Lake Shore Bancorp, Inc. /MD/ 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures The Company maintains disclosure controls and procedures designed to ensure that the information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, are recorded, 51 processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company’s management, with the participation of its Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon such evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control over financial reporting is a process designed under the supervision of our Principal Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management has made a comprehensive review, evaluation, and assessment of our internal control over financial reporting as of December 31, 2025. In making its assessment of internal control over financial reporting, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013) . Based on that assessment, management concluded that, as of December 31, 2025, our internal control over financial reporting was effective. This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting pursuant to rules of the SEC that exempts the Company from such attestation and requires only management’s report. 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 December 31, 2025 to which this report relates that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting. Item 9B. Other Information. During the fourth quarter of 2025, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations. Item 9C. Dis closure Regarding Foreign Jurisdictions that Prevent Inspections. None. 52 PAR T III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this item is incorporated herein by reference to our Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days of our December 31, 2025 fiscal year end. Item 11. Executive Compensation. The information required by this item is incorporated herein by reference to our Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days of our December 31, 2025 fiscal year end. Item 1 2. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this item is incorporated herein by reference to our Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days of our December 31, 2025 fiscal year end. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this item is incorporated herein by reference to our Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days of our December 31, 2025 fiscal year end. Item 14. Principal Accounting Fees and Services. The information required by this item is incorporated herein by reference to our Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days of our December 31, 2025 fiscal year end. 53 PAR T IV Item 15. Exhibits and Financial Statement Schedules. 15(a)(1) Financial Statements. The following are included in Item 8 of Part II of this Annual Report on Form 10-K. • Report of Independent Registered Public Accounting Firm • Consolidated Statements of Financial Condition as of December 31, 2025 and 2024 • Consolidated Statements of Income for the years ended December 31, 2025 and 2024 • Consolidated Statements of Comprehensive Income for the years ended December 31, 2025 and 2024 • Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024 • Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 • Notes to Consolidated Financial Statements 15(a)(2) Financial Statement Schedules. Schedules are omitted because they are not required or the information is provided elsewhere in the Consolidated Financial Statements or Notes thereto included in Item 8 of Part II of this Annual Report on Form 10-K. 15(a)(3) Exhibits. The following exhibits are filed as part of this Annual Report on Form 10-K or are incorporated herein by reference. 54 3.1 Articles of Incorporation of Lake Shore Bancorp, Inc. 1 3.2 Bylaws of Lake Shore Bancorp, Inc. 2 4.1 Form of Stock Certificate of Lake Shore Bancorp, Inc. 3 4.2 Form of Stock Option Certificate 4 4.3 Description of Common Stock * 10.1 Amended and Restated Severance Pay Plan of Lake Shore Savings Bank 5 10.2 Amended and Restated 2015 Executives Supplemental Benefit Plan II 6 10.3 Amended and Restated 2015 Directors Supplemental Benefit Plan II 7 10.4 Lake Shore Bancorp, Inc. 2025 Equity Incentive Plan 8 10.5 Lake Shore Bancorp, Inc. 2006 Stock Option Plan 9 10.6 Employment Agreement, dated as of December 16, 2024, by and between Lake Shore Savings Bank and Kim C. Liddell 10 10.7 Amendment, dated January 20, 2026, to the Employment Agreement, dated as of December 16, 2024, by and between Lake Shore Savings Bank and Kim C. Liddell * 10.8 Supplemental Executive Retirement Plan Agreement, dated as of December 16, 2024, between Lake Shore Savings Bank and Kim C. Liddell 11 10.9 2015 Executives Supplemental Benefit Plan II joinder agreement for Jeffery M. Werdein 12 10.10 Lake Shore Bancorp, Inc. 2012 Equity Incentive Plan 13 10.11 Retention Agreement between Lake Shore Savings Bank and Jeffrey Werdein 14 10.12 Amendment, dated January 20, 2026, to the Employment Agreement, dated as of March 11, 2025, by and between Lake Shore Savings Bank and Taylor M. Gilden * 10.13 Employment Agreement, dated as of March 11, 2025, by and between Lake Shore Savings Bank and Taylor M. Gilden 15 10.14 Annual Incentive Plan 16 10.15 Amendment to Directors Amended and Restated Supplemental Benefit Plan II, dated January 20, 2026 * 19.1 Lake Shore Bancorp, Inc. Lake Shore Savings Bank Statement of Company Policy Regarding Confidential Information and Stock and Securities Trading By Directors, Officers and Employees * 21.1 Subsidiaries of Lake Shore Bancorp, Inc. * 23.1 Consent of Yount, Hyde & Barbour, P.C. * 31.1 Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 31.2 Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 * 32.1 Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * 32.2 Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * 97.0 Policy Relating to Recovery of Erroneously Awarded Compensation * 101.INS XBRL Instance Document * 101.SCH XBRL Taxonomy Extension Schema Document * 101.CAL XBRL Taxonomy Calculation Linkbase Document * 101.DEF XBRL Taxonomy Extension Definition Linkbase Document * 101.LAB XBRL Taxonomy Label Linkbase Document * 104 Cover Page Interactive Date File (formatted as inline XBRL and contained in Exhibit 101) * * Filed herewith. 1 Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission on March 14, 2025, as amended (Registration No. 333-285836). 2 Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission on March 14, 2025, as amended (Registration No. 333-285836) 3 Incorporated by reference to Exhibit 4 to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission on March 14, 2025, as amended (Registration No. 333-285836). 4 Incorporated by reference to the Exhibits to the Registration Statement on Form S-8, filed with the Securities and Exchange Commission on April 3, 2007 (Registration No. 333-141829). 5 Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of Lake Shore Bancorp, Inc., filed with the Securities and Exchange Commission on November 16, 2007 (File No. 000-51821). 6 Incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K of Lake Shore Bancorp, Inc., filed with the Securities and Exchange Commission on March 25, 2016 (File No. 000-51821). 7 Incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K of Lake Shore Bancorp, Inc., filed with the Securities and Exchange Commission on March 25, 2016 (File No. 000-51821). 55 8 Incorporated by reference to Appendix A to the Proxy Statement for the Special Meeting of Stockholders filed with the Securities and Exchange Commission on December 20, 2024 (file No. 000-51821). 9 Incorporated by reference to Appendix A to the Proxy Statement for the Special Meeting of Shareholders filed with the Securities and Exchange Commission on September 7, 2006 (File No. 000-51821). 10 Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Lake Shore Bancorp, Inc., filed with the Securities and Exchange Commission on December 20, 2024 (File No. 000-51821). 11 Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Lake Shore Bancorp, Inc., filed with the Securities and Exchange Commission on December 20, 2024 (File No. 000-51821). 12 Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Lake Shore Bancorp, Inc., filed with the Securities and Exchange Commission on May 23, 2016 (File No. 000-51821). 13 Incorporated by reference to Appendix A to the Proxy Statement for Lake Shore Bancorp, Inc. for the May 23, 2012 annual meeting of stockholders filed with the Securities and Exchange Commission on April 11, 2012 (File No. 000-51821). 14 Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Lake Shore Bancorp, Inc., filed with the Securities and Exchange Commission on April 4, 2018 (File No. 000-51821). 15 Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Lake Shore Bancorp, Inc., filed with the Securities and Exchange Commission on March 14, 2025 (File No. 000-51821). 16 Incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission on March 14, 2025, as amended (Registration No. 333-285836). Item 1 6. Form 10-K Summary. None. 56 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 17, 2026. Lake Shore Bancorp, Inc. By:/s/ Kim C. Liddell Kim C. Liddell President and Chief Executive Officer Date: March 17, 2026 Pursuant to the requirements of the Securities Act of 1933, as amended, and any rules and regulations promulgated there under, this Annual Report on Form 10-K, has been signed by the following persons in the capacities and on the dates indicated. Name Title Date /s/ Kim C. Liddell President and Chief Executive Officer (Principal Executive Officer) March 17, 2026 Kim C. Liddell /s/ Kevin M. Sanvidge Chairman of the Board March 17, 2026 Kevin M. Sanvidge /s/ Sharon E. Brautigam Vice Chairperson of the Board March 17, 2026 Sharon E. Brautigam /s/ Michelle M. DeBergalis Director March 17, 2026 Michelle M. DeBergalis /s/ John P. McGrath Director March 17, 2026 John P. McGrath /s/ Jack L. Mehltretter Director March 17, 2026 Jack L. Mehltretter /s/ Ronald J. Passafaro Director March 17, 2026 Ronald J. Passafaro /s/ Ann M. Segarra Director March 17, 2026 Ann M. Segarra /s/ Taylor M. Gilden Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) March 17, 2026 Taylor M. Gilden 57 Table of Contents Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 613 ) F - 2 Consolidated Statements of Financial Condition F - 4 Consolidated Statements of Income F - 5 Consolidated Statements of Comprehensive Income F - 6 Consolidated Statements of Stockholders’ Equity F - 7 Consolidated Statements of Cash Flows F - 8 Notes to Consolidated Financial Statements F - 9 F - 1 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Lake Shore Bancorp, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of Lake Shore Bancorp, Inc. and its subsidiary (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, 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 the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses – Collectively Evaluated Loans Description of the Matter As further described in Note 2 (Summary of Significant Accounting Policies) and Note 5 (Allowance for Credit Losses) to the consolidated financial statements, the allowance for credit losses (ACL) on loans is a valuation allowance that represents management’s best estimate of expected credit losses on loans measured at amortized cost considering available information relevant to assessing collectability over the loans’ contractual terms. Loans which share common risk characteristics are pooled and collectively evaluated by the Company. The Company’s allowance for credit losses on loans collectively evaluated totaled $4.88 million. The collectively evaluated allowance for credit losses consists of quantitative and qualitative components. Management utilizes a discounted cash flow model to estimate expected credit losses on collectively evaluated loans. The quantitative component consists of loss estimates derived from Probability of Default and loss severity/Loss Given Default Models. The expected default and severity rates are regression-derived and based on benchmark historical performance data and are calibrated to incorporate the Company’s reasonable and supportable forecasts of future losses. The Company F - 2 also relies on benchmark data for other model assumptions, including prepayment and curtailment speeds. The model estimates consider large amounts of data in tabulating significant inputs to the calculations, including default, and loss given default, and require complex calculations as well as management judgment in the selection of appropriate inputs. In addition to the quantitative component, the collectively evaluated ACL also includes a qualitative component which aggregates management’s assessment of available information relevant to assessing collectability that is not captured in the quantitative loss estimation process. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Management exercised significant judgment when estimating the ACL on collectively evaluated loans. We identified the estimation of the collectively evaluated ACL as a critical audit matter as auditing the collectively evaluated ACL involved especially complex and subjective auditor judgment in evaluating management’s assessment of the inherently subjective estimates. The primary audit procedures we performed to address this critical audit matter included: • Obtaining an understanding of the Company’s process for determining its ACL, including the underlying methodology and significant inputs to the calculation. • Substantively testing management’s process for measuring the collectively evaluated ACL, including: • Evaluating the conceptual soundness, assumptions, and key data inputs of the Company’s discounted cash flow methodology, including the identification of loan pools, loss driver assumptions, the probability of default and loss given default rate inputs, and the prepayment/curtailment rate inputs for each pool. • Evaluating the relevance and reliability of the underlying external data utilized to prepare the calculation. • Testing the completeness and accuracy of data utilized to prepare the calculation. • Evaluating the reasonableness of the significant judgements and assumptions utilized within the calculation, including qualitative allocations. • Testing the mathematical accuracy of the ACL for collectively evaluated loans including both the quantitative and qualitative factor components of the calculations. • Performed an analysis of the overall allowance for credit loss ratio compared to a relevant peer group. /s/ Yount, Hyde & Barbour, P.C. We have served as the Company’s auditor since 2024. Winchester, Virginia March 17, 2026 F - 3 Lake Shore Bancorp, Inc. and Subsidiary Consolidated Statements of Financial Condition December 31, December 31, 2025 2024 (Dollars in thousands, except per share data) Assets Cash and due from banks $ 3,035 $ 2,710 Interest-earning deposits 61,245 30,421 Cash and Cash Equivalents 64,280 33,131 Securities, at fair value 56,138 56,495 Federal Home Loan Bank stock, at cost 673 1,157 Loans receivable, net of allowance for credit losses of $ 4,884 in 2025 and $ 5,133 in 2024 555,441 544,620 Premises and equipment, net 7,050 7,218 Accrued interest receivable 3,007 2,819 Bank-owned life insurance 31,525 29,340 Other assets 9,209 10,724 Total Assets $ 727,323 $ 685,504 Liabilities and Stockholders' Equity Liabilities Deposits: Interest-bearing $ 477,174 $ 476,566 Non-interest-bearing 96,103 96,412 Total Deposits 573,277 572,978 Long-term debt — 10,250 Advances from borrowers for taxes and insurance 3,046 3,225 Other liabilities and accrued interest payable 9,361 9,183 Total Liabilities 585,684 595,636 Commitments and Contingencies Stockholders' Equity Preferred stock, $ 0.01 par value per share, 10,000,000 shares authorized at December 31, 2025; no shares issued or outstanding at December 31, 2025 or December 31, 2024 — — Common stock, $ 0.01 par value per share, 40,000,000 shares authorized at December 31, 2025 and 25,000,000 shares authorized at December 31, 2024; 7,836,100 shares issued and outstanding at December 31, 2025 and 9,262,793 shares issued and 7,770,658 shares outstanding at December 31, 2024 78 68 Additional paid-in capital 65,577 31,201 Treasury stock, at cost ( No shares at December 31, 2025 and 1,492,135 shares at December 31, 2024) — ( 13,304 ) Unearned shares held by ESOP ( 4,711 ) ( 938 ) Retained earnings 88,398 82,805 Accumulated other comprehensive loss ( 7,703 ) ( 9,964 ) Total Stockholders' Equity 141,639 89,868 Total Liabilities and Stockholders' Equity $ 727,323 $ 685,504 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 ) (see Note 1). See notes to consolidated financial statements. F - 4 Lake Shore Bancorp, Inc. and Subsidiary Consolidated Sta tements of Income Years Ended December 31, 2025 2024 (Dollars in thousands, except per share data) Interest Income Loans, including fees $ 32,760 $ 30,713 Investment securities, taxable 643 765 Investment securities, tax-exempt 830 866 Interest-earning deposits 2,050 2,460 Total Interest Income 36,283 34,804 Interest Expense Deposits 11,550 13,077 Long-term debt 108 621 Finance Lease and Other 60 43 Total Interest Expense 11,718 13,741 Net Interest Income 24,565 21,063 Provision for Credit Losses ( 180 ) ( 1,479 ) Net Interest Income After Provision for Credit Losses 24,745 22,542 Non-Interest Income Service charges and fees 1,055 1,104 Debit card fees 780 816 Earnings on bank-owned life insurance 1,148 1,074 Gains on equity securities 150 54 Recovery on previously impaired investment securities 4 6 Gain on sale of securities available for sale 10 — Earnings on annuity assets 58 161 Other 68 89 Total Non-Interest Income 3,273 3,304 Non-Interest Expense Salaries and employee benefits 11,609 11,452 Occupancy and equipment 2,590 2,717 Data processing 1,933 1,786 Professional services 1,137 1,449 Telephone and communications 321 434 FDIC insurance 303 796 Postage and supplies 310 276 Advertising 58 94 Other 1,005 976 Total Non-Interest Expense 19,266 19,980 Income before Income Taxes 8,752 5,866 Income Tax Expense 1,483 935 Net Income $ 7,269 $ 4,931 Basic and diluted earnings per common share $ 0.97 $ 0.65 Dividends declared per share $ 0.31 $ 0.40 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) (see Note 1). See notes to consolidated financial statements. F - 5 Lake Shore Bancorp, Inc. and Subsidiary Consolidated S tatements of Comprehensive Income Years Ended December 31, 2025 2024 (Dollars in thousands) Net Income $ 7,269 $ 4,931 Other Comprehensive Income (loss), net of tax expense (benefit): Unrealized holding gains (losses) on securities available for sale, net of tax expense (benefit) 2,272 ( 574 ) Reclassification adjustments related to: Recovery on previously impaired investment securities included in net income, net of tax expense ( 3 ) ( 5 ) Net gain on sale of securities included in net income, net of tax expense ( 8 ) — Total Other Comprehensive Income (Loss) 2,261 ( 579 ) Total Comprehensive Income $ 9,530 $ 4,352 See notes to consolidated financial statements. F - 6 Lake Shore Bancorp, Inc. and Subsidiary Consolidated Statements of Stockholders’ Equity Years Ended December 31, 2025 and 2024 Unearned Accumulated Additional Shares Other Common Paid-In Treasury Held by Retained Comprehensive Stock Capital Stock ESOP Earnings Loss Total (Dollars in thousands, except per share data) Balance - January 1, 2025 $ 68 $ 31,201 $ ( 13,304 ) $ ( 938 ) $ 82,805 $ ( 9,964 ) $ 89,868 Net income — — — — 7,269 — 7,269 Other comprehensive income, net of tax expense of $ 601 — — — — — 2,261 2,261 ESOP shares earned ( 20,572 shares) — 76 — 187 — — 263 Compensation plan shares granted ( 47,556 shares) — ( 256 ) 256 — — — — Compensation plan shares earned ( 31,699 shares) — 295 — — — — 295 Cash dividends declared ($ 0.31 per share) — — — — ( 1,676 ) — ( 1,676 ) Common stock repurchased to authorized and unissued or treasury on vesting for payroll taxes ( 4,517 shares) — ( 2 ) ( 51 ) — — — ( 53 ) Second-step conversion and stock offering: — Lake Shore, MHC shares sold in public offering, net of offering costs of $ 2,308 10 34,087 — — — — 34,097 Purchase by ESOP — — — ( 3,960 ) — — ( 3,960 ) Treasury stock retired — — 13,099 — — — 13,099 Contribution from Lake Shore, MHC — 176 — — — — 176 Balance -December 31, 2025 $ 78 $ 65,577 $ — $ ( 4,711 ) $ 88,398 $ ( 7,703 ) $ 141,639 Unearned Accumulated Additional Shares Other Common Paid-In Treasury Held by Retained Comprehensive Stock Capital Stock ESOP Earnings Loss Total (Dollars in thousands, except per share data) Balance - January 1, 2024 $ 68 $ 31,417 $ ( 13,760 ) $ ( 1,023 ) $ 78,956 $ ( 9,385 ) $ 86,273 Net income — — — — 4,931 — 4,931 Other comprehensive loss, net of tax benefit of $ 153 — — — — — ( 579 ) ( 579 ) ESOP shares earned ( 10,751 shares) — 14 — 85 — — 99 Compensation plan shares granted ( 70,796 shares) — ( 491 ) 491 — — — — Compensation plan shares forfeited ( 2,227 shares) — 15 ( 15 ) — — — — Compensation plan shares earned, net of forfeitures ( 29,428 shares) — 246 — — — — 246 Cash dividends declared ($ 0.40 per share) — — — — ( 1,082 ) — ( 1,082 ) Common stock repurchased to treasury on vesting for payroll taxes ( 2,263 shares) — — ( 20 ) — — — ( 20 ) Balance - December 31, 2024 $ 68 $ 31,201 $ ( 13,304 ) $ ( 938 ) $ 82,805 $ ( 9,964 ) $ 89,868 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 ) (see Note 1). See notes to consolidated financial statements. F - 7 Lake Shore Bancorp, Inc. and Subsidiary Consolidated State ments of Cash Flows Years Ended December 31, 2025 2024 (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 7,269 $ 4,931 Adjustments to reconcile net income to net cash provided by operating activities: Net amortization of investment securities 70 72 Net amortization of deferred loan costs 385 496 Provision for credit losses ( 180 ) ( 1,479 ) Recovery on previously impaired investment securities ( 4 ) ( 6 ) Gains on equity securities ( 150 ) ( 54 ) Gain on sale of securities available for sale ( 10 ) — Loss (gain) on disposal of premises and equipment 2 ( 14 ) Depreciation and amortization of premises and equipment 612 739 Earnings on bank-owned life insurance ( 1,148 ) ( 1,074 ) Deferred income tax (benefit) expense ( 101 ) 128 ESOP shares committed to be released 263 99 Stock based compensation expense 295 246 (Increase) decrease in accrued interest receivable ( 188 ) 16 Decrease (increase) in other assets 595 ( 1,419 ) Loss on sale of foreclosed real estate — 19 Increase (decrease) in other liabilities 346 ( 31 ) Increase in annuity asset ( 58 ) ( 161 ) Net Cash Provided by Operating Activities 7,998 2,508 CASH FLOWS FROM INVESTING ACTIVITIES Activity in debt securities: Sales 17 — Maturities, prepayments, and calls 3,073 3,203 Redemptions of Federal Home Loan Bank of New York Stock 484 1,136 Loan principal collections, originations, and purchases, net ( 10,979 ) 12,020 Proceeds from claims on and surrender of bank-owned life insurance 1,614 7,674 Purchase of annuity assets — ( 3,000 ) Purchase of bank-owned life insurance ( 2,000 ) — Proceeds from the sale of equity securities 223 — Proceeds from sale of foreclosed real estate — 42 (Additions) and sales of premises and equipment, net ( 560 ) 41 Net Cash (Used in) Provided by Investing Activities ( 8,128 ) 21,116 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the sale of common stock, net of offering costs and ESOP purchase 43,239 — Net increase (decrease) in deposits 299 ( 17,946 ) Net decrease in advances from borrowers for taxes and insurance ( 179 ) ( 82 ) Repayment of long-term debt ( 10,250 ) ( 25,000 ) Repayment of finance lease obligation ( 101 ) ( 93 ) Repurchase of common stock ( 53 ) ( 20 ) Cash dividends paid ( 1,676 ) ( 1,082 ) Net Cash Provided by (Used in) Financing Activities 31,279 ( 44,223 ) Net Increase (Decrease) in Cash and Cash Equivalents 31,149 ( 20,599 ) CASH AND CASH EQUIVALENTS - BEGINNING 33,131 53,730 CASH AND CASH EQUIVALENTS - ENDING $ 64,280 $ 33,131 SUPPLEMENTARY CASH FLOWS INFORMATION Interest paid $ 11,760 $ 14,471 Income taxes paid (U.S. Federal) $ 1,571 $ 990 Income taxes paid (NY State) $ 5 $ 5 SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Unrealized gain (loss) on securities available for sale $ 2,876 $ ( 726 ) Accrued purchase of property and equipment $ — $ 114 See notes to consolidated financial statements. F - 8 Lake Shore Bancorp, Inc. and Subsidiary Notes to Consolidate d Financial Statements Note–1 - Organization and Nature of Operations Organizational Structure Lake Shore Bancorp, Inc. (the “Company” or "Lake Shore Bancorp") is the parent holding company for Lake Shore Bank (the "Bank"). Lake Shore Bancorp, Inc., a federal corporation ("Lake Shore Federal Bancorp) and the former parent mutual holding company, Lake Shore, MHC (the “MHC”) were formed on April 3, 2006 to serve as the savings and loan holding companies for Lake Shore Savings Bank, upon Lake Shore Savings Bank’s initial conversion and reorganization from a New York State chartered mutual savings and loan association to the federal mutual holding company form of organization. On July 18, 2025, Lake Shore Bancorp, Inc., a new corporation incorporated under the laws of the State of Maryland, became the bank holding company of Lake Shore Bank upon the completion of a "second-step" conversion (the "Conversion"). Pursuant to the Conversion, Lake Shore Savings Bank, a federally chartered savings bank, the wholly-owned subsidiary of Lake Shore Federal Bancorp, reorganized from the two-tier mutual holding company structure to the fully-public stock holding company structure. In addition, Lake Shore Savings Bank converted its charter from a federal savings bank to a New York commercial bank renamed Lake Shore Bank. 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. 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. 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 $ 2.3 million and have been recorded against offering proceeds. As part of the Conversion transaction, outstanding shares 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. In connection with the Conversion, the Company established a liquidation account for the benefit of eligible and supplemental eligible account holders as defined in the Plan of Conversion and Reorganization of the MHC in an amount equal to the net worth of the Company as of the date of the latest consolidated balance sheet appearing in the final prospectus distributed in connection with the Conversion. The liquidation account will be maintained for the benefit of eligible account holders and supplemental eligible account holders who maintain their accounts at the Bank after the Conversion. The liquidation account will be reduced annually to the extent that such account holders have reduced their qualifying deposits as of each fiscal year end. Subsequent increases will not restore an account holder's interest in the liquidation account. In the event of a complete liquidation of the Company or the Bank, each such account holder will be entitled to receive balances for accounts then held. Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give retroactive recognition to the exchange ratio applied in the Conversion ( 1.3549 ). Charter Lake Shore Bancorp, Inc. is regulated by the Federal Reserve Board and Lake Shore Bank, the wholly-owned subsidiary of Lake Shore Bancorp, Inc., is a New York State chartered commercial bank and regulated by New York Department of Financial Services ("NYSDFS") and the Federal Deposit Insurance Corporation (the “FDIC”). Nature of Business F - 9 The Company’s primary business is the ownership and operation of its subsidiary, the Bank. The Bank is engaged primarily in the business of retail banking through ten branch offices located in Erie and Chautauqua Counties of New York State. Its primary deposit products are checking, savings and term certificate accounts and its primary lending products are commercial real estate loans and residential mortgages. Note–2 - Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of the Company and the Bank. All material inter-company accounts and transactions have been eliminated. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with general practices within the banking industry. Certain prior periods amounts have been reclassified to conform to the current presentation. These reclassifications had no effect on 2024 net income or total stockholders' equity. Subsequent Events The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of December 31, 2025 for items that should potentially be recognized or disclosed in the unaudited consolidated financial statements. The evaluation was conducted through the date these unaudited consolidated financial statements were issued. Use of Estimates To prepare these consolidated financial statements in conformity with GAAP, management of the Company made a number of estimates and assumptions relating to the reporting of assets and liabilities and the reporting of revenue and expenses. Actual results could differ from those estimates. The allowance for credit losses is a material estimate that is particularly susceptible to significant change in the near term. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts due from banks, interest earning deposits at other financial institutions, and overnight federal funds sold, if any, which are generally sold for one to three-day periods. Investment Securities All debt securities are classified as available for sale and are carried at fair value with unrealized gains and losses, net of the related deferred income tax effect, excluded from earnings and reported as a separate component of accumulated other comprehensive loss until realized. Equity securities are also measured at fair value with changes in the fair value recognized in the non-interest income component of the consolidated statements of income. Realized gains and losses on securities transactions are reported in earnings and computed using the specific identification method. An allowance for credit losses is deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be collected over the contractual term. For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell or if it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available for sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit deterioration or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, any excess cost is recorded as an allowance for credit losses. Any impairment that has not been recorded through an allowance for credit losses is recognized in other F - 10 comprehensive income. The Company elected the practical expedient of zero loss estimates for securities issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major agencies, and have a long history of no losses. Federal Home Loan Bank Stock Federal law requires a member institution of the Federal Home Loan Bank (“FHLB”) system to hold restricted stock of its district Federal Home Loan Bank according to a predetermined formula. This stock is restricted in that it can only be sold to the FHLB or to another member institution and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is carried at cost on the consolidated statements of financial condition. The investment is periodically evaluated for impairment based on the ultimate recoverability of cost. Loans Receivable Loans receivable that management has the intent and ability to hold until maturity or payoff are stated at their outstanding unpaid principal balances, net of allowance for credit losses and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan. Management considers a loan to be in delinquency status when the contractual payment of principal or interest has become greater than 30 days past due. The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed in the current year. Interest received on non-accrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Charge-offs are recorded as a reduction to the allowance for credit losses for loans when amounts are deemed uncollectible. When losses are confirmed through the receipt of assets in satisfaction of a loan, such as the underlying collateral upon foreclosure or cash upon completion of a short sale, a charge-off is recorded in an amount equal to the excess of a loan's amortized cost over the fair value of assets received. Subsequent recoveries of charged-off loans, if any, are credited to the allowance for credit losses for loans. Allowance for Credit Losses – Loans and Off-Balance Sheet Credit Exposures The allowance for credit losses for loans is a valuation allowance that is deducted from the loans receivable amortized cost basis to present the net amount expected to be collected as of the valuation date. Loans are charged-off against the allowance for credit losses for loans when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries recorded in the allowance for credit loss for loans account should not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance for credit losses for loans is measured on a collective, or pool, basis when similar risk characteristics exist. Loans that the Company believes do not share risk characteristics are evaluated on an individual basis. Non-accrual loans are individually evaluated and when deemed appropriate, are assigned a reserve based on such evaluation, which may be determined by the underlying collateral value or the loan-level estimated discounted cash flows. The Company considers several factors in its determination of whether to classify loans as collateral-dependent and individually evaluate such loans. When loans are considered to be collateral-dependent, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. The Company also estimates expected credit losses on off-balance sheet credit exposure, such as unfunded loan commitments, on a collective basis. The resulting reserve for unfunded commitments is recorded as a liability on the balance F - 11 sheet, included in other liabilities, and is adjusted through the provision for credit losses line item within the consolidated statement of income, similar to the allowance for credit losses for loans. During the first quarter of 2025, the Company transitioned its allowance for credit losses ("ACL") methodology for loans and unfunded commitments from a vintage model to a discounted cash flow model for all loan segments and loans that are not individually evaluated. In particular, loan-level probability of default ("PD") and loss severity (also referred to as loss given default ("LGD")) are applied to derive a baseline expected loss as of the valuation date. These expected default and severity rates, which are regression-derived and based on benchmark historical performance data, are calibrated to incorporate the Company's reasonable and supportable forecasts of future losses as well as any necessary qualitative adjustments. The loan segments utilized in the discounted cash flow model are consistent with those used in the vintage model and previously disclosed by the Company. The Company relies on benchmark and peer data when deriving its best estimate of PD, LGD, and other model assumptions, including prepayment and curtailment speeds, with consideration given to a bank's size and geographical region in relation to the Company's when included within respective peer data sets. As part of the Company's estimation process, it assesses the reasonableness of data, assumptions, and model methodology utilized to derive its allowance for credit losses. For each of the modeled segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for various elements including, but not limited to, estimated prepayment speeds, curtailment rates, PD rates, and LGD rates. The Company utilizes national unemployment and gross domestic product ("GDP") forecasts calibrated to peer benchmark data for its reasonable and supportable forecasting of expected default within the cash flow model. To further adjust the allowance for credit losses for expected losses not already reflected within the quantitative component of the calculation, the Company considers qualitative factors for current conditions known as of the valuation date, including, but not limited to, trends in the nature and volume of the loan portfolio, loan concentrations, changes in the experience, ability and depth of the Company’s lending management, and national and local economic conditions. These refinements have been accounted for as changes in accounting estimates under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 250 - Accounting Changes and Error Corrections , with prospective application beginning in the period of change. These changes, along with attribution changes in the Bank's loan portfolio as of the valuation date, resulted in a $ 37,000 increase in the ACL for loans and a $ 9,000 increase in the reserve for unfunded commitments at March 31, 2025 when compared to December 31, 2024. Accrued interest on loans of $ 2.7 million at December 31, 2025 and $ 2.5 million at December 31, 2024 is included in accrued interest receivable on the consolidated statements of financial condition and is excluded from the allowance for credit losses estimation process. The Company's determination as to the amount of expected credit losses is subject to review by bank regulators, which can require the establishment of additional expected credit losses. Although the allowance for credit losses is allocated by loan type, the allowance for credit losses is general in nature and is available to offset losses from any loan in the Company’s portfolio. Premises and Equipment Land is carried at cost. Buildings, improvements, furniture and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of assets (generally thirty-nine years for buildings and three to fifteen years for furniture and equipment). Leasehold improvements are amortized on the straight-line method over the lesser of the life of the improvements or the lease term. Maintenance and repairs are charged to expense as incurred while major improvements are capitalized and amortized to operating expense over the identified useful life. F - 12 Leases The Company determines if an arrangement is a lease at the contract’s inception. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the consolidated statements of income. Operating leases are recorded under a right of use (“ROU”) model that requires a lessee to record (for all operating leases with terms longer than 12 months) an asset representing its right to use the underlying asset and a lease liability. The ROU asset and lease liability are included in other assets and other liabilities, respectively, on the consolidated statements of financial condition. Finance leases are recorded in premises and equipment on the consolidated statements of financial condition. Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the lease commencement date. ROU assets are further adjusted for lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy and equipment expense in the consolidated statements of income. Mortgage Servicing Rights Certain low-yielding, fixed rate residential, one to- four- family loans are sold on the secondary market in order to manage interest rate risk. The individual loans are normally sold to an investor immediately after loan closing. The Company retains servicing rights on these loans. Originated mortgage servicing rights are recorded at their fair value at the time of transfer of the related loans and are amortized in proportion to, and over the period of, estimated net servicing income or loss. The carrying value of the originated mortgage servicing rights are periodically evaluated for impairment. The mortgage servicing rights asset is recorded in other assets on the consolidated statements of financial condition. The amortization of the mortgage servicing asset is recorded against service fee income and recorded in service charges and fees on the consolidated statements of income. Revenue Recognition The majority of the Company's revenue-generating transactions are not subject to ASC 606 "Revenue from Contracts with Customers", including revenue generated from financial instruments, such as loans, letters of credit, and investment securities, as well as revenue related to mortgage servicing activities, as these activities are subject to other accounting standards. Descriptions of the Company's revenue-generating activities that are within the scope of ASC 606, which are presented in the Company's consolidated statements of income as components of non-interest income are discussed further in Note 20 - Revenue Recognition. Transfers of Financial Assets Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Foreclosed Real Estate Foreclosed real estate consists of property acquired in settlement of loans which is carried at its fair value less estimated selling costs. Write-downs from cost to fair value less estimated selling costs are recorded at the date of acquisition or repossession and are charged to the allowance for credit losses. Subsequent write-downs to fair value, net of estimated selling costs, are recorded in non-interest expense along with direct operating expenses. Gains or losses not previously recognized, resulting from the sale of foreclosed assets are recognized in non-interest expense on the date of sale. F - 13 Foreclosed real estate was $ 0 at both December 31, 2025 and 2024. Proceeds from the sale of foreclosed real estate for the years ended December 31, 2025 and 2024 were $ 0 and $ 42,000 , respectively. This sale during the year ended December 31, 2024 resulted in a net loss on sale of $ 19,000 , and was included as a component of other non-interest expense in the consolidated statements of income. Bank Owned Life Insurance and Annuity Assets The Company invests in bank owned life insurance (“BOLI”) and annuity assets as sources of funding for employee benefit obligations described below and in Note 11 - Employee and Director Benefit Plans. BOLI involves the purchase of life insurance by the Company on a chosen group of employees. The Company is the owner and beneficiary of the policies. This life insurance investment is carried at the cash surrender value of the underlying policies. Income from the increase in the cash surrender value of the underlying policies and gains resulting from death benefit claims are included within earnings on bank-owned life insurance in non-interest income in the consolidated statements of income and is not subject to income taxes. Income from the increase in the cash surrender value is only subject to income taxes upon surrender. The Company does not intend to surrender the policies held at December 31, 2025, and accordingly, no deferred taxes have been recorded on the earnings from these policies. The cash surrender value of such bank owned life insurance amounted to $ 31.5 million at December 31, 2025 and $ 29.3 million at December 31, 2024. Annuity assets involve the purchase of future cash flow streams by the Company to directly fund the payment of a certain supplemental executive retirement plan. Income from the increase in the value of the underlying annuity contracts are included in non-interest income on the consolidated statements of income. The value of annuity assets were $ 3.2 million at both December 31, 2025 and 2024, and were included within other assets on the Company's consolidated statements of financial condition. Income Taxes The Company files a consolidated federal income tax return. The provision for federal and state income taxes is based on income reported on the consolidated financial statements rather than the amounts reported on the respective income tax returns. Deferred taxes are recorded using the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment and the effect of a change in tax rates is recognized in income at that time. The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are applied in the calculation of certain tax credits and in the calculation of deferred income tax expense or benefit associated with certain deferred tax assets and liabilities. Significant changes to these estimates may result in an increase or decrease to the Company’s tax provision in a subsequent period. The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company periodically reviews its tax positions and applies a “more likely than not” recognition threshold for all tax uncertainties. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Employee Stock Ownership Plan (“ESOP”) Compensation expense is recognized based on the current market price of shares committed to be released to employees. All shares released and committed to be released are deemed outstanding for purposes of earnings per share calculations. Dividends declared and paid on allocated shares held by the ESOP are charged to retained earnings. The value of unearned shares to be allocated to ESOP participants for future services not yet performed is reflected as a reduction of stockholders’ equity. Dividends declared on unallocated shares held by the ESOP are recorded as a reduction of the ESOP’s loan payment to the Company. F - 14 Stock-based Compensation Plans At December 31, 2025, the Company had stock-based compensation plans, which are described more fully in Note 12 - Stock-based Compensation. The Company accounts for the plans using a fair value-based method, which measures compensation cost at the grant date based on the fair value of the award. Compensation is then recognized over the requisite service period, which is usually the vesting period. The fair value of stock option grants are estimated on the date of grant using the Black-Scholes options pricing model. Common shares are issued from the Company’s authorized common shares when a share option is exercised. When restricted shares are granted, the shares are released from authorized and unissued. Common shares awarded as restricted stock are measured based on the fair market value at the grant date. The stock option plan, restricted stock plan, and equity incentive plan expenses are recognized in salaries and employee benefits expense on the consolidated statement of income. Supplemental Employee and Director Benefit Plans The Company maintains a 401(k) savings plan for its employees and has certain non-qualified supplemental executive retirement plans for its directors and certain members of management. Refer to Note 11 - Employee and Director Benefit Plans for additional information. Earnings per Common Share Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding, less unallocated shares held by the Company’s ESOP, during the period. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued as well as any adjustment to income that would result from the assumed conversion. Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock awards, and are determined using the treasury stock method. Off-Balance Sheet Credit Related Financial Instruments In the ordinary course of business, the Company has entered into commitments to extend credit. Such commitments are recorded in the consolidated statements of financial condition when they are funded. Refer to Note 16 - Commitments to Extend Credit for additional information. Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the stockholders’ equity section of the consolidated statements of financial condition, such items, along with net income, are components of comprehensive income. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. The Company does not believe such matters exist that will have a material effect on the financial statements. Segment Reporting The Company has one reporting unit, one operating segment and, consequently, a single reportable segment. The Chief Executive Officer , who is the Company’s chief operating decision maker, or CODM, monitors revenue streams and other information provided about the company’s products and services offered, expenses, operating metrics, and other financial metrics. The information provided to the CODM is presented on an aggregated entity-level basis, which is consistent with the accompanying Consolidated Financial Statements presented in this Form 10-K. In assessing operating results and in allocating resources, the CODM evaluates the financial performance of the Company’s business by evaluating revenue streams, significant expenses, and budget to actual results, among other things. Profitability is only determined at the entity F - 15 level. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets and equity. The CODM uses consolidated net income, among other metrics, to benchmark the Company against its competitors. The benchmarking analysis, coupled with monitoring of budget to actual results, are used in assessing performance and allocating resources. Loans, investments, interest-earning deposits, and non-interest income provide the revenues in the Company's operation. Interest expense, provisions for credit losses, salaries and employee benefits, occupancy and equipment, data processing, and professional services expense provide the significant expenses in the Company's operations. All of the Company's income and expenses are included in the accompanying Consolidated Financial Statements presented in this Form 10-K. All of the Company’s operations are domestic. Recently Adopted Accounting Standards In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ” The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis. Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. The Company adopted ASU 2023-09 effective January 1, 2025 and applied the guidance retrospectively to all periods presented. The adoption of ASU 2023-09 did no t have a material impact on the Company's consolidated financial statements, as the standard impacted disclosures only. Refer to Note 10 - Income Taxes for additional details. Recent Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, " Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). " The amendments in this ASU require a public business entity to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods, including employee compensation, depreciation, intangible asset amortization, and other costs and expenses. Additionally, a public business entity must disclose a qualitative description of the amounts remaining in relevant expense captions which are not separately disaggregated quantitatively under the amendments included within this ASU. This ASU is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption of this ASU is permitted and may be applied prospectively to financial statements issued for reporting periods after the effective date of the ASU or retrospectively to any period presented in the financial statements. The Company does not expect the adoption of ASU 2024-03 to have a material impact on its consolidated financial statements. In November 2025, the FASB issued ASU 2025-08, “ Financial Instruments—Credit Losses (Topic 326): Purchased Loans. ” The amendments in this ASU expand the application of the gross-up approach for recognizing credit losses to certain acquired loans, referred to as purchased seasoned loans, which are recorded at acquisition at their purchase price plus an allowance for expected credit losses. Under this approach, the initial allowance for credit losses does not result in a day-one provision for credit losses, and subsequent changes in the allowance are recognized through earnings. The amendments are intended to reduce complexity and improve comparability in the accounting for acquired loans by aligning the treatment of purchased seasoned loans with that of purchased credit-deteriorated assets. This ASU is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods, and is to be applied prospectively to loans acquired on or after the adoption date. Early adoption is permitted. The Company does not expect the adoption of ASU 2025-08 to have a material impact on its consolidated financial statements. F - 16 Note 3 – Investment Securities The amortized cost and fair value of securities are as follows: December 31, 2025 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (Dollars in thousands) SECURITIES Debt Securities Available for Sale U.S. government agencies $ 2,004 $ — $ ( 67 ) 1,937 Municipal bonds 40,665 — ( 6,825 ) 33,840 Mortgage-backed securities: Collateralized mortgage obligations-private label 8 — — 8 Collateralized mortgage obligations-government sponsored entities 8,649 — ( 885 ) 7,764 Government National Mortgage Association 47 — ( 2 ) 45 Federal National Mortgage Association 9,772 1 ( 1,236 ) 8,537 Federal Home Loan Mortgage Corporation 4,742 1 ( 737 ) 4,006 Asset-backed securities-government sponsored entities 1 — — 1 Total Debt Securities Available for Sale 65,888 2 ( 9,752 ) 56,138 Total Securities $ 65,888 $ 2 $ ( 9,752 ) $ 56,138 December 31, 2024 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (Dollars in thousands) SECURITIES Debt Securities Available for Sale U.S. government agencies $ 2,006 $ — $ ( 155 ) $ 1,851 Municipal bonds 40,719 — ( 8,431 ) 32,288 Mortgage-backed securities: Collateralized mortgage obligations-private label 9 — — 9 Collateralized mortgage obligations-government sponsored entities 10,201 — ( 1,259 ) 8,942 Government National Mortgage Association 54 — ( 4 ) 50 Federal National Mortgage Association 10,812 — ( 1,799 ) 9,013 Federal Home Loan Mortgage Corporation 5,229 — ( 989 ) 4,240 Asset-backed securities-private label — 28 — 28 Asset-backed securities-government sponsored entities 1 — — 1 Total Debt Securities Available for Sale 69,031 28 ( 12,637 ) 56,422 Equity Securities 22 51 — 73 Total Securities $ 69,053 $ 79 $ ( 12,637 ) $ 56,495 Debt Securities All of the Company's collateralized mortgage obligations are backed by one- to four-family residential mortgages. At December 31, 2025 and December 31, 2024, sixteen municipal bonds with an amortized cost of $ 4.7 million and fair value of $ 3.6 million and eighteen municipal bonds with an amortized cost of $ 6.2 million and fair value of $ 4.6 million, respectively, were pledged as collateral for customer deposits in excess of the Federal Deposit Insurance Corporation ("FDIC") insurance limits. At December 31, 2025 and 2024, no securities were pledged as collateral to the Federal Reserve Bank ("FRB"), to the Federal Home Loan Bank of New York ("FHLBNY"), or for any other purposes. F - 17 The following table sets forth the Company’s investment in available for sale debt securities with gross unrealized losses of less than twelve months and gross unrealized losses of twelve months or more and associated fair values for which an allowance for credit losses has not been recorded for the periods indicated: Less than 12 months 12 months or more Total Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (Dollars in thousands) December 31, 2025 U.S. government agencies $ — $ — $ 1,937 $ ( 67 ) $ 1,937 $ ( 67 ) Municipal bonds — — 32,794 ( 6,825 ) 32,794 ( 6,825 ) Mortgage-backed securities — — 20,285 ( 2,860 ) 20,285 ( 2,860 ) $ — $ — $ 55,016 $ ( 9,752 ) $ 55,016 $ ( 9,752 ) December 31, 2024 U.S. government agencies $ — $ — $ 1,851 $ ( 155 ) $ 1,851 $ ( 155 ) Municipal bonds 371 ( 9 ) 31,917 ( 8,422 ) 32,288 ( 8,431 ) Mortgage-backed securities 86 ( 1 ) 22,168 ( 4,050 ) 22,254 ( 4,051 ) $ 457 $ ( 10 ) $ 55,936 $ ( 12,627 ) $ 56,393 $ ( 12,637 ) As of December 31, 2025, the Company’s investment portfolio included no debt securities in the “unrealized losses less than twelve months” category and 164 debt securities in the “unrealized losses twelve months or more” category. As of December 31, 2024, the Company's investment portfolio included seven debt securities in the “unrealized losses less than twelve months” category and 169 debt securities in the “unrealized losses twelve months or more” category. As of December 31, 2025, the Company had 164 debt securities with a fair value of $ 55.0 million in an unrealized loss position. As of December 31, 2024, the Company had 176 debt securities with a fair value of $ 56.4 million in an unrealized loss position. The Company reviews securities in an unrealized loss position to evaluate credit risk. The Company considers payment history, risk ratings from external parties, financial statements for municipal and corporate securities, public statements from issuers, and other available credible published sources in evaluating credit risk. In this review, the Company did not identify any credit risk and, therefore, no allowance for credit losses on securities available for sale was recorded as of December 31, 2025 or December 31, 2024. The unrealized losses are attributed to noncredit-related factors including changes in interest rates and other market conditions. The Company does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the cost basis of the investments. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accrued interest of $ 248,000 as of December 31, 2025 and $ 254,000 as of December 31, 2024 on available-for-sale debt securities is included in accrued interest receivable on the consolidated statements of financial condition and is excluded from the estimate of credit losses. During the year ended December 31, 2025, the Company sold two a sset-backed securities which had previously been written-off, resulting in gross realized gains of $ 10,000 . During the year ended December 31, 2024, the Company did no t sell any debt securities. Scheduled contractual maturities of debt securities are as follows: F - 18 Amortized Fair Cost Value (Dollars in thousands) December 31, 2025: Less than one year $ 633 $ 628 After one year through five years 3,424 3,310 After five years through ten years 12,095 10,942 After ten years 26,517 20,897 Mortgage-backed securities 23,218 20,360 Asset-backed securities 1 1 Total Debt Securities $ 65,888 $ 56,138 The Company's mortgage-backed securities and asset-backed securities have stated maturities that may differ from actual maturities due to the borrowers' ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying assets and are generally influenced by interest rates. In the table above, mortgage-backed securities and asset-backed securities are shown in the aggregate. Equity Securities At December 31, 2024, the Company held 22,368 shares of Federal Home Loan Mortgage Corporation (“FHLMC”) common stock, included within securities, at fair value, on the consolidated statement of financial condition. During the year ended December 31, 2025, the Company sold these shares for proceeds of $ 223,000 . Accordingly, the Company did no t hold any equity securities at December 31, 2025. During the years ended December 31, 2025 and 2024, the Company recognized gains of $ 150,000 and $ 54,000 , respectively, on the equity securities, which was recorded within gains on equity securities in non-interest income in the consolidated statements of income. There were no purchases or sales of equity securities during the year ended December 31, 2024. Note 4 - Loans Receivable Loans receivable, net consists of the following: December 31, December 31, 2025 2024 (Dollars in thousands) Real Estate Loans: Residential, one- to four-family (1) $ 150,095 $ 161,331 Home Equity 46,970 47,456 Commercial (2) 327,352 320,984 Total real estate loans 524,417 529,771 Other Loans: Commercial 17,430 15,728 Consumer (3) 15,466 991 Total gross loans 557,313 546,490 Net deferred loan costs 3,012 3,263 Allowance for credit losses on loans ( 4,884 ) ( 5,133 ) Loans receivable, net $ 555,441 $ 544,620 (1) There were no one- to four-family construction loans as of December 31, 2025 or 2024. (2) Includes commercial construction loans of $ 18.8 million and $ 18.9 million as of December 31, 2025 and 2024, respectively. (3) Includes overdraft protection of $ 24,000 and $ 39,000 as of December 31, 2025 and 2024, respectively. Residential real estate loans serviced for others by the Company totaled $ 32.8 million and $ 35.8 million at December 31, 2025 and 2024, respectively. Real estate loans of approximately $ 116.8 million and $ 39.4 million in unpaid principal balance were pledged as collateral for FHLBNY advances as of December 31, 2025 and 2024, respectively. F - 19 At December 31, 2025 and 2024, loans to related parties including officers and directors and their affiliates were immaterial as a percentage of our loan portfolio. Note 5 - Allowance for Credit Losses Allowance for Credit Losses for Loans The ability of the Company’s residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the geographical area in which they reside. Commercial borrowers’ ability to repay is generally dependent upon the general health of the economy. A large majority of the Company’s loans are in Western New York and, accordingly, the ultimate collectability of a substantial portion of the loans is susceptible to changes in market conditions in this primary market area. The loan portfolio is segmented into the following loan types by risk level: Real Estate Loans: • Residential, One- to Four-Family – are loans secured by first lien collateral on residential real estate primarily held in the Western New York region. These loans can be affected by economic conditions and the value of underlying properties. Western New York’s housing market has consistently demonstrated stability in home prices despite economic conditions. Furthermore, the Company has conservative underwriting standards and its residential lending policies and procedures verify that its one- to four-family residential mortgage loans generally conform to secondary market guidelines. • Home Equity – are loans or lines of credit secured by first or second liens on owner-occupied residential real estate primarily held in the Western New York region. These loans can also be affected by economic conditions and the values of underlying properties. Home equity loans may have increased risk of loss if the Company does not hold the first mortgage resulting in the Company being in a secondary position in the event of collateral liquidation. The Company does not originate interest only home equity loans. • Commercial Real Estate – are loans used to finance the purchase of real property, which generally consists of developed real estate that is held as first lien collateral for the loan. These loans are secured by real estate properties that are primarily held in the Western New York region. Commercial real estate lending involves additional risks compared with one- to four-family residential lending, because payments on loans secured by commercial real estate properties are often dependent on the successful operation or management of the properties, and/or the collateral value of the commercial real estate securing the loan, and repayment of such loans may be subject to adverse conditions in the real estate market or economic conditions to a greater extent than one- to four-family residential mortgage loans. Also, commercial real estate loans typically involve relatively large loan balances concentrated with single borrowers or groups of related borrowers. Other Loans: • Commercial – includes business installment loans, lines of credit, and other commercial loans. Most of our commercial loans are for terms generally not in excess of five years . Whenever possible, we collateralize these loans with a lien on business assets and equipment and require the personal guarantees from principals of the borrower. Commercial loans generally involve a higher degree of credit risk, as commercial loans can involve relatively large loan balances to a single borrower or groups of related borrowers, with the repayment of such loans typically dependent on the successful operation of the commercial business and the income stream of the borrower. Such risks can be significantly affected by economic conditions. Although commercial loans may be collateralized by equipment or other business assets, the liquidation of collateral in the event of a borrower default may be an insufficient source of repayment because the equipment or other business assets may be obsolete or of limited use, among other things. Accordingly, the repayment of a commercial loan depends primarily on the credit worthiness of the borrowers (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment. • Consumer – consist of loans secured by collateral such as an automobile or a deposit account, unsecured loans, and lines of credit. Consumer loans tend to have a higher credit risk due to the loans being either unsecured or secured by rapidly depreciable assets. Furthermore, consumer loan payments are dependent on the borrower’s continuing F - 20 financial stability, and therefore are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Included in the Real Estate Loans for residential, one- to four-family and commercial real estate are loans to finance the construction of either a one- to four-family owner occupied home or commercial real estate. At the end of the construction period, the loan automatically converts to either a one- to four-family residential mortgage or a commercial real estate mortgage, as applicable. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion compared to the actual cost of construction. The Company limits its risk during construction as disbursements are not made until the required work for each advance has been completed and an updated lien search is performed. The completion of the construction progress is verified by a Company loan officer or inspections performed by an independent appraisal firm or other third party. Construction loans also expose us to the risk of construction delays which may impair the borrower’s ability to repay the loan. The following tables detail the changes in the allowance for credit losses by loan segment for the years ended December 31, 2025 and 2024 as well as the related loan balances by individually evaluated and collectively evaluated as of December 31, 2025 and 2024. Real Estate Loans Other Loans One- to Four-Family (1) Home Equity Commercial Real Estate (2) Commercial Consumer Total (Dollars in thousands) December 31, 2025 Allowance for Credit Loss on Loans Balance - January 1, 2025 $ 390 $ 137 $ 4,171 $ 421 $ 14 $ 5,133 Charge-offs — — — — ( 30 ) ( 30 ) Recoveries 4 — — — 4 8 Provision (credit) 327 ( 37 ) ( 255 ) ( 281 ) 19 ( 227 ) Balance – December 31, 2025 $ 721 $ 100 $ 3,916 $ 140 $ 7 $ 4,884 Ending balance: individually evaluated $ 6 $ — $ — $ — $ — $ 6 Ending balance: collectively evaluated $ 715 $ 100 $ 3,916 $ 140 $ 7 $ 4,878 Gross Loans Receivable (3) : Ending balance $ 150,095 $ 46,970 $ 327,352 $ 17,430 $ 15,466 $ 557,313 Ending balance: individually evaluated $ 1,493 $ 62 $ 89 $ — $ — $ 1,644 Ending balance: collectively evaluated $ 148,602 $ 46,908 $ 327,263 $ 17,430 $ 15,466 $ 555,669 (1) There were no one- to four-family construction loans at December 31, 2025. (2) Includes commercial construction loans of $ 18.8 million. (3) Gross Loans Receivable does not include allowance for credit losses of $( 4,884 ) or net deferred loan costs of $ 3,012 . F - 21 Real Estate Loans Other Loans One- to Four-Family (1) Home Equity Commercial Real Estate (2) Commercial Consumer Total (Dollars in thousands) December 31, 2024 Allowance for Credit Loss on Loans Balance- January 1, 2024 $ 532 $ 213 $ 5,231 $ 471 $ 16 $ 6,463 Charge-offs — — — — ( 41 ) ( 41 ) Recoveries 10 — — — 9 19 (Credit) provision ( 152 ) ( 76 ) ( 1,060 ) ( 50 ) 30 ( 1,308 ) Balance – December 31, 2024 $ 390 $ 137 $ 4,171 $ 421 $ 14 $ 5,133 Ending balance: individually evaluated $ — $ — $ — $ — $ — $ — Ending balance: collectively evaluated $ 390 $ 137 $ 4,171 $ 421 $ 14 $ 5,133 Gross Loans Receivable (3) : Ending balance $ 161,331 $ 47,456 $ 320,984 $ 15,728 $ 991 $ 546,490 Ending balance: individually evaluated $ 131 $ — $ 1,242 $ — $ — $ 1,373 Ending balance: collectively evaluated $ 161,200 $ 47,456 $ 319,742 $ 15,728 $ 991 $ 545,117 (1) There were no one- to four-family construction loans at December 31, 2024. (2) Includes commercial construction loans of $ 18.9 million. (3) Gross Loans Receivable does not include allowance for credit losses of $( 5,133 ) or net deferred loan costs of $ 3,263 . Allowance for Credit Losses on Unfunded Loan Commitments The Company’s allowance for credit losses on unfunded loan commitments is recognized as a liability and included within other liabilities on the consolidated statements of financial condition, with adjustments to the reserve recognized in the provision for credit losses on the consolidated statements of income. The Company’s activity in the allowance for credit losses on unfunded loan commitments for the years ended December 31, 2025 and 2024 was as follows: For the years ended December 31, 2024 and 2025 (Dollars in thousands) Balance at January 1, 2024 $ 485 Provision for credit losses ( 171 ) Balance at December 31, 2024 314 Provision for credit losses 47 Balance at December 31, 2025 $ 361 Non-accrual Loans and Delinquency Status The following table presents the amortized cost basis of loans on non-accrual status and loans on non-accrual status with no allowance for credit losses recorded. The Company did not have any loans past due 90 days or more and still accruing at December 31, 2025 and 2024. F - 22 Total Non-accrual Non-accrual with no Allowance for Credit Losses December 31, December 31, December 31, December 31, 2025 2024 2025 2024 (Dollars in thousands) Real Estate Loans: Residential, one- to four-family (1) $ 1,525 $ 1,891 $ 1,388 $ 1,891 Home Equity 66 683 66 683 Commercial Real Estate (2) 89 1,226 89 1,226 Other Loans: Commercial — — — — Consumer — 4 — 4 Total loans $ 1,680 $ 3,804 $ 1,543 $ 3,804 (1) Includes one- to four-family construction loans. (2) Includes commercial construction loans. There was no interest income recognized on non-accrual loans during the years ended December 31, 2025 and 2024. The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. A loan does not have to be 90 days delinquent in order to be classified as non-accrual. When interest accrual is discontinued, all unpaid accrued interest is reversed. If ultimate collection of principal is in doubt, all cash receipts on non-accrual loans are applied to reduce the principal balance. The following tables provide an analysis of past due loans as of the dates indicated: 30-59 Days 60-89 Days 90 Days or More Total Past Current Total Gross Loans Past Due Past Due Past Due Due Due Receivable (Dollars in thousands) December 31, 2025: Real Estate Loans: Residential, one- to four-family $ 788 $ 27 $ 674 $ 1,489 $ 148,606 $ 150,095 Home equity 447 137 — 584 46,386 46,970 Commercial — — 89 89 327,263 327,352 Other Loans: Commercial — — — — 17,430 17,430 Consumer 5 — — 5 15,461 15,466 Total $ 1,240 $ 164 $ 763 $ 2,167 $ 555,146 $ 557,313 30-59 Days 60-89 Days 90 Days or More Total Past Current Total Gross Loans Past Due Past Due Past Due Due Due Receivable (Dollars in thousands) December 31, 2024: Real Estate Loans: Residential, one- to four-family $ 1,035 $ 454 $ 662 $ 2,151 $ 159,180 $ 161,331 Home equity 318 26 596 940 46,516 47,456 Commercial (1) — — 1,242 1,242 319,742 320,984 Other Loans: Commercial — — — — 15,728 15,728 Consumer 3 2 — 5 986 991 Total $ 1,356 $ 482 $ 2,500 $ 4,338 $ 542,152 $ 546,490 F - 23 (1) Includes commercial real estate construction loans. Collateral-Dependent Loans Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. For collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is measured on an individual loan basis based on the difference between the fair value of the loan’s collateral, which is adjusted for liquidation costs, and the amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance for credit losses is required. Refer to Note 13 - Fair Value of Financial Instruments for additional information. The following table presents an analysis of the amortized cost of collateral-dependent loans of the Company as of December 31, 2025 and 2024 by collateral type and loan segment: Residential Business Commercial Total Real Estate Assets Land Real Estate Other Loans December 31, 2025: (Dollars in thousands) Real Estate Loans: Residential, one- to four-family $ 1,525 $ — $ — $ — $ — $ 1,525 Home Equity 66 — — — — 66 Commercial — — — 89 — 89 Total $ 1,591 $ — $ — $ 89 $ — $ 1,680 December 31, 2024: Real Estate Loans: Residential, one- to four-family $ 134 $ — $ — $ — $ — $ 134 Commercial 200 — 1,026 — — 1,226 Total $ 334 $ — $ 1,026 $ — $ — $ 1,360 There was an allowance of $ 6,000 recorded on one collateral-dependent loan secured by residential real estate as of December 31, 2025. There was no allowance recorded on the above noted collateral-dependent loans as of December 31, 2024. Credit Quality Indicators The Company’s policies provide for the classification of loans as follows: • Pass/Performing; • Special Mention – does not currently expose the Company to a sufficient degree of risk but does possess credit deficiencies or potential weaknesses deserving the Company’s close attention; • Substandard – has one or more well-defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. A substandard asset would be one inadequately protected by the current net worth and paying capacity of the obligor or pledged collateral, if applicable; • Doubtful – has all the weaknesses inherent in substandard loans with the additional characteristic that the weaknesses present make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss; and • Loss – loan is considered uncollectible and continuance without the establishment of a specific valuation reserve is not warranted. Each commercial loan is individually assigned a loan classification. The Company’s consumer loans, including residential one- to four-family loans and home equity loans, are classified by using the delinquency status as the basis for classifying these loans. Generally, all consumer loans more than 90 days past due are classified and placed in non-accrual. Such loans that are well-secured and in the process of collection will remain in accrual status. Asset quality indicators for all loans and the Company’s risk rating process are reviewed on a monthly basis. Risk ratings are updated as circumstances that could affect the repayment of individual loans are brought to management’s attention through an established monitoring process. Written action plans are maintained and reviewed on a quarterly basis for all F - 24 classified commercial loans. In addition to the Company’s internal process, an outsourced independent credit review function is in place for commercial loans to further assess assigned risk classifications and monitor compliance with internal lending policies and procedures. The following tables present gross loans by credit quality indicator by origination year at December 31, 2025 and 2024 and gross charge-offs for the years then ended: 2025 2024 2023 2022 2021 Prior Revolving Loans Total December 31, 2025: (Dollars in thousands) Residential, one-to four-family (1) : Pass $ 4,434 $ 5,068 $ 10,308 $ 30,091 $ 24,701 $ 73,327 $ — $ 147,929 Substandard — — 190 315 399 1,262 — 2,166 Doubtful — — — — — — — — Total $ 4,434 5,068 $ 10,498 $ 30,406 $ 25,100 $ 74,589 $ — $ 150,095 Current period gross charge-offs $ — — $ — $ — $ — $ — $ — $ — Home Equity (2) : Pass $ 627 $ 28 $ 2,007 $ 1,721 $ 58 $ 352 $ 41,698 46,491 Substandard — — — — — — 479 479 Doubtful — — — — — — — — Total $ 627 $ 28 $ 2,007 $ 1,721 $ 58 $ 352 $ 42,177 $ 46,970 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial Real Estate (3) : Pass $ 34,815 $ 36,156 $ 19,119 $ 76,565 $ 37,655 $ 113,836 $ 2 $ 318,148 Special mention — — 402 — — 865 — 1,267 Substandard — — — — — 7,937 — 7,937 Doubtful — — — — — — — — Total $ 34,815 $ 36,156 $ 19,521 $ 76,565 $ 37,655 $ 122,638 $ 2 $ 327,352 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial Loans: Pass $ 4,296 $ 1,171 $ 730 $ 1,538 $ 77 $ 1,546 $ 5,184 $ 14,542 Special mention — — — — 63 — — 63 Substandard — — — — — 1,869 956 2,825 Doubtful — — — — — — — — Total $ 4,296 $ 1,171 $ 730 $ 1,538 $ 140 $ 3,415 $ 6,140 $ 17,430 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer Loans: Pass $ 14,857 $ 131 $ 45 $ 50 $ — $ 169 $ 213 $ 15,465 Substandard — — — — — — 1 1 Doubtful — — — — — — — — Total $ 14,857 $ 131 $ 45 $ 50 $ — $ 169 $ 214 $ 15,466 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ 30 $ 30 (1) There were no one- to four-family construction loans at December 31, 2025. (2) Home equity loans presented with an origination year represent home equity lines-of-credit which have been converted to term loans. (3) Includes commercial construction loans. F - 25 2024 2023 2022 2021 2020 Prior Revolving Loans Total December 31, 2024: (Dollars in thousands) Residential, one-to four-family (1) : Pass $ 5,554 $ 11,684 $ 33,058 $ 26,594 $ 16,272 $ 66,081 $ — $ 159,243 Substandard — — 447 265 — 1,377 — 2,088 Doubtful — — — — — — — — Total $ 5,554 11,684 $ 33,504 $ 26,859 $ 16,272 $ 67,458 $ — $ 161,331 Current period gross charge-offs $ — — $ — $ — $ — $ — $ — $ — Home Equity (2) : Pass $ 102 $ 2,712 $ 2,297 $ 76 $ 34 $ 574 $ 40,899 46,694 Substandard — — — — — — 762 762 Doubtful — — — — — — — — Total $ 102 $ 2,712 $ 2,297 $ 76 $ 34 $ 574 $ 41,661 $ 47,456 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial Real Estate (3) : Pass $ 33,959 $ 17,498 $ 84,218 $ 41,871 $ 33,021 $ 97,472 $ 644 $ 308,683 Special mention — — — — 895 1,646 — 2,541 Substandard — — — — 1,242 8,517 — 9,759 Doubtful — — — — — — — — Total $ 33,959 $ 17,498 $ 84,218 $ 41,871 $ 35,158 $ 107,636 $ 644 $ 320,984 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial Loans: Pass $ 3,232 $ 981 $ 1,980 $ 483 $ 349 $ 1,745 $ 2,725 $ 11,496 Special mention — — — 165 — 146 782 1,093 Substandard — — — — — 2,183 956 3,139 Doubtful — — — — — — — — Total $ 3,232 $ 981 $ 1,980 $ 648 $ 349 $ 4,074 $ 4,463 $ 15,728 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer Loans: Pass $ 258 $ 118 $ 138 $ 35 $ 98 $ 115 $ 223 $ 986 Substandard — — — — — — 4 4 Doubtful — — — — — — — — Total $ 258 $ 118 $ 138 $ 35 $ 98 $ 115 $ 228 $ 991 Current period gross charge-offs $ 5 $ — $ 2 $ — $ — $ — $ 34 $ 41 (1) There were no one- to four-family construction loans at December 31, 2024. (2) Home equity loans presented with an origination year represent home equity lines-of-credit which have been converted to term loans. (3) Includes commercial construction loans. Modifications with Borrowers Experiencing Financial Difficulty : Occasionally, the Company modifies loans to borrowers in financial distress by providing modifications to loans that it would not normally grant. Such modifications could include principal forgiveness, term extension, a significant payment delay, an interest rate reduction or the addition of a co-borrower or guarantor. When principal forgiveness is provided, the amount of the forgiveness is charged-off against the allowance for credit losses. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses, a change to the allowance for credit losses is generally not recorded upon modification. In some cases, the Company provides multiple types of modifications on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another modification may be granted, such as principal forgiveness. There were no loans modified to borrowers experiencing financial difficulty during the years ended December 31, 2025 or December 31, 2024. There were no modified loans that were past due or on non-accrual as of December 31, 2025 or December 31, 2024. F - 26 There were no loans to borrowers experiencing financial difficulty during the years ended December 31, 2025 or December 31, 2024 that had a payment default and were modified in the twelve months prior. Foreclosed real estate consists of property acquired in settlement of loans which is carried at its fair value less estimated selling costs. Write-downs from cost to fair value less estimated selling costs are recorded at the date of acquisition or repossession and are charged to the allowance for credit losses. There was no foreclosed real estate at December 31, 2025 and December 31, 2024. The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction was $ 491,000 at December 31, 2025 and $ 927,000 at December 31, 2024. Note 6 - Premises and Equipment Premises and equipment consist of the following: December 31, 2025 2024 (Dollars in thousands) Land $ 1,162 $ 1,210 Buildings and improvements 13,634 13,247 Furniture and equipment 7,546 7,600 Premises and equipment, gross 22,342 22,057 Accumulated depreciation ( 15,292 ) ( 14,839 ) Premises and equipment, net $ 7,050 $ 7,218 Depreciation of premises and equipment amounted to $ 612,000 and $ 739,000 for the years ended December 31, 2025 and 2024, respectively, and is included in occupancy and equipment expense in the accompanying consolidated statements of income. Note 7 - Deposits Deposits consist of the following at the dates indicated: December 31, 2025 December 31, 2024 Weighted Weighted Average Average Amount Rate Amount Rate (Dollars in thousands) Demand deposits: Non-interest bearing $ 96,103 — % $ 96,412 — % Interest bearing 62,346 0.09 65,020 0.09 Money market accounts 159,212 1.91 149,550 2.26 Savings accounts 51,788 0.07 54,322 0.06 Time deposits 203,828 3.44 207,674 3.96 Total deposits $ 573,277 1.77 % $ 572,978 2.04 % Scheduled maturities of time deposits at December 31, 2025 were as follows (dollars in thousands): 2026 $ 184,915 2027 13,827 2028 3,104 2029 1,124 2030 858 Thereafter — $ 203,828 F - 27 Time deposit accounts with balances of $250,000 or more amounted to $ 29.6 million and $ 33.9 million at December 31, 2025 and 2024, respectively. Interest expense on deposits was as follows: Years Ended December 31, 2025 2024 (Dollars in thousands) Interest bearing demand deposits $ 61 $ 64 Money market accounts 3,792 3,811 Savings accounts 35 40 Time deposits 7,662 9,162 $ 11,550 $ 13,077 At December 31, 2025 and 2024, deposits of directors, executive officers and their affiliates totaled $ 2.0 million and $ 1.6 million, respectively. At December 31, 2025 and 2024, no deposit relationships existed greater than 5 % of the Company's total deposits. Note 8 - Borrowings At December 31, 2025 and 2024, the Company had written agreements with the FHLBNY, which allow it to borrow up to the maximum lending values designated by the type of collateral pledged. As of December 31, 2025 and 2024, our maximum lending value was $ 88.0 million and $ 26.7 million, respectively, and was collateralized by a pledge of certain fixed-rate residential, one- to four-family loans. At December 31, 2025 and December 31, 2024, the Company had no short-term borrowings from the FHLBNY. At December 31, 2025, the Company had paid off all long-term debt outstanding under the written agreement with the FHLBNY. At December 31, 2024, the Company had long-term debt outstanding under the written agreement with the FHLBNY of $ 10.3 million. All of the advances outstanding at December 31, 2024, were term borrowings with initial terms of 1 to 5 years at fixed rates of interest ranging from 1.70 % to 5.20 %, with a weighted average interest rate of 3.73 %. Long-term debt from the FHLBNY and related contractual maturities consisted of the following: At December 31, 2025 At December 31, 2024 Maturity Amount Weighted Average Interest Rate Amount Weighted Average Interest Rate (Dollars in thousands) In one year $ — — % $ 8,250 3.79 % In two years — — % 1,000 3.49 % In three years — — % 1,000 3.49 % $ — — % $ 10,250 3.73 % The Company has a written agreement with the FRB discount window for overnight borrowings which is collateralized by a pledge of securities, and allows it to borrow up to the value of the securities pledged. At December 31, 2025 and December 31, 2024, there were no securities pledged to the FRB. Additionally, the Company has uncollateralized intraday credit with the FRB that allows for certain transactions to not be rejected for which there are insufficient funds in its Federal Reserve Master Account during normal hours of operation. The Company has also established an unsecured line of credit with a correspondent bank for $ 20.0 million at December 31, 2025 and December 31, 2024. At December 31, 2025 and 2024, there were no borrowings on this line. F - 28 Note 9 - Lease Obligations The Company leases certain branch offices under operating or finance leases. Certain lease arrangements contain extension options which are typically for 5 years at the then fair market rental rates. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. As of December 31, 2025 and 2024, two of the Company’s branch offices were subject to operating leases with associated ROU assets of $ 759,000 and $ 938,000 , respectively, and lease liabilities of $ 778,000 and $ 944,000 , respectively. The ROU assets are recorded under other assets and the lease liabilities are recorded under other liabilities and accrued interest payable on the consolidated statements of financial condition. Operating lease costs that were recorded in occupancy and equipment expense on the consolidated statements of income for each of the years ended December 31, 2025 and 2024 were $ 180,000 and $ 152,000 , respectively. The table below summarizes information related to the Company's lease liabilities at or for the years ended December 31, 2025 and 2024: For the Years Ended December 31, (dollars in thousands) 2025 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 167 $ 157 Operating cash flows from finance leases 35 44 Financing cash flows from finance leases 101 93 Weighted-average remaining lease term in years – operating leases 4.7 5.9 Weighted-average discount rate – operating leases 4.36 % 4.35 % The Company has one long-term finance lease agreement for a branch location and the outstanding balance of the finance lease (included in other liabilities and accrued interest payable on the consolidated statements of financial condition) at December 31, 2025 and 2024 was $ 277,000 and $ 378,000 , respectively, with a discount rate of 9.22 %. The remaining term of this lease is 2.5 years. The asset related to this finance lease is included in premises and equipment and consists of the cost of $ 1.1 million less accumulated depreciation of $ 839,000 and $ 797,000 at December 31, 2025 and 2024, respectively. Interest expense recognized on the Company's finance lease amounted to $ 35,000 and $ 44,000 for the years ended December 31, 2025 and 2024, respectively. The table below summarizes the maturity of remaining lease liabilities as of December 31, 2025: Operating Finance Leases Lease (Dollars in thousands) 2026 $ 184 $ 136 2027 184 136 2028 184 56 2029 184 — 2030 and thereafter 127 — Total Lease Payments $ 863 $ 328 Less: Amounts representing interest ( 85 ) ( 51 ) Present value of lease liabilities $ 778 $ 277 F - 29 Note 10 - Income Taxes The Company’s deferred federal and state income tax and related valuation accounts represent the estimated impact of temporary differences between how we recognize our assets and liabilities under GAAP and how such assets and liabilities are recognized under federal and state tax law. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences are expected to be recovered or settled. All pretax income from continuing operations for the years ended December 31, 2025 and 2024 was earned in the United States. The provision for income tax expense consists of the following: Years Ended December 31, 2025 2024 (Dollars in thousands) Current: Federal $ 1,579 $ 802 State 5 5 Total Current 1,584 807 Deferred: Federal ( 101 ) 128 State — — Total Deferred ( 101 ) 128 Total Income Tax Expense $ 1,483 $ 935 A reconciliation of the statutory federal income tax at a rate of 21 % for the years ended December 31, 2025 and 2024 to the income tax expense included in the consolidated statements of income is as follows: Years Ended December 31, 2025 2024 U.S . Federal income tax at statutory rate $ 1,838 21.0 % $ 1,232 21.0 % State income tax, net of federal income tax effect (1) 4 — 4 0.1 Nontaxable or nondeductible items Tax-exempt interest income ( 159 ) ( 1.8 ) ( 166 ) ( 2.8 ) Section 291 interest expense disallowance 55 0.6 65 1.1 Life insurance income ( 241 ) ( 2.8 ) ( 226 ) ( 3.8 ) Other ( 14 ) ( 0.1 ) 26 0.3 Total Income Tax Expense $ 1,483 16.9 % $ 935 15.9 % (1) This category includes taxes in New York State. F - 30 The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows: December 31, 2025 2024 (Dollars in thousands) Deferred tax assets: Unrealized losses on securities available for sale $ 2,529 $ 3,271 Allowance for credit loss 1,361 1,413 Deferred compensation 1,756 1,554 Net operating losses ("NOL") 306 290 Impairment of equity investments 130 130 Accrued expenses 120 98 Right of use liabilities 161 196 Stock options granted 12 11 Total Deferred Tax Assets 6,375 6,963 Deferred tax liabilities: Deferred loan origination costs ( 781 ) ( 846 ) Depreciation ( 415 ) ( 464 ) Prepaid expenses ( 93 ) ( 123 ) Right of use assets ( 159 ) ( 197 ) Other ( 45 ) ( 62 ) Total Deferred Tax Liabilities ( 1,493 ) ( 1,692 ) Deferred tax valuation allowance ( 1,293 ) ( 1,354 ) Net Deferred Tax Asset $ 3,589 $ 3,917 The net deferred tax asset was recorded in other assets on the consolidated statements of financial condition at December 31, 2025 and 2024. In assessing the ability of the Company to realize the benefit of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, availability of operating loss carry-backs, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which deferred tax assets are deductible, management believes it is more likely than not the Company will generate sufficient taxable income to realize the benefits of these deductible differences at December 31, 2025, except for the following: • Valuation allowance of $ 130,000 on the deferred tax asset for the 2011 other than temporary impairment charge; and • Valuation allowance of $ 1,163,000 on state deferred tax assets. Management believes that the Company will not generate sufficient income of the appropriate character (i.e. capital gains) to utilize any of the deferred tax asset created by the 2011 other than temporary impairment charge. Management believes that it is more likely than not that the Company will not realize its state deferred tax assets because of reform in New York State corporate tax law. Beginning in 2015, the most significant change in the tax law allows the Company to deduct up to 50 % of its net interest income received from qualifying loans. This change effectively eliminates the Company’s New York State tax on income resulting in the Company being taxed on its apportioned capital. Because of this tax reform, the Company will not generate sufficient taxable income within New York State to realize its existing state deferred tax assets. The existing state deferred tax assets and offsetting valuation allowance include the tax impact of $ 6.0 million of New York State net operating loss carryover deductions with expiration dates of 2036 through 2045. There was a $ 61,000 decrease in the deferred tax valuation recorded during 2025 and a $ 151,000 increase in the deferred tax valuation recorded during 2024. F - 31 The capital based tax paid to New York State is recorded in other non-interest expense on the consolidated statements of income for the years ended December 31, 2025 and 2024. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The legislation did not have a material impact on the Company's financial statements. Under prior federal law, tax bad debt reserves created prior to January 1, 1998 were subject to recapture into taxable income should the Company fail to meet certain qualifying asset and definition tests. The 1996 federal legislation eliminated these thrift related recapture rules. However, under current law, pre-1988 reserves remain subject to recapture should the Company make certain non-dividend distributions or cease to maintain a thrift or bank charter. Management has no intention of taking any such actions. At December 31, 2025 and 2024, the Company’s total pre-1988 tax bad debt reserve was $ 2.2 million. This reserve reflects the cumulative effect of federal tax deductions by the Company for which no federal income tax provision has been made. Current income tax guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognized no adjustment for unrecognized income tax benefits for the years ended December 31, 2025 and 2024. As of December 31, 2025, there has been no material change in any uncertain tax position. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the consolidated statements of income. The Company’s Federal and New York State tax returns, constituting the returns of the major taxing jurisdictions, are subject to examination by the taxing authorities for all open years as prescribed by applicable statute. No waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute. The federal tax returns for the years ended December 31, 2022, 2023, 2024, and 2025 remain subject to examination by the IRS. The state tax returns for the years ended December 31, 2022, 2023, 2024, and 2025 for New York State remain subject to examination. Note 11 - Employee and Director Benefit Plans 401K Plan The Company maintains a 401(k) savings plan covering employees who are employed on the first month following their initial date of employment and attained age 21. Participants may make contributions to the 401(k) Plan in the form of salary deferrals of up to 75 % of their total compensation subject to certain IRS limitations. The plan consists of three components: 401(k), Profit Sharing, and Safe Harbor. For the 401(k) component, the Company makes a matching contribution equal to 40 % of the eligible employee's salary deferral, up to 6 % of such employee’s compensation, once an employee is eligible to participate in the 401(k) plan. For the profit sharing component, the Company makes a discretionary contribution, up to 5.1 % of an eligible employee’s salary, depending on years of service. Lastly, the Company contributes 3.4 % of an eligible employee’s salary based on years of service, which is a non-discretionary contribution to the Safe Harbor component of the plan. The Company’s expense for all three components of the 401(k) plan for the years ended December 31, 2025 and 2024 was $ 568,000 and $ 554,000 , respectively. 1999 Supplemental Benefit Plans Effective October 1, 1999, the Company initiated a non-qualified Executive Supplemental Benefit Plan and a non-qualified Directors Supplemental Benefit Plan (the “1999 Plans”). Both plans are unfunded and provide a predefined annual benefit to be paid to executives and directors for fifteen years upon their retirement. The Company can set aside assets to fund the liability which will be subject to claims of the Company’s creditors upon liquidation of the Company. Annual benefits increase at a predetermined amount until the executive or director reaches a predetermined retirement age. Predefined benefits are 100% vested at all times and in the event of death, are guaranteed to continue at the full amount to their designated beneficiaries. The Company had a liability under the 1999 Plans of $ 236,000 and $ 278,000 at December 31, F - 32 2025 and 2024, respectively. This liability was included in other liabilities and accrued interest payable on the consolidated statements of financial condition and was calculated using an assumed discount rate of 6.17 % in 2025 and 2024. The Company’s expense for the 1999 Plans was $ 15,000 and $ 18,000 for the years ended December 31, 2025 and 2024, respectively. 2001 and 2012 Supplemental Benefit Plans Effective October 1, 2001, the Company initiated a non-qualified Executive Supplemental Benefit Plan and a non-qualified Director’s Supplemental Benefit Plan (collectively, the “2001 Plans”). The Company amended and restated the 2001 Plans effective November 1, 2015. Effective January 27, 2016, the Company amended the 2001 Supplemental Benefit Plan for Directors, resulting in a change to the benefit formula from a fixed, pre-determined dollar benefit. The formula provides a benefit equal to a percentage of the director’s average pay. The average pay is multiplied by number of years of service, not to exceed 20 years of service or 40 % of average final pay. The benefit is payable over a period of fifteen years beginning the month following age 72, unless termination occurs due to disability, death, or a change in control. Effective May 18, 2016, the Company amended the 2001 Supplemental Benefit Plan for Executives resulting in a change in the benefit formula from a fixed, pre-determined dollar benefit to a formula-based benefit. The formula provides a benefit equal to a percentage of the executive’s average pay. The average pay is multiplied by number of years of service, not to exceed 20 years of service or 40 % of average final pay. A reduced benefit is payable if a termination of service occurs prior to age 65. The benefit is payable over a period of fifteen years beginning the month following age 65, unless termination occurs due to disability, death, or a change in control. The 2001 Plans are unfunded. The Company had a liability under these plans of $ 3.0 million and $ 2.9 million at December 31, 2025 and 2024, respectively. This liability was included in other liabilities on the consolidated statements of financial condition and was calculated using an assumed discount rate of 6.17 % in 2025 and 2024. Effective June 30, 2012, the Company implemented a Supplemental Executive Benefit Plan (the “2012 Plan”) with one executive. The 2012 Plan provides that when the executive attains age 67 , the executive will be entitled to a fixed, pre-determined annual benefit under the 2012 Plan, which will be paid in monthly installments for 15 years. The 2012 Plan was amended on May 18, 2016 to update the fixed, pre-determined annual benefit amount. The 2012 Plan provides for a reduced benefit in the event the executive terminates his employment for a reason other than death, disability, cause, or a change in control, before the executive attains the age 67 , which will be paid in monthly installments for 15 years. In the event of death, the vested benefit is payable to the beneficiary as a lump sum payment. The Company had a liability under this plan of $ 1.4 million and $ 1.5 million as of December 31, 2025 and 2024, respectively. This liability was included in other liabilities and accrued interest payable on the consolidated statements of financial condition and was calculated using an assumed discount rate of 5.12 % in 2025 and 2024. Under the 2001 Plans and the 2012 Plan, the Company can set aside assets to fund the liability which will be subject to claims of the Company’s creditors upon liquidation of the Company. The Company’s expense for the 2001 and 2012 Plans was $ 365,000 and $ 370,000 for the years ended December 31, 2025 and 2024, respectively. 2018 Retention Agreement Effective March 29, 2018, the Company entered into a retention agreement with one executive. The agreement provides that the executive will receive a payment of $ 1.4 million (the "Normal Retention Payment") provided that the executive remains continuously employed with the Bank through March 29, 2028 (the "Retention Date"). The Normal Retention Payment will be paid in three equal installments on March 29, 2028, January 2, 2029, and January 2, 2030. If the executive's employment is terminated without cause or for good reason (as defined in the agreement) prior to the Retention Date, the executive will receive the vested account balance as set forth in the agreement. In the event that the executive's employment F - 33 terminates prior to the Retention Date due to death or disability, the executive or his beneficiary, as applicable, will generally receive the vested account balance. If the executive's employment is terminated prior to the Retention Date and within two years of a change in control (as defined in the agreement), the executive will receive the Normal Retention Payment in a lump sum payment. The Company has a liability under this plan of $ 935,000 and $ 775,000 as of December 31, 2025 and 2024, respectively. This liability was included in other liabilities and accrued interest payable on the consolidated statements of financial condition and was calculated using an assumed discount rate of 5.12 % in 2025 and 2024. The Company’s expense for the 2018 Plan was $ 161,000 and $ 147,000 for the years ended December 31, 2025 and 2024, respectively. The Company has purchased bank owned life insurance for the purpose of funding the liabilities related to the 1999 Supplemental Benefit Plans, the 2001 and 2012 Supplemental Benefit Plans, and the 2018 Retention Agreement. The cash surrender value of such bank owned life insurance amounted to $ 31.5 million at December 31, 2025 and $ 29.3 million at December 31, 2024. 2024 Supplemental Executive Retirement Plan Agreement Effective December 16, 2024, the Company entered into a supplemental executive retirement plan with one executive which replaces the prior supplemental executive retirement plan that the Company entered into with the executive on July 16, 2024. Under the plan, if the executive terminates employment on or after age 67 , the Bank will pay the annual amount that is paid from the annuity contracts as defined in the plan, with such annual amount payable in twelve equal monthly installments for 15 years, and if the executive is living at the end of the 15 year payment period, such payments will continue for the remainder of the executive’s life. If the executive terminates employment before age 67 , the Bank will pay the executive an amount equal to the amount that is paid from the annuity contracts, with such annual amount payable in twelve equal monthly installments for 15 years, and if the executive is living at the end of the 15 year payment period, such payments will continue for the remainder of the executive’s life. The plan also provides a benefit in the event of the executives disability, death, or upon the occurrence of a change in control followed by a qualifying termination of employment. The Company has a liability under this plan of $ 921,000 and $ 175,000 as of December 31, 2025 and 2024, respectively. which was included in other liabilities and accrued interest payable on the consolidated statements of financial condition and was calculated using an assumed discount rate of 5.00 % in 2024. The annuity contracts amounted to $ 3.2 million as of December 31, 2025 and 2024, and were included within other assets on the consolidated statements of financial condition. The Company's expense for the 2024 plan was $ 746,000 and $ 175,000 for the year ended December 31, 2025 and 2024, respectively. Note 12 – Stock-based Compensation As of December 31, 2025, the Company had four active stock-based compensation plans, which are described below. The compensation cost related to these plans was $ 558,000 and $ 345,000 for the years ended December 31, 2025 and 2024, respectively, and is included within salary and benefits expense in the non-interest expense section of the consolidated statements of income. 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 ). 2006 Stock Option Plan The Company’s 2006 Stock Option Plan (the “Stock Option Plan”), which was approved by the Company’s stockholders, permitted the grant of options to its employees and non-employee directors for up to 403,167 shares of common stock. The Stock Option Plan expired on October 24, 2016 and grants of options can no longer be awarded. F - 34 Both incentive stock options and non-qualified stock options have been granted under the Stock Option Plan. The exercise price of each stock option equals the market price of the Company’s common stock on the date of grant and an option’s maximum term is ten years . The stock options generally vest over a five-year period. A summary of the status of the Stock Option Plan during the years ended December 31, 2025 and 2024 is presented below: 2025 2024 Options Weighted Average Exercise Price Remaining Contractual Life Options Weighted Average Exercise Price Remaining Contractual Life Outstanding at beginning of year 37,696 $ 10.61 79,745 $ 10.61 Forfeited — — ( 42,049 ) 10.61 Outstanding at end of period 37,696 $ 10.61 0.8 years 37,696 $ 10.61 1.8 years Options exercisable at end of period 37,696 $ 10.61 0.8 years 37,696 $ 10.61 1.8 years At December 31, 2025, stock options granted under this plan had an intrinsic value of $ 153,000 and there were no remaining options available for grant under the Stock Option Plan. At December 31, 2025 all compensation cost and expense related to the Stock Option Plan had been recognized in prior periods. 2012 Equity Incentive Plan The Company’s 2012 Equity Incentive Plan (the “2012 EIP”), which was approved by the Company’s stockholders on May 23, 2012, authorized the issuance of up to 243,882 shares of common stock pursuant to grants of restricted stock awards and up to 27,098 shares of common stock pursuant to grants of incentive stock options and non-qualified stock options, subject to permitted adjustments for certain corporate transactions. Employees and non-employee directors of the Company were eligible to receive awards under the 2012 EIP, except that non-employees may not be granted incentive stock options. The 2012 EIP expired on April 24, 2024 and grants of awards can no longer be made. A summary of the status of unvested restricted stock awards under the 2012 EIP for the years ended December 31, 2025 and 2024 is as follows: For the Year Ended December 31, 2025 Weighted Average Grant Price (per Share) For the Year Ended December 31, 2024 Weighted Average Grant Price (per Share) Unvested shares outstanding at beginning of year 77,231 $ 8.19 24,548 $ 10.27 Granted — — 70,796 7.89 Vested ( 44,693 ) 8.39 ( 15,886 ) 10.02 Forfeited — — ( 2,227 ) 8.49 Unvested shares outstanding at end of period 32,538 $ 7.91 77,231 $ 8.19 As of December 31, 2025, there were 209,099 shares of restricted stock vested or distributed to eligible participants under the 2012 EIP and the plan expired on April 24, 2024 . Accordingly, there were no remaining shares available for grant. Compensation expense related to restricted stock awards under the EIP amounted to $ 158,000 and $ 242,000 for the years ended December 31, 2025 and 2024, respectively. At December 31, 2025, $ 193,000 of unrecognized compensation cost related to unvested restricted stock awards is expected to be recognized over a period of 28.1 months. F - 35 A summary of the status of stock options under the 2012 EIP for the years ended December 31, 2025 and 2024 is as follows: 2025 2024 Options Exercise Price Intrinsic Value Remaining Contractual Life Options Exercise Price Intrinsic Value Remaining Contractual Life Outstanding at beginning of year 17,749 $ 8.68 17,751 $ 10.61 Granted — — 12,609 7.89 Forfeited — — ( 12,610 ) 10.61 Outstanding at end of period 17,749 $ 8.68 $ 106,000 6.1 years 17,749 $ 8.68 $ 28,000 7.1 years Options exercisable at end of period 7,661 $ 9.71 $ 38,000 3.3 years 5,140 $ 10.61 $ — 1.8 years Compensation expense related to unvested stock options under the 2012 EIP amounted to $ 6,000 and $ 4,000 for the years ended December 31, 2025 and 2024, respectively. At December 31, 2025, $ 23,000 of unrecognized compensation cost related to unvested stock options is expected to be recognized over a period of 3.3 years. During April 2024, the Company granted all remaining options available under the 2012 EIP. The 2012 EIP expired on April 24, 2024 and no additional options were available for grant nor issued after this date. 2025 Equity Incentive Plan On February 4, 2025, the stockholders of Lake Shore Bancorp, Inc. approved the Company's 2025 Equity Incentive Plan ("2025 EIP") which authorized the issuance of up to 406,470 shares of common stock pursuant to grants of restricted stock, restricted stock units, non-qualified stock options, and incentive stock options. Employees of the Company and Lake Shore Bank and non-employee members of the Company's Board of Directors are eligible to receive grants of stock-based awards under the 2025 EIP. The Compensation Committee of the Board of Directors granted restricted stock awards under the 2025 EIP during the year ended December 31, 2025 as follows: Grant Date Number of Restricted Stock Awards Vesting Fair Value per Share of Award on Grant Date Awardees March 12, 2025 6,391 100 % on March 12, 2026 $ 11.64 Non-employee directors March 12, 2025 30,453 25 % per year for four years with first vesting on March 12, 2026 $ 11.64 Employees December 9, 2025 10,712 100 % on December 9, 2026 $ 14.85 Non-employee directors A summary of the status of unvested restricted stock awards under the 2025 EIP for the year ended December 31, 2025 is as follows: At December 31, 2025 Weighted Average Grant Price (per Share) Unvested shares outstanding at beginning of year — $ — Granted 47,556 12.36 Unvested shares outstanding at end of period 47,556 $ 12.36 As of December 31, 2025, there were 47,556 shares of restricted stock vested or distributed to eligible participants under the 2025 EIP. Compensation expense related to unvested restricted stock awards under the 2025 EIP amounted to $ 130,000 for the year ended 2025. At December 31, 2025 $ 420,000 of unrecognized compensation cost related to unvested restricted stock awards is expected to be recognized over a period of 27.8 months. F - 36 The Compensation Committee of the Board of Directors granted stock options under the 2025 EIP during the year ended December 31, 2025 as follows: Grant Date Number of Stock Option Awards Vesting Exercise Price Awardees December 9, 2025 43,175 20 % per year for five years with first vesting on December 9, 2026 $ 14.85 Non-employee directors The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. This model requires the use of assumptions that involve significant judgment, including expected volatility, expected term, risk‑free interest rate, and expected dividend yield. The expected term represents the period of time the options are expected to be outstanding and is based on the simplified method and amounted to 6.5 years for the options granted during the year ended December 31, 2025. The risk‑free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a term consistent with the expected term of the options and was 3.96 % for the options granted during the year ended December 31, 2025. Expected volatility and the expected dividend yield is based on the historical volatility and dividend yield of the Company’s common stock since the date of the second step conversion. Expected volatility and dividend yield amounted to 16.24 % and 2.75 %, respectively, for the options granted during the year ended December 31, 2025. A summary of the status of stock options under the 2025 EIP for the year ended December 31, 2025 is presented below: 2025 Options Exercise Price Intrinsic Value Remaining Contractual Life Outstanding at beginning of year — $ — Granted 43,175 14.85 Outstanding at end of period 43,175 $ 14.85 $ — 9.9 years Options exercisable at end of period — $ — $ — — Compensation expense related to unvested stock options under the 2025 EIP amounted to $ 1,000 , for the year ended December 31, 2025. At December 31, 2025 $ 105,000 of unrecognized cost related to unvested stock options is expected to be recognized over a period of 4.9 years. As of December 31, 2025 there were 315,739 shares available to be granted under the 2025 EIP. Employee Stock Ownership Plan (“ESOP”) The Company established the ESOP for the benefit of eligible employees of the Company and Bank. All Company and Bank employees meeting certain age and service requirements are eligible to participate in the ESOP. Participants’ benefits become fully vested after five years of service once the employee is eligible to participate in the ESOP. The Company utilized $ 2.6 million of the proceeds of its 2006 stock offering to extend a loan to the ESOP and the ESOP used such proceeds to purchase 322,534 shares of stock on the open market at an average price of $ 7.90 per share, plus commission expenses. As a result of the purchase of shares by the ESOP, total stockholders’ equity of the Company was reduced by $ 2.6 million. As part of the Conversion, the remaining balance of $ 1.2 million of the original 2006 ESOP loan was paid off and refinanced with a new loan to the ESOP. The Company utilized $ 4.0 million of the proceeds from the 2025 stock offering to extend a loan to the ESOP and ESOP purchased 396,036 shares of stock in the new Company at an average cost of $ 10.00 . As a resu lt of the purchase of shares by the ESOP, total stockholders' equity of the Company was reduced by $ 4.0 million. As of December 31, 2025, the balance of the loan to the ESOP was $ 5.0 million and the fair value of unallocated shares was $ 7.2 million . As of December 31, 2025, there were 111,292 allocated shares and 493,724 unallocated shares compared to 89,582 allocated shares and 129,012 unallocated shares at December 31, 2024. The ESOP compensation F - 37 expense was $ 263,000 for the year ended December 31, 2025 and $ 99,000 for the year ended December 31, 2024 based on 20,572 shares and 10,751 shares earned in each of those years, respectively. Note 13 - Fair Value of Financial Instruments Management uses its best judgment in estimating the fair value of the Company’s financial instruments. However, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of December 31, 2025 and 2024 and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. The estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported here. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities measurements (Level 1) and the lowest priority to unobservable input measurements (Level 3). The three levels of the fair value hierarchy are as follows: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. Level 3: Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Asset and Liabilities Measured at Fair Value on a Recurring Basis The Company’s consolidated statements of financial condition contain investment securities that are recorded at fair value on a recurring basis. For financial instruments measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2025 and 2024 were as follows: F - 38 Fair Value Measurements at December 31, 2025 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs Fair Value (Level 1) (Level 2) (Level 3) (Dollars in thousands) Measured at fair value on a recurring basis: Securities: Debt Securities Available for Sale U.S. government agencies $ 1,937 $ — $ 1,937 $ — Municipal bonds 33,840 — 33,840 — Mortgage-backed securities: Collateralized mortgage obligations-private label 8 — 8 — Collateralized mortgage obligations-government sponsored entities 7,764 — 7,764 — Government National Mortgage Association 45 — 45 — Federal National Mortgage Association 8,537 — 8,537 — Federal Home Loan Mortgage Corporation 4,006 — 4,006 — Asset-backed securities- government sponsored entities: 1 — 1 — Total Debt Securities Available for Sale 56,138 — 56,138 — Total Securities $ 56,138 $ — $ 56,138 $ — Fair Value Measurements at December 31, 2024 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs Fair Value (Level 1) (Level 2) (Level 3) (Dollars in thousands) Measured at fair value on a recurring basis: Securities: Debt Securities Available for Sale U.S. government agencies $ 1,851 $ — $ 1,851 $ — Municipal bonds 32,288 — 32,288 — Mortgage-backed securities: Collateralized mortgage obligations-private label 9 — 9 — Collateralized mortgage obligations-government sponsored entities 8,942 — 8,942 — Government National Mortgage Association 50 — 50 — Federal National Mortgage Association 9,013 — 9,013 — Federal Home Loan Mortgage Corporation 4,240 — 4,240 — Asset-backed securities: Private label 28 — 28 — Government sponsored entities 1 — 1 — Total Debt Securities Available for Sale 56,422 — 56,422 — Equity Securities 73 73 — — Total Securities $ 56,495 $ 73 $ 56,422 $ — Level 2 inputs for assets or liabilities measured at fair value on a recurring basis might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment projections, credit risks, etc.), or inputs that are derived principally from or corroborated by market data by correlation or other means. The following is a description of valuation methodologies used for financial assets recorded at fair value on a recurring basis: F - 39 • Investment securities - the fair values are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1) or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted prices. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution date, market consensus prepayment projections, credit information, and the security’s terms and conditions, among other things. Level 2 securities which are fixed income instruments that are not quoted on an exchange, but are traded in active markets, are valued using prices obtained from our custodian, who use third party data service providers. In addition to disclosure of the fair value of assets on a recurring basis, GAAP requires disclosures for assets and liabilities measured at fair value on a non-recurring basis. The following is a description of the valuation methods used for assets measured at fair value on a non-recurring basis. Collateral-Dependent Loans . Loans for which repayment is substantially expected to be provided through the operations or sale of collateral are considered collateral dependent. They are held at the lower of cost or fair value and are considered to be measured at fair value when recorded below cost. Collateral-dependent loans are valued based on the estimated fair value of the collateral, less estimated costs to sell at the measurement date, based on either a recent appraisal or discounted cash flows based on market conditions. Accordingly, collateral-dependent loans are classified within Level 3 of the fair value hierarchy. The Company had one collateral-dependent loan with a recorded allowance for credit losses of $ 6,000 as of December 31, 2025 and no collateral dependent loans with a recorded allowance for credit losses at December 31, 2024. Foreclosed Real Estate and Repossessed Assets . Foreclosed real estate and repossessed assets are held at the lower of cost or fair value and are considered to be measured at fair value when recorded below cost. The fair value of foreclosed real estate is calculated using independent appraisals, less estimated selling costs. Certain repossessed assets may require assumptions about factors that are not observable in an active market when determining fair value. Accordingly, foreclosed real estate and repossessed assets are classified within Level 3 of the fair value hierarchy. There was no foreclosed real estate at December 31, 2025 and December 31, 2024. The Company did no t have repossessed assets at December 31, 2025 and December 31, 2024. Mortgage Servicing Right s. Mortgage servicing rights do not trade in an active market with readily observable market data. As a result, the Company estimates the fair value of loan servicing rights by using a discounted cash flow model to calculate the present value of estimated future net servicing income. The key assumptions used in the model include the estimated life of loans sold with servicing retained and the estimated cost to service the loans. Loan servicing rights are classified as Level 3 measurements due to the use of unobservable inputs as well as management judgment and estimation. Mortgage servicing rights amounted to $ 163,000 and $ 177,000 at December 31, 2025 and December 31, 2024, respectively, and were included as a component of other assets on the consolidated statements of financial condition. F - 40 For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2025 and 2024 were as follows: Fair Value Measurements Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs Fair Value (Level 1) (Level 2) (Level 3) (Dollars in thousands) Measured at fair value on a non-recurring basis: At December 31, 2025 Mortgage servicing rights $ 163 $ — $ — $ 163 Collateral-dependent loan 131 — — 131 At December 31, 2024 Mortgage servicing rights $ 177 $ — $ — $ 177 The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value: Quantitative Information about Level 3 Fair Value Measurements (Dollars in thousands) Fair Value Estimate Valuation Technique Unobservable Input Range Weighted Average At December 31, 2025 Mortgage servicing rights $ 163 Discounted Cash Flow Model (1) Servicing Fees 0.25 % 0.25 % Servicing Costs 0.10 % 0.10 % Estimated Life of Loans 4.04 - 7.68 years 5.86 years Collateral-dependent loan 131 Appraisal of collateral (2) Direct Disposal Costs (3) 8.00 % 8.00 % At December 31, 2024 Mortgage servicing rights 177 Discounted Cash Flow Model (1) Servicing Fees 0.25 % 0.25 % Servicing Costs 0.10 % 0.10 % Estimated Life of Loans 5.17 - 6.17 years 5.67 years (1) The fair value is based on a discounted cash flow model. The model’s key assumptions are the estimated life of loans sold with servicing retained and the estimated cost to service the loan. (2) Fair value is generally determined through independent third-party appraisals of the underlying collateral, which generally includes various Level 3 inputs which are not observable. (3) The fair value basis of collateral-dependent loans may be adjusted to reflect estimates of disposal costs including, but not necessarily limited to, real estate brokerage commissions, legal fees, and delinquent property taxes. F - 41 The carrying amount and estimated fair value, based on the exit price notion, of the Company’s financial instruments, whether carried at cost or fair value, are as follows: Fair Value Measurements at December 31, 2025 Carrying Estimated Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs Amount Fair Value (Level 1) (Level 2) (Level 3) (Dollars in thousands) Financial assets: Cash and cash equivalents $ 64,280 $ 64,280 $ 64,280 $ — $ — Securities 56,138 56,138 — 56,138 — Federal Home Loan Bank stock 673 673 — 673 — Loans receivable, net 555,441 547,492 — — 547,492 Accrued interest receivable 3,007 3,007 — 3,007 — Bank-owned life insurance 31,525 31,525 — 31,525 — Mortgage servicing rights 163 163 — — 163 Financial liabilities: Deposits 573,277 572,772 — 572,772 — Accrued interest payable 58 58 — 58 — Fair Value Measurements at December 31, 2024 Carrying Estimated Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Other Unobservable Inputs Amount Fair Value (Level 1) (Level 2) (Level 3) (Dollars in thousands) Financial assets: Cash and cash equivalents $ 33,131 $ 33,131 $ 33,131 $ — $ — Securities 56,495 56,495 73 56,422 — Federal Home Loan Bank stock 1,157 1,157 — 1,157 — Loans receivable, net 544,620 525,728 — — 525,728 Accrued interest receivable 2,819 2,819 — 2,819 — Bank-owned life insurance 29,340 29,340 — 29,340 — Mortgage servicing rights 177 177 — — 177 Financial liabilities: Deposits 572,978 572,082 — 572,082 — Long-term debt 10,250 10,199 — 10,199 — Accrued interest payable 99 99 — 99 — Note 14 - Regulatory Capital Requirements The Bank is subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors. The Company is exempt from consolidated capital requirements as those requirements do not apply to bank holding companies with consolidated assets under $3 billion. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to F - 42 represent overall financial condition. If a bank becomes undercapitalized, its regulator must take certain supervisory actions under prompt corrective action regulations, and such actions could have a direct material effect on the institution's financial statements. Generally, an institution is considered well capitalized if it has a leverage (Tier 1) ratio of 5.0 % or greater, a common equity Tier 1 ratio of 6.5 % or greater, a Tier 1 risk-based capital ratio of 8.0 % or greater, and a total risk-based capital ratio of 10.0 % or greater. The federal banking agencies have developed a minimum Community Bank Leverage Ratio ("CBLR") (which represents a bank's tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion and limited amounts of off-balance-sheet exposures and trading assets and liabilities. A “qualifying community bank” may elect to utilize the CBLR in lieu of the general applicable risk-based capital requirements under Basel III. If the community bank exceeds this ratio it will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Basel III. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies set the minimum CBLR at 9.00 %. The Bank elected to be subject to the CBLR when it became effective on January 1, 2020, and has continued to use the Community Bank Leverage Ratio since that time. As of December 31, 2025 and 2024, the Bank's Community Bank Leverage Ratio was 16.65 % and 13.83 %, respectively, so it was deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. Volatile earnings, along with other qualitative factors and changes to regulatory mandates, could significantly impact the Bank’s capital adequacy. The most recent notification from the FDIC categorized the Bank as “well capitalized” and there have been no conditions or events since that notification that management believes have changed the Bank’s categorization. Actual and required capital amounts and ratios are presented below as of December 31, 2025 and December 31, 2024. Actual To Be Well Capitalized Under Prompt Corrective Action Regulations (CBLR Framework) Capital Amount Ratio Capital Amount Ratio (Dollars in thousands) (Dollars in thousands) 2025 Tier 1 Capital to average total assets Lake Shore Bank $ 124,696 16.65 % 67,399 9.00 % 2024 Tier 1 Capital to average total assets Lake Shore Bank $ 97,244 13.83 % 63,271 9.00 % Note 15 – Earnings per Share Earnings per share was calculated for the years ended December 31, 2025 and 2024, in accordance with ASC 260 - Earnings Per Share , which provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Basic earnings per share is based upon the weighted average number of common shares outstanding, exclusive of unearned shares held by the ESOP. Unvested shares of restricted stock which have voting rights and are eligible to receive dividends are included in the calculation of the weighted average number of common shares outstanding. Diluted earnings per share is based upon the weighted average number of common shares outstanding and common share equivalents that would arise from the exercise of dilutive securities. Stock options are regarded as potential common stock and are considered in the diluted earnings per share calculations to the extent they would be dilutive and computed using the treasury stock method. F - 43 The calculated basic and diluted earnings per share are as follows. 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 ). Years Ended December 31, 2025 2024 Numerator – net income $ 7,269,000 $ 4,931,000 Denominator: Basic weighted average shares outstanding 7,510,235 7,617,009 Increase in weighted average shares outstanding due to: Stock options (1) 9,180 — Diluted weighted average shares outstanding (1) 7,519,415 7,617,009 Earnings per share: Basic $ 0.97 $ 0.65 Diluted $ 0.97 $ 0.65 (1) Weighted average stock options to purchase 2,721 shares under the Company's 2025 Equity Incentive Plan ("2025 EIP") at $ 14.85 were outstanding during the year ended December 31, 2025 and were not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive. Weighted average stock options to purchase 47,069 shares under the Company's 2006 Stock Option Plan and 23,795 shares under the Company's 2012 Equity Incentive Plan ("2012 EIP") at $ 10.61 and $ 7.89 , respectively, were outstanding during the year ended December 31, 2024 and were not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive. Note 16 – Commitments to Extend Credit The Company has commitments to extend credit with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. There was a $ 361,000 and $ 316,000 allowance for credit losses associated with these commitments at December 31, 2025 and December 31, 2024, respectively. The following commitments to extend credit were outstanding as of the dates specified: Commitment Amount December 31, December 31, 2025 2024 (Dollars in thousands) Commitments to grant loans $ 17,644 $ 3,098 Unfunded commitments to fund loans and lines of credit 92,748 96,711 Commercial and Standby letters of credit 720 765 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. The commitments for lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer. Note 17 – Parent Company Only Financial Information F - 44 The following condensed financial statements summarize the financial position and results of operations and cash flows of the parent bank holding company, Lake Shore Bancorp, Inc., as of December 31, 2025 and 2024 and for the years ended December 31, 2025 and 2024. Statements of Financial Condition December 31, 2025 2024 (Dollars in thousands) Assets Cash and due from banks $ 19,318 $ 906 Investment in subsidiary 116,993 87,281 ESOP loan receivable 4,961 1,224 Other assets 540 607 Total assets $ 141,812 $ 90,018 Liabilities and Stockholders' Equity Other liabilities 173 150 Total stockholders' equity 141,639 89,868 Total liabilities and stockholders' equity $ 141,812 $ 90,018 Statements of Income For the Years Ended December 31, 2025 2024 (Dollars in thousands) Interest Income $ 229 $ 98 Other 6 6 Total Income 235 104 Non-interest Expenses 427 489 Loss before income taxes and equity in undistributed net income of subsidiary ( 192 ) ( 385 ) Income tax benefit ( 69 ) ( 99 ) Loss before undistributed net income of subsidiary ( 123 ) ( 286 ) Equity in undistributed net income of subsidiary 7,392 5,217 Net Income $ 7,269 $ 4,931 F - 45 Statements of Cash Flows For the Years Ended December 31, 2025 2024 (Dollars in thousands) Cash Flows from Operating Activities: Net income $ 7,269 $ 4,931 Adjustments to reconcile net income to net cash used in provided by operating activities: ESOP shares committed to be released 263 99 Stock-based compensation expense 295 246 Increase in other assets ( 137 ) ( 426 ) Increase in other liabilities 23 33 Equity in undistributed earnings of subsidiary ( 7,392 ) ( 5,217 ) Net Cash Provided by (Used in) Operating Activities 321 ( 334 ) Cash Flows from Investing Activities: Repayment of 2006 ESOP loan 1,224 — Origination of 2025 ESOP loan ( 5,234 ) — Payments received on 2025 and 2006 ESOP loan, respectively 273 70 Investment in subsidiary ( 23,642 ) — Net Cash (Used in) Provided by Investing Activities ( 27,379 ) 70 Cash Flows from Financing Activities: Purchase of common stock ( 53 ) ( 20 ) Cash dividends paid ( 1,676 ) ( 1,082 ) Proceeds from the sale of common stock, net of offering costs 47,199 — Net Cash Provided by (Used in) Financing Activities 45,470 ( 1,102 ) Net Increase (Decrease) in Cash and Cash Equivalents 18,412 ( 1,366 ) Cash and Cash Equivalents - Beginning 906 2,272 Cash and Cash Equivalents - Ending $ 19,318 $ 906 Note 18 – Treasury Stock and Repurchases to Authorized and Unissued Share and per share information disclosed herein which relate to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio ( 1.3549 ) applied in the Conversion. The Company's previous stock repurchase program adopted on August 13, 2021 was terminated effective July 18, 2025 in connection with the Conversion, and 1,459,691 shares of common stock held in treasury at a cost of $ 13.1 million were retired. During the year ended December 31, 2025, the Company transferred 36,849 shares of common stock out of treasury stock under the 2025 Equity Incentive Plan, at an average cost of $ 6.93 per share, to fund awards that had been granted under the plan. During the year ended December 31, 2025, the Company repurchased 4,517 shares upon vesting of shares under the 2012 Equity Incentive Plan for the purpose of remitting payroll taxes on behalf of awardees who were employees, at an average cost of $ 11.58 per share. Following the second step conversion, shares repurchased for the purpose of remitting payroll taxes are repurchased into common stock authorized and unissued in accordance with the Company's incorporation in the State of Maryland. During the year ended December 31, 2024, the Company did no t repurchase any shares of common stock under the existing stock repurchase program. During the year ended December 31, 2024, the Company transferred 70,796 shares of common stock out of treasury stock reserved for the 2012 Equity Incentive Plan, at an average cost of $ 6.93 per share, to fund awards that had been granted under the plan. During the year ended December 31, 2024, there were 2,227 shares transferred back into treasury stock reserved for the 2012 Equity Incentive Plan, at an average cost of $ 6.93 per share due to forfeitures. The Company repurchased 2,263 shares upon the vesting of shares under the 2012 Equity Incentive Plan for the purpose of F - 46 remitting payroll taxes on behalf of awardees who were employees, at an average cost of $ 8.72 per share, during the year ended December 31, 2024. On October 22, 2025, the Company adopted a plan to repurchase up to 5 % of its outstanding shares of common stock. Share repurchases under the plan may occur following the one-year anniversary of the Conversion, or on July 20, 2026. All share repurchases made after the Conversion will be repurchased into common stock authorized and unissued. Note 19 – Other Comprehensive Income (Loss) In addition to presenting the consolidated statements of comprehensive income (loss) herein, the following table shows the tax effects allocated to the Company’s single component of other comprehensive income (loss) for the periods presented: For the Year Ended December 31, 2025 For the Year Ended December 31, 2024 Pre-Tax Amount Tax (Expense) / Benefit Net of Tax Amount Pre-Tax Amount Tax Benefit Net of Tax Amount (Dollars in thousands) Net unrealized gains (losses) on securities available for sale: Net unrealized gains (losses) arising during the period $ 2,876 $ ( 604 ) $ 2,272 $ ( 726 ) $ 152 $ ( 574 ) Less: reclassification adjustment related to: Gain on sale of securities included in net income ( 10 ) 2 ( 8 ) — — $ — Recovery on previously impaired investment securities included in net income ( 4 ) 1 ( 3 ) ( 6 ) 1 $ ( 5 ) Total Other Comprehensive Income (Loss) $ 2,862 $ ( 601 ) $ 2,261 $ ( 732 ) $ 153 $ ( 579 ) The following table presents the amounts reclassified out of the single component of the Company’s accumulated other comprehensive loss for the indicated periods: Amounts Reclassified from Accumulated Details about Accumulated Other Other Comprehensive Loss Affected Line Item Comprehensive Loss For the Years Ended December 31, on the Consolidated Components 2025 2024 Statements of Income (Dollars in thousands) Net unrealized gains on securities available for sale: Gain on sale of securities included in net income $ ( 10 ) $ — Gain on sale of securities available for sale Recovery on previously impaired investment securities ( 4 ) ( 6 ) Recovery on previously impaired investment securities Provision for income tax expense 3 1 Income tax expense Total reclassification for the period $ ( 11 ) $ ( 5 ) Increase to Net Income Note 20 – Revenue Recognition The Company’s non-interest revenue streams primarily result from services it provides to its deposit customers. When a customer makes a deposit, the Company records a liability because the Company has an obligation to deliver funds to its customer on demand. A contract between the Company and a deposit account customer is typically documented in writing and is often terminable at will by the customer alone or by both the customer and the Company without penalty. The term of a deposit contract between a customer and the Company will likely be day-to-day or minute-to-minute, and the termination clause is likely similar to a renewal right where each day or minute represents the renewal of the contract. The F - 47 Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Debit Card Fees Debit card fees are primarily comprised of interchange fees earned whenever the Company’s debit cards are used to purchase goods or services from a merchant via a card payment network, such as Mastercard. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value. The Company’s performance obligations for interchange income are largely satisfied and related revenue recognized, when the services are rendered or upon completion. Payment is typically immediately. Service Charges on Deposit Accounts Service charges and fees on deposit accounts consist of transaction-based fees, account maintenance fees, and overdraft service fees for various retail and business deposit customers. Transaction-based fees, such as stop payment charges, are recognized at the time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn directly from the customer’s account balance. Fees and Other Service Charges Fees and other service charges are primarily comprised of ATM fees, merchant services income, and other service charges. ATM fees are comprised of fees earned whenever a Company’s ATM or debit card is used at an out-of-network ATM or a non-Company cardholder uses a Company ATM. ATM fees represent a fixed fee for the convenience to cardholders for accessibility of funds. Merchant services income mainly represents fees charged to merchants serviced by a third party vendor under contract with the Company for debit or credit card processing and represents a percentage of the underlying transaction value. Other service charges include revenue from services provided to our retail or business customers which may include fees for wire transfer processing, bill pay services, cashier’s checks and other services. The Company’s performance obligations for fees and other service charges are largely satisfied and related revenue recognized, when the services are rendered or upon completion. Payment is typically immediately or in the following month. Other Other non-interest income consists of safe deposit rental fees. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since safe deposit rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Contract Balances The Company’s non-interest revenue streams are largely based on transactional activity. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers and therefore does not experience significant contract balances. As of December 31, 2025 and 2024, the Company did not have any significant contract balances. F - 48 The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the years ended December 31, 2025 and 2024: For the years ended December 31, 2025 2024 (Dollars in thousands) Non-Interest Income In-Scope of Topic 606: Debit card fees $ 780 $ 816 Service charges on deposit accounts 652 722 Fees and other service charges 119 126 Other 28 31 Non-interest Income (in-scope of Topic 606) 1,579 1,695 Non-interest Income (out of scope of Topic 606) 1,694 1,609 Total Non-Interest Income $ 3,273 $ 3,304 F - 49