What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-12 · 197 added, 89 removed, 163 unchanged (64% of the section changed)

15 unchanged sentences

(vii) decreased demand for loan products, deposit flows, competition, or decreased demand for financial services in our market area;

(viii) major catastrophes such as earthquakes, floods or other natural or human disasters and infectious disease outbreaks, including the current coronavirus (COVID-19) pandemic, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies;

(viii) major catastrophes such as earthquakes, floods or other natural or human disasters and infectious disease outbreaks, including the recent coronavirus (COVID-19) pandemic, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies;

(ix) legislative or regulatory changes that adversely affect our business or changes in the monetary and fiscal policies of the U.S.

10 unchanged sentences

We consider these accounting policies to be our crucial accounting policies.

The judgements and assumptions we use are

based on historical experience and other factors, which we believe to be reasonable under the circumstances.

The judgements and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances.

Actual results could differ from these judgements and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of operations.

4 unchanged sentences

Balance Sheet Analysis

Total assets increased by $77.8 million, or 5.5%, to $1.5 billion at March 31, 2023, from $1.4 billion at December 31, 2022.

The increase in assets was primarily due to increases in net loans of $98.6 million, partially offset by decreases in cash and cash equivalents of $18.3 million and other assets of $3.3 million.

Cash and cash equivalents decreased by $18.3 million, or 19.2%, to $77.0 million at March 31, 2023 from $95.3 million at December 31, 2022.

The decrease in cash and cash equivalents was a result of cash being deployed to fund an increase in net loans of $98.6 million, a reduction in FHLB advances of $7.0 million, and stock repurchases of $10.5 million.

Equity securities increased by $225,000, or 1.2%, to $18.3 million at March 31, 2023 from $18.0 million at December 31, 2022.

The increase in equity securities was attributable to market depreciation of $225,000 due to market interest rate volatility during the three months ended March 31, 2023.

Securities held-to-maturity decreased by $287,000, or 1.1%, to $26.1 million at March 31, 2023 from $26.4 million at December 31, 2022 due partially to the establishment of $136,000 in an allowance for held-to-maturity securities pursuant to the adoption of the current expected credit losses model (“CECL”) on held-to-maturity investment securities loss exposures and to maturities and pay-downs.

Loans, net of the allowance for credit losses, increased by $98.6 million, or 8.1%, to $1.3 billion at March 31, 2023 from $1.2 million at December 31, 2022.

The increase in loans, net of the allowance for credit losses, was primarily due to loan originations of $214.7 million during the three months ended March 31, 2023, consisting primarily of $176.4 million in construction loans with respect to which approximately 31.5% of the funds were disbursed at loan closings, with the remaining funds to be disbursed over the terms of the construction loans.

Total assets increased by $190.7 million, or 13.4%, to $1.6 billion at June 30, 2023, from $1.4 billion at December 31, 2022.

The increase in assets was primarily due to an increase in net loans of $175.2 million and an increase in cash and cash equivalents of $24.6 million, partially offset by a decrease in Federal Home Loan Bank advances of $7.0 million and a decrease in bank owned life insurance of $1.1 million.

Cash and cash equivalents increased by $24.6 million, or 25.8%, to $119.9 million at June 30, 2023 from $95.3 million at December 31, 2022.

The increase in cash and cash equivalents was a result of increases in deposits of $193.9 million, partially offset by a reduction in FHLB advances of $7.0 million, and stock repurchases of $14.3 million.

Equity securities increased by $102,000, or 0.6%, to $18.1 million at June 30, 2023 from $18.0 million at December 31, 2022.

The increase in equity securities was attributable to market appreciation of $102,000 due to market interest rate volatility during the six months ended June 30, 2023.

Securities held-to-maturity decreased by $10.6 million, or 40.2%, to $15.8 million at June 30, 2023 from $26.4 million at December 31, 2022 due to the maturity of $10.0 million in U.S.

Treasury holdings, the establishment of $135,000 in an allowance for credit losses for held-to-maturity securities, and pay-downs of various investment securities.

The allowance for credit losses for held-to-maturity securities totaling $135,000 was established pursuant to the adoption of the current expected credit losses model (“CECL”) on held-to-maturity investment securities loss exposures.

In this regard, we recognized a one-time credit of $132,000 due to the adoption of CECL at January 1, 2023 and credit loss expense totaling $3,000 during the six months ended June 30, 2023.

Loans, net of the allowance for credit losses, increased by $175.2 million, or 14.5%, to $1.4 billion at June 30, 2023 from $1.2 billion at December 31, 2022.

The increase in loans, net of the allowance for loan losses, was primarily due to loan originations of $448.0 million during the six months ended June 30, 2023, consisting primarily of $405.6 million in construction loans with respect to which approximately 42.5% of the funds were disbursed at loan closings, with the remaining funds to be disbursed over the terms of the construction loans.

In addition, we originated $20.9 million in commercial and industrial loans, $13.3 million in multi-family loans, and $8.2 million in mixed-use loans.

Loan originations resulted in a net increase of $78.2 million in construction loans, $13.5 million in commercial and industrial loans, $7.2 million in mixed-use loans, $1.6 million in multi-family loans, and $490,000 in consumer loans.

The increase in our loan portfolio was partially offset by decreases in non-residential loans of $3.7 million and residential loans of $67,000, coupled with normal pay-downs and principal reductions.

Premises and equipment decreased by $220,000, or 0.8%, to $25.8 million at March 31, 2023 from $26.1 million at December 31, 2022 primarily due to depreciation of fixed assets.

Investments in Federal Home Loan Bank stock decreased by $315,000, or 25.4%, to $923,000 at March 31, 2023 from $1.2 million at December 31, 2022 due to a reduction in mandatory Federal Home Loan Bank stock in connection with the maturity/pay-off of $7.0 million in advances during the quarter ended March 31, 2023.

Accrued interest receivable increased by $1.3 million, or 15.4%, to $9.9 million at March 31, 2023 from $8.6 million at December 31, 2022 due to an increase in the loan portfolio and two interest rate increases in 2023 that caused an increase in the interest rates in our construction loan portfolio.

Foreclosed real estate was $1.5 million at March 31, 2023 and at December 31, 2022.

Right of use assets — operating decreased by $130,000, or 5.6%, to $2.2 million at March 31, 2023 from $2.3 million at December 31, 2022, primarily due to amortization.

Other assets decreased by $3.3 million, or 61.5%, to $2.1 million at March 31, 2023 from $5.3 million at December 31, 2022 due to a decrease in tax assets of $4.1 million coupled with a reclassification of tax assets totaling $1.0 million from other assets to other liabilities and a decrease in suspense accounts of $268,000, partially offset by increases in prepaid expenses of $47,000 and miscellaneous assets of $5,000.

Total deposits increased by $86.4 million, or 7.7%, to $1.2 billion at March 31, 2023 from $1.1 billion at December 31, 2022.

The increase was primarily due to an increase in certificates of deposit of $122.3 million, or 31.9%, savings account balances of $5.1 million, or 1.9% and NOW/money market accounts of $4.7 million, or 5.3%.

These increases were partially offset by a decrease in non-interest bearing demand deposits of $45.7 million, or 12.2%, from December 31, 2022 to March 31, 2023.

Federal Home Loan Bank advances decreased by $7.0 million, or 33.3%, to $14.0 million at March 31, 2023 from $21.0 million at December 31, 2022 due to maturity of borrowings.

Advance payments by borrowers for taxes and insurance increased by $1.4 million, or 58.4%, to $3.8 million at March 31, 2023 from $2.4 million at December 31, 2022 due primarily to the accumulation of tax payments from borrowers.

Lease liability – operating decreased by $129,000, or 5.5%, to $2.2 million at March 31, 2023 from $2.4 million at December 31, 2022, primarily due to amortization.

Accounts payable and accrued expenses decreased by $3.4 million, or 23.3%, to $11.3 million at March 31, 2023 from $14.8 million at December 31, 2022 due primarily to a decrease in accrued bonus expense of $3.2 million for employees and a decrease in suspense accounts for loan closings of $2.7 million, partially offset by the addition of an allowance for off-balance sheet commitments of $1.4 million due to the adoption of CECL on off-balance sheet exposures and a reclassification of tax assets totaling $1.0 million from other assets to other liabilities.

Stockholders’ equity increased by $514,000, or 0.2% to $262.5 million at March 31, 2023, from $262.0 million at December 31, 2022.

The increase in stockholders’ equity was due to net income of $11.2 million for the three months ended March 31, 2023, $433,000 in the amortization of restricted stocks and stock options granted in connection with the 2022 Equity Incentive Plan, a reduction of $145,000 in unearned employee stock ownership plan shares coupled with an increase of $109,000 in earned employee stock ownership plan shares, and $7,000 in other comprehensive income, partially offset by stock repurchases totaling $10.5 million, dividends paid and declared of $875,000, and a one-time adjustment to retained earnings of $99,000 due to the adoption of CECL.

Results of Operations for the Three Months Ended March 31, 2023 and 2022

Loan originations resulted in a net increase of $168.1 million in construction loans, $7.0 million in mixed-use loans, $4.0 million in commercial and industrial loans, and $184,000 in consumer loans.

The increase in our loan portfolio was partially offset by decreases in non-residential loans of $4.5 million, $409,000 in multi-family loans, and $116,000 in residential loans, coupled with normal pay-downs and principal reductions.

The allowance for credit losses related to loans decreased to $4.4 million as of June 30, 2023 from $5.5 million as of December 31, 2022.

The decrease in the allowance for credit losses related to loans was due to a one-time decrease of $1.6 million due to the adoption of CECL at January 1, 2023 and charge-offs of $214,000, partially offset by provision for credit losses totaling $725,000.

Premises and equipment decreased by $417,000, or 1.6%, to $25.6 million at June 30, 2023 from $26.1 million at December 31, 2022 primarily due to depreciation of fixed assets.

Investments in Federal Home Loan Bank stock decreased by $309,000, or 25.0%, to $929,000 at June 30, 2023 from $1.2 million at December 31, 2022 due primarily to a reduction in mandatory Federal Home Loan Bank stock in connection with the maturity of $7.0 million in advances during the six months ended June 30, 2023.

Bank owned life insurance (“BOLI”) decreased by $1.1 million, or 4.3%, to $24.8 million at June 30, 2023 from $25.9 million at December 31, 2022 due to two death claims totaling $1.8 million on BOLI policies, partially offset by increases in the BOLI cash value.

Accrued interest receivable increased by $1.9 million, or 22.5%, to $10.5 million at June 30, 2023 from $8.6 million at December 31, 2022 due to an increase in the loan portfolio and three interest rate increases in 2023 that resulted in an increase in the interest rates on loans in our construction loan portfolio.

Foreclosed real estate was $1.5 million at June 30, 2023 and December 31, 2022.

Right of use assets — operating decreased by $257,000, or 11.1%, to $2.1 million at June 30, 2023 from $2.3 million at December 31, 2022, primarily due to amortization.

Other assets increased by $1.7 million, or 31.2%, to $7.0 million at June 30, 2023 from $5.3 million at December 31, 2022 due to an increase in tax assets of $2.0 million, partially offset by a decrease in suspense accounts of $320,000 and a decrease in prepaid expense of $6,000.

Total deposits increased by $193.9 million, or 17.3%, to $1.3 billion at June 30, 2023 from $1.1 billion at December 31, 2022.

The increase was primarily due to an increase in certificates of deposit of $282.6 million, or 73.7%, partially offset by decreases in non-interest bearing demand deposits of $47.1 million, or 12.5 %, savings account balances of $32.0 million, or 11.7%, and NOW/money market accounts of $9.8 million, or 11.1%.

Federal Home Loan Bank advances decreased by $7.0 million, or 33.3%, to $14.0 million at June 30, 2023 from $21.0 million at December 31, 2022 due to maturity of borrowings.

Advance payments by borrowers for taxes and insurance decreased by $216,000, or 9.1%, to $2.2 million at June 30, 2023 from $2.4 million at December 31, 2022 due primarily to real estate tax payments remitted by the Bank on behalf of borrowers.

Lease liability – operating decreased by $254,000, or 10.7%, to $2.1 million at June 30, 2023 from $2.4 million at December 31, 2022, primarily due to repayments.

Accounts payable and accrued expenses decreased by $3.3 million, or 22.3%, to $11.5 million at June 30, 2023 from $14.8 million at December 31, 2022 due primarily to a decrease in suspense account for loan closings of $2.7 million and a decrease in accrued bonus expense of $2.2 million for employees, partially offset by an allowance for off-balance sheet commitments totaling $1.5 million.

The allowance for off-balance sheet commitments was $1.5 million at June 30, 2023 due to a one-time credit of $1.6 million resulting from the adoption of CECL at January 1, 2023, partially offset by a credit loss expense reduction totaling $117,000 during the six months ended June 30, 2023.

Stockholders’ equity increased by $7.6 million, or 2.9% to $269.6 million at June 30, 2023, from $262.0 million at December 31, 2022.

The increase in stockholders’ equity was due to net income of $22.3 million for the six months ended June 30, 2023, $865,000 in the amortization of restricted stock and stock options granted in connection with the 2022 Equity Incentive Plan, a reduction of $435,000 in unearned employee stock ownership plan shares coupled with an increase of $185,000 in earned employee stock ownership plan shares, and $15,000 in other comprehensive income, partially offset by stock repurchases totaling $14.3 million, dividends paid and declared of $1.7 million, and a one-time adjustment to retained earnings of $99,000 due to the adoption of CECL.

Results of Operations for the Three Months Ended June 30, 2023 and 2022

Financial Highlights

Net income for the three months ended March 31, 2023 was $11.2 million compared to net income of $3.6 million for the three months ended March 31, 2022.

The increase in net income of $7.6 million, or 208.5% for the three months ended March 31, 2023 compared to the same period in the prior year was due to increases in net interest income and non-interest income, partially offset by increases in provisions for credit loss expense, non-interest expense, and income tax expense.

Net income for the three months ended June 30, 2023 was $11.1 million compared to net income of $5.4 million for the three months ended June 30, 2022.

The increase in net income of $5.7 million, or 105.6%, between periods was primarily due to an increase in net interest income and an increase in non-interest income, partially offset by an increase in provision for credit losses, an increase in non-interest expense, and an increase in income tax expense.

Net Interest Income

Net interest income totaled $22.8 million for the three months ended March 31, 2023, as compared to $11.9 million for the three months ended March 31, 2022.

Net interest income totaled $24.0 million for the three months ended June 30, 2023, as compared to $13.5 million for the three months ended June 30, 2022.

The increase in net interest income of $10.5 million, or 77.4%, was primarily due to an increase in interest income offset by an increase in interest expense.

The increase in interest income is attributable to increases in loans and investment securities, offset by a decrease in interest-bearing deposits.

The increase in interest income is also attributed to a rising interest rate environment and the Federal Reserve’s interest rate increases in the past year.

In this regard, total interest income increased by $15.2 million, or 114.8%, to $28.5 million for the three months ended March 31, 2023 from $13.3 million for the three months ended March 31, 2022.

The increase was due to an increase in the average balance of interest earning assets of $207.0 million, or 17.7%, to $1.4 billion for the three months ended March 31, 2023 from $1.2 billion for the three months ended March 31, 2022 and an increase in the yield on interest earning assets by 374 basis points from 4.54% for the three months ended March 31, 2022 to 8.28% for the three months ended March 31, 2023.

The increase in interest income was attributable to increases in loans and interest-bearing deposits, partially offset by a decrease in investment securities.

The increase in interest income was also attributable to a rising interest rate environment due to the Federal Reserve’s interest rate increases in the past year.

The increase in market interest rates in the past year also caused an increase in our interest expense.

As a result, the increase in interest expense for the three months ended March 31, 2023 was due to an increase in the cost of funds on our deposits and borrowed money and increases in the balances on our certificates of deposits and savings and club balances, partially offset by decreases in the balances on interest-bearing demand deposits and balances on our borrowed money.

Interest expense increased by $4.3 million, or 320.8%, to $5.7 million for the three months ended March 31, 2023 from $1.3 million for the three months ended March 31, 2022.

The increase was due to an increase in the cost of interest bearing liabilities by 189 basis points from 0.85% for the three months ended March 31, 2022 to 2.74% for the three months ended March 31, 2023 and an increase in average interest bearing liabilities of $191.7 million, or 30.2%, to $827.0 million for the three months ended March 31, 2023 from $635.3 million for the three months ended March 31, 2022.

Net interest margin increased by 255 basis points, or 62.5%, during the three months ended March 31, 2023 to 6.63% compared to 4.08% during the three months ended March 31, 2022.

As a result, the increase in interest expense for the three months ended June 30, 2023 was due to an increase in the cost of funds on our deposits, partially offset by a decrease in the cost of our borrowed money.

The increase in interest expense was also due to an increase in the balances on our certificates of deposits and an increase in the balances on our savings and club deposits, offset by a decrease in the balances on our interest-bearing demand deposits and a decrease in the balances of our borrowed money.

Total interest and dividend income increased by $16.9 million, or 113.7%, to $31.7 million for the three months ended June 30, 2023 from $14.8 million for the three months ended June 30, 2022.

The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $273.6 million, or 23.2%, to $1.5 billion for the three months ended June 30, 2023 from $1.2 billion for the three months ended June 30, 2022 and an increase in the yield on interest earning assets by 370 basis points from 5.02% for the three months ended June 30, 2022 to 8.72% for the three months ended June 30, 2023.

Interest expense increased by $6.4 million, or 493.8%, to $7.7 million for the three months ended June 30, 2023 from $1.3 million for the three months ended June 30, 2022.

The increase in interest expense was due to an increase in the cost of interest bearing liabilities by 248 basis points from 0.84% for the three months ended June 30, 2022 to 3.32% for the three months ended June 30, 2023 and an increase in average interest bearing liabilities of $314.3 million, or 51.2%, to $928.0 million for the three months ended June 30, 2023 from $613.6 million for the three months ended June 30, 2022.

Net interest margin increased by 202 basis points, or 44.1%, during the three months ended June 30, 2023 to 6.60% compared to 4.58% during the three months ended June 30, 2022.

Provision for Credit Losses.

The Company recorded credit loss expense of $1,000 for the three months ended March 31, 2023 compared to no credit loss expense for the three months ended March 31, 2022.

The credit loss expense of $1,000 for the three months ended March 31, 2023 was due to the implementation of CECL and was comprised of credit loss expense for loans of $197,000 and credit loss expense for HTM investment securities of $4,000, which expenses were mostly offset by a credit loss expense reduction for off-balance sheet commitments of $200,000.

We charged-off $21,000 during the three months ended March 31, 2023 as compared to charged-off of $10,000 during the three months ended March 31, 2022 against various unpaid overdrafts in our demand deposit accounts.

We recorded no recoveries from previously charged-off loans during the three months ended March 31, 2023 compared to recoveries of $96,000 during the three months ended March 31, 2022 which comprised of $53,000 from a previously charged-off loan secured by a non-residential property and $43,000 regarding a previously charged-off loan secured by a mixed-use property.

Based on a review at March 31, 2023 of the loans that were in the loan portfolio, our off-balance sheet credit exposures, and our HTM investment securities, management believes that the allowances for these three components are maintained at a level that represents our best estimate of inherent losses in the loan portfolio, off-balance sheet credit exposures, and HTM investment securities that were both probable and reasonably estimable.

The Company recorded credit loss expenses totaling $610,000 for the three months ended June 30, 2023 compared to no credit loss expense for the three months ended June 30, 2023.

The credit loss expense of $610,000 for the three months ended June 30, 2023 was comprised of credit loss expense for loans of $528,000 and credit loss expense for off-balance sheet commitments of $83,000, partially offset by for credit loss expense reduction held-to-maturity investment securities of $1,000.

We charged-off $194,000 during the three months ended June 30, 2023 as compared to charge-offs of $7,000 during the three months ended June 30, 2022.

The charge-offs of $194,000 during the three months ended June 30, 2023 comprised of a charge-off of $159,000 related to three performing construction loans on the same project whereby we sold the loans to a third-party subsequent to June 30, 2023 at a loss of $159,000.

The remaining charge-offs of $35,000 were against various unpaid overdrafts in our demand deposit accounts.

The charge-offs of $7,000 during the three months ended June 30, 2022 were against various unpaid overdrafts in our demand deposit accounts.

Based on a review at June 30, 2023 of the loans that were in the loan portfolio, our off-balance sheet credit exposures, and our HTM investment securities, management believes that the allowances for these three components are maintained at a level that represents our best estimate of inherent losses in the loan portfolio, off-balance sheet credit exposures, and HTM investment securities that were both probable and reasonably estimable.

Management uses available information to establish the appropriate level of the three ACLs.

Future additions or reductions to the three ACLs might be necessary based on estimates that are susceptible to change as a result of changes

in economic conditions and other factors.

As a result, our three ACLs might not be sufficient to cover actual credit losses, and future provisions for credit losses could materially adversely affect our operating results.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review our three ACLs.

Such agencies may require us to recognize adjustments to the three ACLs based on their judgments about information available to them at the time of their examination.

Non-Interest Income

Non-interest income for the three months ended June 30, 2023 was $1.0 million compared to non-interest income of $536,000 for the three months ended June 30, 2022.

The increase of $484,000, or 90.3%, in total non-interest income was primarily due to an increase of $403,000 in BOLI income, a decrease of $307,000 in unrealized loss on equity securities, and an increase of $7,000 in other non-interest income, partially offset by a decrease of $180,000 in other loan fees and service charges, a decrease of $46,000 in gain on sale of fixed assets, and a decrease of $7,000 in investment advisory fees.

The increase in BOLI income was primarily due to two death claims totaling $1.8 million on BOLI policies that resulted in additional BOLI income of $404,000 in the three months ended June 30, 2023.

The decrease in unrealized loss on equity was due to an unrealized loss of $123,000 on equity securities during the three months ended June 30, 2023 compared to an unrealized loss of $430,000 on equity securities during the three months ended June 30, 2022.

The unrealized loss of $123,000 on equity securities during the three months ended June 30, 2023 was due to market interest rate volatility during the quarter ended June 30, 2023.

The decrease of $180,000 in other loan fees and service charges was due to a decrease of $185,000 in other loan fees and loan servicing fees and a decrease of $4,000 in deposit fees, partially offset by an increase of $9,000 in ATM and debit card usage fees.

Non-Interest Expense

Non-interest expense increased by $1.9 million, or 26.7%, to $8.9 million for the three months ended June 30, 2023 from $7.0 million for the three months ended June 30, 2022.

The increase resulted primarily from increases of $1.2 million in salaries and employee benefits, $321,000 in other operating expense, $187,000 in advertising expense, $75,000 in outside data processing expense, $43,000 in occupancy expense, and $24,000 in equipment expense.

Salaries and employee benefits increased by $1.2 million, or 33.9%, to $4.8 million for the three months ended June 30, 2023 from $3.6 million for the three months ended June 30, 2022 primarily due to an increase in number of full time equivalent personnel due to the hiring of additional personnel to support the growth of the Company, the amortization of expenses related to the 2022 Equity Incentive Plan awards of restricted stocks and options, and a decrease in loan origination expenses related to loan origination fees due to a decrease in loan originations.

Other non-interest expense increased by $321,000, or 16.0%, to $2.3 million for the three months ended June 30, 2023 from $2.0 million for the three months ended June 30, 2022 due mainly to increases of $179,000 in miscellaneous other non-interest expense, $87,000 in service contracts expense, $84,000 in directors compensation, $30,000 in consulting fees, $11,000 in telephone expense, $10,000 in audit and accounting fees, $6,000 in expenses related to the hiring of personnel, $1,000 in insurance expense, and $2,000 in office supplies.

These increases were partially offset by a decrease of $87,000 in legal fees and $2,000 in directors, officers, and employee expenses.

The increase of $179,000 in miscellaneous other non-interest expense was mainly due to an increase of $120,000 in regulatory insurance premiums and assessments due to an increase in our total assets, and increases of $37,000 in dues and subscriptions, $23,000 in public company expenses, $11,000 in miscellaneous expenses, and $2,000 in postage expenses.

These increases were partially offset by decreases of $9,000 in check and correspondence bank charges, and $4,000 in miscellaneous charge-offs.

Service contracts expense increased by $87,000, or 32.1%, to $358,000 for the three months ended June 30, 2023 from $271,000 for the three months ended June 30, 2022 due to the increased cost to support the growth of the Company.

Directors compensation increased by $84,000, or 59.2%, to $226,000 for the three months ended June 30, 2023 from $142,000 for the three months ended June 30, 2022 due to the amortization of expenses related to the 2022

Equity Incentive Plan awards of restricted stocks and options.

Consultant fees increased by $30,000, or 15.0%, to $232,000 for the three months ended June 30, 2023 from $202,000 for the three months ended June 30, 2022 due to the retention of consultants to help implement CECL.

Advertising expense increased by $187,000, or 366.7%, to $238,000 for the three months ended June 30, 2023 from $51,000 for the three months ended June 30, 2022 due mainly to the resumption of advertising and promotional products to promote the opening of additional branch offices and to promote interest rates offered on our deposit products.

Outside data processing expense increased by $75,000, or 15.7%, to $554,000 for the three months ended June 30, 2023 from $479,000 for the three months ended June 30, 2022 due to the cost of operating an additional branch office and additional data processing services.

Occupancy expense increased by $43,000, or 7.7%, to $605,000 for the three months ended June 30, 2023 from $562,000 for the three months ended June 30, 2022 primarily as a result of the cost of operating an additional branch office space.

Equipment expense increased by $24,000, or 8.7%, to $300,000 for the three months ended June 30, 2023 from $276,000 for the three months ended June 30, 2022 due to the purchases of additional equipment to support the Company’s growth.

Income Taxes.

We recorded income tax expense of $4.5 million and $1.7 million for the three months ended June 30, 2023 and 2022, respectively.

For the three months ended June 30, 2023, we had approximately $587,000 in tax exempt income, compared to approximately $185,000 in tax exempt income for the three months ended June 30, 2022.

The increase in tax exempt income was due to two death claims totaling $1.8 million on BOLI policies.

Our effective income tax rates were 28.7% and 23.7% for the three months ended June 30, 2023 and 2022, respectively.

Results of Operations for the Six Months Ended June 30, 2023 and 2022

Financial Highlights

Net income for the six months ended June 30, 2023 was $22.3 million compared to net income of $9.0 million for the six months ended June 30, 2022.

The increase in net income of $13.3 million, or 147.1% for the six months ended June 30, 2023 compared to the same period in the prior year was due to increases in net interest income and non-interest income, partially offset by increases in provisions for credit losses, non-interest expense, and income tax expense.

Net Interest Income

Net interest income totaled $46.9 million for the six months ended June 30, 2023, as compared to $25.5 million for the six months ended June 30, 2022.

The increase in net interest income of $21.4 million, or 84.0%, was primarily due to an increase in interest income offset by an increase in interest expense.

The increase in interest income was attributable to increases in loans and interest-bearing deposits, partially offset by a decrease in investment securities.

The increase in interest income was also attributable to a rising interest rate environment as a result of the Federal Reserve’s interest rate increases during 2023.

The increase in market interest rates in 2023 also caused an increase in our interest expense.

As a result, the increase in interest expense for the six months ended June 30, 2023 was due to an increase in the cost of funds on our deposits, partially offset by a decrease in the cost of our borrowed money.

The increase in interest expense was also due to an increase in our certificates of deposits and an increase in our savings and club deposits, offset by a decrease in our interest-bearing demand deposits and a decrease in our borrowed money.

Total interest and dividend income increased by $32.1 million, or 114.2%, to $60.2 million for the six months ended June 30, 2023 from $28.1 million for the six months ended June 30, 2022.

The increase was due to an increase in the average balance of interest earning assets of $240.5 million, or 20.5%, to $1.4 billion for the six months ended June 30, 2023 from $1.2 billion for the six months ended June 30, 2022 and an increase in the yield on interest earning assets

by 372 basis points from 4.78% for the six months ended June 30, 2022 to 8.50% for the six months ended June 30, 2023.

Interest expense increased by $10.7 million, or 405.7%, to $13.4 million for the six months ended June 30, 2023 from $2.6 million for the six months ended June 30, 2022.

The increase in interest expense was due to an increase in the cost of interest bearing liabilities by 220 basis points from 0.85% for the six months ended June 30, 2022 to 3.05% for the six months ended June 30, 2023, and an increase in average interest bearing liabilities of $253.4 million, or 40.6%, to $877.8 million for the six months ended June 30, 2023 from $624.4 million for the six months ended June 30, 2022.

Net interest margin increased by 229 basis points, or 52.9%, during the six months ended June 30, 2023 to 6.62% compared to 4.33% during the six months ended June 30, 2022.

Provision for Credit Losses

The Company recorded credit loss expenses totaling $611,000 for the six months ended June 30, 2023 compared to no credit loss expense for the six months ended June 30, 2022.

The credit loss expense of $611,000 for the six months ended June 30, 2023 was comprised of credit loss expense for loans of $725,000 and credit loss expense for held-to-maturity investment securities of $3,000, partially offset by a credit loss expense reduction for off-balance sheet commitments of $117,000.

We charged-off $215,000 during the six months ended June 30, 2023 as compared to charge-offs of $17,000 during the six months ended June 30, 2022.

The charge-offs of $214,000 during the six months ended June 30, 2023 comprised of a charge-off of $159,000 related to three performing construction loans on the same project whereby we sold the loans to a third-party subsequent to June 30, 2023 at a loss of $159,000.

The remaining charge-offs of $56,000 were against various unpaid overdrafts in our demand deposit accounts.

The charge-offs of $17,000 during the six months ended June 30, 2022 were against various unpaid overdrafts in our demand deposit accounts.

We recorded no recoveries from previously charged-off loans during the six months ended June 30, 2023 compared to recoveries of $242,000 during the six months ended June 30, 2022, which was comprised of $146,000 from a previously charged-off loan secured by a multi-family property, $53,000 from a previously charged-off loan secured by a non-residential property, and $43,000 regarding a previously charged-off loan secured by a mixed-use property.

Management uses available information to establish the appropriate level of the three ACLs.

Future additions or reductions to the three ACLs might be necessary based on estimates that are susceptible to change as a result of changes in economic conditions and other factors.

3 unchanged sentences

Non-Interest Income

Non-interest income for the three months ended March 31, 2023 was $1.1 million compared to non-interest income of $58,000 for the three months ended March 31, 2022.

The increase in total non-interest income was primarily due to an unrealized gain on equity securities of $225,000 during the three months ended March 31, 2023 compared to an unrealized loss of $634,000 on equity securities during the three months ended March 31, 2022.

The unrealized gain of $225,000 on equity securities during the 2023 period was due to market interest rate volatility during the quarter ended March 31, 2023.

The increase in total non-interest income was also due to increases of $216,000 in other loan fees and service charges and $2,000 in bank-owned life insurance income, partially offset by a decrease of $20,000 in investment advisory fees.

The increase in other loan fees and service charges was due to an increase of $179,000 in other loan fees and loan servicing fees and an increase of $41,000 in ATM and debit card usage fees, partially offset by a decrease of $4,000 in savings account fees.

Non-interest income for the six months ended June 30, 2023 was $2.1 million compared to non-interest income of $594,000 for the six months ended June 30, 2022.

The increase in total non-interest income of $1.5 million, or 259.4%, was primarily due to an unrealized gain on equity securities of $102,000 during the six months ended June 30, 2023 compared to an unrealized loss of $1.1 million on equity securities during the six months ended June 30, 2022.

The unrealized gain of $102,000 on equity securities during the 2023 period was due to market interest rate volatility as the Federal Reserve continued to increase interest rates, which impacted the value of the equity securities during the six months ended June 30, 2023.

The increase in total non-interest income was also due to increases of $407,000 in BOLI income, an increase of $36,000 in other loan fees and service charges, and an increase of $6,000 in other non-interest income, partially offset by a decrease of $46,000 in gain on sale of fixed assets and a decrease of $28,000 in investment advisory fees.

The increase in BOLI income was primarily due to two death claims totaling $1.8 million on BOLI policies that resulted in additional BOLI income of $404,000.

The increase in other loan fees and service charges was due to an increase of $50,000 in ATM and debit card usage fees, partially offset by a decrease of $9,000 in deposit account fees and a decrease of $6,000 in other loan fees and loan servicing fees.

Non-Interest Expense

Non-interest expense increased by $971,000, or 13.4%, to $8.2 million for the three months ended March 31, 2023 from $7.2 million for the three months ended March 31, 2022.

The increase resulted primarily from increases of $714,000 in salaries and employee benefits, $113,000 in other operating expense, $79,000 in outside data processing expense, $66,000 in occupancy expense, and $14,000 in equipment expense, partially offset by a decrease of $10,000 in real estate owned expense and $5,000 in advertising expense,.

Salaries and employee benefits increased by $714,000, or 18.7%, to $4.5 million for the three months ended March 31, 2023 from $3.8 million for the three months ended March 31, 2022 primarily due to the amortized expense in 2023 but none in 2022 regarding the restricted stocks and stocks options granted to employees in connection with the 2022 Equity Incentive Plan, an increase in the number of full time equivalent personnel due to the opening of one additional branch office and the expansion of headquarters staff to support the Company’s growth, an increase in bonus accruals, an increase in the employee stock ownership plan (“ESOP”) compensation cost, and a decrease in loan origination offset expenses related to loan origination fees.

These increases were partially offset by a decrease in the Supplemental Executive Retirement Plan (“SERP”) compensation due to an increase in the discount rate used to calculate accrued benefits/expense.

Other non-interest expense increased by $113,000, or 5.7%, to $2.1 million for the three months ended March 31, 2023 from $2.0 million for the three months ended March 31, 2022 due mainly to increases of $151,000 in miscellaneous other non-interest expense, $85,000 in directors compensation, $62,000 in service contracts expense, $15,000 in telephone expense, $13,000 in insurance expense, $10,000 in office supplies, and $4,000 in directors, officers and employee expense.

These increases were partially offset by decreases of $94,000 in audit and accounting fees, $69,000 in consulting fees, $34,000 in legal fees, and $26,000 in expenses related to the hiring of personnel.

The increase of $151,000 in miscellaneous other non-interest expense was mainly due to an increase of $102,000 in dues and subscriptions, an increase of $56,000 in regulatory insurance premiums and assessments due to an increase in our total assets, and an increase of $17,000 in check and correspondence bank charges, partially offset by a decrease of $26,000 in miscellaneous charge-offs.

Non-interest expense increased by $2.8 million, or 20.0%, to $17.1 million for the six months ended June 30, 2023 from $14.2 million for the six months ended June 30, 2022.

The increase resulted primarily from increases of $1.9 million in salaries and employee benefits, $435,000 in other operating expense, $183,000 in advertising expense, $154,000 in outside data processing expense, $108,000 in occupancy expense, and $38,000 in equipment expense, partially offset by a decrease of $11,000 in real estate owned expense.

Salaries and employee benefits increased by $1.9 million, or 26.0%, to $9.4 million for the six months ended June 30, 2023 from $7.4 million for the six months ended June 30, 2022 primarily due to an increase in number of full time equivalent personnel due to the hiring of additional personnel to support the growth of the Company, the amortization of expenses related to the 2022 Equity Incentive Plan awards of restricted stocks and options, and a decrease in loan origination expenses related to loan origination fees due to a decrease in loan originations.

Other non-interest expense increased by $435,000, or 10.9%, to $4.4 million for the six months ended June 30, 2023 from $4.0 million for the six months ended June 30, 2022 due mainly to increases of $328,000 in miscellaneous other non-interest expense, $169,000 in directors compensation, $148,000 in service contracts expense, $28,000 in telephone expense, $14,000 in insurance expense, and $11,000 in office supplies.

These increases were partially offset by decreases of $121,000 in legal fees, $83,000 in audit and accounting fees, $39,000 in consulting fees, and $20,000 in expenses related to the hiring of personnel.

The increase of $328,000 in miscellaneous other non-interest expense was mainly due to an increase of $176,000 in regulatory insurance premiums and assessments due to an increase in our total assets, an increase of $139,000 in dues and subscriptions, an increase of $28,000 in public company expense, an increase of $7,000 in check and correspondence bank charges, an increase of $5,000 in miscellaneous other non-interest expense, and an increase of $3,000 in postage expense, partially offset by a decrease of $30,000 in miscellaneous charge-offs.

The increase of $169,000 in directors compensation was due to the amortized expense in 2023 but none in 2022 regarding the restricted stocks and stocks options granted to directors in connection with the 2022 Equity Incentive Plan.

Outside data processing expense increased by $79,000, or 18.1%, to $515,000 for the three months ended March 31, 2023 from $436,000 for the three months ended March 31, 2022 due to the cost of operating an additional branch office and additional data processing services.

Occupancy expense increased by $66,000, or 10.9%, to $669,000 for the three months ended March 31, 2023 from $603,000 for the three months ended March 31, 2022 primarily as a result of the cost of operating an additional branch office.

Equipment expense increased by $14,000, or 4.8%, to $304,000 for the three months ended March 31, 2023 from $290,000 for the three months ended March 31, 2022 due to the purchases of additional equipment to support the Company’s expansion.

Real estate owned expense decreased by $10,000, or 32.3%, to $21,000 for the three months ended March 31, 2023 from $31,000 for the three months ended March 31, 2022 due to reduction in operating expenses to maintain the one real estate owned property.

Advertising expense decreased by $5,000, or 9.3%, to $49,000 for the three months ended March 31, 2023 from $54,000 for the three months ended March 31, 2022 due to normal fluctuations in advertising campaign expenses to promote deposit products.

Advertising expense increased by $183,000, or 174.3%, to $288,000 for the six months ended June 30, 2023 from $105,000 for the six months ended June 30, 2022 due mainly to the resumption of advertising and promotional products to promote the opening of additional branch offices and to promote interest rates offered on our deposit products.

Outside data processing expense increased by $154,000, or 16.8%, to $1.1 million for the six months ended June 30, 2023 from $915,000 for the six months ended June 30, 2022 due to the cost of operating an additional branch office and additional data processing services.

Occupancy expense increased by $108,000, or 9.3%, to $1.3 million for the six months ended June 30, 2023 from $1.2 million for the six months ended June 30, 2022 primarily as a result of the cost of operating an additional branch office.

Equipment expense increased by $38,000, or 6.7%, to $604,000 for the six months ended June 30, 2023 from $566,000 for the six months ended June 30, 2022 due to the purchases of additional equipment to support the Company’s expansion.

Real estate owned expense decreased by $11,000, or 21.2%, to $41,000 for the six months ended June 30, 2023 from $52,000 for the six months ended June 30, 2022 due to reduction in operating expenses to maintain the one real estate owned property.

Income Taxes.

We recorded income tax expense of $4.5 million and $1.1 million for the three months ended March 31, 2023 and 2022, respectively.

For the three months ended March 31, 2023 and March 31, 2022, we had approximately $182,000 and $184,000, respectively, in tax exempt income.

Our effective income tax rates were 28.7% and 23.5% for the three months ended March 31, 2023 and 2022, respectively.

We recorded income tax expense of $9.0 million and $2.8 million for the six months ended June 30, 2023 and 2022, respectively.

For the six months ended June 30, 2023 and 2022, we had approximately $770,000 and $370,000, respectively, in tax exempt income.

Our effective income tax rates were 28.7% and 23.6% for the six months ended June 30, 2023 and 2022, respectively.

Average Balances and Yields

5 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Loans receivable

18 unchanged sentences

Average interest-earning assets to interest-bearing liabilities

Six Months Ended June 30,

Loans receivable

Federal Home Loan Bank stock

Other interest-earning assets

Total interest-earning assets

Allowance for credit losses

Non-interest-earning assets

Interest bearing demand

Savings and club accounts

Certificates of deposit

Interest-bearing deposits

Borrowed money

Interest-bearing liabilities

Non-interest-bearing demand

Other non-interest-bearing liabilities

Total liabilities

Total liabilities and equity

Net interest income/interest spread

Net interest margin

Net interest-earning assets

Average interest-earning assets to interest-bearing liabilities

Rate/Volume Analysis

17 unchanged sentences

Net change in net interest income

Six Months Ended 6/30/2023

Six Months Ended 6/30/2022

Increase (Decrease)

(Dollars in thousands)

Interest income:

Loans receivable

Federal Home Loan Bank stock

Other interest-earning assets

Interest expense:

Interest bearing demand deposit

Savings accounts

Certificates of deposits

Borrowed money

Net change in net interest income

Asset Quality

8 unchanged sentences

Total non-performing assets to total assets

Non-performing assets totaled $1.5 million at March 31, 2023 and December 31, 2022.

There were no nonaccrual loans at March 31, 2023 and December 31, 2022.

During the three months ended March 31, 2023, we did not collect any interest income from the loans that were in non-accrual status in 2022.

Non-performing assets totaled $5.8 million at June 30, 2023 compared to $1.5 million at December 31, 2022.

At June 30, 2023, we had two non-performing, non-accrual construction loans totaling $4.4 million secured by the same project located in the Bronx, New York.

The other non-performing assets consisted of one foreclosed property at June 30, 2023 and December 31, 2022.

There were no nonaccrual loans at December 31, 2022.

During the six months ended June 30, 2023, we did not collect any interest income from the loans that were in non-accrual status.

We did not collect any interest income from loans that were in non-accrual status in 2022.

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 loan modifications during the three months ended March 31, 2023 or 2022 or during the year ended December 31, 2022.

There were no new loan modifications during the six months ended June 30, 2023 or 2022 or during the year ended December 31, 2022.

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.

21 unchanged sentences

Non-performing loans

In connection with the adoption of CECL, the Company’s allowance for credit losses related to loans totaled $4.1 million, or 0.31% of total loans as of March 31, 2023 compared to $5.5 million, or 0.45% of total loans as of December 31, 2022.

In addition, the Company established an allowance for credit losses related to off-balance sheet commitments totaling $1.4 million and an allowance for credit losses related to held-to-maturity debt securities totaling $136,000 as of March 31, 2023.

The allowance for credit losses related to loans decreased by $1.4 million to $4.1 million at March 31, 2023 from $5.5 million at December 31, 2022.

The decrease in the allowances for credit losses was due primarily to the adoption of CECL which reduced the allowance by $1.6 million and charge-offs totaling $21,000 against various unpaid overdrafts in our demand deposit accounts, partially offset by provision for credit losses related to loans totaling $197,000 at March 31, 2023.

The allowance for credit losses related to off-balance sheet commitments of $1.4 million comprised of the adoption of CECL totaling $1.6 million, partially offset by a credit loss expense reduction of $200,000 at March 31, 2023.

The allowance for credit losses related to held-to-maturity of debt securities of $136,000 comprised of the adoption of CECL totaling $132,000 and credit loss expense of $4,000 at March 31, 2023.

The Company’s allowance for credit losses related to loans totaled $4.4 million, or 0.32% of total loans as of June 30, 2023 compared to $5.5 million, or 0.45% of total loans as of December 31, 2022.

In addition, the Company’s allowance for credit losses related to off-balance sheet commitments totaling $1.5 million and an allowance for credit losses related to held-to-maturity debt securities totaling $135,000 as of June 30, 2023 compared to none at December 31, 2022.

The allowance for credit losses related to loans decreased by $1.1 million to $4.4 million at June 30, 2023 from $5.5 million at December 31, 2022.

The decrease in the allowances for credit losses was due primarily to the adoption of CECL which reduced the allowance by $1.6 million and charge-offs totaling $215,000 against various unpaid overdrafts in our demand deposit accounts and one construction loan, partially offset by provision for credit losses related to loans totaling $725,000 at June 30, 2023.

The allowance for credit losses related to held-to-maturity of debt securities of $135,000 comprised of the adoption of CECL totaling $132,000 and credit loss expense of $3,000 at June 30, 2023.

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 6.3%, 10.1%, and 13.2%, respectively, for the three months ended March 31, 2023 compared to 11.2%, 15.5%, and 19.0%, respectively, for the year ended December 31, 2022.

Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 7.2%, 10.6%, and 13.8%, respectively, for the six months ended June 30, 2023 compared to 11.2%, 15.5%, and 19.0%, respectively, for the year ended December 31, 2022.

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.

13 unchanged sentences

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 three months ended March 31, 2023 and 2022, our loan originations totaled $214.7 million and $121.8 million, respectively.

Cash received from the maturities and pay-downs on securities totaled $142,000 and $240,000 for the three months ended March 31, 2023 and 2022, respectively.

We did not purchase any securities during the three months ended March 31, 2023 and March 31, 2022.

For the six months ended June 30, 2023 and 2022, our loan originations totaled $448.0 million and $307.4 million, respectively.

Cash received from the maturities and pay-downs on securities totaled $10.5 million and $737,000 for the six months ended June 30, 2023 and 2022, respectively.

We did not purchase any securities during the six months ended June 30, 2023 compared to purchase of $10.0 million in investment securities during the six months ended June 30, 2022.

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

1 unchanged sentence

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 $35.5 million and $31.5 million from the Federal Home Loan Bank of New York as of March 31, 2023 and December 31, 2022, respectively.

There were $14.0 million and $21.0 million in Federal Home Loan Bank advances at March 31, 2023 and December 31, 2022, respectively.

We had an available borrowing limit of $32.6 million and $31.5 million from the Federal Home Loan Bank of New York as of June 30, 2023 and December 31, 2022, respectively.

There were $14.0 million and $21.0 million in Federal Home Loan Bank advances at June 30, 2023 and December 31, 2022, respectively.

In addition, we are party to a loan agreement with ACBB under which we can borrow up to $8.0 million in short-term borrowings.

There were no outstanding borrowings with ACBB at March 31, 2023 and December 31, 2022.

At March 31, 2023, we had unfunded commitments on construction loans of $578.5 million, unfunded commitments under lines of credit of $132.1 million, outstanding commitments to originate loans of $115.2 million, and unfunded standby letters of credit of $10.6 million.

At March 31, 2023, certificates of deposit scheduled to mature in less than one year totaled $376.3 million.

There were no outstanding borrowings with ACBB at June 30, 2023 and December 31, 2022.

At June 30, 2023, we had unfunded commitments on construction loans of $513.7 million, outstanding commitments to originate loans of $164.2 million, unfunded commitments under lines of credit of $127.5 million, and unfunded standby letters of credit of $10.3 million.

At June 30, 2023, certificates of deposit scheduled to mature in less than one year totaled $466.3 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.

Alternatively, we could reduce our level of liquid assets, such as our cash and cash equivalents.

Alternatively, we

could reduce our level of liquid assets, such as our cash and cash equivalents.

In addition, the cost of such deposits may be significantly higher or lower depending on market interest rates at the time of renewal.

1 unchanged sentence

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 March 31, 2023, the Company had liquid assets of $8.5 million and $14.5 million in loan participations originated by the Bank which are held by the Company.

At June 30, 2023, the Company had liquid assets of $6.1 million and $12.2 million in loan participations originated by the Bank which are held by the Company.

Off-Balance Sheet Arrangements

For the three months ended March 31, 2023, 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 six months ended June 30, 2023, 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

4 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis