What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-13 compared with 2025-03-14 · 295 added, 423 removed, 1155 unchanged (38% of the section changed)

2 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors of Hanover Bancorp, Inc.

Shareholders and the Board of Directors of

Hanover Bancorp, Inc.

Mineola, New York

1 unchanged sentence

We have audited the accompanying consolidated statements of financial condition of Hanover Bancorp, Inc.

and Subsidiary (the "Company") as of December 31, 2024, December 31, 2023 and September 30, 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for years ended December 31, 2024 and September 30, 2023 and three months ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, December 31, 2023 and September 30, 2023, and the results of its operations and its cash flows for years ended December 31, 2024 and September 30, 2023 and three months ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph - Change In Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for credit losses effective October 1, 2023 due to the adoption of ASC 326, Financial Instruments – Credit Losses.

and Subsidiary (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

17 unchanged sentences

(Dollars in thousands, except share and per share amounts)

September 30,

Cash and non-interest-bearing deposits due from banks

Interest-bearing deposits due from banks

Federal funds sold

Total cash and cash equivalents

Securities held to maturity, fair value of $ 3,609 , $ 3,835 and $ 3,760 at December 31, 2024 and 2023 and September 30, 2023, respectively (net of allowance for credit losses of $ 0 at December 31, 2024 and 2023)

Securities held to maturity, fair value of $ 976 and $ 3,609 at December 31, 2025 and 2024, respectively (net of allowance for credit losses of $ 0 at December 31, 2025 and 2024)

Securities available for sale, at fair value (net of allowance for credit losses of $ 0 at December 31, 2025 and 2024)

6 unchanged sentences

Stock in Federal Home Loan Bank ("FHLB"), at cost

Other intangible assets

Loan servicing rights

Deferred income taxes

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Total deposits

Subordinated debentures ($ 25,000 face amount less unamortized debt issuance costs of $ 311 , $ 365 and $ 379 at December 31, 2024 and 2023 and September 30, 2023, respectively)

Subordinated debentures ($ 25,000 face amount less unamortized debt issuance costs of $ 257 and $ 311 at December 31, 2025 and 2024, respectively)

Operating lease liabilities

6 unchanged sentences

15,000,000 shares authorized;

issued and outstanding 275,000 at December 31, 2024 and 150,000 at December 31, 2023 and September 30, 2023)

issued and outstanding 275,000 at December 31, 2025 and 2024)

Common stock (par value $ 0.01 ;

17,000,000 shares authorized;

issued and outstanding 7,152,127 , 7,195,012 and 7,170,419 at December 31, 2024, December 31, 2023 and September 30, 2023, respectively)

issued and outstanding 7,135,403 and 7,152,127 at December 31, 2025 and 2024, respectively)

Retained earnings

2 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

Commencing on October 1, 2023 the allowance calculation is based on the current expected credit loss methodology.

Prior to October 1, 2023 the calculation was based on the incurred loss methodology.

Refer to Note 1 for further discussion.

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

INTEREST INCOME

21 unchanged sentences

Federal deposit insurance premiums

Conversion expenses

Other expenses

3 unchanged sentences

Earnings per share:

Commencing on October 1, 2023 the allowance calculation is based on the current expected credit loss methodology.

Prior to October 1, 2023 the calculation was based on the incurred loss methodology.

Refer to Note 1 for further discussion.

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(Dollars in thousands)

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

Other comprehensive income (loss), net of tax:

5 unchanged sentences

Change in unrealized gain (loss) on cash flow hedges arising during the period, net of tax of ($ 48 ) and $ 188 , respectively

Total other comprehensive income (loss), net of tax

Total other comprehensive income, net of tax

Total comprehensive income, net of tax

7 unchanged sentences

Stockholders'

(Loss) Income, Net

Balance at October 1, 2022

Other comprehensive loss, net of tax

Balance at January 1, 2024

Other comprehensive income, net of tax

Cash dividends declared ( $ 0.10 per share)

3 unchanged sentences

Preferred stock issued in exchange for common stock

Exercise of stock options

Balance at September 30, 2023

Cumulative effect adjustment for adoption of ASU 2016-13

Balance at October 1, 2023 (as adjusted for change in accounting principle)

Other comprehensive loss, net of tax

Cash dividends declared ( $ 0.10 per share)

Stock-based compensation

Stock awards granted, net of forfeitures

Shares received related to tax withholding

Exercise of stock options

Exercise of stock options, net

Balance at December 31, 2024

3 unchanged sentences

Stock awards granted, net of forfeitures

Shares issued for performance stock units

Shares received related to tax withholding

Preferred stock issued in exchange for common stock

Stock repurchases

Exercise of stock options, net

5 unchanged sentences

(Dollars in thousands)

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

Cash flows from operating activities:

3 unchanged sentences

Amortization of right-of-use assets

Originations of loans held for sale

Proceeds from loans held for sale

Net gain on sale of securities available-for-sale

Gain on sale of fixed assets (included in other income)

Stock-based compensation

Net gain on sale of loans held-for-sale

Net amortization (accretion) of premiums, discounts and loan fees and costs

Net amortization of premiums, discounts and loan fees and costs

Payments on operating leases

Amortization of intangible assets

2 unchanged sentences

Deferred tax expense

Decrease (increase) in accrued interest receivable

Decrease in accrued interest receivable

Increase in other assets

(Decrease) increase in accrued interest payable

Increase (decrease) in other liabilities

Payments on operating leases

Increase (decrease) in accrued interest payable

(Decrease) increase in other liabilities

Net cash provided by operating activities

1 unchanged sentence

Purchases of securities available-for-sale

Repayments (purchases) of restricted securities, net

Redemptions of restricted securities, net

Proceeds from sales of securities available-for-sale

Principal repayments of securities held to maturity

Principal repayments of securities available-for-sale

Proceeds from sales of loans

Maturities, prepayments and calls of securities available-for-sale

Proceeds from loans held for sale previously classified as portfolio loans

Net increase in loans

Purchases of premises and equipment

Additions to premises and equipment

Proceeds from sales of fixed assets

Net cash used in investing activities

1 unchanged sentence

Net increase in deposits

Proceeds from term FHLB advances

Repayments of term FHLB advances

1 unchanged sentence

Repayments of Federal Reserve Bank borrowings

Repayments of other short-term borrowings, net

Payments related to tax withholding for equity awards

Cash dividends paid

Exercise of stock options, net

Repurchase of common stock of Hanover Bancorp, Inc.

Proceeds from exercise of stock options, net

Net cash provided by financing activities

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

5 unchanged sentences

Transfers from portfolio loans to loans held for sale

Transfers from loans to other real estate owned (included in other assets)

Preferred stock issued in exchange for common stock

Lease liabilities arising from obtaining right-of-use assets

Other assets received in satisfaction of a loan

Commencing on October 1, 2023 the allowance calculation is based on the current expected credit loss methodology.

Prior to October 1, 2023 the calculation was based on the incurred loss methodology.

Refer to Note 1 for further discussion.

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

Nature of Operations

Hanover Bancorp, Inc.

(the “Company”) is currently a New York corporation which is the holding company for Hanover Community Bank (the “Bank”).

Hanover Bancorp, Inc., a Maryland corporation (the “Company”) is the holding company for Hanover Community Bank (the “Bank”).

On June 25, 2025, the Company completed its reincorporation from New York to Maryland (the “Reincorporation”).

The Reincorporation was approved by the Company’s shareholders at the annual shareholder meeting held on March 5, 2024, by the Federal Reserve Bank of New York on July 5, 2024, and the New York State Department of Financial Services (the “DFS”) on November 20, 2024.

Accordingly, the Company is incorporated in the State of Maryland.

The Bank, headquartered in Mineola, New York, is a New York State chartered bank.

The Bank commenced operations on November 4, 2008 and is a full-service bank providing personal and business lending and deposit services.

As a New York State chartered, non-Federal Reserve member bank, the Bank is subject to regulation by the New York State Department of Financial Services (“DFS”) and the Federal Deposit Insurance Corporation.

The Company is subject to regulation and examination by the Board of Governors of the FRB.

At the Company’s annual shareholder meeting held on March 5, 2024, the shareholders approved a change in its state of incorporation from the State of New York to the State of Maryland subject to regulatory approval, which has been received.

The Company is in the process of completing its reincorporation in Maryland.

As a New York State chartered, non-Federal Reserve member bank, the Bank is subject to regulation by the DFS and the Federal Deposit Insurance Corporation (“FDIC”).

The Company is subject to regulation and examination by the Board of Governors of the Federal Reserve System (the “FRB”).

Basis of Presentation

In October 2023, the Company’s Board of Directors approved a change in the Company’s fiscal year end from September 30 to December 31.

The Company’s current fiscal year is the calendar year January 1, 2024 through December 31, 2024.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.

All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company completed its core data processing system conversion to FIS Horizon in February 2025.

In connection with the conversion, the Company incurred non-recurring expenses of approximately $ 3.2 million, which was comprised of $ 2.2 million in consulting and audit fees, $ 0.7 million in deconversion fees to previous provider, and $ 0.3 million in training and other related charges.

Certain prior period amounts have been reclassified to conform to the current year’s presentation.

These reclassifications had an immaterial effect on the Company’s consolidated financial statements and had no effect on prior periods net income or stockholders’ equity.

These reclassifications had an immaterial effect on the Company’s consolidated financial statements and had no effect on prior year net income or stockholders’ equity.

Use of Estimates

2 unchanged sentences

Significant Group Concentrations of Credit Risk

Most of the Company’s activities are with customers located in Nassau, Queens and Kings Counties and surrounding areas of New York State.

Most of the Company’s activities are with customers located in New York metro area.

Note 3 discusses the types of lending that the Company engages in.

23 unchanged sentences

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type.

Accrued interest receivable on held-to-maturity debt securities was $ 9 thousand at both December 31, 2024 and 2023, respectively, and is excluded from the estimate of credit losses.

Accrued interest receivable on held-to-maturity debt securities was $ 2 thousand and $ 9 thousand at December 31, 2025 and 2024, respectively, and is excluded from the estimate of credit losses.

The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

27 unchanged sentences

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff, are reported at the principal balance outstanding, net of purchase premiums and discounts, deferred loan fees and costs and an allowance for credit losses.

The loan portfolio is segmented into residential real estate, multi-family, commercial real estate, commercial and industrial, construction and land development, and consumer loans.

Accrued interest receivable totaled $ 10.9 million, $ 10.8 million and $ 9.9 million at December 31, 2024 and 2023 and September 30, 2023, respectively, and was reported in Accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the estimate of credit losses.

The loan portfolio is segmented into residential real estate, multifamily, commercial real estate, commercial and industrial, construction and land development, and consumer loans.

Accrued interest receivable totaled $ 10.6 million and $ 10.9 million at December 31, 2025 and 2024, respectively, and was reported in Accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the estimate of credit losses.

Interest income on loans is accrued on the unpaid principal balance and credited to income as earned.

8 unchanged sentences

The allowance for credit losses (“ACL”) is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

Loans are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed.

Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

9 unchanged sentences

A loss given default rate (LGD) is assigned to each pool for each period based on these PD outcomes.

The model primarily utilizes an expected discounted cash flow (DCF) analysis with a remaining life (RL) approach used limitedly and which does not have a material impact to the allowance.

Consumer loans uses RL and are immaterial to total ACL.

The model utilizes an expected discounted cash flow (DCF) analysis for all but the Bank’s minimal consumer loan portfolio which uses the remaining life (RL) approach and does not have a material impact to the allowance.

The DCF analysis is run at the instrument-level and incorporates an array of loan-specific data points and segment-implied assumptions to determine the lifetime expected loss attributable to each instrument.

3 unchanged sentences

It is utilized when a regression analysis could not provide adequate correlation of PD and external economic factors on which to base projected losses.

During the year ended December 31, 2024, the Company updated the model utilized for the commercial and industrial allowance for credit loss loan segment from RL to DCF.

The update was due to the strong statistical relationship now supporting the DCF calculation.

The change in methodology did not have a material impact to the allowance reserve for the commercial and industrial loan segment.

Portfolio segments are the level at which loss assumptions are applied to a pool of loans based on the similarity of risk characteristics inherent in the included instruments, relying on FFIEC Call Report codes.

5 unchanged sentences

b) changes in international, national, regional, and local conditions;

c) changes in the nature and volume of the portfolio and term loans;

c) changes in the nature and volume of the portfolio;

d) changes in experience, depth, and ability of lending management;

50 unchanged sentences

The amortization of loan servicing rights is netted against loan servicing fee income.

Servicing fees totaled $ 2.6 million and $ 2.0 million for the years ended December 31, 2024 and September 30, 2023, respectively, and $ 0.6 million for the three months ended December 31, 2023.

Servicing fees totaled $ 3.1 million and $ 2.6 million for the years ended December 31, 2025 and 2024, respectively.

Late fees and ancillary fees related to loan servicing are not material.

8 unchanged sentences

Operating costs after acquisition are expensed.

The Bank had one other real estate owned property at December 31, 2025 with a $ 650 thousand carrying value (included in other assets) and none in 2024.

Premises and Equipment

102 unchanged sentences

The adoption of this standard did not have a material effect on the Company’s operating results or financial condition.

The Company adopted ASU 2016-13, Financial Instruments — Credit Losses (Topic 326) on October 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost, and off-balance-sheet credit exposures.

In November 2019, the FASB adopted changes to delay the effective date of ASU 2016-13 to 2023 for certain entities, including certain Securities and Exchange Commission filers, public business entities, and private companies.

As the Company is a smaller reporting company under SEC regulations, the Company was eligible for and elected delayed adoption of the ASU until October 1, 2023.

The objective of the ASU 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 by replacing the incurred loss impairment methodology with a methodology that reflects expected credit losses, which is referred to as the current expected credit loss (“CECL”) methodology, and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates.

Results for reporting periods beginning after October 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

On October 1, 2023, the Company recognized a one-time cumulative effect adjustment to retained earnings, of $ 4.0 million, or $ 3.2 million, net of tax effects, of which $ 0.1 million reflected a reduction of allowance for credit losses on unfunded commitments, $ 4.1 million reflected additional allowance related to the loan portfolio, and no adjustment was recognized related to the securities portfolio.

In March 2022, the FASB issued ASU 2022-02, which eliminates creditor accounting guidance for troubled debt restructurings (“TDRs”) for entities that have adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) and enhances Vintage Disclosures of Gross Writeoffs.

This ASU eliminates Subtopic 310-40 guidance for TDRs, and requires creditors to apply the loan refinancing and restructuring guidance in Subtopic 310-20 when evaluating modifications granted to borrowers experiencing financial difficulty to determine whether the modification is considered a continuation of an existing loan or a new loan.

The vintage disclosure component of the ASU requires entities to disclose current-period gross writeoffs by origination year for financing receivables and investment leases within the scope of Subtopic 326-20.

The Company adopted ASU 2022-02 prospectively, beginning October 1, 2023, concurrently with the aforementioned ASU 2016-13.

The Company did not have any loans that were both experiencing financial difficulties and modified during the three months ended December 31, 2023.

Refer to Note 3 for reportable modifications made during the year ended December 31, 2024.

Standards That Have Not Yet Been Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures, which will require public business entities to disclose annually a tabular rate reconciliation, including specific items such as state and local income tax, tax credits, nontaxable or nondeductible items, among others, and a separate disclosure requiring disaggregation of reconciling items as described above which equal or exceed 5% of the product of multiplying income from continuing operations by the applicable statutory income tax rate.

The ASU is effective for all public business entities for annual periods beginning after December 15, 2024.

The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition.

Improvements to Income Tax Disclosures, which will require public business entities to disclose annually a tabular rate reconciliation, including specific items such as state and local income tax, tax credits, nontaxable or nondeductible items, among others, and a separate disclosure requiring disaggregation of reconciling items as described above which equal or exceed 5% of the product of multiplying income from continuing operations by the applicable statutory income tax rate.

The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis for annual reporting periods.

The adoption of this standard did not have a material effect on the Company’s operating results or financial condition.

Standards That Have Not Yet Been Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), which will require enhanced disaggregation of certain expense categories in the notes to the financial statements.

The standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

The adoption of this standard is not expected to have a significant impact on the Company’s operating results or financial condition.

Investment Securities

The following tables summarize the amortized cost, fair value and allowance for credit losses of securities available for sale and securities held to maturity at December 31, 2024 and 2023 and September 30, 2023 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:

The following tables summarize the amortized cost, fair value and allowance for credit losses of securities available for sale and securities held to maturity at December 31, 2025 and 2024 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:

December 31, 2025

3 unchanged sentences

GSE residential mortgage-backed securities

GSE residential collateralized mortgage obligations

GSE commercial mortgage-backed securities

4 unchanged sentences

GSE residential mortgage-backed securities

GSE commercial mortgage-backed securities

Total held to maturity securities

December 31, 2024

1 unchanged sentence

Available for sale:

GSE residential mortgage-backed securities

Collateralized loan obligations

Corporate bonds

Total available for sale securities

Held to maturity:

Treasury securities

GSE residential mortgage-backed securities

GSE commercial mortgage-backed securities

Total held to maturity securities

September 30, 2023

(in thousands)

Available for sale:

GSE residential mortgage-backed securities

Collateralized loan obligations

Corporate bonds

15 unchanged sentences

GSE residential mortgage-backed securities

GSE residential collateralized mortgage obligations

GSE commercial mortgage-backed securities

2 unchanged sentences

GSE residential mortgage-backed securities

GSE commercial mortgage-backed securities

Total securities held to maturity

Total investment securities

At December 31, 2024 and 2023 and September 30, 2023, investment securities with a carrying amount of $ 28.9 million, $ 2.0 million and $ 2.0 million, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

There were no holdings of securities of any one issuer in an amount greater than 10% of stockholders' equity at December 31, 2024 and 2023 and September 30, 2023.

At December 31, 2025 and 2024, investment securities with a carrying amount of $ 34.0 million and $ 28.9 million, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

There were no holdings of securities of any one issuer in an amount greater than 10% of stockholders' equity other than securities issued by the U.S.

government and its agencies at December 31, 2025 and 2024.

The following table presents a summary of realized gains and losses from the sale of investment securities:

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands)

3 unchanged sentences

Total realized gains, net (1)

(1) Amount does not include associated income tax of $ 7 for year ended December 31, 2024.

The following tables summarize securities available-for-sale in an unrealized loss position for which an allowance for credit losses has not been recorded at December 31, 2024 and 2023 and September 30, 2023, aggregated by major security type and length of time in a continuous unrealized loss position.

(1) Amount does not include associated income tax of $ 53 and $ 7 for the year ended December 31, 2025 and 2024, respectively.

The following tables summarize securities available-for-sale in an unrealized loss position for which an allowance for credit losses has not been recorded at December 31, 2025 and 2024, aggregated by major security type and length of time in a continuous unrealized loss position.

December 31, 2025

4 unchanged sentences

GSE residential mortgage-backed securities

GSE residential collateralized mortgage obligations

GSE commercial mortgage-backed securities

Corporate bonds

Total available-for-sale

December 31, 2023

Less than Twelve Months

Twelve Months or Longer

(in thousands, except number of securities)

Available-for-sale:

GSE residential mortgage-backed securities

Collateralized loan obligations

1 unchanged sentence

Total available-for-sale

September 30, 2023

December 31, 2024

Less than Twelve Months

3 unchanged sentences

GSE residential mortgage-backed securities

GSE commercial mortgage-backed securities

Corporate bonds

Total available-for-sale

There was no other than temporary impairment loss recognized on any securities during the year ended September 30, 2023.

Assessment of Available for Sale Debt Securities for Credit Risk

5 unchanged sentences

Government agencies and sponsored entities

The mortgage-backed securities held by the Company were issued by U.S government-sponsored entities and agencies.

The mortgage-backed securities and collateralized mortgage obligations held by the Company were issued by U.S government-sponsored entities and agencies.

The decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality.

The Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

The Company considers these securities to carry zero loss estimates and no allowance for credit losses was recorded at December 31, 2024 and 2023.

The Company does not have the intent to sell these mortgage-backed securities and collateralized mortgage obligations and it is likely that it will not be required to sell the securities before their anticipated recovery.

The Company did no t record expected credit loss on these securities during the years ended December 31, 2025 and 2024.

Corporate bonds

1 unchanged sentence

Management considers the credit quality of each individual investment.

Management reviewed the collectability of these investments, considering such factors as the financial condition of the issuers, reported regulatory capital ratios, and credit ratings, when available, and other factors.

Management reviewed the collectability of these investments, taking into account such factors as the financial condition of the issuers, reported regulatory capital ratios, and credit ratings, when available, and other factors.

All corporate bond debt securities continue to accrue interest and make payments as expected with no defaults or deferrals on the part of the issuers.

5 unchanged sentences

All CLO securities continue to accrue interest and make payments as expected with no defaults or deferrals on the part of the issuers.

The Company considers the potential credit risk of the issuers to be immaterial and has no t allocated an allowance for credit losses on its CLO portfolio as of December 31, 2023.

The Company considers the potential credit risk of the issuers to be immaterial and has no t allocated an allowance for credit losses on its CLO portfolio as of December 31, 2025 and 2024.

The following table sets forth the major classifications of loans:

September 30,

(in thousands)

5 unchanged sentences

Total loans, net

The Company had $ 11.0 million and $ 8.9 million of SBA loans held for sale at December 31, 2024 and 2023, respectively.

The Company had $ 1.4 million of residential real estate loans held for sale at December 31, 2024 and none at December 31, 2023.

SBA loans of $ 1.0 million and $ 4.9 million included in commercial real estate and C&I loans, respectively, in the table above were sold as of September 30, 2023 and settled in early October 2023.

As of December 31, 2024 and 2023 and September 30, 2023, the Company was servicing approximately $ 338.8 million, $ 262.8 million and $ 255.7 million, respectively, of loans for others.

In the years ended December 31, 2024 and September 30, 2023, the Company sold approximately $ 159.1 million and $ 51.8 million, respectively, of loans and recognized gains on the sales of loans of $ 10.9 million and $ 4.1 million, respectively.

For the three months ended December 31, 2023, the Company sold loans totaling approximately $ 29.7 million recognizing net gains of $ 2.3 million.

The Company had $ 0 and $ 11.0 million of SBA loans held for sale at December 31, 2025 and 2024, respectively.

The Company had $ 6.4 million and $ 1.4 million of residential real estate loans held for sale at December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, the Company was servicing approximately $ 375.6 million and $ 338.8 million, respectively, of loans for others.

In the years ended December 31, 2025 and 2024, the Company sold approximately $ 190.9 million and $ 159.1 million, respectively, of loans and recognized gains on the sales of loans of $ 7.3 million and $ 10.9 million, respectively.

The Company continuously monitors the credit quality of its loan receivables.

26 unchanged sentences

Special Mention

Total Multi-family

Total Multifamily

Current period gross charge-offs

14 unchanged sentences

Current period gross charge-offs

Gross charge-offs

Total Gross charge-offs

Certain fixed rate residential mortgage loans are included in a fair value hedging relationship.

1 unchanged sentence

These basis adjustments would be allocated to the amortized cost of specific loans within the pool if the hedge was de-designated.

See “Note 9 – Derivates” for more information on the fair value hedge.

The following table summarizes the Company’s loans by year of origination and internally assigned credit risk at December 31, 2023:

See “Note 9 – Derivatives” for more information on the fair value hedge.

The following table summarizes the Company’s loans by year of origination and internally assigned credit risk at December 31, 2024 and the gross charge-offs for the year ended December 31, 2024:

Term Loans Amortized Cost by Origination Year

3 unchanged sentences

Total Residential real estate

Current period gross charge-offs

Special Mention

Total Multi-family

Total Multifamily

Current period gross charge-offs

Commercial real estate

1 unchanged sentence

Total Commercial real estate

Current period gross charge-offs

Commercial and industrial

1 unchanged sentence

Total Commercial and industrial

Current period gross charge-offs

Construction and land development

1 unchanged sentence

Total Construction and land development

Current period gross charge-offs

Special Mention

Total Consumer

Current period gross charge-offs

Total Gross charge-offs

Certain fixed rate residential mortgage loans are included in a fair value hedging relationship.

1 unchanged sentence

These basis adjustments would be allocated to the amortized cost of specific loans within the pool if the hedge was de-designated.

See “Note 9 – Derivates” for more information on the fair value hedge.

The following table presents loans categorized by class and internally assigned risk grades at September 30, 2023.

September 30, 2023

(in thousands)

Residential real estate

Commercial real estate

Commercial and industrial

Construction and land development

See “Note 9 – Derivatives” for more information on the fair value hedge.

Allowance for Credit Losses on Unfunded Commitments

The Company has recorded an ACL for unfunded credit commitments, which is recorded in other liabilities.

The provision for credit losses on unfunded commitments is recorded within the provision for credit losses on the Company’s income statement for the year ended December 31, 2024.

The provision for credit losses on unfunded commitments is recorded within the provision for credit losses on the Company’s income statement.

The following table presents the allowance for credit losses for unfunded commitments for the periods indicated:

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands)

Balance at beginning of period

Provision for credit losses

Provision for credit losses on unfunded commitments

Balance at end of period

The table below presents the provision for credit losses on loans and unfunded commitments for the years ended December 31, 2025 and 2024:

Year Ended December 31,

(in thousands)

Provision for credit losses on loans

Provision for credit losses on unfunded commitments

Total provision for credit losses

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of December 31, 2025 and 2024:

15 unchanged sentences

Construction and land development

The Company recognized $ 205 thousand, $ 155 thousand and $ 131 thousand of interest income on nonaccrual loans during the year ended December 31, 2024, the three months ended December 31, 2023 and the fiscal year ended September 30, 2023, respectively.

The Company recognized $ 398 thousand and $ 205 thousand of interest income on nonaccrual loans during the year ended December 31, 2025 and 2024, respectively.

Individually Analyzed Loans

Effective October 1, 2023, the Company began analyzing loans on an individual basis when management determined that the loan no longer exhibited risk characteristics consistent with the risk characteristics existing in its designed pool of loans, under the Company’s CECL methodology.

The Company analyzes loans on an individual basis when management has determined that the loan no longer exhibits risk characteristics consistent with the risk characteristics existing in its designed pool of loans, under the Company’s CECL methodology.

Loans individually analyzed include certain nonaccrual loans.

As of December 31, 2024, the amortized cost basis of individually analyzed loans amounted to $ 16.4 million, of which $ 15.6 million were considered collateral dependent.

As of December 31, 2025 and 2024, the amortized cost basis of individually analyzed loans amounted to $ 17.2 million and $ 16.4 million, respectively, of which $ 16.4 million and $ 15.6 million were considered collateral dependent.

For collateral dependent loans where foreclosure is probable or the borrower is experiencing financial difficulty and repayment is likely to be substantially provided through the sale or operation of the collateral, the ACL is measured based on the difference between the fair value of the collateral adjusted for sales costs and the amortized cost basis of the loan, at measurement date.

6 unchanged sentences

Residential real estate (1)

Multi-family (2)

Multifamily (2)

Commercial real estate (2)

8 unchanged sentences

Residential real estate (1)

Multi-family (2)

Multifamily (2)

Commercial real estate (2)

2 unchanged sentences

Secured by commercial real estate

The following table presents information related to impaired loans by portfolio segment as of and for the fiscal year ended September 30,2023:

September 30, 2023

(in thousands)

With no related allowance recorded:

Residential real estate

Commercial real estate

Commercial and industrial

Secured by business assets

Past Due Loans

12 unchanged sentences

Construction and land development

At September 30, 2023, past due and non-accrual loans disaggregated by portfolio segment were as follows:

(in thousands)

Past Due and Non-Accrual

September 30, 2023

Residential real estate

Commercial real estate

Commercial and industrial

Construction and land development

(1) Purchased credit impaired loans at September 30, 2023 were greater than 89 days past due.

The Company adopted ASU 2022-02, Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) on October 1, 2023.

The Company may occasionally make modifications to loans where the borrower is considered to be in financial distress.

1 unchanged sentence

The amount of principal reduction is charged-off against the allowance for credit losses.

The Company did no t have any loans that were both experiencing difficulties and modified during the three months ended December 31, 2023.

The Company had six loans that were classified as troubled debt restructurings under the old guidance, with a total recorded investment of $ 1.7 million at September 30, 2023.

There were no new troubled debt restructurings recorded for the fiscal year ended September 30, 2023.

The following table presents the amortized cost basis of loans at December 31, 2024 that were both experiencing financial difficulty and modified during the year ended December 31, 2024, by class and type of modification.

The following table presents the amortized cost basis of loans at December 31, 2025 and 2024 that were both experiencing financial difficulty and modified during the years ended December 31, 2025 and 2024, by class and type of modification.

The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

Year Ended December 31, 2025

(in thousands)

Commercial real estate

Commercial and industrial

The Company had no commitment to lend additional funds to the borrowers included in the previous table.

Year Ended December 31, 2024

(in thousands)

Commercial and industrial

The Company had no commitment to lend additional funds to borrowers for which modifications described above were made during the years ended December 31, 2025 and 2024.

The Company monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

No such loans that have been modified in the last 12 months were past due.

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2024.

No such loans that have been modified in the twelve month periods preceding December 31, 2025 and December 31, 2024 were past due.

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the years ended December 31, 2025 and 2024.

Year Ended December 31, 2025

(in thousands)

Commercial real estate

Commercial and industrial

Year Ended December 31, 2024

(in thousands)

Commercial and industrial

Upon the Company’s determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

During the year ended December 31, 2024, no loans that were modified in the last 12 months to borrowers experiencing financial difficulty had a payment default.

There were no troubled debt restructurings for which there was a payment default during the fiscal year ended September 30, 2023 for loans that were modified during the twelve-month period prior to default.

The following tables present the activity in the allowance by portfolio segment for the periods indicated:

During the years ended December 31, 2025 and 2024, no loans that were modified to borrowers experiencing financial difficulty had a payment default within twelve months of modification.

The following tables present the activity in the allowance for credit losses by portfolio segment for the years ended December 31, 2025 and 2024:

Year Ended December 31, 2025

5 unchanged sentences

(1) Additional provision related to off-balance sheet exposure was a debit of $ 312 thousand for the year ended December 31, 2025.

Three Months Ended December 31, 2023 (transition period)

Year Ended December 31, 2024

(in thousands)

Allowance for credit losses:

Beginning balance, prior to adoption of ASC 326

Impact of adopting ASC 326

Provision for credit losses

Ending balance

Fiscal Year Ended September 30, 2023

(in thousands)

Allowance for loan losses:

Beginning balance

Provision for loan losses

Provision for credit losses (1)

Ending balance

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment evaluation method as of September 30, 2023:

September 30, 2023

(in thousands)

Allowance for loan losses:

Ending allowance balance attributable to loans:

Individually evaluated for impairment

Collectively evaluated for impairment

Purchased credit-impaired

Total ending allowance balance

Loans individually evaluated for impairment

Loans collectively evaluated for impairment

Purchased credit-impaired

Total ending loans balance

Additional provision related to off-balance sheet exposure was a debit of $ 190 thousand for the year ended December 31, 2024.

Premises and Equipment

The following table details the components of premises and equipment:

September 30,

(in thousands)

4 unchanged sentences

Premises and equipment, net

Depreciation was $ 1.8 million and $ 1.6 million for the years ended December 31, 2024 and September 30, 2023, respectively, and $ 0.5 million for the three months ended December 31, 2023.

Depreciation was $ 1.8 million for the years ended December 31, 2025 and 2024.

Operating Leases

3 unchanged sentences

The Company has no leases that are subject to sublease agreements.

As of December 31, 2024 and 2023 and September 30, 2023, the Company had lease liabilities totaling $ 9.0 million, $ 10.5 million and $ 10.9 million, respectively, and right-of-use assets totaling $ 8.3 million, $ 9.8 million and $ 10.2 million.

As of December 31, 2025 and 2024, the Company had lease liabilities totaling $ 10.6 million and $ 9.0 million, respectively, and right-of-use assets totaling $ 9.9 million and $ 8.3 million.

As of December 31, 2025, the weighted average remaining lease term was 8 years and the weighted average discount rate was 4.5 %.

Total lease costs for the year ended December 31, 2024 and September 30, 2023 was $ 2.2 million and $ 2.1 million, respectively, and $ 0.5 million for the three months ended December 31, 2023.

Total lease costs for the year ended December 31, 2025 and 2024 were $ 2.5 million and $ 2.2 million, respectively.

Future undiscounted lease payments for operating leases with initial terms of one year or more as of December 31, 2025 are as follows:

5 unchanged sentences

The following table details the components of deposits:

September 30,

(in thousands)

8 unchanged sentences

Federal Home Loan Bank (“FHLB”) Advances

At December 31, 2024 and 2023 and September 30, 2023, FHLB term borrowings outstanding were $ 107.8 million, $ 126.7 million and $ 126.7 million, respectively, all of which were fixed rate.

At December 31, 2025 and 2024, FHLB term borrowings outstanding were $ 100.7 million and $ 107.8 million, respectively, all of which were fixed rate.

There were no FHLB overnight borrowings outstanding at December 31, 2025 and 2024.

At September 30, 2023, the Company had FHLB overnight borrowings outstanding of $ 49.0 million at the fixed rate of 5.59 %.

The following tables set forth the contractual maturities in the next five years of the balance sheet date and weighted average interest rates of the Company’s fixed rate FHLB advances (dollars in thousands):

The following tables set forth the contractual maturities in the next five years and weighted average interest rates of the Company’s fixed rate FHLB advances (dollars in thousands):

Balance at December 31,

3 unchanged sentences

2028, rates from 3.99 % to 4.58 %

Total term advances

6 unchanged sentences

2028, rates from 3.99 % to 4.58 %

Total term advances

Total FHLB advances

Balance at September 30,

Contractual Maturity

2024, rates from 0.39 % to 2.53 %

2025, rates from 0.56 % to 0.59 %

2026, rates from 4.29 % to 4.98 %

2027, rates from 4.13 % to 4.74 %

2028, rates from 3.99 % to 4.58 %

Total term advances

Total FHLB advances

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances.

The advances were collateralized by residential and commercial mortgage loans under a blanket lien arrangement at December 31, 2024 and 2023 and September 30, 2023.

Based on this collateral and the Company’s holdings of FHLB stock, the Company was eligible to borrow up to an additional total of $ 97.9 million, $ 187.1 million and $ 291.2 million at December 31, 2024 and 2023 and September 30, 2023, respectively.

The advances were collateralized by residential and commercial mortgage loans under a blanket lien arrangement at December 31, 2025 and 2024.

Based on this collateral and the Company’s holdings of FHLB stock, the Company was eligible to borrow up to an additional total of $ 8.9 million and $ 97.9 million at December 31, 2025 and 2024, respectively.

Federal Reserve Borrowings

At December 31, 2024 and 2023 and September 30, 2023, the Company’s borrowings from the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) were $ 0 , $ 2.3 million and $ 4.1 million, respectively.

The borrowings had a rate of 0.35 % and the maturity date equaled the maturity date of the underlying PPP loan pledged to secure the extension of credit.

The Company also pledges residential and commercial loans and investments to the Federal Reserve Bank of New York’s Discount Window.

The Company pledges residential and commercial loans and investments to the Federal Reserve Bank of New York’s Discount Window.

Based on this collateral, the Company was eligible to borrow up to $ 97.3 million and $ 247.2 million as of December 31, 2025 and 2024, respectively.

2 unchanged sentences

At December 31, 2025, approximately $ 92 million in unsecured lines of credit extended by correspondent banks were available to be utilized for short-term funding purposes.

No borrowings were outstanding under lines of credit with correspondent banks at December 31, 2024 and 2023 and September 30, 2023.

No borrowings were outstanding under lines of credit with correspondent banks at December 31, 2025 and 2024.

Subordinated Debentures

In October 2020, the Company completed the private placement of $ 25.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2030 (the “Notes”) to certain qualified institutional buyers and accredited investors.

The Notes bear interest, payable semi-annually, at the rate of 5.00 % per annum, until October 15, 2025.

From and including October 15, 2025 through maturity, the interest rate applicable to the outstanding principal amount due will reset quarterly to the then current three-month Secured Overnight Financing Rate (“ SOFR ”) plus 487.4 basis points.

The Company may, at its option, beginning with the interest payment date of October 15, 2025, but not generally prior thereto, and on any scheduled interest payment date thereafter, redeem the Notes, in whole or in part, subject to the receipt of any required regulatory approval.

The Notes are not subject to redemption at the option of the holder.

The portion of the proceeds of these subordinated notes contributed to the Bank are included as a component of the Bank’s Tier 1 capital for regulatory reporting.

At December 31, 2024 and 2023 and September 30, 2023, the unamortized issuance costs of the Notes were $ 0.3 million, $ 0.4 million and $ 0.4 million, respectively.

For each of the years ended December 31, 2024 and September 30, 2023, $ 0.1 million of issuance costs were recorded in interest expense.

For the three months ended December 31, 2023, $ 14 thousand of issuance costs were recorded in interest expense.

The Notes bore interest, payable semi-annually, at the rate of 5.00 % per annum, until October 15, 2025.

From and including October 15, 2025 through maturity or earlier redemption, the interest rate applicable to the outstanding principal amount due will reset quarterly to the then current three-month Term Secured Overnight Financing Rate (“ SOFR ”) plus 487.4 basis points payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, commencing on January 15, 2026.

As of December 31, 2025, the variable interest rate was 8.76 %.

The Company may, at its option, on any upcoming scheduled interest payment date, redeem the Notes, in whole or in part, subject to the receipt of any required regulatory approval.

The Notes are not subject to redemption at the option of the holders of the Notes.

The portion of the proceeds of these subordinated notes contributed to the Bank is included as a component of the Bank’s Tier 1 capital for regulatory reporting.

At December 31, 2025 and 2024, the unamortized issuance costs of the Notes were $ 257 thousand and $ 311 thousand, respectively.

For each of the years ended December 31, 2025 and 2024, $ 54 thousand of issuance costs were recorded in interest expense.

The Notes are presented net of unamortized issuance costs in the Company’s Consolidated Statements of Financial Condition.

16 unchanged sentences

Interest rate swaps (Loans)

September 30, 2023

Cash flow hedges:

Interest rate swaps (Brokered Certificates of Deposit)

Fair value hedges:

Interest rate swaps (Loans)

Derivatives in a positive position are recorded as “ Other assets ” and derivatives in a negative position are recorded as “Other liabilities” in the Consolidated Statements of Financial Condition.

Cash Flow Hedges of Interest Rate Risk

Interest rate swaps with notional amounts totaling $ 75.0 million as of December 31, 2024 and 2023 and September 30, 2023, were designated as cash flow hedges of certain Brokered Certificates of Deposit.

Interest rate swaps with notional amounts totaling $ 75.0 million as of December 31, 2025 and 2024, were designated as cash flow hedges of certain Brokered Certificates of Deposit.

The swaps were determined to be fully effective during the periods presented and therefore no amount of ineffectiveness has been included in net income.

2 unchanged sentences

The Company expects the hedges to remain fully effective during the remaining term of the swaps.

The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the consolidated statements of income relating to the cash flow derivative instruments for the periods indicated:

Three Months Ended

(transition period)

September 30,

The following table presents the net (losses) gains recorded in accumulated other comprehensive income and the consolidated statements of income relating to the cash flow derivative instruments for the periods indicated:

Year Ended December 31,

(in thousands)

Gain (loss) recognized in other comprehensive income

Gain recognized in interest expense

(Loss) gain recognized in other comprehensive income, net of tax

(Loss) gain recognized in interest expense

Fair Value Hedges of Interest Rate Risk

1 unchanged sentence

The Company pays a fixed rate of 4.56 % and receives a floating rate based on SOFR for the life of the agreement without an exchange of the underlying notional amount.

The hedge was determined to be effective during the year ended December 31, 2024 and the Company expects the hedge to remain effective during the remaining term of the swap.

The hedge was determined to be effective during the years ended December 31, 2025 and 2024, and the Company expects the hedge to remain effective during the remaining term of the swap.

The gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk is recognized in interest income.

The following table presents the effects of the Company’s derivative instruments designated as fair value hedges on the Consolidated Statements of Income for the year ended December 31, 2024 and the three months ended December 31, 2023 (transition period).

There were no fair value hedges for the year ended September 30, 2023.

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands)

Net gain on hedged items recorded in interest income on loans

Gain on hedge recorded in interest income on loans

(Loss) gain on hedge recorded in interest income on loans

The following amounts were recorded on the Statement of Financial Condition related to cumulative basis adjustment for fair value hedges as of the dates indicated.

September 30,

(in thousands)

10 unchanged sentences

At December 31, 2025 and 2024, the Company posted $ 1.2 million and $ 0.7 million, respectively, in collateral to its counterparties in a net liability position.

At September 30, 2023, the Company received $ 0.7 million in collateral from its counterparties under the agreements in a net asset position.

Goodwill and Other Intangible Assets

FASB ASC 350, Intangibles - Goodwill and Other , requires a company to perform an impairment test on goodwill annually, or more frequently if events or changes in circumstance indicate that the asset might be impaired, by comparing the fair value of such goodwill to its recorded or carrying amount.

The Company performs an impairment test on goodwill annually, or more frequently if events or changes in circumstance indicate that the asset might be impaired, by comparing the fair value of such goodwill to its recorded or carrying amount.

If the carrying amount of goodwill exceeds the fair value, an impairment charge must be recorded in an amount equal to the excess.

The following table presents activity for goodwill and other intangible assets, which consist of core deposit intangibles:

September 30,

The following table presents activity for goodwill and other intangible assets, which consist of core deposit intangibles (included in other liabilities):

(in thousands)

13 unchanged sentences

The results of the annual quantitative impairment analysis indicated that the fair value exceeded the carrying value of the reporting unit.

No impairment charges were required to be recorded in the years ended December 31, 2024 and September 30, 2023 and the three months ended December 31, 2023.

No impairment charges were required to be recorded in the years ended December 31, 2025 and 2024.

The following table presents the gross carrying amount and accumulated amortization for the Company’s other intangible assets, which consist of core deposit intangibles:

September 30,

(in thousands)

5 unchanged sentences

(in thousands)

The following table details the components of income tax expense (benefit):

Three Months Ended

(transition period)

September 30,

Pretax income from continuing operations is as follows:

(in thousands)

Income tax expense (benefit) from continuing operations was as follows:

Year Ended December 31,

(in thousands)

Total current

Total deferred

Change in valuation allowance

Total income tax expense

The following table reflects a reconciliation of reported income tax expense to the amount that would result from applying the federal statutory rate of 21 %:

(a) The components of the State deferred income tax expense for the year ended December 31, 2024, are presented net of the valuation allowance in accordance with ASU 2023-09.

The Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures effective January 1, 2025 on a prospective basis for annual reporting periods.

The following table is a reconciliation of the U.S.

federal statutory rate of 21 % to the Company's effective rate for the year ended December 31, 2025 in accordance with ASU 2023-09:

Year Ended December 31,

Three Months Ended December 31,

Fiscal Year Ended September 30,

2023 (transition period)

(in thousands)

(dollars in thousands)

Income tax expense at U.S.

federal statutory rate

State and local income taxes, net of federal income tax effect (1)

Nontaxable or nondeductible items:

Restricted stock

Nonqualified stock options

Other nontaxable and nondeductible items

Income tax expense

(1) State taxes in New York and New York City made up the majority (greater than 50%) of the tax effect in this category.

The following table is a reconciliation of the U.S.

federal statutory rate of 21 % to the Company's effective rate for the year ended December 31, 2024:

Year Ended December 31,

(dollars in thousands)

Federal income tax expense computed by applying the statutory rate to income before income taxes

1 unchanged sentence

Salaries deduction limitation

Non-deductible expenses

Nondeductible expenses

Change in valuation allowance

Income tax expense

The components of income taxes paid for the year ended December 31, 2025, were as follows:

(in thousands)

New York State

New York City

At December 31, 2025, net deferred tax liability (included in other liabilities) was $ 0.4 million.

At December 31, 2024, net deferred tax asset (included in other assets) was $ 1.6 million.

The following table summarizes the composition of deferred tax assets and liabilities:

September 30,

(in thousands)

7 unchanged sentences

Purchase accounting fair value adjustments

Organizational costs

Total deferred tax assets

6 unchanged sentences

Valuation allowance

Net deferred tax asset

Net deferred tax (liability) asset

The Company does no t have net operating loss carryforwards available for federal income tax purposes as of December 31, 2025.

9 unchanged sentences

The Company and its subsidiaries are subject to U.S.

federal income tax as well as income tax of the states of Connecticut, Florida, New Jersey, New York and Pennsylvania and the city of New York.

The Company is no longer subject to examination by taxing authorities for years before 2020.

federal income tax as well as income tax of the states of Alabama, Connecticut, Florida, Georgia, Kansas, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Utah and the city of New York.

The Company is generally no longer subject to examination by taxing authorities for years before 2022.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination.

2 unchanged sentences

The Company’s 2021 and 2018 Equity Compensation Plans (the “2021 Plan” and the “2018 Plan,” respectively), provide for the grant of stock-based compensation awards to members of management, including employees and management officials, and members of the Board.

Under the 2021 Plan, a total of 427,500 shares of the Company’s common stock or equivalents were approved for issuance, of which 230,966 , 276,127 and 276,127 shares remain available for issuance at December 31, 2024 and 2023 and September 30, 2023, respectively.

Of the total 346,000 shares of common stock approved for issuance under the 2018 Plan, 2,795 , 11,352 and 21,784 shares remain available for issuance at December 31, 2024 and 2023 and September 30, 2023, respectively.

Under the 2021 Plan, a total of 427,500 shares of the Company’s common stock or equivalents were approved for issuance, of which 157,445 and 230,966 shares remain available for issuance at December 31, 2025 and 2024, respectively.

Of the total 346,000 shares of common stock approved for issuance under the 2018 Plan, 8,767 and 2,795 shares remain available for issuance at December 31, 2025 and 2024, respectively.

Stock Options

8 unchanged sentences

There were 42,000 stock options exercised resulting in the net issuance (after netting the value of the exercise price and/or certain tax liabilities) of 14,332 shares of common stock during the year ended December 31, 2025.

There were 33,400 and 10,614 stock options exercised during the three months ended December 31, 2023 and the year ended September 30, 2023, respectively.

There were 99,392 stock options exercised resulting in the net issuance (after netting the value of the exercise price and/or certain tax liabilities) of 39,170 shares of common stock during the year ended December 31, 2024.

A summary of stock option activity follows (aggregate intrinsic value in thousands):

Outstanding, October 1, 2023

Outstanding, December 31, 2023 (1)

Outstanding, January 1, 2025

Outstanding, December 31, 2025 (1)

1 unchanged sentence

The following table presents information related to the stock option plan for the periods presented:

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands)

2 unchanged sentences

Tax benefit from option exercises

There was no compensation expense attributable to stock options for the years ended December 31, 2024 and September 30, 2023 and the three months ended December 31, 2023.

There was no compensation expense attributable to stock options for the years ended December 31, 2025 and 2024.

Restricted Stock Awards

During the three months ended December 31, 2023, the year ended December 31, 2024 and the fiscal year ended September 30, 2023, restricted stock awards of 14,000 shares, 59,911 shares and 50,580 shares, respectively, were granted with a five-year vesting period.

During the years ended December 31, 2025 and 2024, restricted stock awards of 58,250 shares and 59,911 shares, respectively, were granted with a five-year vesting period.

Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at issue date.

1 unchanged sentence

Weighted-Average

Grant Date Fair

Unvested, October 1, 2023

Unvested, December 31, 2023

Unvested, January 1, 2025

Unvested, December 31, 2025

Compensation expense attributable to restricted stock awards was $ 1.4 million and $ 1.7 million for the years ended December 31, 2024 and September 30, 2023, respectively, and $ 0.3 million for the three months ended December 31, 2023.

As of December 31, 2024 and 2023 and September 30, 2023, there was $ 3.1 million, $ 3.5 million and $ 3.6 million of total unrealized compensation cost related to unvested restricted stock, expected to be recognized over a weighted-average term of 3.00 years, 3.32 years and 3.41 years, respectively.

The total fair value of shares vested during the years ended December 31, 2024 and September 30, 2023 was $ 1.3 million and $ 1.4 million, respectively, and $ 0.1 million during the three months ended December 31, 2023.

Compensation expense attributable to restricted stock awards was $ 1.3 million and $ 1.4 million for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, there was $ 2.9 million and $ 3.1 million of total unrealized compensation cost related to unvested restricted stock, expected to be recognized over a weighted-average term of 3.01 years and 3.00 years, respectively.

The total fair value of shares vested during the years ended December 31, 2025 and 2024 was $ 1.9 million and $ 1.3 million, respectively.

Restricted Stock Units

3 unchanged sentences

RSUs do not provide voting rights and RSUs may accrue dividends from the date of grant.

The following table summarizes the unvested performance-based RSU activity for the three months ended December 31, 2023 and the year ended December 31, 2024:

The following table summarizes the unvested performance-based RSU activity for the year ended December 31, 2025:

Weighted-Average

Grant Date Fair

Unvested, October 1, 2023

Unvested, December 31, 2023

Unvested, January 1, 2025

Incremental performance shares vested

Unvested, December 31, 2025

No RSUs were granted during the three months ended December 31, 2023, the year ended December 31, 2024 and the fiscal year ended September 30, 2023.

Performance-based RSUs granted in 2022 cliff vest after three years and are subject to the achievement of the Company's pre-defined performance goals for the three-year period ending December 31, 2024.

Compensation expense attributable to RSUs were $ 0.2 million and $ 0.2 million for the years ended December 31, 2024 and September 30, 2023, respectively, and $ 0.1 million for the three months ended December 31, 2023.

As of December 31, 2024 and 2023 and September 30, 2023, there was $ 31 thousand, $ 0.3 million and $ 0.3 million of total unrecognized compensation cost related to non-vested RSUs.

The cost is expected to be recognized over a weighted-average period of 0.14 years, 1.14 years and 1.39 years, respectively.

No RSUs were granted during the year ended December 31, 2024.

During the year ended December 31, 2025, the Company granted 22,345 RSUs.

These performance-based RSUs cliff vest after three years and are subject to the achievement of the Company's pre-defined performance goals for the three-year period ending December 31, 2027.

Compensation expense attributable to RSUs were $ 300 thousand and $ 224 thousand for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, there was $ 414 thousand and $ 31 thousand of total unrecognized compensation cost related to non-vested RSUs.

The cost is expected to be recognized over a weighted-average period of 2.21 years and 0.14 years, respectively.

Related Party Transactions

2 unchanged sentences

(in thousands)

Beginning balance, October 1, 2023

Ending balance, December 31, 2023

Beginning balance, January 1, 2025

Effect of changes in composition of related parties

Ending balance, December 31, 2025

Deposits from principal officers, directors and their affiliates at December 31, 2024 and 2023 and September 30, 2023 were $ 19.3 million, $ 22.6 million and $ 28.5 million, respectively.

Deposits from principal officers, directors and their affiliates at December 31, 2025 and 2024 were $ 38.0 million, $ 19.3 million, respectively.

Loan Commitments and Other Related Activities

5 unchanged sentences

The contractual amounts of financial instruments with off-balance sheet risk were as follows:

September 30,

(in thousands)

1 unchanged sentence

Variable Rate

Standby letters of credit

2 unchanged sentences

Commitments to make loans are generally made for periods of 60 days or less.

The fixed rate loan commitments at December 31, 2025 have interest rates ranging from 5.62 % to 7.15 % and maturities ranging from 1 year to 30 years .

The fixed rate loan commitments at December 31, 2024 have interest rates ranging from 6.625 % to 7.75 % and maturities ranging from 3 years to 30 years .

The fixed rate loan commitment at December 31, 2023 has an interest rate of 7.67 % and a maturity of 5 years .

Regulatory Matters

11 unchanged sentences

If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

At December 31, 2024 and 2023 and September 30, 2023, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.

At December 31, 2025 and 2024, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.

There are no conditions or events since that notification that management believes have changed the institution’s category.

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Tier 1 capital to average total assets

September 30, 2023

Total capital to risk-weighted assets

Tier 1 capital to risk-weighted assets

Common equity tier 1 capital to risk-weighted assets

Tier 1 capital to average total assets

Dividend restrictions - The Company’s principal source of funds for dividend and debt service payments is dividends received from the Bank.

During 2024 the Bank paid $ 5.1 million in cash dividends to the Company.

During the year ended December 31, 2025 the Bank paid $ 6.9 million in cash dividends to the Company.

Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies.

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Fair Value Measurements

820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair value is the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair value is best determined using quoted market prices.

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As such, the fair value estimates may not be realized in an immediate transfer of the respective asset or liability.

FASB ASC 820-10 also establishes a fair value hierarchy and describes three levels of inputs that may be used to measure fair values.

The three levels within the fair value hierarchy are as follows:

There are three levels of inputs that may be used to measure fair values:

Valuation is based upon unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

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GSE residential mortgage-backed securities

GSE residential collateralized mortgage obligations

GSE commercial mortgage-backed securities

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Available-for-sale securities:

Treasury securities

GSE residential mortgage-backed securities

GSE commercial mortgage-backed securities

Collateralized loan obligations

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Financial liabilities:

September 30, 2023

Fair Value Measurements Using:

Quoted Prices In

Active Markets

for Identical

Significant Other

Observable Inputs

(In thousands)

Financial assets:

Available-for-sale securities:

GSE residential mortgage-backed securities

Corporate bonds

Loan servicing rights

The fair value for the securities available-for-sale was obtained from an independent broker based upon matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

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Derivatives represent interest rate swaps for which the estimated fair values are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.

The fair value of mortgage servicing rights are based on a valuation model that calculates the present value of estimated future servicing income.

The fair value of collateral-dependent loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals.

These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans.

Non-real estate collateral may be valued using an appraisal, net book value per the borrowers financial statements, adjusted or discounted based on management’s knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.

Collateral-dependent loans are evaluated on a quarterly basis and adjusted in accordance with the allowance policy.

Other Real Estate Owned (“OREO”) (included in Other Assets):

Assets acquired through or in lieu of loan foreclosures are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.

These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell.

Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually.

These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and income approach with data comparable properties.

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

OREO properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for both collateral-dependent loans and OREO are performed by certified commercial appraisers for commercial properties or certified residential appraisers for residential properties whose qualifications and licenses have been reviewed and approved by the Bank.

Once received, an independent third party reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated future servicing income.

The valuation model utilizes interest rate, prepayment speed, and default rate assumptions that market participants would use in estimating future net servicing income.

Fair value of loan servicing rights related to residential mortgage loans at December 31, 2024 was determined based on discounted expected future cash flows using discount rates ranging from 13.0 % to 15.5 %, prepayment speeds ranging from 18.0 % to 19.4 % and a weighted average life ranging from 2.0 to 3.5 years.

Fair value at December 31, 2023 was determined based on discounted expected future cash flows using discount rates ranging from 12.4 % to 14.9 %, prepayment speed of 26.25 % and a weighted average life ranging from 1.6 to 2.8 years.

Fair value at September 30, 2023 for mortgage servicing rights was determined based on discounted expected future cash flows using discount rates ranging from 12.9 % to 15.4 %, prepayment speed of 26.25 % and a weighted average life ranging from 1.2 to 2.8 years.

The fair value of loan servicing rights related to residential mortgage loans at December 31, 2025 was determined based on discounted expected future cash flows using discount rates ranging from 12.4 % to 14.9 %, prepayment speeds ranging from 17.6 % to 18.9 % and a weighted average life ranging from 1.5 to 3.6 years.

Fair value at December 31, 2024 was determined based on discounted expected future cash flows using discount rates ranging from 13.0 % to 15.5 %, prepayment speeds ranging from 18.0 % to 19.4 % and a weighted average life ranging from 2.0 to 3.5 years.

The fair value of loan servicing rights for SBA loans at December 31, 2025 was determined based on discounted expected future cash flows using discount rates ranging from 6.0 % to 48.8 %, prepayment speeds ranging from 7.9 % to 31.9 % and a weighted average life ranging from 0.4 to 5.4 years.

The fair value of loan servicing rights for SBA loans at December 31, 2024 was determined based on discounted expected future cash flows using discount rates ranging from 5.5 % to 43.4 %, prepayment speeds ranging from 9.3 % to 35.0 % and a weighted average life ranging from 0.8 to 5.1 years.

The fair value of loan servicing rights for SBA loans at September 30, 2023 was determined based on discounted expected future cash flows using discount rates ranging from 10.1 % to 41.6 %, prepayment speeds ranging from 8.3 % to 29.3 % and a weighted average life ranging from 1.2 to 5.8 years.

The Company has determined these are mostly unobservable inputs and considers them Level 3 inputs within the fair value hierarchy.

The following table presents the changes in loan servicing rights for the periods presented:

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands)

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Assets Measured at Fair Value on a Non-recurring Basis

There were no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2024 and September 30, 2023 and for the years then ended.

Financial assets measured at fair value on a non-recurring basis as of December 31, 2023 include certain individually evaluated loans reported at fair value of the underlying collateral if repayment is expected solely from the collateral.

There were no assets measured at fair value on a non-recurring basis as of December 31, 2024.

Assets measured at fair value on a non-recurring basis as of December 31, 2025 are summarized below:

December 31, 2025

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(in thousands)

Individually evaluated loans - Multi-family

The fair value amounts shown in the table above are individually evaluated loans net of reserves allocated to said loans.

The total reserves allocated to these loans were $ 397 thousand at December 31, 2023.

The table below presents additional quantitative information about level 3 fair value measurements for assets measured at fair value on a non-recurring basis at December 31, 2023:

Collateral-dependent loans:

Commercial real estate

Commercial and industrial

Other real estate owned, net:

Commercial real estate

The Bank had one other real estate owned property at December 31, 2025 with a $ 650 thousand carrying value (included in other assets).

The table below presents quantitative information about level 3 fair value measurements for assets measured at fair value on a non-recurring basis at December 31, 2025:

December 31, 2025

3 unchanged sentences

(Dollar in thousands)

Individually evaluated loans - Multi-family

Appraisal of collateral

Appraisal and

adjustments (1)

The appraisal of the underlying collateral property generally includes various significant unobservable inputs (level 3).

This was performed by certified general appraisers.

Management adjusted the appraisal downward for factors such as the condition of the property and liquidation expenses.

The range of other appraisal adjustments and liquidation expenses are shown as a percentage of the appraisal.

Collateral-dependent loans:

Income approach

Capitalization rate

4.00 % - 9.40 %

Commercial real estate

Sales comparison

Comparable sales

5.00 % - 20.00 %

Commercial and industrial

Income approach

Capitalization rate

5.00 % - 9.50 %

Other real estate owned:

Commercial real estate

Income approach

Capitalization rate

5.50 % - 12.00 %

Financial Instruments Not Measured at Fair Value

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments not carried at fair value at December 31, 2024 and 2023 and September 30, 2023:

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments not carried at fair value at December 31, 2025 and 2024:

December 31, 2025

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Accrued interest payable

September 30, 2023

Fair Value Measurements Using:

Quoted Prices In

Active Markets

for Identical

Significant Other

Observable Inputs

(In thousands)

Financial assets:

Cash and cash equivalents

Securities held-to-maturity

Accrued interest receivable

Financial liabilities:

Time deposits

Demand and other deposits

Subordinated debentures

Accrued interest payable

Parent Company Only Condensed Financial Information

2 unchanged sentences

Condensed Balance Sheets

September 30,

(in thousands)

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Condensed Statements of Income

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands)

6 unchanged sentences

Condensed Statements of Cash Flows

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands)

3 unchanged sentences

Amortization of debt issuance costs

(Increase) decrease in other assets

Decrease in accrued interest payable

Increase in other assets

Increase in accrued interest payable

Decrease in accrued expenses and other liabilities

Net cash provided by operating activities

2 unchanged sentences

Payments related to tax withholding for equity awards

Repurchase of common stock

Cash dividends paid

Net cash used in financing activities

Net increase (decrease) in cash and due from banks

Net (decrease) increase in cash and due from banks

Cash and due from banks, beginning of period

5 unchanged sentences

The Company’s basic and diluted EPS calculations are presented in the following table:

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands, except share and per share data)

9 unchanged sentences

Weighted average common and equivalent shares outstanding

There were no stock options that were antidilutive at December 31, 2024 and 2023 and September 30, 2023.

There were no stock options that were antidilutive at December 31, 2025 and 2024.

Accumulated Other Comprehensive (Loss) Income

The following presents changes in accumulated other comprehensive (loss) income by component, net of tax:

The following presents changes in accumulated other comprehensive (loss) income by component, net of tax, for the periods indicated:

Unrealized Gains and

3 unchanged sentences

Balance at January 1, 2025

Other comprehensive income, before reclassification

Amount reclassified from accumulated other comprehensive income

Net current period other comprehensive income

Balance at December 31, 2024

Unrealized Gains and

Losses on Available-

for-Sale Debt

(in thousands)

Balance at October 1, 2023

Other comprehensive income (loss), before reclassification

Amount reclassified from accumulated other comprehensive income (loss)

Amount reclassified from accumulated other comprehensive income

Net current period other comprehensive income (loss)

4 unchanged sentences

(in thousands)

Balance at October 1, 2022

Other comprehensive (loss) income, before reclassification

Amount reclassified from accumulated other comprehensive loss

Net current period other comprehensive (loss) income

Balance at September 30, 2023

The following represents the reclassification out of accumulated other comprehensive (loss) income for the years ended December 31, 2024 and September 30, 2023 and the three months ended December 31, 2023:

Three Months Ended

(transition period)

September 30,

Balance at January 1, 2024

Other comprehensive income, before reclassification

Amount reclassified from accumulated other comprehensive income

Net current period other comprehensive income

Balance at December 31, 2024

The following presents the reclassification out of accumulated other comprehensive (loss) income for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Affected Line Item in Consolidated

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Other significant non-cash items assessed by the CODM are depreciation, amortization and provision for credit losses consistent with the reporting on the consolidated statements of cash flows.

Expenditures for long-lived assets are also evaluated and are consistent with the reporting on the consolidated statements

of cash flows.

Expenditures for long-lived assets are also evaluated and are consistent with the reporting on the consolidated statements of cash flows.

Strategic plans and budget to actual monitoring are evaluated as one reportable segment.

The actual results are used in assessing performance of the segment and in establishing compensation.

All revenues are derived from banking operations within the United States, and for the year ended December 31, 2024, the three months ended December 31, 2023 and the fiscal year ended September 30, 2023, there was no customer that accounted for more than 10% of the Company's consolidated revenue.

All revenues are derived from banking operations within the United States, and for the years ended December 31, 2025 and 2024, there was no customer that accounted for more than 10% of the Company's consolidated revenue.

Accounting policies of the Community Banking segment are the same as those described in Note 1.

3 unchanged sentences

Items outside the scope of ASC 606 are noted as such.

Three Months Ended

(transition period)

September 30,

Year Ended December 31,

(in thousands)

6 unchanged sentences

(1) Not included within the scope of ASC 606

(2) Other income includes merchant card processing fees of $ 48 and $ 47 for the year ended December 31, 2024 and September 30, 2023, respectively, and $ 6 for the three months ended December 31, 2023, which are included in the scope of ASC 606 and loan related fee income, recoveries on acquired loans and miscellaneous income totaling $ 161 and $ 1,724 for the year ended December 31, 2024 and September 30, 2023, respectively, and $ 59 for the three months ended December 31, 2023, which are not included in the scope of ASC 606.

The Company settled ongoing litigation and received a settlement payment of $ 975 in the year ended September 30, 2023.

(2) Other income includes merchant card processing fees of $ 38 and $ 48 for the year ended December 31, 2025 and 2024, respectively, which are included in the scope of ASC 606 and gain on sale of fixed assets, loan related fee income and miscellaneous income totaling $ 225 and $ 161 for the year ended December 31, 2025 and 2024, respectively, which are not included in the scope of ASC 606.

A description of the Company’s revenue streams included in the scope of ASC 606 is as follows:

8 unchanged sentences

The dividend was paid on February 26, 2026 to shareholders of record on February 12, 2026 .

On March 12, 2026, the Company completed the private placement of $ 35 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2036 (the “Notes”) to certain qualified institutional buyers and accredited investors.

The Notes will initially bear interest, payable semi-annually, at the rate of 7.25 % per annum, until March 15, 2031.

From and including March 15, 2031, the interest rate applicable to the outstanding principal amount due will reset quarterly to the then current three-month secured overnight financing rate ( SOFR ) plus 386 basis points.

The Company intends to use the net proceeds to redeem the Company’s outstanding $ 25 million in aggregate principal amount of subordinated notes and for general corporate purposes, including contributing equity capital to the Bank.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data