board established the maximum rent increase on certain apartments at 3% for a one-year lease and 4.5% for a two-year lease, beginning on or after October 1, 2025 and through September 30, 2026.

In addition, overhead (including maintenance) expenses often increase significantly during inflationary periods.

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, if leases are not obtained or renewed), the borrower’s ability to repay the loan and the value of the security for the loan may be impaired.

The recent election of Zohran Mamdani as Mayor of New York City introduces potential policy changes that could affect the city’s multifamily housing market.

The administration has expressed support for rent freezes and expanded tenant protections, which, if enacted, may reduce rental income and property values across multifamily properties.

These market dynamics could adversely impact the credit quality of our borrowers.

Lower property cash flows may impair borrowers’ ability to service existing debt.

In addition, a sustained decline in collateral values could elevate loan-to-value ratios and reduce recovery prospects in the event of foreclosure.

If we experience greater credit losses than anticipated, earnings may be adversely impacted.

As a lender, we are exposed to the risk that customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance.

Additionally, at December 31, 2024, our portfolio of business loans, totaled $2.73 billion, or 25.1% of our total loan portfolio.

Additionally, at December 31, 2025, our portfolio of business loans totaled $3.24 billion, or 30.1% of our total loan portfolio, and our portfolio of non-owner occupied commercial real estate totaled $2.93 billion, or 27.3% of our total loan portfolio.

We plan to continue to emphasize the origination of these types of loans, which generally expose us to a greater risk of nonpayment and loss than residential real estate loans because repayment of such loans often depends on the successful operations and income stream of the borrowers.

Additionally, such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to consumer loans or residential real estate loans.

Furthermore, these loans expose us to greater credit risk than loans secured by residential real estate because the collateral securing these loans typically

cannot be liquidated as easily as residential real estate.

If we foreclose on these loans, our holding period for the collateral is typically longer than for a single or multi-family residential property because there are fewer potential purchasers of the collateral.

Hence, we may experience significant credit losses, which could have a material adverse effect on our operating results.

Since the first quarter of 2021, we have been required to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for credit losses.

This method of loan loss accounting represents a change from the previous method of providing allowances for loan losses that are probable, and greatly increased the types of data we need to collect and review to determine the appropriate level of the allowance for credit losses.

We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans.

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Such actions could have a material adverse effect on our business, financial condition and results of operations.

If our regulators impose limitations on our commercial real estate lending activities, earnings could be adversely affected.

Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure may receive increased supervisory scrutiny where total non-owner-occupied CRE loans, including loans secured by apartment buildings, investor CRE and construction and land loans, represent 300% or more of an institution’s total risk-based capital and the outstanding balance of the CRE loan portfolio has increased by 50% or more during the preceding 36 months.

The Consolidated Company’s non-owner-occupied CRE level equaled 387% of total risk-based capital at December 31, 2025.

The Company is subject to environmental liability risk associated with lending activities.

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Environmental reviews of real property before initiating foreclosure may not be sufficient to detect all potential environmental hazards.

The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Company’s business, financial condition and results of operations.

remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Company’s business, financial condition and results of operations.

Risks Related to Interest Rates

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Our ability to attract and retain customers, investors, employees and advisors may depend upon external perceptions of the Company.

Damage to the Company's reputation could cause significant harm to our business and prospects and may arise from numerous sources, including litigation or regulatory actions, compliance failures, customer services failures, or unethical behavior or misconduct of employees, advisors and counterparties.

Adverse developments with respect to the financial services industry may also, by association, negatively impact the Company's reputation or result in greater regulatory or legislative scrutiny of or litigation against the Company.

Furthermore, shareholders and other stakeholders have begun to consider how corporations are addressing environmental, social and governance (“ESG”) issues.

Governments, investors, customers and the general public are increasingly focused

on ESG practices and disclosures, and views about ESG are diverse and rapidly changing.

These shifts in investing priorities may result in adverse effects on the trading price of the Company’s common stock if the Company, or our relationships with certain customers, vendors or suppliers became the subject of negative publicity.

Damage to the Company's reputation could cause significant harm to our business and prospects and may arise from numerous sources, including litigation or regulatory actions, compliance failures, cybersecurity incidents, errors in the use of artificial intelligence, customer services failures, or unethical behavior or misconduct of employees, advisors and counterparties.

In addition, third parties with whom the Company has relationships with may take actions the Company has limited control over that could negatively impact perceptions about the Company or the financial services industry.

Adverse developments with respect to the financial services industry may also, by association, negatively impact the Company's reputation or result in greater regulatory or

legislative scrutiny of or litigation against the Company.

The proliferation of social media may increase the likelihood that negative information about the Company, whether or not accurate, could impact the Company’s reputation and business.

Accounting-Related Risks

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If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses.

From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our external financial statements.

From time to time, the Financial Accounting Standards Board (“FASB”) and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our external financial statements.

These changes are beyond our control, can be hard to predict and could materially impact how we report our results of operations and financial condition.

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Any write-down would have a negative effect on the consolidated financial statements.

Technology-Related Risks

The potential reliance on and integration of artificial intelligence (“AI”) and machine learning (“ML”) technologies expose us to various risks, including operational, data, regulatory, and reputational risks, which could materially affect our business and financial results.

● Operational & Model Risk:

Potential AI/ML models, used for credit scoring, fraud detection, customer service, and investment decisions, rely on complex algorithms and vast datasets.

Errors, biases, or "hallucinations" (generating false information) in these models, or unexpected system failures, could lead to flawed decisions, financial losses, compliance failures, or degraded customer experiences, impacting profitability and client retention.

● Data Security & Privacy:

AI systems process sensitive customer data.

Security breaches or unauthorized access to these systems could result in data theft, loss of intellectual property, and significant penalties, damaging customer trust.

● Regulatory & Compliance Risk:

The regulatory landscape for AI is rapidly evolving.

New laws could impose costly compliance burdens, restrict AI use, or introduce liabilities, particularly concerning algorithmic bias and fair lending practices (e.g., "digital redlining"), potentially increasing operational costs and limiting service offerings.

● Talent & Third-Party Risk :

Attracting and retaining skilled AI professionals is crucial and competitive.

We also depend on third-party AI vendors, creating dependency risks and potential issues with data handling, model reliability, and licensing, all of which could disrupt operations.

● Reputational & Ethical Risk :

Misuse of AI, biased outcomes, or privacy violations can harm our brand, erode customer confidence, and attract negative public attention, potentially affecting demand for our services.

If we cannot effectively manage these challenges, including adapting to rapid technological change and ensuring responsible AI governance, our reputation, competitive position, and financial performance could be significantly harmed.

IP Rights – Infringement by Registrant or Its Customers

We may be subject to IP rights claims from third parties claiming ownership of, or demanding the release or license of, modifications or derivative works that we have developed using open-source software (which could include our proprietary source code or AI models), or otherwise seeking to enforce the terms of the applicable open-source license.

Our applications and uses of trademarks relating to our design, software or AI technologies could be found to infringe upon existing trademark ownership and rights.

We may fail to apply for key trademarks in a timely manner.

We may face IP infringement claims in the future.

If we are determined to have infringed upon a third party's IP rights, we may be required to cease selling, leasing, licensing, incorporating certain components into, and/or using or offering goods or services that incorporate or use the challenged IP.

IP Rights – Generative AI-Related Infringement by Registrant

We utilize some open-source software that may include generative AI software or other software that incorporates or relies on generative AI.

Software that includes generative AI may incorporate data from entities and the use of that data may itself be illegal and/or violate contractual or IP rights.

By using such software, we may expose the company to risks as the IP ownership and license rights, including copyright, of generative AI software and tools, have not been fully interpreted by U.S.

courts or been fully addressed by federal, state, or international regulations.

In addition, any use of generative AI by our customers may lead to additional claims of IP infringement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors