What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-13 · 162 added, 126 removed, 289 unchanged (50% of the section changed)

49 unchanged sentences

Due to the impact of COVID-19 on our borrowers, we granted eligible loan modifications under the CARES Act in the form of payment deferral of principal and interest to 196 loans totaling $190.9 million at the time payment deferral was requested.

As of June 30, 2021, we had two loans totaling $9.5 million still in deferral status.

One loan, with a balance of $672,000 as of June 30, 2021, is secured by a restaurant including land and building located in Philadelphia, Pennsylvania.

We granted deferral of principal payments until July 1, 2021 with the borrower making monthly interest and tax escrow payments.

The borrower resumed making regular principal, interest and escrow payments in August 2021.

The second loan, with a balance of $8.8 million as of June 30, 2021, is secured by a 218 unit apartment complex located in Philadelphia, Pennsylvania.

We granted deferment to the second loan effective May 1, 2021 until November 1, 2021 based on a review of a current rent roll whereby we determined the borrower has been negatively affected by the COVID-19 pandemic, with a higher than normal level of delinquent rent payments and non-paying tenants and limited recourse under a continued eviction moratorium in Pennsylvania, and based on our good relationship with the borrower.

As of September 30, 2021, we had two loans totaling $8.9 million still in deferral status.

The first loan, with a balance of $8.8 million as of September 30, 2021, is secured by a 218 unit apartment complex located in Philadelphia, Pennsylvania.

We granted deferment to this loan effective May 1, 2021 until November 1, 2021 based on a review of a current rent roll whereby we determined the borrower has been negatively affected by the COVID-19 pandemic, with a higher than normal level of delinquent rent payments and non-paying tenants and limited recourse under a continued eviction moratorium in Pennsylvania, and based on our good relationship with the borrower.

The borrower’s real estate taxes are paid through March 31, 2022.

We will continue to monitor the rent collection activity throughout the deferral period.

The second loan, with a balance of $75,000 as of September 30, 2021, is secured by a mixed-use building located in Brooklyn, New York.

We granted deferment of principal and interest payments to this loan effective August 1, 2021 until February 1, 2022 with the borrower making monthly tax escrow payments.

The granting of the payment deferrals had no significant impact on our evaluation of the allowance for loan losses.

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Loans whose terms are modified are classified as troubled debt restructurings if we grant such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty.

Concessions granted under a

troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date at a below market rate.

Adversely classified, non-accrual troubled debt restructurings may be returned to accrued status if principal and interest payments, under the modified terms, are current for six consecutive months after modification.

Concessions granted under a troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date at a below market rate.

Adversely classified, non-accrual troubled debt restructurings may be returned to

accrued status if principal and interest payments, under the modified terms, are current for six consecutive months after modification.

All troubled debt restructured loans are classified as impaired.

5 unchanged sentences

This standard requires earlier recognition of expected credit losses on loans and certain other instruments, compared to the incurred loss model.

Based on management’s comprehensive analysis of the loan portfolio, management believes the allowance for loan losses is appropriate as of June 30, 2021.

Based on management’s comprehensive analysis of the loan portfolio, management believes the allowance for loan losses is appropriate as of September 30, 2021.

Balance Sheet Analysis

Total assets increased by $108.3 million, or 11.2%, to $1,076.5 billion at June 30, 2021, from $968.2 million at December 31, 2020.

The increase in assets was primarily due to increases in cash and cash equivalents of $94.6 million, premises and equipment of $4.5 million, net loans of $5.5 million, and investment securities held-to-maturity of $3.5 million.

Cash and cash equivalents increased by $94.6 million, or 136.8%, to $163.8 million at June 30, 2021 from $69.2 million at December 31, 2020.

The increase in cash can primarily be attributed to an increase in deposits of $27.1 million and an increase in stock subscriptions of $74.9 million related to our recently completed second-step conversion offering, partially offset by an increase in loans of $5.5 million, an increase in investment securities held-to-maturity of $3.5 million, an increase in premises and equipment of $4.5 million due primarily to the purchase of property for a new branch office, a decrease in advance payments by borrowers for taxes and insurance of $246,000 and cash dividends of $295,000.

Securities held-to-maturity increased by $3.5 million, or 46.9%, to $10.8 million at June 30, 2021 from $7.4 million at December 31, 2020.

The increase was primarily due to the purchase of investment securities totaling $4.3 million, partially offset by maturities and pay-downs of $793,000.

Loans, net of the allowance for loan losses, increased by $5.5 million, or 0.7%, to $825.2 million at June 30, 2021 from $819.7 million at December 31, 2020.

The increase in loans, net of the allowance for loan losses, was primarily due to a net increase in construction loans of $26.2 million.

The increases were partially offset by decreases in non-residential loans of $5.5 million, mixed-use loans of $2.3 million, commercial and industrial loans of $10.6 million, one- to four-family loans of $1.4 million, and multi-family loans of $992,000, coupled with normal pay-downs and principal reductions.

Premises and equipment increased by $4.5 million, or 24.2%, to $23.2 million at June 30, 2021 from $18.7 million at December 31, 2020 due to the acquisition of property for a new branch site located in Monsey, New York.

Foreclosed real estate was $2.0 million at June 30, 2021 and December 31, 2020.

Right of use assets — operating, recognized in accordance with Accounting Standards Codification 842 “Leases”, decreased by $264,000, or 8.5%, to $2.8 million at June 30, 2021 from $3.1 million at December 31, 2020, primarily due to amortization.

Other assets increased by $510,000, or 10.1%, to $5.6 million at June 30, 2021 from $5.1 million at December 31, 2020 due to an increase in suspense accounts of $1.0 million and an increase in prepaid expense of $240,000, partially offset by a decrease in tax assets of $728,000.

Total deposits increased by $27.1 million, or 3.5%, to $798.8 million at June 30, 2021, from $771.7 million at December 31, 2020.

The increase was primarily due to an increase in non-interest bearing demand deposits of $36.4 million, or 16.5%, and an increase in NOW/money market accounts of $18.0 million, or 17.9%, from December 31, 2020 to June 30, 2021.

The increase was partially offset by a decrease in certificates of deposit of $25.3 million, or 7.3%, and a decrease in savings account balances of $2.0 million, or 2.0%, from December 31, 2020 to June 30, 2021.

Federal Home Loan Bank advances were $28.0 million at both June 30, 2021 and December 31, 2020.

Stock subscription was $74.9 million at June 30, 2021due to stock subscription orders received in connection with our recently completed second-step conversion offering.

Stockholders’ equity increased by $7.0 million, or 4.6% to $160.8 million at June 30, 2021, from $153.8 million at December 31, 2020.

The increase in stockholders’equity was primarily a result of net income of $7.0 million for the six months ended June 30, 2021, a reduction of $202,000 in unearned employee stock ownership plan shares, partially offset by dividends declared of $144,000 and $3,000 in other comprehensive loss.

Results of Operations for the Three Months Ended June 30, 2021 and 2020

Total assets increased by $139.9 million, or 14.4%, to $1.1 billion at September 30, 2021, from $968.2 million at December 31, 2020.

The increase in assets was primarily due to increases in net loans of $84.8 million, cash and cash equivalents of $38.8 million, investment securities held-to-maturity of $6.0 million, equity securities of $4.8 million, and premises and equipment of $4.9 million.

Cash and cash equivalents increased by $38.8 million, or 56.1%, to $108.0 million at September 30, 2021 from $69.2 million at December 31, 2020.

The increase in cash can primarily be attributed to an increase in deposits of $45.1 million and an increase in stockholders’ equity primarily due to the completion of the second-step conversion offering that increased stockholders’ equity by $88.4 million, net of conversion costs, partially offset by an increase in loans of $84.8 million, an increase in investment securities held-to-maturity of $6.0 million, an increase in equity securities of $4.8 million, an increase in property and equipment of $4.9 million due primarily to the purchase of property for a new branch office, and cash dividends of $1.3 million.

Equity securities increased by $4.8 million, or 46.3%, to $15.1 million at September 30, 2021 from $10.3 million at December 31, 2020.

The increase in equity securities was primarily attributed to the purchase of equity securities totaling $5.0 million, partially offset by market depreciation of $215,000.

Securities held-to-maturity increased by $6.0 million, or 81.8%, to $13.4 million at September 30, 2021 from $7.4 million at December 31, 2020.

The increase was primarily due to the purchase of investment securities totaling $10.3 million, partially offset by maturities and pay-downs of $4.3 million.

Loans, net of the allowance for loan losses, increased by $84.8 million, or 10.3%, to $904.6 million at September 30, 2021 from $819.7 million at December 31, 2020.

The increase in loans, net of the allowance for loan losses, was primarily due to net increases in construction loans of $87.5 million, commercial and industrial loans of $13.2 million and multi-family loans of $612,000.

The increases were partially offset by decreases in non-residential loans of $8.6 million, mixed-use loans of $6.1 million, and one- to four-family loans of $1.4 million, coupled with normal pay-downs and principal reductions.

Premises and equipment increased by $4.9 million, or 26.1%, to $23.5 million at September 30, 2021 from $18.7 million at December 31, 2020 due to the acquisition of property for a new branch site located in Monsey, New York.

Foreclosed real estate was $2.0 million at both September 30, 2021 and December 31, 2020.

Right of use assets — operating, recognized in accordance with Accounting Standards Codification 842 “Leases”, decreased by $397,000, or 12.8%, to $2.7 million at September 30, 2021 from $3.1 million at December 31, 2020, primarily due to amortization.

Other assets increased by $286,000, or 5.7%, to $5.3 million at September 30, 2021 from $5.1 million at December 31, 2020 due to an increase in tax assets of $347,000 and an increase in prepaid expense of $233,000, partially offset by a decrease in suspense accounts of $351,000.

Total deposits increased by $45.1 million, or 5.8%, to $816.8 million at September 30, 2021, from $771.7 million at December 31, 2020.

The increase was primarily due to an increase in non-interest bearing demand deposits of $85.3 million, or 38.5%, and an increase in NOW/money market accounts of $17.1 million, or 17.0%, from December 31, 2020 to September 30, 2021.

These increases were partially offset by a decrease in certificates of deposit of $53.2 million, or 15.3%, and a decrease in savings account balances of $4.1 million, or 4.0%, from December 31, 2020 to September 30, 2021.

Federal Home Loan Bank advances were $28.0 million at both September 30, 2021 and December 31, 2020.

Accounts payable and accrued expense increased by $232,000, or 2.6%, to $9.1 million at September 30, 2021 from $8.9 million at December 31, 2020 due primarily to increases of $439,000 in deferred compensation, partially offset by a decrease of $177,000 in accrued expenses.

Stockholders’ equity increased by $94.9 million, or 61.7% to $248.7 million at September 30, 2021, from $153.8 million at December 31, 2020.

The increase in stockholders’ equity was primarily a result of the completion of the second-step conversion offering that increased stockholders’ equity by $88.4 million, net of conversion costs.

The second-step conversion also reduced stockholders’ equity by the addition of new unearned employee stock ownership plan shares totaling $7.8 million and increased stockholders’ equity by the retirement of treasury shares totaling $7.0 million.

The increase in stockholders’ equity was also due to net income of $7.7 million for the nine months ended September 30, 2021 and a reduction of $693,000 in unearned employee stock ownership plan shares, partially offset by dividends paid of $1.1 million and $9,000 in other comprehensive loss.

Results of Operations for the Three Months Ended September 30, 2021 and 2020

Financial Highlights

Net income for the three months ended June 30, 2021 was $3.7 million compared to net income of $2.5 million for the three months ended June 30, 2020.

Net income for the three months ended June 30, 2021 was higher than net income for the three months ended June 30, 2020 primarily due to an increase in the net interest income, an increase in non-interest income, and a decrease in the provision for loan losses expense.

These were partially offset by an increase in non-interest expense and an increase in income tax expense.

Net income for the three months ended September 30, 2021 was $730,000 compared to net income of $3.1 million for the three months ended September 30, 2020.

Net income for the three months ended September 30, 2021 was lower than net income for the three months ended September 30, 2020 primarily due to an increase in the provision for loan losses expense and an increase in non-interest expense.

These were partially offset by an increase in the net interest income, an increase in non-interest income, and a decrease in income tax expense.

Net Interest Income

Net interest income totaled $10.4 million for the three months ended June 30, 2021, as compared to $9.5 million for the three months ended June 30, 2020.

The increase in net interest income of $870,000, or 9.1%, was primarily due to the decrease in interest expense that exceeded a decrease in interest income.

The decrease in interest expense and interest income is consistent with the decrease in interest rates in response to the COVID-19 pandemic and its impact on the economy and interest rate environment.

However, our cost of interest bearing liabilities decreased much greater than our yield on interest earning assets as our interest bearing liabilities repriced much faster to lower interest rates than our yield on interest earning assets.

Interest and dividend income decreased by $639,000, or 5.2%, to $11.7 million for the three months ended June 30, 2021 from $12.3 million for the three months ended June 30, 2020 due to a decrease in the yield on interest earning assets by 53 basis points from 5.58% for the three months ended June 30, 2020 to 5.05% for the three months ended June 30, 2021, partially offset by an increase in the average balance of interest earning assets of $42.3 million, or 4.8%, to $924.9 million for the three months ended June 30, 2021 from $882.6 million for the three months ended June 30, 2020.

Interest expense decreased by $1.5 million, or 53.8%, to $1.3 million for the three months ended June 30, 2021 from $2.8 million for the three months ended June 30, 2020 due to a decrease in average interest bearing liabilities of $53.8 million, or 8.7%, to $568.3 million for the three months ended June 30, 2021 from $622.1 million for the three months ended June 30, 2020 and a decrease in the cost of interest bearing liabilities by 89 basis points from 1.80% for the three months ended June 30, 2020 to 0.91% for the three months ended June 30, 2021.

The decrease in the cost of interest bearing liabilities was also partially due to a shift to non-interest bearing demand deposits from interest bearing certificates of deposits as the average balances of non-interest bearing demand deposits increased by $80.0 million, or 50.0%, to $240.0 million for the three months ended June 30, 2021 from $160.0 million for the three months ended June 30, 2020 and the average balances of certificates of deposits decreased by $55.5 million, or 14.6%, to $324.4 million for the three months ended June 30, 2021 from $379.9 million for the three months ended June 30, 2020.

Net interest margin increased by 18 basis points, or 4.2%, during the three months ended June 30, 2021 to 4.49% compared to 4.31% during the three months ended June 30, 2020.

Net interest income totaled $10.9 million for the three months ended September 30, 2021, as compared to $9.8 million for the three months ended September 30, 2020.

The increase in net interest income of $1.1 million, or 11.3%, was primarily due to an increase in interest income combined with a decrease in interest expense.

The increase in interest income is attributed to increases in loans, investment securities, equity securities, and interest-bearing deposits as we continued to deploy the proceeds raised in the second-step conversion.

The decrease in interest expense is consistent with the decrease in interest rates in response to the COVID-19 pandemic and its impact on the economy and interest rate environment.

Interest and dividend income increased by $93,000, or 0.8%, to $12.1 million for the three months ended September 30, 2021 from $12.0 million for the three months ended September 30, 2020 due to an increase in the average balance of interest earning assets of $136.1 million, or 15.3%, to $1.0 billion for the three months ended September 30, 2021 from $888.6 million for the three months ended September 30, 2020, partially offset by a decrease in the yield on interest earning assets by 68 basis points from 5.40% for the three months ended September 30, 2020 to 4.72% for the three months ended September 30, 2021.

In addition to the decrease in interest rates in response to the COVID-19 pandemic and its impact on the economy and interest rate environment that decreased the yield on interest earning assets, the

decrease in the yield on interest earning assets is also attributed to the over-weighting of the amount of low yielding other interest-earning assets relative to total interest-earning assets due to the yet to be deployed funds raised in the second-step conversion.

Interest expense decreased by $1.0 million, or 46.1%, to $1.2 million for the three months ended September 30, 2021 from $2.2 million for the three months ended September 30, 2020 due to a decrease in average interest bearing liabilities of $50.6 million, or 8.5%, to $547.9 million for the three months ended September 30, 2021 from $598.6 million for the three months ended September 30, 2020 and a decrease in the cost of interest bearing liabilities by 61 basis points from 1.47% for the three months ended September 30, 2020 to 0.86% for the three months ended September 30, 2021.

The decrease in the cost of interest bearing liabilities was also partially due to a shift to non-interest bearing demand deposits and interest bearing demand deposits from interest bearing certificates of deposits and savings and club accounts.

In this regard, the average balances of non-interest bearing demand deposits increased by $92.9 million, or 49.2%, to $281.5 million for the three months ended September 30, 2021 from $188.6 million for the three months ended September 30, 2020 and the average balances of interest bearing demand deposits increased by $17.0 million, or 17.0%, to $117.3 million for the three months ended September 30, 2021 from $100.3 million for the three months ended September 30, 2020.

During this same time period, the average balances of certificates of deposits decreased by $63.2 million, or 17.2%, to $305.1 million for the three months ended September 30, 2021 from $368.2 million for the three months ended September 30, 2020 and the average balances of savings and club accounts decreased by $4.5 million, or 4.4%, to $97.6 million for the three months ended September 30, 2021 from $102.1 million for the three months ended September 30, 2020.

Net interest margin decreased by 15 basis points, or 3.4%, during the three months ended September 30, 2021 to 4.26% compared to 4.41% during the three months ended September 30, 2020.

Provision for Loan Losses.

Management recorded no loan loss provision for the three months ended June 30, 2021 compared to loan loss provision of $518,000 for the three months ended June 30, 2020.

We charged-off a total of $9,000 and $3,000 during the three months ended June 30, 2021 and June 30, 2020, respectively, against various unpaid overdrafts in our demand deposit accounts.

We recorded recoveries of $1,000 and $9,000 during the three months ended June 30, 2021 and June 30, 2020, respectively.

The provision recorded for the three months ended June 30, 2020 was primarily attributed to the perceived potential credit risk associated with the COVID-19 pandemic, although no specific or probable losses were identified at that time.

Management recorded a loan loss provision of $3.6 million for the three months ended September 30, 2021 compared to a loan loss provision of $229,000 for the three months ended September 30, 2020.

We charged-off a total of $3.6 million and $7,000 during the three months ended September 30, 2021 and September 30, 2020, respectively.

The provision recorded for the three months ended September 30, 2021 was primarily attributed to the previously disclosed charge-off of $3.6 million during the three months ended September 30, 2021 regarding a non-residential bridge loan secured by real estate with a balance of $3.6 million.

The loan is secured by commercial real estate located in Greenwich, Connecticut and guaranteed by the two borrowers.

The loan was originated in 2016 as a two-year bridge loan and, upon the borrower’s failure to satisfy the loan at the maturity date, the loan was accelerated and a foreclosure action was instituted.

The loan remains in foreclosure but is subject to Connecticut’s continuing foreclosure backlog.

The property securing the loan is subject to a parking easement and based on a recently updated appraisal showing the property’s value with the parking easement to be zero, the Company has determined to write off the $3.6 million loan as a non-cash charge against the allowance for loan losses.

The Company intends to aggressively seek recovery of all amounts due from the personal guarantors of the loan.

However, the recovery process is uncertain and might take an extended period of time to resolve this matter.

In the event the Company is successful against the guarantors, any recovery received would be added back to the allowance for loan losses and an analysis will be performed at that time to determine the appropriateness of recognizing the recovery into income.

The provision recorded for the three months ended September 30, 2020 was primarily attributed to the perceived potential credit risk associated with the COVID-19 pandemic, although no specific or probable losses were identified at that time.

Although the COVID- 19 pandemic and the resulting recession has impacted the local economy, we have not experienced any significant deterioration of our borrowers’ ability to keep current in accordance with the terms of their obligations.

Based on a review of the loans that were in the loan portfolio at June 30, 2021, management believes that the allowance is maintained at a level that represents its best estimate of inherent losses in the loan portfolio that were both probable and reasonably estimable.

We also charged-off $3,000 and $7,000 during the three months ended September 30, 2021 and September 30, 2020, respectively, against various unpaid overdrafts in our demand deposit accounts.

We recorded recoveries of $151,000 and $1,000 during the three months ended September 30, 2021 and September 30, 2020, respectively.

Based on a review of the loans that were in the loan portfolio at September 30, 2021, management believes that the allowance is maintained at a level that represents its best estimate of inherent losses in the loan portfolio that were both probable and reasonably estimable.

Management uses available information to establish the appropriate level of the allowance for loan losses.

4 unchanged sentences

Non-Interest Income

Non-interest income for the three months ended June 30, 2021 was $778,000 compared to non-interest income of $541,000 for the three months ended June 30, 2020.

The increase in total non-interest income was primarily due to an increase of $193,000 in other loan fees and service charges, an increase of $32,000 in investment advisory fees, a net gain of $7,000 on the sale of fixed assets, and an increase of $6,000 in other non-interest income, partially offset by a decrease of $1,000 in bank owned life insurance income.

Non-interest income for the three months ended September 30, 2021 was $532,000 compared to non-interest income of $527,000 for the three months ended September 30, 2020.

The increase in total non-interest income was primarily due to an increase of $130,000 in other loan fees and service charges, an increase of $27,000 in investment advisory fees, and a net loss of $2,000 on the sale of fixed assets that occurred during the three months ended September 30, 2020 compared to none during the three months ended September 30, 2021.

These increases were partially offset by unrealized loss on equity securities of $154,000 during the three months ended September 30, 2021 compared to none during the three months ended September 30, 2020.

The increase in other loan fees and service charges was due to an increase of $81,000 in other loan fees and loan servicing fees and an increase of $49,000 in ATM and debit card usage fees.

The increase in investment advisory fees was due to an increase in commission income from Harbor West Wealth Management Group.

The unrealized loss on equity securities was primarily due to an increase in market interest rates that impacted the value of the equity securities.

Non-Interest Expense

Non-interest expense increased by $8,000, or 0.1%, to $6.3 million for the three months ended June 30, 2021 from $6.3 million for the three months ended June 30, 2020.

The increase resulted primarily from increases of $244,000 in other operating expense and $45,000 in equipment expense, partially offset by decreases of $88,000 in outside data processing expense, $77,000 in salaries and employee benefits, $67,000 in real estate owned expense, $42,000 in advertising expense, and $7,000 in occupancy expense.

Other non-interest expense increased by $244,000, or 16.8%, to $1.7 million for the three months ended June 30, 2021 from $1.5 million for the three months ended June 30, 2020 due mainly to increases of $207,000 in consulting services, $37,000 in audit and accounting fees, $9,000 in telephone expense, $6,000 in directors, officers and employee expense, $4,000 in legal fees, $3,000 in miscellaneous other non-interest expense, $1,000 in office supplies, and $1,000 in recruitment expenses related to the hiring of personnel, partially offset by decreases of $11,000 in service contracts expense, $8,000 in insurance expense, and $5,000 in directors compensation.

Equipment expense increased by $45,000, or 23.2%, to $239,000 for the three months ended June 30, 2021 from $194,000 for the three months ended June 30, 2020 due to the purchases of additional equipment.

Outside data processing expense decreased by $88,000, or 20.7%, to $337,000 for the three months ended June 30, 2021 from $425,000 for the three months ended June 30, 2020 due to additional services required in 2020 to enable us to expand and to enable employees to work remotely.

Salaries and employee benefits decreased by $77,000, or 2.1%, to $3.5 million for the three months ended June 30, 2021 from $3.6 million for the three months ended June 30, 2020 primarily due to an increase in loan originations that caused an increase in loan origination expenses offset, partially offset by an increase in bonuses paid to loan production personnel.

Real estate owned expense decreased by $67,000, or 72.0%, to $26,000 for the three months ended June 30, 2021 from $93,000 for the three months ended June 30, 2020 due to a write-down of $56,000 during the 2020 period on the one real estate owned property and a reduction in operating expenses to maintain the one real estate owned property.

Advertising expense decreased by $42,000, or 63.6%, to $24,000 for the three months ended June 30, 2021 from $66,000 for the three months ended June 30, 2020 due mainly to the curtailment of advertising and promotional products in light of the COVID- 19 pandemic.

Occupancy expense decreased by $7,000, or 1.5%, to $472,000 for the three months ended June 30, 2021 from $479,000 for the three months ended June 30, 2020 primarily as a result of reduction in the intensive cleaning of our offices due to the COVID-19 pandemic, partially offset by the leasing of additional office space to facilitate the expansion of the Company.

Non-interest expense increased by $839,000, or 13.9%, to $6.9 million for the three months ended September 30, 2021 from $6.0 million for the three months ended September 30, 2020.

The increase resulted primarily from increases of $889,000 in salaries and employee benefits, $37,000 in equipment expense, $15,000 in other operating expense, $9,000 in advertising expense, and $9,000 in occupancy expense, partially offset by decreases of $54,000 in outside data processing expense, $50,000 in impairment loss on goodwill, and $16,000 in real estate owned expense.

Salaries and employee benefits increased by $889,000, or 28.1%, to $4.1 million for the three months ended September 30, 2021 from $3.2 million for the three months ended September 30, 2020 primarily due to an increase in number of full time equivalent personnel, an increase in bonuses paid to loan production personnel as loan originations increased, and an increase in employee stock ownership plan (“ESOP”) compensation cost as the ESOP purchased additional shares of Company common stock using funds loaned from the Company as part of the second-step conversion offering.

These increases were partially offset by an increase in loan origination expenses related to loan origination fees due to an increase in loan originations.

Equipment expense increased by $37,000, or 19.3%, to $229,000 for the three months ended September 30, 2021 from $192,000 for the three months ended September 30, 2020 due to the purchases of additional equipment to support the Company’s operations.

Other non-interest expense increased by $15,000, or 0.9%, to $1.6 million for the three months ended September 30, 2021 from $1.6 million for the three months ended September 30, 2020 due mainly to increases of $84,000 in consulting services, $27,000 in audit and accounting fees, $18,000 in service contracts expense, $11,000 in directors

compensation, and $9,000 in telephone expense, partially offset by decreases of $55,000 in legal fees, $51,000 in miscellaneous other non-interest expense, $13,000 in insurance expense, $8,000 in directors, officers and employee expense, $5,000 in office supplies, and $1,000 in recruitment expenses related to the hiring of personnel.

Advertising expense increased by $9,000, or 33.3%, to $36,000 for the three months ended September 30, 2021 from $27,000 for the three months ended September 30, 2020 due mainly to the resumption of advertising and promotional products.

Occupancy expense increased by $9,000, or 1.9%, to $489,000 for the three months ended September 30, 2021 from $480,000 for the three months ended September 30, 2020 primarily as a result of the cost of operating additional office space.

Outside data processing expense decreased by $54,000, or 12.0%, to $395,000 for the three months ended September 30, 2021 from $449,000 for the three months ended September 30, 2020 due to additional services required in 2020.

There was no goodwill impairment expense for the three months ended September 30, 2021 compared to goodwill impairment expense of $50,000 for the three months ended September 30, 2020.

The goodwill was recorded in connection with the acquisition of Harbor West Financial Planning Wealth Management Group in 2007, which is operated as a division of Northeast Community Bank.

The goodwill impairment was caused primarily by the expected decrease in revenue from this division due to a decrease in clients and the resulting decrease in assets under management.

Real estate owned expense decreased by $16,000, or 47.1%, to $18,000 for the three months ended September 30, 2021 from $34,000 for the three months ended September 30, 2020 due to a reduction in operating expenses to maintain the one real estate owned property.

Income Taxes.

We recorded income tax expense of $1.1 million and $752,000 for the three months ended June 31, 2021 and 2020, respectively.

For the three months ended June 30, 2021, we had approximately $174,000 in tax exempt income, compared to approximately $165,000 in tax exempt income for the three months ended June 30, 2020.

Our effective income tax rates were 23.2% and 23.3% for the three months ended June 30, 2021 and 2020, respectively.

Results of Operations for the Six Months Ended June 30, 2021 and 2020

We recorded income tax expense of $265,000 and $956,000 for the three months ended September 30, 2021 and 2020, respectively.

For the three months ended September 30, 2021, we had approximately $185,000 in tax exempt income, compared to approximately $166,000 in tax exempt income for the three months ended September 30, 2020.

Our effective income tax rates were 26.6% and 23.4% for the three months ended September 30, 2021 and 2020, respectively.

Results of Operations for the Nine Months Ended September 30, 2021 and 2020

Financial Highlights

Net income for the six months ended June 30, 2021 was $7.0 million compared to net income of $5.7 million for the six months ended June 30, 2020.

Net income for the six months ended June 30, 2021 was higher than net income for the six months ended June 30, 2020 primarily due to an increase in the net interest income and a decrease in the provision for loan losses expense.

These were partially offset by a decrease in non-interest income, an increase in non-interest expense and an increase in income tax expense.

Net income for the nine months ended September 30, 2021 was $7.7 million compared to net income of $8.9 million for the nine months ended September 30, 2020.

Net income for the nine months ended September 30, 2021 was lower than net income for the nine months ended September 30, 2020 primarily due to an increase in the provision for loan losses expense, an increase in non-interest expense, and a decrease in non-interest income.

These were partially offset by an increase in the net interest income and a decrease in income tax expense.

Net Interest Income

Net interest income totaled $20.7 million for the six months ended June 30, 2021, as compared to $19.0 million for the six months ended June 30, 2020.

Net interest income totaled $31.6 million for the nine months ended September 30, 2021, as compared to $28.8 million for the nine months ended September 30, 2020.

The increase in net interest income of $2.9 million, or 10.0%, was primarily due to the decrease in interest expense that exceeded a decrease in interest income.

In a manner consistent with the decrease in interest rates in response to the COVID-19 pandemic, our cost of interest bearing liabilities decreased much greater than our yield on interest earning assets as our interest bearing liabilities repriced much faster to lower interest rates than our yield on interest earning assets.

Interest and dividend income decreased by $1.5 million, or 6.0%, to $23.5 million for the six months ended June 30, 2021 from $25.0 million for the six months ended June 30, 2020 due to a decrease in the yield on interest earning assets by 62 basis points from 5.76% for the six months ended June 30, 2020 to 5.14% for the six months ended June 30, 2021, partially offset by an increase in the average balance of interest earning assets of $46.0 million, or 5.3%, to $913.5 million for the six months ended June 30, 2021 from $867.5 million for the six months ended June 30, 2020.

Interest expense decreased by $3.3 million, or 54.2%, to $2.8 million for the six months ended June 30, 2021 from $6.0 million for the six months ended June 30, 2020 due to a decrease in average interest bearing liabilities of $53.0 million, or 8.5%, to $571.8 million for the six months ended June 30, 2021 from $624.8 million for the six months ended June 30, 2020 and a decrease in the cost of interest bearing liabilities by 96 basis points from 1.93% for the six months ended June 30, 2020 to 0.97% for the six months ended June 30, 2021.

increased by $80.9 million, or 54.3%, to $229.9 million for the six months ended June 30, 2021 from $149.0 million for the six months ended June 30, 2020 and the average balances of certificates of deposits decreased by $56.6 million, or 14.6%, to $330.5 million for the six months ended June 30, 2021 from $387.1 million for the six months ended June 30, 2020.

Net interest margin increased by 17 basis points, or 0.2%, during the six months ended June 30, 2021 to 4.54% compared to 4.37% during the six months ended June 30, 2020.

Interest and dividend income decreased by $1.4 million, or 3.8%, to $35.6 million for the nine months ended September 30, 2021 from $37.0 million for the nine months ended September 30, 2020 due to a decrease in the yield on interest earning assets by 65 basis points from 5.64% for the nine months ended September 30, 2020 to 4.99% for the nine months ended September 30, 2021, partially offset by an increase in the average balance of interest earning assets of

$76.4 million, or 8.7%, to $951.0 million for the nine months ended September 30, 2021 from $874.6 million for the nine months ended September 30, 2020.

Interest expense decreased by $4.3 million, or 52.1%, to $3.9 million for the nine months ended September 30, 2021 from $8.2 million for the nine months ended September 30, 2020 due to a decrease in average interest bearing liabilities of $52.3 million, or 8.5%, to $563.8 million for the nine months ended September 30, 2021 from $616.0 million for the nine months ended September 30, 2020 and a decrease in the cost of interest bearing liabilities by 85 basis points from 1.78% for the nine months ended September 30, 2020 to 0.93% for the nine months ended September 30, 2021.

In this regard, the average balances of non-interest bearing demand deposits increased by $85.0 million, or 52.4%, to $247.3 million for the nine months ended September 30, 2021 from $162.3 million for the nine months ended September 30, 2020 and the average balances of interest bearing demand deposits increased by $6.6 million, or 6.2%, to $113.4 million for the nine months ended September 30, 2021 from $106.7 million for the nine months ended September 30, 2020.

During this same time period, the average balances of certificates of deposits decreased by $58.8 million, or 15.4%, to $322.0 million for the nine months ended September 30, 2021 from $380.8 million for the nine months ended September 30, 2020 and the average balances of savings and club accounts decreased by $1.7 million, or 1.7%, to $100.4 million for the nine months ended September 30, 2021 from $102.1 million for the nine months ended September 30, 2020.

Net interest margin increased by 5 basis points, or 1.1%, during the nine months ended September 30, 2021 to 4.44% compared to 4.39% during the nine months ended September 30, 2020.

Provision for Loan Losses.

Management recorded loan loss provision of $17,000 for the six months ended June 30, 2021 compared to loan loss provision of $532,000 for the six months ended June 30, 2020.

We charged-off a total of $20,000 and $4,000 during the six months ended June 30, 2021 and June 30, 2020, respectively, against various unpaid overdrafts in our demand deposit accounts.

We recorded recoveries of $9,000 and $25,000 during the six months ended June 30, 2021 and June 30, 2020, respectively.

The provision recorded for the six months ended June 30, 2020 was primarily attributed to the perceived potential credit risk associated with the COVID-19 pandemic, although no specific or probable losses were identified at that time.

Management recorded a loan loss provision of $3.6 million for the nine months ended September 30, 2021 compared to a loan loss provision of $762,000 for the nine months ended September 30, 2020.

The provision recorded for the nine months ended September 30, 2021 was primarily attributed to the previously disclosed charge-off of $3.6 million during the nine months ended September 30, 2021 regarding a non-residential bridge loan secured by real estate with a balance of $3.6 million.

The loan is secured by commercial real estate located in Greenwich, Connecticut and guaranteed by the two borrowers.

The loan remains in foreclosure but is subject to Connecticut’s continuing foreclosure backlog.

The Company intends to aggressively seek recovery of all amounts due from the personal guarantors of the loan.

However, the recovery process is uncertain and might take an extended period of time to resolve this matter.

The provision recorded for the nine months ended September 30, 2020 was primarily attributed to the perceived potential credit risk associated with the COVID-19 pandemic, although no specific or probable losses were identified at that time.

We also charged-off $23,000 and $10,000 during the nine months ended September 30, 2021 and September 30, 2020, respectively, against various unpaid overdrafts in our demand deposit accounts.

We recorded recoveries of $160,000 and $25,000 during the nine months ended September 30, 2021 and September 30, 2020, respectively.

Management uses available information to establish the appropriate level of the allowance for loan losses.

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Non-Interest Income

Non-interest income for the six months ended June 30, 2021 was $1.2 million compared to non-interest income of $1.4 million for the six months ended June 30, 2020.

Non-interest income for the nine months ended September 30, 2021 was $1.8 million compared to non-interest income of $2.0 million for the nine months ended September 30, 2020.

The decrease in total non-interest income was primarily due to an unrealized loss of $215,000 in our equity securities in the 2021 period compared to an unrealized gain of $299,000 in the comparable period in 2020, a decrease of $120,000 in other non-interest income, and a decrease of $10,000 in bank owned life insurance income.

These were partially offset by an increase of $245,000 in other loan fees and service charges, an increase of $36,000 in investment advisory fees, and a net gain of $7,000 on the sale of fixed assets.

These were partially offset by an increase of $374,000 in other loan fees and service charges, an increase of $63,000 in investment advisory fees, and a net gain of $7,000 on the sale of fixed assets in the 2021 period compared to a net loss of $2,000 on the sale of fixed assets in the 2020 period.

The unrealized loss on equity securities was primarily due to an increase in market interest rates that impacted the value of the equity securities.

The decrease in other non-interest income was due to a gain of $125,000 in 2020 as a result of an independent third party successful bid on a sheriff foreclosure sale on a mixed-use property securing a delinquent real estate mortgage loan.

The increase in other loan fees and service charges was due to an increase of $208,000 in other loan fees and loan servicing fees and an increase of $174,000 in ATM and debit card usage fees, partially offset by a decrease of $7,000 in deposit account fees.

The increase in investment advisory fees was due to an increase in commission income from Harbor West Wealth Management Group.

The increase in investment advisory fees was due to an increase in commission and advisory fee income from Harbor West Wealth Management Group.

Non-Interest Expense

Non-interest expense increased by $493,000, or 4.0%, to $12.9 million for the six months ended June 30, 2021 from $12.4 million for the six months ended June 30, 2020.

The increase resulted primarily from increases of $303,000 in salaries and employee benefits, $195,000 in other operating expense, $88,000 in occupancy expense, and $77,000 in equipment expense, partially offset by decreases of $73,000 in real estate owned expense, $71,000 in advertising expense, and $26,000 in outside data processing expense.

Salaries and employee benefits increased by $303,000, or 4.4%, to $7.2 million for the six months ended June 30, 2021 from $6.9 million for the six months ended June 30, 2020 primarily due to an increase in bonuses paid to loan production personnel resulting from an increase in loan originations and normal annual increases in personnel salaries, partially offset by an increase in loan origination expenses offset due to an increase in loan originations.

Other non-interest expense increased by $195,000, or 6.4%, to $3.2 million for the six months ended June 30, 2021 from $3.0 million for the six months ended June 30, 2020 due mainly to increases of $217,000 in consulting services, $77,000 in audit and accounting fees, $14,000 in service contracts expense, $13,000 in telephone expense, and $6,000 in office supplies, partially offset by decreases of $69,000 in legal fees, $32,000 in miscellaneous other non-interest expense, $20,000 in insurance expense, $7,000 in directors, officers and employee expense, $3,000 in recruitment expenses related to the hiring of personnel, and $2,000 in directors compensation.

Occupancy expense increased by $88,000, or 9.4%, to $1.0 million for the six months ended June 30, 2021 from $957,000 for the six months ended June 30, 2020 primarily as a result of the leasing of additional office space to facilitate the expansion of the Company.

Equipment expense increased by $77,000, or 18.7%, to $488,000 for the six months ended June 30, 2021 from $411,000 for the six months ended June 30, 2020 due to the purchases of additional equipment.

Real estate owned expense decreased by $73,000, or 51.8%, to $68,000 for the six months ended June 30, 2021 from $141,000 for the six months ended June 30, 2020 due to a write-down of $56,000 during the 2020 period on the one real estate owned property and a reduction in operating expenses to maintain the one real estate owned property.

Advertising expense decreased by $71,000, or 60.2%, to $47,000 for the six months ended June 30, 2021 from $118,000 for the six months ended June 30, 2020 due mainly to the curtailment of advertising and promotional products in light of the COVID- 19 pandemic.

Outside data processing expense decreased by $26,000, or 3.1%, to $824,000 for the six months ended June 30, 2021 from $850,000 for the six months ended June 30, 2020 due to additional services required in 2020 to enable us to expand and to enable employees to work remotely.

Non-interest expense increased by $1.3 million, or 7.3%, to $19.7 million for the nine months ended September 30, 2021 from $18.4 million for the nine months ended September 30, 2020.

The increase resulted primarily from increases of $1.2 million in salaries and employee benefits, $210,000 in other operating expense, $114,000 in equipment expense, and $98,000 in occupancy expense, partially offset by decreases of $90,000 in real estate owned expense, $80,000 in outside data processing expense, $61,000 in advertising expense, and $50,000 in impairment loss on goodwill.

Salaries and employee benefits increased by $1.2 million, or 11.9%, to $11.2 million for the nine months ended September 30, 2021 from $10.0 million for the nine months ended September 30, 2020 primarily due to an increase in number of full time equivalent personnel, an increase in bonuses paid to loan production personnel as loan originations increased, and an increase in employee stock ownership plan (“ESOP”) compensation cost as the Company ESOP purchased additional shares of Company common stock using funds loaned from the Company as part of the second-step conversion offering.

These increases were partially offset by an increase in loan origination expenses related to loan origination fees due to an increase in loan originations.

Other non-interest expense increased by $210,000, or 4.5%, to $4.9 million for the nine months ended September 30, 2021 from $4.6 million for the nine months ended September 30, 2020 due mainly to increases of $301,000 in consulting services, $103,000 in audit and accounting fees, $31,000 in service contracts expense, $22,000 in telephone expense, and $9,000 in directors compensation, partially offset by decreases of $124,000 in legal fees, $83,000 in miscellaneous other non-interest expense, $33,000 in insurance expense, $14,000 in directors, officers and employee expense, and $3,000 in recruitment expenses related to the hiring of personnel.

Equipment expense increased by $114,000, or 18.9%, to $718,000 for the nine months ended September 30, 2021 from $604,000 for the nine months ended September 30, 2020 due to the purchases of additional equipment.

Occupancy expense increased by $98,000, or 6.8%, to $1.5 million for the nine months ended September 30, 2021 from $1.4 million for the nine months ended September 30, 2020 primarily as a result of the cost of operating additional office space.

Real estate owned expense decreased by $90,000, or 51.4%, to $85,000 for the nine months ended September 30, 2021 from $175,000 for the nine months ended September 30, 2020 due to a write-down of $56,000 during the 2020 period on the one real estate owned property and a reduction in operating expenses to maintain the one real estate owned property.

Outside data processing expense decreased by $80,000, or 6.2%, to $1.2 million for the nine months ended September 30, 2021 from $1.3 million for the nine months ended September 30, 2020 due to additional services required in 2020, among other things, to enable employees to work remotely.

Advertising expense decreased by $61,000, or 42.4%, to $83,000 for the nine months ended September 30, 2021 from $144,000 for the nine months ended September 30, 2020 due mainly to the curtailment of advertising and promotional products in light of the COVID- 19 pandemic.

There was no goodwill impairment expense for the nine months ended September 30, 2021 compared to goodwill impairment expense of $50,000 for the nine months ended September 30, 2020.

The goodwill was recorded in connection with the acquisition of Harbor West Financial Planning Wealth Management Group in 2007, which is operated as a division of Northeast Community Bank.

The goodwill impairment was caused primarily by the expected decrease in revenue from this division due to a decrease in clients and the resulting decrease in assets under management.

Income Taxes.

We recorded income tax expense of $2.1 million and $1.7 million for the six months ended June 31, 2021 and 2020, respectively.

For the six months ended June 30, 2021, we had approximately $336,000 in tax exempt income, compared to approximately $337,000 in tax exempt income for the six months ended June 30, 2020.

Our effective income tax rates were 23.2% and 23.4% for the six months ended June 30, 2021 and 2020, respectively.

We recorded income tax expense of $2.4 million and $2.7 million for the nine months ended September 30, 2021 and 2020, respectively.

For the nine months ended September 30, 2021, we had approximately $522,000 in tax exempt income, compared to approximately $337,000 in tax exempt income for the nine months ended September 30, 2020.

Our effective income tax rates were 23.6% and 23.4% for the nine months ended September 30, 2021 and 2020, respectively.

Average Balances and Yields

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Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

Three Months Ended June 30,

Three Months Ended September 30,

Loans receivable

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Average interest-earning assets to interest-bearing liabilities

Six Months Ended June 30,

Nine Months Ended September 30,

Loans receivable

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Net change in net interest income

Six Months Ended 6/30/2021

Six Months Ended 6/30/2020

Nine Months Ended 9/30/2021

Nine Months Ended 9/30/2020

Increase (Decrease)

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The following table sets forth information with respect to our non-performing assets at the dates indicated.

September 30,

(Dollars in thousands)

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Total non-performing assets to total assets

During the six months ended June 30, 2021, non-performing assets increased by $21,000, or 0.4%, to $5.6 million from $5.6 million as of December 31, 2020.

The increase in non-performing assets was primarily due to the amount of capitalized real estate taxes we paid for the one non-accrual loan.

Total non-performing loans consisted of one loan at June 30, 2021 and at December 31, 2020.

For the six months ended June 30, 2021 and June 30, 2020, gross interest income of $114,000 and $131,000, respectively, would have been recorded had the non-accrual loans at the end of the period been on accrual status throughout the period.

During the six months ended June 30, 2021, we did not collect any interest income from the loan that was in non-accrual status in 2020.

At June 30, 2021, our one non-performing loan was a non-residential real estate loan with a balance of $3.6 million that is secured by commercial real estate located in Greenwich, Connecticut.

At June 30, 2021, the loan remains in foreclosure but is subject to Connecticut’s continuing foreclosure moratorium.

The property securing the loan is subject to a parking easement and we have ordered updated appraisals showing the property’s value both with and without the parking easement.

During the nine months ended September 30, 2021, non-performing assets decreased by $3.6 million, or 64.2%, to $2.0 million from $5.6 million as of December 31, 2020.

The decrease in non-performing assets was primarily due to the previously disclosed charge-off of $3.6 million on a non-accrual, non-residential bridge loan during 2021.

We had no non-performing loans at September 30, 2021 compared to one non-performing loan at December 31, 2020.

For the nine months ended September 30, 2021 and September 30, 2020, gross interest income of $171,000 and $192,000, respectively, would have been recorded had the non-accrual loans at the end of the period been on accrual status throughout the period.

During the nine months ended September 30, 2021, we did not collect any interest income from the loans that were in non-accrual status in 2020.

From time to time, as part of our loss mitigation strategy, we may renegotiate the loan terms based on the economic or legal reasons related to the borrower’s financial difficulties.

There were no new TDRs during the six months ended June 30, 2021 or 2020 or during the year ended December 31, 2020.

There were no new TDRs during the nine months ended September 30, 2021 or 2020 or during the year ended December 31, 2020.

TDRs may be considered to be non-performing and if so are placed on non-accrual, except for those that have established a sufficient performance history (generally a minimum of six consecutive months of performance) under the terms of the restructured loan.

At June 30, 2021, five loans with aggregate balances of $2.7 million were considered TDRs but were performing in accordance with their restructured terms for the requisite period of time (generally at least six consecutive months) to be returned to accrual status.

At September 30, 2021, five loans with aggregate balances of $2.7 million were considered TDRs but were performing in accordance with their restructured terms for the requisite period of time (generally at least six consecutive months) to be returned to accrual status.

At December 31, 2020, five loans with aggregate balances of $2.8 million were considered TDRs but were performing in accordance with their restructured terms for the requisite period of time.

Impaired loans at June 30, 2021 totaled $4.3 million and consisted of three non-residential mortgage loans.

There were no charge-offs for the six months ended June 30, 2021.

Two of these loans are performing according to their loan terms.

The remaining impaired loan is non-performing and is under foreclosure proceedings.

Impaired loans at September 30, 2021 totaled $740,000 and consisted of two non-residential mortgage loans.

There was a charge-off of $3.6 million on an impaired, non-accrual, non-residential bridge loan during the nine months ended September 30, 2021.

The two impaired loans are performing according to their loan terms.

The following table sets forth an analysis of the activity in the allowance for loan losses for the periods indicated:

September 30,

(In Thousands)

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Net charge-offs (charge-offs less recoveries)

The allowance for loan losses increased by $6,000 to $5.1 million at June 30, 2021 from $5.1 million at December 31, 2020.

The increase in the allowances for loan losses was due primarily to the increase in the provision for loan losses, which reflected the increase in the charge-off levels which had an unfavorable impact on the historical loss factors and an increase in the construction loan and commercial and industrial loan portfolio, partially offset by the reduction of the non-performing asset levels and a decrease in the residential, multifamily, mixed-use and non-residential mortgage loan portfolio.

The allowance for loan losses increased by $154,000 to $5.2 million at September 30, 2021 from $5.1 million at December 31, 2020.

The increase in the allowances for loan losses was due primarily to the increase in the provision for loan losses, which reflected the increase in the charge-off levels and an increase in the construction loan and commercial and industrial loan portfolio, partially offset by the reduction of the non-performing asset levels and a decrease in the residential, multifamily, mixed-use and non-residential mortgage loan portfolio.

Liquidity and Capital Resources

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We also establish targets of 2.0% for the Cash Liquidity ratio, 8.0% for the On Balance Sheet Liquidity ratio, and 20.0% for the On Balance Sheet Liquidity & Borrowing Capacity ratio.

Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 9.7%, 12.2%, and 19.0%, respectively, for the six months ended June 30, 2021 compared to 8.9%, 11.3%, and 19.9%, respectively, for the year ended December 31, 2020.

Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 11.9%, 14.7%, and 21.2%, respectively, for the nine months ended September 30, 2021 compared to 8.9%, 11.3%, and 19.9%, respectively, for the year ended December 31, 2020.

We adjust our liquidity levels to fund deposit outflows, pay real estate taxes on real estate loans, repay our borrowings, and to fund loan commitments.

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Our primary investing activities are the origination of construction loans, commercial and industrial loans, multifamily loans, and to a lesser extent, mixed-use real estate loans and other loans.

For the six months ended June 30, 2021 and 2020, our loan originations totaled $285.1 million and $165.7 million, respectively.

Cash received from the sales, calls, maturities and pay-downs on securities totaled $793,000 and $614,000 for the six months ended June 30, 2021 and 2020, respectively.

We purchased securities totaling $4.3 million during the six months ended June 30, 2021.

We did not purchase any securities during the six months ended June 30, 2020.

For the nine months ended September 30, 2021 and 2020, our loan originations totaled $486.0 million and $248.5 million, respectively.

Cash received from the sales, calls, maturities and pay-downs on securities totaled $4.3 million and $1.3 million for the nine months ended September 30, 2021 and 2020, respectively.

We purchased securities totaling $15.3 million during the nine months ended September 30, 2021.

We did not purchase any securities during the nine months ended September 30, 2020.

Liquidity management is both a daily and long-term function of business management.

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As a member of the Federal Home Loan Bank of New York, we are required to own capital stock in the Federal Home Loan Bank of New York and are authorized to apply for advances on the security of such stock and certain of our mortgage loans and other assets (principally securities which are obligations of, or guaranteed by, the United States), provided certain standards related to credit-worthiness have been met.

We had an available borrowing limit of $41.2 million and $49.4 million from the Federal Home Loan Bank of New York as of June 30, 2021 and December 31, 2020, respectively.

There were $28.0 million of Federal Home Loan Bank advances at June 30, 2021 and December 31, 2020.

In addition, we have a borrowing agreement with ACBB to provide short-term borrowings of $8.0 million at June 30, 2021 and December 31, 2020.

There were no outstanding borrowings with ACBB at June 30, 2021 and December 31, 2020.

At June 30, 2021, we had unfunded commitments on construction loans of $349.4 million, outstanding commitments to originate loans of $315.7 million, unfunded commitments under lines of credit of $113.6 million, and unfunded standby letters of credit of $7.0 million.

At June 30, 2021, certificates of deposit scheduled to mature in less than one year totaled $209.4 million.

Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case.

We had an available borrowing limit of $39.0 million and $49.4 million from the Federal Home Loan Bank of New York as of September 30, 2021 and December 31, 2020, respectively.

There were $28.0 million of Federal Home Loan Bank advances at September 30, 2021 and December 31, 2020.

In addition, we have a borrowing agreement with ACBB to provide short-term borrowings of $8.0 million at September 30, 2021 and December 31, 2020.

There were no outstanding borrowings with ACBB at September 30, 2021 and December 31, 2020.

At September 30, 2021, we had unfunded commitments on construction loans of $373.9 million, outstanding commitments to originate loans of $259.4 million, unfunded commitments under lines of credit of $138.8 million, and unfunded standby letters of credit of $6.9 million.

At September 30, 2021, certificates of deposit scheduled to mature in less than one year totaled $190.4 million.

Based on prior experience, management believes that a significant portion of

such deposits will remain with us, although there can be no assurance that this will be the case.

In the event a significant portion of our deposits are not retained by us, we will have to utilize other funding sources, such as various types of sourced deposits, and/or Federal Home Loan Bank advances, in order to maintain our level of assets.

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In addition to its operating expenses, the Company is responsible for paying any dividends declared to its stockholders and for the repurchase, if any, of its shares of common stock.

At June 30, 2021, the Company had liquid assets of $78.2 million and $5.5 million in loan participations originated by the Bank which are held by the Company.

At September 30, 2021, the Company had liquid assets of $43.3 million and $5.2 million in loan participations originated by the Bank which are held by the Company.

Off-Balance Sheet Arrangements

For the six months ended June 30, 2021, we did not engage in any off-balance sheet transactions reasonably likely to have a material adverse effect on our financial condition, results of operations or cash-flows.

For the nine months ended September 30, 2021, we did not engage in any off-balance sheet transactions reasonably likely to have a material adverse effect on our financial condition, results of operations or cash-flows.

Impact of Inflation and Changing Prices

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What changed 10-Q

Item 2. Management’s Discussion and Analysis