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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-12 · 144 added, 152 removed, 291 unchanged (50% of the section changed)

33 unchanged sentences

It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith.

The detailed discussion focuses on our consolidated financial condition as of June 30, 2025 compared to the consolidated financial condition as of December 31, 2024 and the consolidated results of operations for the three and six months ended June 30, 2025 and 2024.

The detailed discussion focuses on our consolidated financial condition as of September 30, 2025 compared to the consolidated financial condition as of December 31, 2024 and the consolidated results of operations for the three and nine months ended September 30, 2025 and 2024.

Our results of operations depend primarily on our net interest income, which is the difference between the interest income we earn on loans and investments and the interest expense we pay on deposits, borrowings, and other interest-bearing liabilities.

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Recent Events

On January 27, 2025, Lake Shore, MHC, the former parent mutual holding company of Lake Shore Bancorp, Inc., a federal corporation ("Lake Shore Federal Bancorp"), adopted a Plan of Conversion and Reorganization pursuant to which Lake Shore, MHC, would undertake a "second-step" conversion (the “Conversion”) and Lake Shore Savings Bank, a federally chartered savings bank, the wholly-owned subsidiary of Lake Shore Bancorp Federal, would reorganize from the two-tier mutual holding company structure to the fully-public stock holding company structure.

In addition, Lake Shore Savings Bank would convert its charter from a federal savings bank to a New York commercial bank renamed Lake Shore Bank.

Effective July 18, 2025, Lake Shore Bancorp, Inc.

(“Lake Shore Bancorp”) incorporated under the laws of the State of Maryland became the banking holding company of Lake Shore Bank, a New York commercial bank and its only wholly-owned subsidiary.

On January 27, 2025, Lake Shore, MHC, the former parent mutual holding company of Lake Shore Bancorp, Inc., a federal corporation ("Lake Shore Federal Bancorp"), adopted a Plan of Conversion and Reorganization (the "Plan") pursuant to which Lake Shore, MHC, would undertake a "second-step" conversion and Lake Shore Savings Bank, a federally chartered savings bank, the wholly-owned subsidiary of Lake Shore Bancorp Federal, would reorganize from the two-tier mutual holding company structure to the fully-public stock holding company structure.

Pursuant to the Plan, (i) Lake Shore Savings Bank became the wholly-owned subsidiary of Lake Shore Bancorp, converted its charter to a New York chartered commercial bank, and was renamed as Lake Shore Bank, (ii) the shares of common stock of Lake Shore Federal Bancorp owned by persons other than Lake Shore, MHC (the shares owned by Lake Shore, MHC were canceled) were converted into shares of common stock of Lake Shore Bancorp based on an exchange ratio designed to preserve the percentage ownership interests of such persons (excluding shares of common stock of Lake Shore Bancorp purchased in the stock offering described below and cash received in lieu of issuance of fractional shares of common stock of Lake Shore Bancorp, and as adjusted to reflect certain assets held by Lake Shore, MHC), and (iii) Lake Shore Bancorp offered and sold shares of common stock, representing the ownership interest of Lake Shore, MHC in Lake Shore Federal Bancorp, in a subscription offering.

The number and price of shares of Lake Shore Bancorp common stock sold in the offering and the exchange ratio were based on Lake Shore Bancorp's pro forma market value on a fully converted basis, as determined by an independent appraisal.

The Plan was subject to regulatory approval as well as approval by the depositors of Lake Shore Savings Bank and by Lake

Shore Federal Bancorp stockholders (including approval by the holders of a majority of the outstanding shares of Lake Shore Federal Bancorp's common stock held by persons other than the MHC).

The Plan received all required regulatory, depositor and stockholder approval, and the conversion and offering were consummated on July 18, 2025.

(“Lake Shore Bancorp”), a new corporation incorporated under the laws of the State of Maryland, became the bank holding company of Lake Shore Bank, a New York commercial bank and its only wholly-owned subsidiary in connection with the completion of Conversion.

The Conversion was consummated through the merger of Lake Shore, MHC with and into Lake Shore Federal Bancorp, followed by the merger of Lake Shore Federal Bancorp with and into Lake Shore Bancorp, which occurred on July 18, 2025.

In the subscription offering, Lake Shore Bancorp raised gross proceeds of $49.5 million by selling 4,950,460 shares of its common stock (approximately the midpoint of the offering range) at $10.00 per share to depositors of the Bank.

As part of the conversion transaction, each outstanding share of Lake Shore Federal Bancorp common stock owned by the public stockholders of Lake Shore Federal Bancorp (stockholders other than Lake Shore, MHC) as of the closing date were converted into shares of Lake Shore Bancorp's common stock based on an exchange ratio of 1.3549 shares of Lake Shore Bancorp's common stock for each share of Lake Shore Federal Bancorp common stock so that Lake Shore Federal Bancorp's existing public stockholders would own approximately the same percentage of Lake Shore Bancorp's common stock as they owned of Lake Shore Federal Bancorp's common stock immediately prior to the conversion.

The Company used $4.0 million of the proceeds to fund an addition to its Employee Stock Ownership Plan ("ESOP") loan for the acquisition of an additional 396,036 shares at $10.00 per share.

Expenses incurred related to the offering were approximately $2.3 million and have been recorded against offering proceeds.

As part of the Conversion transaction, each outstanding share of Lake Shore Federal Bancorp common stock owned by the public stockholders of Lake Shore Federal Bancorp (stockholders other than Lake Shore, MHC) as of July 18, 2025 were converted into shares of Lake Shore Bancorp's common stock based on an exchange ratio of 1.3549 shares of Lake Shore Bancorp's common stock for each share of Lake Shore Federal Bancorp common stock so that Lake Shore Federal Bancorp's existing public stockholders would own approximately the same percentage of Lake Shore Bancorp's common

stock as they owned of Lake Shore Federal Bancorp's common stock immediately prior to the Conversion.

A total of 7,825,501 shares of common stock were outstanding following the completion of the stock offering.

Earnings per share and other share information disclosed herein do not reflect the effect of Lake Shore Bancorp's conversion and related stock offering.

As previously reported on a Current Report on Form 8-K filed on July 24, 2025 with the SEC, the Company’s Board of Directors declared a cash dividend of $0.09 per share on its outstanding common stock on July 23, 2025.

The dividend is expected to be paid on August 13, 2025 to stockholders of record as of August 4, 2025.

Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549).

As previously disclosed on a Current Report on Form 8-K , on October 22, 2025, the Board of Directors of the Company declared a cash dividend of $0.09 per share on its outstanding common stock.

The dividend is expected to be paid on November 12, 2025 to stockholders of record as of November 3, 2025.

As previously disclosed on a Current Report on Form 8-K , on October 22, 2025, the Board of Directors of the Company adopted a plan to repurchase up to 5% of its outstanding shares of common stock, which may commence following the one-year anniversary of the Conversion, or on July 20, 2026.

Management Strategy

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In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for credit losses.

As of June 30, 2025 and December 31, 2024, the allowance for credit losses on loans totaled $5.2 million and $5.1 million, respectively.

As of September 30, 2025 and December 31, 2024, the allowance for credit losses on loans totaled $4.9 million and $5.1 million, respectively.

Due to the nature and composition of the Bank's lending activities, a significant portion of the allowance for credit losses on loans is allocated to the commercial real estate portfolio.

As of June 30, 2025 and December 31, 2024, the allowance for credit losses on loans allocated to the total commercial real estate portfolio was $4.2 million, or 80.7%, and $4.2 million, or 81.3%, respectively.

As of September 30, 2025 and December 31, 2024, the allowance for credit losses on loans allocated to the total commercial real estate portfolio was $3.9 million, or 80.2%, and $4.2 million, or 81.3%, respectively.

The Company's methodology for maintaining its allowance for credit losses is based on historical loan-level performance experience and data, peer data, current economic information, and reasonable and supportable forecasts.

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civilian unemployment, and a decrease of 100 basis points in the FOMC's projected rate of U.S.

GDP growth, this would increase the model's total calculated allowance for credit losses on loans by $288,000, or 5.6%, representing a five basis points increase in the coverage ratio of the allowance for credit losses as a percentage of loans at amortized cost, assuming all other quantitative and qualitative factors are kept at current levels, as of June 30, 2025.

This example is only one of the numerous possible economic scenarios that could be utilized in assessing the sensitivity of the allowance for credit losses and does not represent management’s assumptions or judgment of factors as of June 30, 2025.

GDP growth, this would increase the model's total calculated allowance for credit losses on loans by $297,000, or 6.1%, representing a five basis points increase in the coverage ratio of the allowance for credit losses as a percentage of loans at amortized cost, assuming all other quantitative and qualitative factors are kept at current levels, as of September 30, 2025.

Unexpected changes in economic growth could adversely affect our results of operations, including causing increases in delinquencies and default rates on loans, which would adversely impact our charge-offs, allowance for credit losses, and provision for credit losses.

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The following tables set forth certain information relating to our average balance sheets for each principal category, and the amount of interest income or expense associated with that category, as well as corresponding average yields earned and rates paid for the periods indicated.

Such yields and costs are derived by dividing income or expense by the average balance of interest-earning assets or interest-bearing liabilities, respectively, for

the periods presented.

Such yields and costs are derived by dividing income or expense by the average balance of interest-earning assets or interest-bearing liabilities, respectively, for the periods presented.

Average balances are derived from daily balances over the periods indicated.

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The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.

The net amortization of deferred loan fees and costs were $100,000 and $142,000 for the three months ended June 30, 2025 and 2024, respectively.

The net amortization of deferred loan fees and costs were $163,000 and $266,000 for the six months ended June 30, 2025 and 2024, respectively.

The net amortization of deferred loan fees and costs were $112,000 and $103,000 for the three months ended September 30, 2025 and 2024, respectively.

amortization of deferred loan fees and costs were $275,000 and $369,000 for the nine months ended September 30, 2025 and 2024, respectively.

Interest income on securities does not include a tax equivalent adjustment for tax exempt securities.

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For the Three Months Ended

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

Interest Income/

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Time deposits

Total interest-bearing deposits

Borrowed funds & other interest-bearing liabilities

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Net interest margin

(1) The tax equivalent adjustment for bank qualified tax exempt municipal securities, using a federal statutory rate of 21%, results in rates of 3.03% and 3.20% for the three months ended June 30, 2025 and 2024, respectively.

(1) The tax equivalent adjustment for bank qualified tax exempt municipal securities, using a federal statutory rate of 21%, results in rates of 3.00% and 3.11% for the three months ended September 30, 2025 and 2024, respectively.

Yields above are not presented on a tax equivalent basis.

(2) Annualized.

(3) Included within savings accounts as of June 30, 2025 is $43.7 million of funds collected and held on deposit in a segregated account in connection with the Company's stock offering.

The average rate paid on these funds was 5 basis points and the collection of these funds resulted in a $3.8 million increase in the average balance of savings accounts during the three months ended June 30, 2025.

For the Six Months Ended

June 30, 2025

June 30, 2024

For the Nine Months Ended

September 30, 2025

September 30, 2024

Interest Income/

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Time deposits

Total interest-bearing deposits

Borrowed funds & other interest-bearing liabilities

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Net interest margin

(1) The tax equivalent adjustment for bank qualified tax exempt municipal securities, using a federal statutory rate of 21%, results in rates of 3.03% and 3.16% for the six months ended June 30, 2025 and 2024, respectively.

(1) The tax equivalent adjustment for bank qualified tax exempt municipal securities, using a federal statutory rate of 21%, results in rates of 3.02% and 3.14% for the nine months ended September 30, 2025 and 2024, respectively.

Yields above are not presented on a tax equivalent basis.

(2) Annualized.

(3) Included within savings accounts as of June 30, 2025 is $43.7 million of funds collected and held on deposit in a segregated account in connection with the Company's stock offering.

The average rate paid on these funds was 5 basis points and the collection of these funds resulted in a $1.9 million increase in the average balance of savings accounts during the six months ended June 30, 2025.

Rate Volume Analysis .

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The effect of changes in rate is measured by applying the change in rate between the two periods to the average volume during the first period.

Three Months Ended June 30, 2025

Three Months Ended June 30, 2024

Three Months Ended September 30, 2025

Three Months Ended September 30, 2024

(Dollars in thousands)

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Total change in net interest income

Six Months Ended June 30, 2025

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2025

Nine Months Ended September 30, 2024

(Dollars in thousands)

Interest-earning assets:

Interest-earning deposits & federal funds sold

Interest-earning deposits

Loans, including fees

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Total change in net interest income

As shown in the above tables, the increase in net interest income for the three months ended June 30, 2025 when compared to the three months ended June 30, 2024 was primarily impacted by an increase in the average yield of interest-earning assets, a decrease in the average interest rate paid on interest-bearing liabilities, and a decrease in the average balance of interest-bearing liabilities.

This increase was partially offset by a decrease in the average balance of interest-earning assets when compared to the prior year period.

The average yield of interest-earning assets increased by 44 basis points to 5.72% for the three months ended June 30, 2025 as compared to 5.28% for the same period in the prior year primarily as a result of a 54 basis points increase in the average yield of the loan portfolio.

The average interest rate paid on interest-bearing liabilities decreased 32 basis points from 2.72% during the three months ended June 30, 2024 to 2.40% during the three months ended June 30, 2025.

The decrease in the average interest rate paid on interest-bearing liabilities during the three

months ended June 30, 2025 was primarily due to a 33 basis points decrease in the average interest rate paid on deposit accounts.

As shown in the above tables, the increase in net interest income for the three months ended September 30, 2025 when compared to the three months ended September 30, 2024 was primarily impacted by an increase in the average balance of interest-earning assets, a decrease in the average interest rate paid on interest-bearing liabilities, a decrease in the average balance of interest-bearing liabilities, and an increase in the average yield of interest-earning assets.

The average balance of interest-earning assets increased by $26.9 million to $683.6 million for the three months ended September 30, 2025 as compared to $656.7 million for the three months ended September 30, 2024.

The average interest rate paid on interest-bearing liabilities decreased 27 basis points from 2.72% during the three months ended September 30, 2024 to 2.45% during the three months ended September 30, 2025.

The decrease in the average interest rate paid on interest-bearing liabilities during the three months ended September 30, 2025 was primarily due to a 27 basis points decrease in the average interest

rate paid on deposit accounts.

The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates and time deposit repricing.

The average balance of interest-bearing liabilities decreased $24.7 million, from $521.8 million during the three months ended June 30, 2024 to $497.1 million during the three months ended June 30, 2025 as a result of decreases in the average balance of deposits of $3.2 million and the average balance of borrowed funds and other interest-bearing liabilities of $21.4 million.

The decrease in the average balance of interest-earning assets was primarily due to a $25.5 million, or 48.4%, decrease in interest-earning deposits when compared to the prior year period.

Net interest margin increased to 3.84% for the three months ended June 30, 2025 as compared to 3.14% for the same period of the prior year.

As shown in the above tables, the increase in net interest income for the six months ended June 30, 2025 was primarily impacted by an increase in the average yield of interest-earning assets, a decrease in the average interest rate paid on interest-bearing liabilities, and a decrease in the average balance of interest-bearing liabilities.

The average balance of interest-bearing liabilities decreased $20.8 million, from $509.8 million during the three months ended September 30, 2024 to $489.0 million during the three months ended September 30, 2025 as a result of decreases in the average balance of borrowed funds and other interest-bearing liabilities of $18.2 million and in the average balance of deposits of $2.6 million.

The average yield earned on interest-earning assets increased eight basis points from 5.39% during the three months ended September 30, 2024 to 5.47% during the three months ended September 30, 2025.

The increase in the average yield of interest-earning assets was primarily due to a 21 basis points increase in the average yield on the loan portfolio when compared to the prior year period.

Net interest margin increased to 3.72% for the three months ended September 30, 2025 as compared to 3.28% for the same period of the prior year.

As shown in the above tables, the increase in net interest income for the nine months ended September 30, 2025 was primarily impacted by a decrease in the average interest rate paid on interest-bearing liabilities, an increase in the average yield of interest-earning assets, and a decrease in the average balance of interest-bearing liabilities.

This increase was partially offset by a decrease in the average balance of interest-earning assets when compared to the same period in the prior year.

The average yield of interest-earning assets increased by 29 basis points to 5.53% for the six months ended June 30, 2025 as compared to the same period in the prior year primarily as a result of a 38 basis points increase in the average yield of the loan portfolio.

The average interest rate paid on interest-bearing liabilities decreased 29 basis points from 2.69% during the six months ended June 30, 2024 to 2.40% during the six months ended June 30, 2025.

The decrease in the average interest rate paid on interest-bearing liabilities during the six months ended June 30, 2025 was primarily due to a 29 basis points decrease in the average interest rate paid on deposit accounts.

The average interest rate paid on interest-bearing liabilities decreased 28 basis points from 2.70% during the nine months ended September 30, 2024 to 2.42% during the nine months ended September 30, 2025.

The decrease in the average interest rate paid on interest-bearing liabilities during the nine months ended September 30, 2025 was primarily due to a 28 basis points decrease in the average interest rate paid on deposit accounts.

The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates and time deposit repricing.

The average balance of interest-bearing liabilities decreased $32.3 million, from $522.9 million during the six months ended June 30, 2024 to $490.6 million during the six months ended June 30, 2025 as a result of decreases in the average balance of deposits of $9.9 million and the average balance of borrowed funds and other interest-bearing liabilities of $22.4 million.

The decrease in the average balance of interest-earning assets was primarily due to a $23.0 million, or 47.5%, decrease in interest-earning deposits when compared to the prior year period.

Net interest margin increased to 3.67% for the six months ended June 30, 2025 as compared to 3.12% for the same period of the prior year.

Comparison of Financial Condition at June 30, 2025 and December 31, 2024

Total assets at June 30, 2025 were $734.8 million, an increase of $49.3 million, or 7.2%, as compared to $685.5 million at December 31, 2024 primarily due to increases in cash and cash equivalents and loans receivable, net.

Cash and cash equivalents increased by $42.2 million, or 127.5%, from $33.1 million at December 31, 2024 to $75.4 million at June 30, 2025.

The increase in cash and cash equivalents was primarily due to an increase in interest earning deposits of $42.0 million, or 138.1%, as the result of $43.7 million of funds collected and held on deposit in a segregated account in connection with the Company's stock offering in the second quarter of 2025.

The increase in cash and cash equivalents was partially offset by a decrease in long-term debt due to the repayment of Federal Home Loan Bank of New York ("FHLBNY") borrowings of $8.3 million.

Securities, at fair value, decreased by $1.2 million, or 2.1%, from $56.5 million at December 31, 2024 to $55.3 million at June 30, 2025, primarily due to securities paydowns of $1.5 million, partially offset by a $288,000 increase in the market value of the securities.

Net loans receivable increased during the six months ended June 30, 2025, as shown in the table below:

The average yield of interest-earning assets increased by 22 basis points to 5.51% for the nine months ended September 30, 2025 as compared to the same period in the prior year primarily as a result of a 33 basis points increase in the average yield of the loan portfolio.

The average balance of interest-bearing liabilities decreased $28.4 million, from $518.5 million during the nine months ended September 30, 2024 to $490.1 million during the nine months ended September 30, 2025 as a result of decreases of the average balance of borrowed funds and other interest-bearing liabilities of $21.0 million and decreases in the average balance of deposits of $7.4 million.

The average balance of interest-earning assets decreased by $11.1 million to $649.3 million for the nine months ended September 30, 2025 as compared to $660.4 million for the nine months ended September 30, 2024.

The decrease in the average balance of interest-earning assets was primarily due to an $8.9 million, or 17.7%, decrease in average interest-earning deposits when compared to the prior year period.

Net interest margin increased to 3.68% for the nine months ended September 30, 2025 as compared to 3.17% for the same period of the prior year.

Comparison of Financial Condition at September 30, 2025 and December 31, 2024

Total assets at September 30, 2025 were $742.8 million, an increase of $57.3 million, or 8.4%, as compared to $685.5 million at December 31, 2024 primarily due to increases in cash and cash equivalents and loans receivable, net.

Cash and cash equivalents increased by $50.5 million, or 152.4%, from $33.1 million at December 31, 2024 to $83.6 million at September 30, 2025.

The increase in cash and cash equivalents was primarily due to an increase in interest earning deposits of $49.9 million, or 164.1%, as the result of the second step conversion and offering that was completed during the third quarter of 2025.

Securities, at fair value, decreased by $446,000, or 0.8%, from $56.5 million at December 31, 2024 to $56.0 million at September 30, 2025, primarily due to securities paydowns of $2.3 million, partially offset by a $1.7 million increase in the market value of the securities.

Net loans receivable increased during the nine months ended September 30, 2025, as shown in the table below:

At September 30,

At December 31,

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Loans receivable, net

(1) Includes one- to four-family construction loans.

(1) There were no one- to four- family construction loans as of September 30, 2025 or December 31, 2024.

(2) Includes commercial construction loans.

The loans receivable, net balance increased $7.8 million, or 1.4%, from $544.6 million at December 31, 2024 to $552.4 million at June 30, 2025.

The loans receivable, net balance increased $8.0 million, or 1.5%, from $544.6 million at December 31, 2024 to $552.6 million at September 30, 2025.

The increase was primarily due to increases in consumer loans and commercial real estate loans, partially offset by a decrease in residential, one- to four-family real estate loans.

During the six months ended June 30, 2025, we remained strategically focused on originating shorter duration, adjustable-rate loans to diversify our asset mix and to manage interest rate risk while continuing to reduce our reliance on wholesale funding sources.

During the nine months ended September 30, 2025, we remained strategically focused on originating shorter duration, adjustable-rate loans to diversify our asset mix and to manage interest rate risk while continuing to reduce our reliance on wholesale funding sources.

Asset Quality .

The following tables set forth activity in our allowance for credit losses on loans and other ratios at or for the dates indicated:

At or For the Six Months Ended June 30,

At or For the Nine Months Ended September 30,

(Dollars in thousands)

Balance at beginning of period

(Credit) provision for credit losses

Credit to provision for credit losses

Total charge-offs

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Balance at end of period

At September 30,

At December 31,

Average loans outstanding, including fees

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Allowance for credit losses as a percent of non-performing loans at amortized cost

When compared to December 31, 2024, the current modeled allowance for credit losses related to the loan portfolio increased by approximately $31 thousand, or 0.60%, of which $45 thousand was due to an increase in loan balance, which was partially offset by a decrease of $14 thousand due to a decrease in reserve rate for the blended portfolio.

Such allowance

for credit losses was calculated utilizing a discounted cash flow model as further described in Part I Item 1 - Note 1 - Basis of Presentation and Significant Accounting Policies and Estimates.

For the Six Months Ended June 30,

When compared to December 31, 2024, the current modeled allowance for credit losses related to the loan portfolio decreased by approximately $263 thousand, or 5.13%, which was comprised of a decrease of $354 thousand due to a decrease in reserve rate for the blended portfolio, partially offset by an increase of $91 thousand related to an increase in loan balance.

Such allowance for credit losses was calculated utilizing a discounted cash flow model as further described in Part I Item 1 - Note 1 - Basis of Presentation and Significant Accounting Policies and Estimates.

For the Nine Months Ended September 30,

Ratio of net recoveries (charge-offs) to average loans outstanding by loan type, annualized:

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Ratio of net recoveries to average loans outstanding

For the six months ended June 30, 2025, consumer loan net charge-offs to average consumer loans outstanding, annualized, improved to (0.14)% from (1.51)% for the prior year period.

This improvement was primarily driven by an increase in average consumer loans outstanding of $7.3 million for the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

For the nine months ended September 30, 2025, consumer loan net charge-offs to average consumer loans outstanding, annualized, improved to (0.20)% from (2.81)% for the prior year period.

This improvement was primarily driven by an increase in average consumer loans outstanding of $8.6 million for the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

At September 30,

At December 31,

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Non-performing assets as a percent of total assets:

(1) Includes one- to four- family construction loans.

(1) Includes Commercial construction loans.

Total non-performing assets decreased by $2.0 million, or 53.3%, to $1.8 million at June 30, 2025 from $3.8 million at December 31, 2024, due to a decrease in non-accrual loans of $2.0 million.

Total non-performing assets decreased by $2.0 million, or 51.8%, to $1.8 million at September 30, 2025 from $3.8 million at December 31, 2024, due to a decrease in non-accrual loans of $2.0 million.

Contributing to this decrease was one commercial relationship representing two loans with a total amortized cost of $1.2 million being sold at foreclosure and one nonaccrual home equity loan with an amortized cost of $545,000 being paid in full during the second quarter of 2025.

The Company had no loans past due 90 days or more but still accruing at June 30, 2025 or December 31, 2024.

Other assets increased $291,000, or 2.7%, to $11.0 million at June 30, 2025 from $10.7 million at December 31, 2024 as a result of normal operations.

The table below shows changes in deposit balances by type of deposit account between June 30, 2025 and December 31, 2024:

The Company had no loans past due 90 days or more but still accruing at September 30, 2025 or December 31, 2024.

Other assets decreased $490,000, or 4.6%, to $10.2 million at September 30, 2025 from $10.7 million at December 31, 2024 as a result of normal operations.

The table below shows changes in deposit balances by type of deposit account between September 30, 2025 and December 31, 2024:

At September 30,

At December 31,

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Total deposits

The increase in total deposits was primarily due to the collection of $43.7 million of funds held on deposit in connection with the Company's stock offering in the second quarter of 2025, which was included in the savings deposit account category above.

In addition, the Company also had a 6.1% increase in money market accounts, a 4.2% increase in time deposits less than or equal to $250,000, and a 1.9% increase in interest bearing transaction accounts.

These increases were partially offset by a 5.1% decrease in non-interest bearing transaction accounts and a 4.6% decrease in time deposits greater than $250,000.

The increase in total deposits was primarily due to the 13.9% increase in money market accounts, a 3.4% increase in time deposits less than or equal to $250,000, and a 4.7% increase in interest bearing transaction accounts.

These increases were partially offset by a 7.6% decrease in non-interest bearing transaction accounts, a 4.9% decrease in savings accounts and a 6.8% decrease in time deposits greater than $250,000.

The increase in core time deposits and money market deposits was primarily due to an increase in customer demand for these types of deposit products as the result of the competitive interest rate environment.

Our strategic focus remains centered on organic growth of deposits among our retail and commercial customers to reduce our reliance on wholesale funding and to strengthen customer relationships.

At June 30, 2025 and December 31, 2024, our percentage of uninsured deposits to total deposits was 18.1% and 13.5%, respectively.

Excluding the $43.7 million of funds collected and held on deposit in a segregated account in connection with the Company's stock offering in the second quarter of 2025, the Company's uninsured deposits to total deposits totaled 12.0% at June 30, 2025.

During the six months ended June 30, 2025, long-term borrowings decreased by $8.3 million, or 80.5%, to $2.0 million at June 30, 2025 from $10.3 million at December 31, 2024 in connection with the repayment of $8.3 million of long-term debt with the FHLBNY.

At September 30, 2025 and December 31, 2024, our percentage of uninsured deposits to total deposits was 13.3% and 13.5%, respectively.

During the nine months ended September 30, 2025, long-term borrowings decreased by $8.3 million, or 80.5%, to $2.0 million at September 30, 2025 from $10.3 million at December 31, 2024 in connection with the repayment of $8.3 million of long-term debt with the FHLBNY.

The borrowings were paid off at maturity as part of a balance sheet management strategy to focus on organic deposit growth and reduce reliance on wholesale funding sources.

Total stockholders’ equity increased $3.0 million, or 3.4%, to $92.9 million at June 30, 2025 from $89.9 million at December 31, 2024.

The increase in stockholders’ equity was primarily attributed to $3.0 million in net income earned during the six months ended June 30, 2025.

Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024

Net income increased to $1.9 million during the three months ended June 30, 2025, or $0.34 per diluted share, an increase of $803,000, or 72.0%, compared to net income of $1.1 million, or $0.19 per diluted share, for the three months ended June 30, 2024.

Our financial performance for the three months ended June 30, 2025 was positively impacted by an increase in net interest income along with a decrease in non-interest expenses.

Total stockholders’ equity increased $49.4 million, or 55.0%, to $139.3 million at September 30, 2025 from $89.9 million at December 31, 2024.

The increase in stockholders’ equity was primarily attributed to the completion of the second step conversion and offering during the third quarter of 2025, as well as $5.3 million in net income earned during the first nine months of 2025.

Comparison of Results of Operations for the Three Months Ended September 30, 2025 and 2024

Net income increased to $2.4 million during the three months ended September 30, 2025, or $0.32 per diluted share, an increase of $1.0 million, or 77.1%, compared to net income of $1.3 million, or $0.18 per diluted share, for the three months ended September 30, 2024.

Our financial performance for the three months ended September 30, 2025 was positively impacted by a $972,000 increase in net interest income along with an increase in non-interest income.

Net Interest Income.

Net interest income for the second quarter of 2025 increased by $916,000, or 17.6%, to $6.1 million as compared to $5.2 million for the second quarter of 2024.

Net interest margin and interest rate spread were 3.84% and 3.32%, respectively, for the three months ended June 30, 2025 as compared to 3.14% and 2.56%, respectively, for the three months ended June 30, 2024.

Net interest income for the three months ended September 30, 2025 increased by $972,000, or 18.1%, to $6.4 million as compared to $5.4 million for the three months ended September 30, 2024.

Net interest margin and interest rate spread were 3.72% and 3.02%, respectively, for the three months ended September 30, 2025 as compared to 3.28% and 2.67%, respectively, for the three months ended September 30, 2024.

Interest Income.

Interest income for the three months ended June 30, 2025 was $9.1 million, an increase of $353,000, or 4.0%, compared to $8.8 million for the three months ended June 30, 2024.

The increase in interest income from the prior year quarter was primarily due to an increase in interest earned on loans of $776,000, or 10.1%, as a result of an increase in the average yield on loans of 54 basis points.

The increase in the average yield on loans was positively impacted by the recognition of $461,000 of interest income associated with the payoff of three loans on nonaccrual status during the second quarter of 2025.

The increase was partially offset by a $377,000, or 58.3%, decrease in interest earned on interest-earning deposits resulting primarily from a decrease in the average balance of interest earning deposits of $25.5 million, or 48.4%.

The decrease in the average balance of interest earning deposits from the prior year was primarily due to the repayment of FHLBNY borrowings during the period.

Additionally, during the second quarter of 2025 as compared to the same period in 2024, there was a $46,000 decrease in interest earned on securities due to decreases in the average balance and average yield of securities of $2.8 million, or 4.7%, and 19 basis points, respectively.

Interest income for the three months ended September 30, 2025 was $9.4 million, an increase of $500,000, or 5.6%, compared to $8.9 million for the three months ended September 30, 2024.

The increase in interest income from the prior year quarter was primarily due to an increase in interest earned on loans of $463,000, or 6.0%, as a result of an

increase in the average yield on loans of 21 basis points and an increase in the average balance of loans of $12.0 million, or 2.2%.

The increase in the average yield on loans was primarily attributable to the origination and repricing of loans at higher interest rates since the third quarter of 2024.

Interest Expense.

Interest expense for the three months ended June 30, 2025 was $3.0 million, a decrease of $563,000, or 15.9%, from $3.5 million for the three months ended June 30, 2024.

Interest expense for the three months ended September 30, 2025 was $3.0 million, a decrease of $472,000, or 13.6%, from $3.5 million for the three months ended September 30, 2024.

The decrease in interest expense when compared to the prior year quarter was primarily due to a 27 basis points decrease in average interest rate paid on interest-bearing liabilities and a $20.8 million, or 4.1%, decrease in the average balance of interest-bearing liabilities.

During the second quarter of 2025 as compared to the same period in 2024, interest expense on deposits decreased by $423,000, or 12.5%, due to a 33 basis points decrease in the average interest rate paid on deposit accounts and a $3.2 million, or 0.6%, decrease in the average balance of deposits.

The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates, time deposit repricing, and a marginal shift in deposit composition.

Average interest-bearing deposit balances decreased 0.6% during the second quarter of 2025 when compared to the second quarter of 2024 due to a decrease in all deposit categories except money market accounts.

During the second quarter of 2025, interest expense on borrowed funds and other interest-bearing liabilities decreased by $140,000, or 79.1%, compared to the second quarter of 2024, primarily due to a $21.4 million, or 84.7%, decrease in average borrowed funds and other interest-bearing liabilities outstanding due to the repayment of $25.0 million of FHLBNY borrowings during 2024 and $8.3 million during the first half of 2025.

During the three months ended September 30, 2025 as compared to the same period in 2024, interest expense on deposits decreased by $353,000, or 10.6%, due to a 27 basis points decrease in the average interest rate paid on deposit accounts and a $2.6 million, or 0.5%, decrease in the average balance of deposits.

The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates, time deposit repricing, and a marginal shift in deposit composition to core deposits.

Average interest-bearing deposit balances decreased during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024 due to a decrease in all deposit categories except money market accounts.

During the three months ended September 30, 2025, interest expense on borrowed funds and other interest-bearing liabilities decreased by $119,000, or 79.9%, compared to the three months ended September 30, 2024, primarily due to a $18.2 million, or 88.7%, decrease in average borrowed funds and other interest-bearing liabilities outstanding due to the repayment of $8.3 million in borrowed funds during the first nine months of 2025.

Provision (Credit) for Credit Losses.

We recorded no provision for credit losses for the three months ended June 30, 2025, as compared to a credit to the provision of $285,000 for the three months ended June 30, 2024.

The provision for credit losses of $0 for the three months ended June 30, 2025 was attributable to the modeled allowance for credit losses estimate derived as of June 30, 2025.

The allowance for credit losses on loans and unfunded commitments and the corresponding provision for credit losses of $0 recognized during the second quarter of 2025 was the result of an increase in the calculation of expected quantitative losses inclusive of forecasted economic trends, primarily related to the residential mortgage loan pool, along with the impact of net charge offs during the period, offset by a decrease in the calculation of expected losses for the commercial loan pool.

The Company recorded a $269,000 credit to the provision for credit losses for the three months ended September 30, 2025, as compared to a credit to the provision of $229,000 for the three months ended September 30, 2024.

The credit to the provision for credit losses of $269,000 for the three months ended September 30, 2025 was primarily attributable to a decrease in the qualitative factors related to current economic conditions within the modeled allowance for credit losses estimate derived as of September 30, 2025.

Non-Interest Income.

Non-interest income was $800,000 for the three months ended June 30, 2025, an increase of $62,000, or 8.4%, as compared to $738,000 for the three months ended June 30, 2024.

The increase was primarily due to a $65,000 increase in unrealized gain on equity securities and a $23,000 increase in earnings on annuity assets in connection with the purchase of annuities during the fourth quarter of 2024, partially offset by a $14,000 decrease in service charges and fees.

Non-interest income was $1.1 million for the three months ended September 30, 2025, an increase of $274,000, or 34.6%, as compared to $791,000 for the three months ended September 30, 2024.

The increase was primarily due to a $182,000 increase in earnings on bank-owned life insurance as a result of a death benefit, an $83,000 increase in unrealized gain on equity securities, and a $24,000 increase in earnings on annuity assets in connection with the purchase of annuities during the fourth quarter of 2024, partially offset by a $14,000 decrease in debit card fees.

Non-Interest Expense.

Non-interest expense was $4.6 million for the three months ended June 30, 2025, a decrease of $272,000, or 5.6%, as compared to $4.9 million for the three months ended June 30, 2024.

The decrease from the prior year quarter was primarily related to a decrease in FDIC insurance of $210,000, or 73.9%, as the result of a decrease in premium assessments related to remediating regulatory matters, and a decrease in professional services expense of $146,000, or 36.8%, as a result of management's efforts to decrease the use of external consultants and optimize operating expenses, partially offset by an increase in salaries and employee benefits of $198,000, or 7.5%.

Non-interest expense remained relatively consistent at $4.8 million for both the three months ended September 30, 2025 and 2024, increasing $30,000, or 0.6%.

Income Tax Expense.

Income tax expense was $378,000 for the three months ended June 30, 2025, an increase of $162,000, or 75.0%, as compared to $216,000 for the three months ended June 30, 2024.

The increase in income tax expense from the prior year quarter was due to an increase in pre-tax income earned during the current quarter as well as an increase in the

effective tax rate during the second quarter of 2025.

The effective tax rate was 16.5% for the three months ended June 30, 2025 as compared to 16.2% for the three months ended June 30, 2024.

Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024

Net income was $3.0 million for the six months ended June 30, 2025, or $0.53 per diluted share, an increase of $845,000, or 39.7%, compared to net income of $2.1 million, or $0.36 per diluted share, for the six months ended June 30, 2024.

Net income for the six months ended June 30, 2025 was positively impacted by a $1.2 million increase in net interest income along with a decrease in non-interest expenses.

Income tax expense was $487,000 for the three months ended September 30, 2025, an increase of $229,000, or 88.8%, as compared to $258,000 for the three months ended September 30, 2024.

The increase in income tax expense from the prior year quarter was due to an increase in pre-tax income earned during the current quarter as well as an increase in the effective tax rate during the third quarter of 2025.

The effective tax rate was 17.1% for the three months ended September 30, 2025 as compared to 16.2% for the three months ended September 30, 2024, as a result of an increase in pre-tax, taxable income.

Comparison of Results of Operations for the Nine Months Ended September 30, 2025 and 2024

Net income was $5.3 million for the nine months ended September 30, 2025, or $0.70 per diluted share, an increase of $1.9 million, or 54.1%, compared to net income of $3.5 million, or $0.46 per diluted share, for the nine months ended September 30, 2024.

Net income for the nine months ended September 30, 2025 was positively impacted by a $2.2 million increase in net interest income along with a decrease in non-interest expenses.

Net Interest Income.

Net interest income for the six months ended June 30, 2025 increased by $1.2 million, or 12.1%, to $11.6 million as compared to $10.3 million for the first half of 2024.

Net interest margin and interest rate spread were 3.67% and 3.13%, respectively, for the six months ended June 30, 2025 as compared to 3.12% and 2.55%, respectively, for the six months ended June 30, 2024.

Net interest income for the nine months ended September 30, 2025 increased by $2.2 million, or 14.1%, to $17.9 million as compared to $15.7 million for the nine months ended September 30, 2024.

Net interest margin and interest rate spread were 3.68% and 3.09%, respectively, for the nine months ended September 30, 2025 as compared to 3.17% and 2.59%, respectively, for the nine months ended September 30, 2024.

Interest Income.

Interest income increased by $111,000, or 0.6%, to $17.5 million for the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

This increase was primarily due to an increase in the interest earned on loans of $943,000, or 6.2%, with a 38 basis points increase in the average yield on loans.

This increase was mostly offset by a $742,000, or 59.6% decrease in interest earned on interest earning deposits resulting from a $23.0 million, or 47.5%, decrease in the average balance of interest-earning deposits and a 119 basis points decrease in the average yield of interest earning deposits primarily due to the repayment of FHLBNY borrowings during the period.

Interest income increased by $610,000, or 2.3%, to $26.8 million for the nine months ended September 30, 2025 when compared to $26.2 million for the nine months ended September 30, 2024.

This increase was primarily due to an increase in the interest earned on loans of $1.4 million, or 6.1%, as a result of an increase in the average yield on loans of 33 basis points and an increase in the average balance of loans of $1.4 million.

The increase in the average yield on loans was primarily attributable to the origination and repricing of loans at higher interest rates since the third quarter of 2024.

This increase in interest income was partially offset by a decrease in interest earned on interest-earning deposits of $665,000 or 33.9%, resulting from a decrease in the average yield on interest-earning deposits of 102 basis points and a decrease in the average balance of interest-earning deposits of $8.9 million, or 17.7%.

Interest Expense.

Interest expense decreased $1.1 million, or 16.2%, to $5.9 million for the six months ended June 30, 2025, compared to $7.0 million for the six months ended June 30, 2024.

Interest expense decreased $1.6 million, or 15.3%, to $8.9 million for the nine months ended September 30, 2025, compared to $10.5 million for the nine months ended September 30, 2024.

The decrease in interest expense was primarily due to a 28 basis points decrease in average interest rate paid on interest-bearing liabilities and a decrease in the average balance of interest-bearing liabilities of $28.4 million, or 5.5%.

During the first half of 2025, there was a $825,000 decrease in interest expense on total deposit accounts when compared to the first half of 2024 due to a 29 basis points decrease in the average interest rate paid on total deposits along with a decrease in average total deposit balance of $9.9 million, or 2.0%.

The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates, time deposit repricing, and a marginal shift in deposit composition.

Average interest-bearing deposit balances decreased 2.0% during the first half of 2025 when compared to the first half of 2024 due to a decrease in all deposit categories except money market accounts.

Interest expense on borrowed funds and other interest-bearing liabilities also decreased $312,000, or 76.3%, during the first half of 2025 when compared to the first half of 2024, primarily due to a $22.4 million, or 81.6%, decrease in the average balance of borrowed funds and other interest-bearing liabilities outstanding as we reduced our FHLBNY borrowings.

During the first nine months of 2025, there was a $1.2 million decrease in interest expense on total deposit accounts when compared to the first nine months of 2024 due to a 28 basis points decrease in the average interest rate paid on total deposits along with a decrease in average total deposit balance of $7.4 million, or 1.5%.

Interest expense on borrowed funds and other interest-bearing liabilities also decreased $431,000, or 77.2%, during the first nine months of 2025 when compared to the first nine months of 2024, primarily due to a $21.0 million, or 83.6%, decrease in the average balance of borrowed funds and other interest-bearing liabilities outstanding as we reduced our FHLBNY borrowings.

Provision (Credit) for Credit Losses.

The Company recorded a $48,000 provision for credit losses on loans and unfunded commitments during the six months ended June 30, 2025, as compared to a credit of $637,000 to the provision for credit losses during the six months ended June 30, 2024.

The increase in the allowance for credit losses on loans and unfunded commitments and the corresponding provision for credit losses recognized during the first half of 2025 was the result of an increase in the calculation of expected quantitative losses inclusive of forecasted economic trends, primarily related to the residential mortgage loan pool, partially offset by a decrease in the calculation of expected losses for the commercial loan pool.

The Company recorded a $221,000 credit to the provision for credit losses on loans and unfunded commitments during the nine months ended September 30, 2025, as compared to a credit of $866,000 to the provision for credit losses during the nine months ended September 30, 2024.

The decrease in the allowance for credit losses on loans and corresponding credit to the provision for credit losses recognized during the first nine months of 2025 was the result of a decrease in expected loss rates derived from expected quantitative losses inclusive of forecasted economic trends and qualitative considerations including current local economic conditions as of September 30, 2025.

Non-Interest Income.

Non-interest income increased by $79,000, or 5.5%, to $1.5 million for the six months ended June 30, 2025, as compared to $1.4 million for the six months ended June 30, 2024.

The increase was primarily due to a $100,000 increase in unrealized gain on equity securities and a $46,000 increase in earnings on annuity assets in connection with the purchase of annuities during the fourth quarter of 2024, partially offset by a $42,000 decrease in service charges and fees and a $17,000 decrease in debit card fees.

Non-interest income increased by $354,000, or 15.8%, to $2.6 million for the nine months ended September 30, 2025, as compared to $2.2 million for the nine months ended September 30, 2024.

The increase was primarily due to a $185,000 increase in earnings on bank owned life insurance as a result of the recognition of a death benefit during the third quarter of 2025, a $182,000 increase in unrealized gain on equity securities, and a $69,000 increase in earnings on annuity assets in connection with the purchase of annuities during the fourth quarter of 2024, partially offset by a $49,000 decrease in service charges and fees and a $31,000 decrease in debit card fees.

Non-Interest Expense.

Non-interest expense was $9.5 million for the six months ended June 30, 2025, a decrease of $389,000, or 3.9%, as compared to $9.9 million for the six months ended June 30, 2024.

The decrease related primarily to

a decline in FDIC insurance expense of $417,000, or 74.1%, due to a decrease in premium assessments related to remediating regulatory matters.

Non-interest expense was $14.3 million for the nine months ended September 30, 2025, a decrease of $360,000, or 2.4%, as compared to $14.7 million for the nine months ended September 30, 2024.

The decrease related primarily to a decline in FDIC insurance expense of $469,000, or 67.7%, due to a decrease in premium assessments related to remediating regulatory matters.

As a result of management's efforts to decrease the use of external consultants and optimize operating expenses, professional services decreased by $217,000, or 20.0%, and occupancy and equipment expenses decreased by $143,000, or 6.9%.

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Income Taxes Expense.

Income tax expense was $585,000 for the six months ended June 30, 2025, an increase of $186,000, or 46.6%, as compared to $399,000 for the six months ended June 30, 2024.

The increase in income tax expense from the first half of 2024 was primarily related to the increase in pre-tax income earned during the first half of 2025 and an increase in the effective tax rate during the first half of 2025.

The effective tax rate was 16.4% for the first half of 2025 and 15.8% for the first half of 2024.

Income tax expense was $1.1 million for the nine months ended September 30, 2025, an increase of $415,000, or 63.2%, as compared to $657,000 for the first nine months of 2024.

The increase in income tax expense from the first nine months of 2024 was primarily related to the increase in pre-tax income earned during the first nine months of 2025 and an increase in the effective tax rate during the first nine months of 2025.

The effective tax rate was 16.7% for the first nine months of 2025 and 16.0% for the first nine months of 2024, as a result of an increase in pre-tax, taxable income.

Liquidity and Capital Resources

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We have written agreements with the FHLBNY, which allow us to borrow the maximum lending values designated by the type of collateral pledged.

As of June 30, 2025, the maximum amount that we could borrow from the FHLBNY, based on the market value of certain fixed-rate residential, one- to four-family loans pledged to FHLBNY, was $90.3 million, which was collateralized by certain fixed-rate residential, one- to four-family loans.

At June 30, 2025, and December 31, 2024, we had outstanding advances under this agreement of $2.0 million and $10.3 million, respectively.

As of June 30, 2025, we had available borrowing capacity of $88.3 million under the aforementioned agreement with the FHLBNY.

As of September 30, 2025, the maximum amount that we could borrow from the FHLBNY, based on the market value of certain fixed-rate residential, one- to four-family loans pledged to FHLBNY, was $88.6 million, which was collateralized by certain fixed-rate residential, one- to four-family loans.

At September 30, 2025, and December 31, 2024, we had outstanding advances under this agreement of $2.0 million and $10.3 million, respectively.

As of September 30, 2025, we had available borrowing capacity of $86.6 million under the aforementioned agreement with the FHLBNY.

We have a written agreement with the Federal Reserve Bank discount window for overnight borrowings which is collateralized by a pledge of our securities, and allows us to borrow up to the value of the securities pledged.

At June 30, 2025, and December 31, 2024, there were no securities pledged to the Federal Reserve Bank and we had no balances outstanding.

Additionally, as of June 30, 2025, the Bank has uncollateralized intraday credit with the Federal Reserve Bank that allows for certain transactions to not be rejected for which there are insufficient funds in our Federal Reserve Master Account during normal hours of operation.

At September 30, 2025, and December 31, 2024, there were no securities pledged to the Federal Reserve Bank and we had no balances outstanding.

Additionally, as of September 30, 2025, the Bank has uncollateralized intraday credit with the Federal Reserve Bank that allows for certain transactions to not be rejected for which there are insufficient funds in our Federal Reserve Master Account during normal hours of operation.

Lastly, we have also established an unsecured line of credit with a correspondent bank for $20.0 million.

There were no borrowings on this line as of June 30, 2025 and December 31, 2024.

There were no borrowings on this line as of September 30, 2025 and December 31, 2024.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, calls of investment securities, and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions, and competition in the marketplace.

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Our primary investing activities include the origination of loans and the purchase of investment securities.

For the six months ended June 30, 2025, we originated loans of approximately $37.9 million as compared to approximately $24.7 million of loans originated during the six months ended June 30, 2024.

Loan originations exceeded principal repayments and other deductions during the six months ended June 30, 2025 by $8.0 million.

The Company did not make any purchases of investment securities or sell any investment securities during the six months ended June 30, 2025.

For the nine months ended September 30, 2025, we originated loans of approximately $56.9 million as compared to approximately $42.8 million of loans originated during the nine months ended September 30, 2024.

Loan originations exceeded principal repayments and other deductions during the nine months ended September 30, 2025 by $8.1 million.

The Company did not make any purchases of investment securities or sell any investment securities during the nine months ended September 30, 2025.

We have loan commitments to borrowers and borrowers have unused overdraft lines of protection, unused home equity lines of credit, and unused commercial lines of credit that may require funding at a future date.

We believe we have sufficient funds to fulfill these commitments, including sources of funds available through the use of FHLBNY advances or other liquidity sources.

Total deposits were $627.5 million at June 30, 2025 as compared to $573.0 million at December 31, 2024.

Approximately $188.4 million of time deposit accounts are scheduled to mature within one year as of June 30, 2025.

on our deposit retention experience, current pricing strategy, and competitive pricing policies, we anticipate that a significant portion of these time deposits will remain with us following their maturity.

Total deposits were $590.3 million at September 30, 2025 as compared to $573.0 million at December 31, 2024.

Approximately $188.4 million of time deposit accounts are scheduled to mature within one year as of September 30, 2025.

Based on our deposit retention experience, current pricing strategy, and competitive pricing policies, we anticipate that a significant portion of these time deposits will remain with us following their maturity.

We are committed to maintaining a strong liquidity position;

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We do not have any balloon or other payments due on any long-term obligations, other than the borrowing agreements noted above.

At June 30, 2025, the Bank exceeded all of its regulatory capital requirements.

At September 30, 2025, the Bank exceeded all of its regulatory capital requirements.

Regulatory Capital

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The Bank elected to be subject to this new definition when it became effective on January 1, 2020, and has continued to use the Community Bank Leverage Ratio since that time.

As of June 30, 2025 and December 31, 2024, the Bank’s Community Bank Leverage Ratio was 14.37% and 13.83%, respectively.

In order to be considered “well-capitalized” by the FDIC, a non-CBLR savings bank must maintain a Tier 1 Leverage capital ratio of 5% and a Total Risk-Based capital ratio of 10%.

At June 30, 2025 and December 31, 2024, the Bank’s Tier 1 Leverage capital ratio was 14.37% and 13.83%, respectively, and its Total Risk-Based capital ratio was 18.94% and 18.79%, respectively.

As of September 30, 2025 and December 31, 2024, the Bank’s Community Bank Leverage Ratio was 16.34% and 13.83%, respectively.

In order to be considered “well-capitalized” by the FDIC, a non-CBLR bank must maintain a Tier 1 Leverage capital ratio of 5% and a Total Risk-Based capital ratio of 10%.

At September 30, 2025 and December 31, 2024, the Bank’s Tier 1 Leverage capital ratio was 16.34% and 13.83%, respectively, and its Total Risk-Based capital ratio was 22.76% and 18.79%, respectively.

Accordingly, the Bank was considered to be well-capitalized under applicable regulatory capital requirements.

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Other than loan commitments, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Refer to Note 7 in the Notes to our unaudited consolidated financial statements for a summary of loan commitments outstanding as of June 30, 2025.

Refer to Note 7 in the Notes to our unaudited consolidated financial statements for a summary of loan commitments outstanding as of September 30, 2025.

Quantitative and Qualitative Disclosures About Market Risk

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Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

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-Q

Item 2. Management’s Discussion and Analysis