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Item 2. Management’s Discussion and Analysis

2024-08-09 compared with 2024-05-09 · 213 added, 111 removed, 164 unchanged (66% of the section changed)

12 unchanged sentences

(iv) changes in consumer spending, borrowing and savings habits;

(v) changes in the quality and composition of our loan or investment portfolios and the adequacy of credit loss reserves;

(v) changes in the quality and

composition of our loan or investment portfolios and the adequacy of credit loss reserves;

(vi) changes in real estate market values in our market area;

17 unchanged sentences

Balance Sheet Analysis

Total assets increased by $102.8 million, or 5.8%, to $1.9 billion at March 31, 2024, from $1.8 billion at December 31, 2023.

The increase in assets was primarily due to an increase in net loans of $67.8 million and an increase in cash and cash equivalents of $38.8 million, partially offset by a decrease in other assets of $3.7 million.

Cash and cash equivalents increased by $38.8 million, or 56.5%, to $107.4 million at March 31, 2024 from $68.7 million at December 31, 2023.

Total assets increased $166.1 million, or 9.4%, to $1.9 billion at June 30, 2024, from $1.8 billion at December 31, 2023.

The increase in assets was primarily due to an increase in net loans of $121.5 million and an increase in cash and cash equivalents of $45.2 million.

Cash and cash equivalents increased $45.2 million, or 65.8%, to $113.9 million at June 30, 2024 from $68.7 million at December 31, 2023.

The increase in cash and cash equivalents was a result of an increase in deposits of $163.8 million, partially offset by a decrease in borrowings of $17.0 million, an increase of $121.5 million in net loans, and stock repurchases of $2.4 million.

Equity securities decreased by $82,000, or 0.5%, to $18.0 million at March 31, 2024 from $18.1 million at December 31, 2023.

The decrease in equity securities was attributable to market depreciation of $82,000 due to market interest rate volatility during the three months ended March 31, 2024.

Securities held-to-maturity decreased by $125,000, or 0.8%, to $15.7 million at March 31, 2024 from $15.9 million at December 31, 2023 due to $128,000 in maturities and pay-downs of various investment securities, partially offset by a decrease of $3,000 in the allowance for credit losses for held-to-maturity securities.

Loans, net of the allowance for credit losses, increased by $67.8 million, or 4.3%, to $1.6 billion at March 31, 2024 from $1.6 billion at December 31, 2023.

The increase in loans, net of the allowance for credit losses, was primarily due to loan originations of $180.5 million during the three months ended March 31, 2024, consisting primarily of $170.9 million in construction loans with respect to which approximately 34.0% of the funds were disbursed at loan closings, with the remaining funds to be disbursed over the terms of the construction loans.

In addition, during the three months ended March 31, 2024, we originated $9.5 million in commercial and industrial loans.

Loan originations during the first quarter of 2024 resulted in a net increase of $74.5 million in construction loans and $410,000 in consumer loans.

The increase in our loan portfolio was partially offset by decreases of $2.2 million in commercial and industrial loans, $2.0 million in non-residential loans, $1.1 million in mixed-use loans, $981,000 in multi-family loans, and $605,000 in residential loans, coupled with normal pay-downs and principal reductions.

The allowance for credit losses related to loans decreased to $4.9 million as of March 31, 2024 from $5.1 million as of December 31, 2023.

The decrease in the allowance for credit losses related to loans was due to a credit to provision for credit losses totaling $145,000 and charge-offs of $21,000.

Premises and equipment decreased by $229,000, or 0.9%, to $25.2 million at March 31, 2024 from $25.5 million at December 31, 2023 primarily due to the depreciation of fixed assets.

Investments in Federal Home Loan Bank stock decreased by $315,000, or 33.9%, to $614,000 at March 31, 2024 from $929,000 at December 31, 2023 due primarily to the mandatory redemption of Federal Home Loan Bank stock in connection with the maturity of $7.0 million in advances in the first quarter of 2024.

Bank owned life insurance (“BOLI”) increased by $157,000, or 0.6%, to $25.2 million at March 31, 2024 from $25.1 million at December 31, 2023 due to increases in the BOLI cash value.

Accrued interest receivable increased by $641,000, or 5.2%, to $13.0 million at March 31, 2024 from $12.3 million at December 31, 2023 due to an increase in the loan portfolio.

Foreclosed real estate was $1.5 million at both March 31, 2024 and December 31, 2023.

Right of use assets — operating decreased by $139,000, or 3.0%, to $4.4 million at March 31, 2024 from $4.6 million at December 31, 2023, primarily due to amortization.

Other assets decreased by $3.7 million, or 46.6%, to $4.3 million at March 31, 2024 from $8.0 million at December 31, 2023 due to a decrease in tax assets of $3.6 million and a decrease in suspense accounts of $236,000, partially offset by an increase of $126,000 in prepaid expenses.

Total deposits increased by $112.0 million, or 8.0%, to $1.5 billion at March 31, 2024 from $1.4 billion at December 31, 2023.

The increase in deposits was due to the Bank offering competitive interest rates to attract deposits.

Equity securities decreased $102,000, or 0.6%, to $18.0 million at June 30, 2024 from $18.1 million at December 31, 2023.

The decrease in equity securities was attributable to market depreciation of $102,000 due to market interest rate volatility during the six months ended June 30, 2024.

Securities held-to-maturity decreased $468,000, or 3.0%, to $15.4 million at June 30, 2024 from $15.9 million at December 31, 2023 due to $479,000 in maturities and pay-downs of various investment securities, partially offset by a decrease of $10,000 in the allowance for credit losses for held-to-maturity securities.

Loans, net of the allowance for credit losses, increased $121.5 million, or 7.7%, to $1.7 billion at June 30, 2024 from $1.6 billion at December 31, 2023.

The increase in loans, net of the allowance for credit losses, was primarily due to loan originations of $364.7 million during the six months ended June 30, 2024, consisting primarily of $323.8 million in construction loans with respect to which approximately 34.0% of the funds were disbursed at loan closings, with the remaining funds to be disbursed over the terms of the construction loans.

In addition, during the six months ended June 30, 2024, we originated $21.8 million in commercial and industrial loans, $14.0 million in non-residential loans, and $5.1 million in multi-family loans.

Loan originations during the six months ended June 30, 2024 resulted in a net increase of $110.5 million in construction loans, $9.4 million in non-residential loans, $2.4 million in commercial and industrial loans, $938,000 in

multi-family loans, and $440,000 in consumer loans.

The increase in our loan portfolio was partially offset by decreases of $1.3 million in mixed-use loans and $652,000 in residential loans, coupled with normal pay-downs and principal reductions.

The allowance for credit losses related to loans decreased to $4.9 million as of June 30, 2024 from $5.1 million as of December 31, 2023.

The decrease in the allowance for credit losses related to loans was due to a credit to the provision for credit losses totaling $145,000 and charge-offs of $33,000.

Premises and equipment decreased $397,000, or 1.6%, to $25.1 million at June 30, 2024 from $25.5 million at December 31, 2023 primarily due to the depreciation of fixed assets.

Investments in Federal Home Loan Bank stock decreased $217,000, or 23.4%, to $712,000 at June 30, 2024 from $929,000 at December 31, 2023 due primarily to the mandatory redemption of Federal Home Loan Bank stock totaling $315,000 in connection with the maturity of $7.0 million in advances in 2024, offset by purchases of Federal Home Loan Bank stock totaling $98,000 due to the growth of our mortgage loan portfolio.

Bank owned life insurance (“BOLI”) increased $319,000, or 1.3%, to $25.4 million at June 30, 2024 from $25.1 million at December 31, 2023 due to increases in the BOLI cash value.

Accrued interest receivable increased $1.2 million, or 9.4%, to $13.5 million at June 30, 2024 from $12.3 million at December 31, 2023 due to an increase in the loan portfolio.

Foreclosed real estate was $1.5 million at both June 30, 2024 and December 31, 2023.

Right of use assets — operating decreased $280,000, or 6.1%, to $4.3 million at June 30, 2024 from $4.6 million at December 31, 2023, primarily due to amortization.

Other assets decreased $660,000, or 8.2%, to $7.4 million at June 30, 2024 from $8.0 million at December 31, 2023 due to a decrease in tax assets of $691,000 and a decrease in suspense accounts of $31,000, partially offset by an increase of $66,000 in prepaid expenses.

Total deposits increased $163.8 million, or 11.7%, to $1.6 billion at June 30, 2024 from $1.4 billion at December 31, 2023.

The increase in deposits was primarily due to the Bank offering competitive interest rates to attract deposits.

This resulted in a shift in deposits whereby certificates of deposit increased by $151.0 million, or 19.8%, and NOW/money market accounts increased by $75.0 million, or 51.8%, partially offset by decreases in savings account balances of $47.5 million, or 24.7%, and non-interest bearing demand deposits of $14.6 million, or 4.9%.

Federal Home Loan Bank advances decreased by $7.0 million, or 50.0%, to $7.0 million at March 31, 2024 from $14.0 million at December 31, 2023 due to the maturity of borrowings in 2024.

Federal Reserve Bank borrowings decreased by $10.0 million, or 20.0%, to $40.0 million at March 31, 2024 from $50.0 million at December 31, 2023.

Advance payments by borrowers for taxes and insurance increased by $326,000, or 16.1%, to $2.3 million at March 31, 2024 from $2.0 million at December 31, 2023 due primarily to remittance of real estate tax payments from our borrowers.

Lease liability – operating decreased by $128,000, or 2.8%, to $4.5 million at March 31, 2024 from $4.6 million at December 31, 2023, primarily due to amortization.

Accounts payable and accrued expenses decreased by $2.0 million, or 14.7%, to $11.6 million at March 31, 2024 from $13.6 million at December 31, 2023 due primarily to a decrease in accrued expense of $2.5 million, partially offset by an increase in accounts payable of $486,000 and deferred compensation of $132,000.

The allowance for credit losses for off-balance sheet commitments was $1.0 million at March 31, 2024 and at December 31, 2023.

Stockholders’ equity increased by $9.6 million, or 3.4% to $288.9 million at March 31, 2024, from $279.3 million at December 31, 2023.

The increase in stockholders’ equity was due to net income of $11.4 million for the three months ended March 31, 2024, $444,000 in the amortization of restricted stock and stock options granted under the Company’s 2022 Equity Incentive Plan, a reduction of $217,000 in unearned employee stock ownership plan shares coupled with an increase of $135,000 in earned employee stock ownership plan shares, an exercise of stock options totaling $14,000, and $3,000 in other comprehensive income, partially offset by stock repurchases totaling $1.2 million and dividends paid and declared of $1.3 million.

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Uninsured deposits decreased $17.0 million, or 4.9%, to approximately $327.8 million at June 30, 2024 from approximately $344.8 million at December 31, 2023.

Federal Home Loan Bank advances decreased $7.0 million, or 50.0%, to $7.0 million at June 30, 2024 from $14.0 million at December 31, 2023 due to the maturity of borrowings in 2024.

Federal Reserve Bank borrowings decreased by $10.0 million, or 20.0%, to $40.0 million at June 30, 2024 from $50.0 million at December 31, 2023.

Advance payments by borrowers for taxes and insurance decreased $117,000, or 5.8%, to $1.9 million at June 30, 2024 from $2.0 million at December 31, 2023 due primarily to remittance of real estate tax payments to various local tax authorities.

Lease liability – operating decreased $255,000, or 5.5%, to $4.4 million at June 30, 2024 from $4.6 million at December 31, 2023, primarily due to amortization.

Accounts payable and accrued expenses decreased $1.1 million, or 7.8%, to $12.5 million at June 30, 2024 from $13.6 million at December 31, 2023 due primarily to a decrease in accrued expense of $1.5 million, partially offset by an increase in accounts payable of $526,000 and deferred compensation of $263,000.

The allowance for credit losses for off-balance sheet commitments decreased $236,000, or 22.6%, to $802,000 at June 30, 2024 from $1.0 million at December 31, 2023.

Stockholders’ equity increased $20.7 million, or 7.4% to $300.0 million at June 30, 2024, from $279.3 million at December 31, 2023.

The increase in stockholders’ equity was due to net income of $24.2 million for the six months ended June 30, 2024, the amortization expense of $888,000 relating to restricted stock and stock options granted under the Company’s 2022 Equity Incentive Plan, a reduction of $435,000 in unearned employee stock ownership plan shares coupled with an increase of $276,000 in earned employee stock ownership plan shares, an exercise of stock options totaling $14,000, and $7,000 in other comprehensive income, partially offset by stock repurchases totaling $2.5 million and dividends paid and declared of $2.7 million.

Results of Operations for the Three Months Ended June 30, 2024 and 2023

Financial Highlights

Net income for the three months ended March 31, 2024 was $11.4 million compared to net income of $11.2 million for the three months ended March 31, 2023.

The increase in net income of $130,000, or 1.2%, between periods was primarily due to an increase in net interest income and a credit loss expense reduction, 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 three months ended June 30, 2024 was $12.8 million compared to net income of $11.1 million for the three months ended June 30, 2023.

The increase in net income of $1.7 million, or 15.4%, between periods was primarily due to an increase in net interest income and a credit loss expense reduction, partially offset by a decrease in non-interest income, an increase in non-interest expense, and an increase in income tax expense.

Net Interest Income

Net interest income totaled $25.0 million for the three months ended March 31, 2024, as compared to $22.8 million for the three months ended March 31, 2023.

The increase in net interest income of $2.2 million, or 9.4%, was primarily due to an increase in interest income offset by an increase in interest expense.

Net interest income totaled $26.2 million for the three months ended June 30, 2024, as compared to $24.0 million for the three months ended June 30, 2023.

The increase in net interest income of $2.2 million, or 9.2%, was primarily due to an increase in interest income that exceeded an increase in interest expense.

The increase in interest income is attributable to increases in the average balances of loans and interest-bearing deposits, partially offset by decreases in the average balances of investment securities and FHLB stock.

The increase in interest income is also attributable to a rising interest rate environment due to the Federal Reserve’s interest rate increases in 2023 that resulted in an increase in the yield on our interest-earning assets.

The increase in interest income is also attributable to a rising interest rate environment due to the Federal Reserve’s interest rate increases in 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 three months ended March 31, 2024 was due to an increase in the cost of funds on our deposits and borrowed money.

As a result, the increase in interest expense for the three months ended June 30, 2024 was due to an increase in the cost of funds on our deposits and borrowed money.

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

Total interest and dividend income increased by $9.6 million, or 33.7%, to $38.1 million for the three months ended March 31, 2024 from $28.5 million for the three months ended March 31, 2023.

The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $361.6 million, or 26.3%, to $1.7 billion for the three months ended March 31, 2024 from $1.4 billion for the three months ended March 31, 2023 and an increase in the yield on interest earning assets by 49 basis points from 8.28% for the three months ended March 31, 2023 to 8.77% for the three months ended March 31, 2024.

Interest expense increased by $7.4 million, or 131.5%, to $13.1 million for the three months ended March 31, 2024 from $5.7 million for the three months ended March 31, 2023.

The increase in interest expense was due to an increase in the cost of interest bearing liabilities by 155 basis points from 2.74% for the three months ended March 31, 2023 to 4.29% for the three months ended March 31, 2024 and an increase in average interest bearing liabilities of $398.9 million, or 48.2%, to $1.2 billion for the three months ended March 31, 2024 from $827.0 million for the three months ended March 31, 2023.

Net interest margin decreased by 88 basis points, or 13.3%, during the three months ended March 31, 2024 to 5.75% compared to 6.63% during the three months ended March 31, 2023.

Total interest and dividend income increased $8.5 million, or 26.9%, to $40.2 million for the three months ended June 30, 2024 from $31.7 million for the three months ended June 30, 2023.

The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $355.4 million, or 24.4%, to $1.8 billion for the three months ended June 30, 2024 from $1.5 billion for the three months ended June 30, 2023 and an increase in the yield on interest earning assets by 17 basis points from 8.72% for the three months ended June 30, 2023 to 8.89% for the three months ended June 30, 2024.

Interest expense increased $6.3 million, or 82.1%, to $14.0 million for the three months ended June 30, 2024 from $7.7 million for the three months ended June 30, 2023.

The increase in interest expense was due to an increase in the cost of interest bearing liabilities by 101 basis points from 3.32% for the three months ended June 30, 2023 to 4.33% for the three months ended June 30, 2024 and an increase in average interest bearing liabilities of $367.7 million, or 39.6%, to $1.3 billion for the three months ended June 30, 2024 from $928.0 million for the three months ended June 30, 2023.

Net interest margin decreased 81 basis points, or 12.3%, to 5.79% for the three months ended June 30, 2024 compared to 6.60% for the three months ended June 30, 2023.

The decrease in the net interest margin was due to the increase in the cost of interest-bearing liabilities outpacing the increase in the yield on interest-earning assets.

Credit Loss Expense

The Company recorded a credit loss expense reduction totaling $165,000 for the three months ended March 31, 2024 compared to credit loss expenses totaling $1,000 for the three months ended March 31, 2023.

The credit loss expense reduction of $165,000 for the three months ended March 31, 2024 was comprised of a credit loss expense reduction for loans of $145,000, a credit loss expense reduction for held-to-maturity investment securities of $3,000, and a credit loss expense reduction for off-balance sheet commitments of $17,000.

The credit loss expense reduction for loans of $145,000 for the three months ended March 31, 2024 was primarily attributed to favorable trend in the economy.

We charged-off $21,000 during the three months ended March 31, 2024 as compared to charge-offs of $21,000 during the three months ended March 31, 2023.

The charge-offs of $21,000 during the three months ended March 31, 2024 and March 31, 2023 were 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, 2024 and 2023.

Based on a review at March 31, 2024 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 a credit loss expense reduction of $226,000 for the three months ended June 30, 2024 compared to a credit loss expenses of $610,000 for the three months ended June 30, 2023.

The credit loss expense reduction of $226,000 for the three months ended June 30, 2024 was comprised of a credit loss expense reduction for

off-balance sheet commitments of $219,000 and a credit loss expense reduction for held-to-maturity investment securities of $7,000.

The credit loss expense reduction for off-balance sheet commitments of $219,000 for the three months ended June 30, 2024 was primarily attributed to a reduction of $30.4 million in the level of off-balance sheet commitments and favorable trends in the economy.

We charged-off $12,000 during the three months ended June 30, 2024 as compared to charge-offs of $194,000 during the three months ended June 30, 2023.

The charge-offs of $12,000 during the three months ended June 30, 2024 were against various unpaid overdrafts in our demand deposit accounts.

The charge-offs of $194,000 during the three months ended June 30, 2023 were primarily due to the 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 for the 2023 period were against various unpaid overdrafts in our demand deposit accounts.

We recorded no recoveries from previously charged-off loans during the three months ended June 30, 2024 and 2023.

Based on a review at June 30, 2024 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.

2 unchanged sentences

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.

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 March 31, 2024 was $554,000 compared to non-interest income of $1.1 million for the three months ended March 31, 2023.

The decrease of $561,000, or 50.3%, in total non-interest income was primarily due to an increase of $307,000 in unrealized loss on equity securities, a decrease of $145,000 in other loan fees and service charges, and a decrease of $117,000 in investment advisory fees.

The increase in unrealized gain/loss on equity was due to an unrealized loss of $82,000 on equity securities during the three months ended March 31, 2024 compared to an unrealized gain of $225,000 on equity securities during the three months ended March 31, 2023.

The unrealized loss of $82,000 on equity securities during the three months ended March 31, 2024 was due to market interest rate volatility during the quarter ended March 31, 2024.

The decrease of $145,000 in other loan fees and service charges was due to a decrease of $138,000 in other loan fees and loan servicing fees and a decrease of $7,000 in ATM/debit card/ACH fees.

Non-interest income for the three months ended June 30, 2024 was $731,000 compared to non-interest income of $1.0 million for the three months ended June 30, 2023.

The decrease of $289,000, or 28.3%, in total non-interest income was primarily due to decreases of $391,000 in BOLI income, $113,000 in investment advisory fees, and $4,000 in miscellaneous other non-interest income, partially offset by increases of $116,000 in other loan fees and service charges and $103,000 in unrealized loss on equity securities.

The decrease 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 investment advisory fees was due to the disposition in January 2024 of the Bank’s assets relating to the Harbor West Wealth Management Group.

Consequently, the Bank no longer generates investment advisory fees following the completion of the transaction.

As a result of the transaction, the Bank no longer generates investment advisory fees.

The increase of $116,000 in other loan fees and service charges was due to an increase of $93,000 in other loan fees and loan servicing fees and an increase of $21,000 in ATM/debit card/ACH fees.

The increase in unrealized loss on equity was due to an unrealized loss of $20,000 on equity securities during the three months ended June 30, 2024 compared to an unrealized loss of $123,000 on equity securities during the three months ended June 30, 2023.

The unrealized loss of $20,000 on equity securities during the three months ended June 30, 2024 was due to market interest rate volatility during the quarter ended June 30, 2023.

Non-Interest Expense

Non-interest expense increased by $1.5 million, or 18.2%, to $9.7 million for the three months ended March 31, 2024 from $8.2 million for the three months ended March 31, 2023.

The increase resulted primarily from increases of $809,000 in salaries and employee benefits, $543,000 in other operating expense, $122,000 in outside data processing expense, $39,000 in advertising expense, and $38,000 in occupancy expense, partially offset by decreases of $51,000 in equipment expense and $10,000 in real estate owned expense.

Salaries and employee benefits increased by $809,000, or 17.8%, to $5.4 million for the three months ended March 31, 2024 from $4.5 million for the three months ended March 31, 2023 primarily due to the hiring of additional personnel to support the growth of the Company 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 $543,000, or 26.0%, to $2.6 million for the three months ended March 31, 2024 from $2.1 million for the three months ended March 31, 2023 due mainly to increases of $338,000 in miscellaneous other non-interest expense, $105,000 in service contracts expense, $42,000 in consulting fees, $25,000 in expenses related to the hiring of personnel, $24,000 in audit and accounting fees, $22,000 in directors compensation, $21,000 in directors, officers, and employee expenses, $13,000 in telephone expense, $7,000 in insurance expense, and $1,000 in office supplies.

These increases were partially offset by a decrease of $54,000 in legal fees.

The increase of $338,000 in miscellaneous other non-interest expense was mainly due to increases of $339,000 in regulatory insurance premiums and assessments due to an increase in our total assets, $22,000 in dues and subscriptions, and $7,000 in check and correspondence bank charges.

These increases were partially offset by decreases of $24,000 in miscellaneous charge-offs, $3,000 in postage expense, and $2,000 in miscellaneous expenses.

Service contracts expense increased by $105,000, or 32.9%, to $424,000 for the three months ended March 31, 2024 from $319,000 for the three months ended March 31, 2023 due to the increased cost to support the growth of the Company.

Consultant fees increased by $42,000, or 22.3%, to $231,000 for the three months ended March 31, 2024 from $189,000 for the three months ended March 31, 2023 due to the upgrading of the Company’s telephone system.

Recruiting expense increased by $25,000, or 1,250.0%, to $27,000 for the three months ended March 31, 2024 from $2,000 for the three months ended March 31, 2023 due to the use of a traditional recruiting firm in 2024 compared to less reliance on traditional recruiting firms in 2023 for personnel hirings.

Audit and accounting expense increased by

$24,000, or 21.7%, to $135,000 for the three months ended March 31, 2024 from $111,000 for the three months ended March 31, 2023 due to the Company’s growth.

Directors’ compensation increased by $22,000, or 9.8%, to $246,000 for the three months ended March 31, 2024 from $224,000 for the three months ended March 31, 2023 due to an increase in fees and an increase to the amortization of expenses due to the awarding of additional restricted stocks related to the 2022 Equity Incentive Plan.

Directors, officers, and employee expenses increased by $21,000, or 36.2%, to $79,000 for the three months ended March 31, 2024 from $58,000 for the three months ended March 31, 2023 due to tuition payments for employees.

Telephone expense increased by $13,000, or 8.5%, to $170,000 for the three months ended March 31, 2024 from $157,000 for the three months ended March 31, 2023 due to increased usage to service customers.

Insurance expense increased by $7,000, or 7.8%, to $102,000 for the three months ended March 31, 2024 from $95,000 for the three months ended March 31, 2023 due to a general increase in insurance premiums.

Legal fees decreased by $54,000, or 45.0%, to $66,000 for the three months ended March 31, 2024 from $120,000 for the three months ended March 31, 2023 due to a reduction in transactions requiring legal services.

Outside data processing expense increased by $122,000, or 23.7%, to $637,000 for the three months ended March 31, 2024 from $515,000 for the three months ended March 31, 2023 due to an increase in transactions and additional data processing services.

Advertising expense increased by $39,000, or 79.6%, to $88,000 for the three months ended March 31, 2024 from $49,000 for the three months ended March 31, 2023 due mainly to advertising to promote interest rates offered on our deposit products.

Occupancy expense increased by $38,000, or 5.7%, to $707,000 for the three months ended March 31, 2024 from $669,000 for the three months ended March 31, 2023 primarily as a result of the increased cost of operating office space.

Equipment expense decreased by $51,000, or 16.8%, to $253,000 for the three months ended March 31, 2024 from $304,000 for the three months ended March 31, 2023 due to a reduced need to purchase additional equipment.

Real estate owned expense decreased by $10,000, or 47.6%, to $11,000 for the three months ended March 31, 2024 from $21,000 for the three months ended March 31, 2023 due to efforts to contain cost.

Non-interest expense increased $617,000, or 6.9%, to $9.5 million for the three months ended June 30, 2024 from $8.9 million for the three months ended June 30, 2023.

The increase resulted primarily from increases of $415,000 in salaries and employee benefits, $297,000 in other operating expense, $69,000 in occupancy expense, $53,000 in outside data processing expense, and $6,000 in real estate owned expense, partially offset by decreases of $144,000 in advertising expense, and $79,000 in equipment expense.

Salaries and employee benefits increased $415,000, or 8.5%, to $5.3 million for the three months ended June 30, 2024 from $4.8 million for the three months ended June 30, 2023 primarily due to the hiring of additional personnel to support the growth of the Company and a decrease in loan origination expenses related to loan origination fees due to a decrease in loan originations.

Other non-interest expense increased $297,000, or 12.8%, to $2.6 million for the three months ended June 30, 2024 from $2.4 million for the three months ended June 30, 2023 due mainly to increases of $221,000 in miscellaneous other non-interest expense, $63,000 in service contracts expense, $35,000 in audit and accounting fees, $18,000 in office supplies, $15,000 in directors compensation, $13,000 in directors, officers, and employee expenses, $12,000 in insurance expense, $3,000 in legal fees, and $1,000 in telephone expense.

These increases were partially offset by decreases of $62,000 in consulting fees and $23,000 in expenses related to the hiring of personnel.

The increase of $221,000 in miscellaneous other non-interest expense was mainly due to increases of $171,000 in regulatory insurance premiums and assessments due to an increase in our total assets, $27,000 in dues and subscriptions, $26,000 in check and correspondence bank charges, and $19,000 in miscellaneous expenses.

These increases were partially offset by decreases of $16,000 in public company expenses, $4,000 in miscellaneous charge-offs, and $1,000 in postage expense.

Service contracts expense increased $63,000, or 17.8%, to $421,000 for the three months ended June 30, 2024 from $358,000 for the three months ended June 30, 2023 due to the increased cost to support the growth of the Company.

Audit and accounting expense increased $35,000, or 33.2%, to $141,000 for the three months ended June 30, 2024 from $106,000 for the three months ended June 30, 2023 due to the Company’s growth.

Office supplies increased $18,000, or 47.0%, to $57,000 for the three months ended June 30, 2024 from $39,000 for the three months ended June 30, 2023 due to the growth of the Company.

Directors’ compensation increased $15,000, or 6.5%, to $240,000 for the three months ended June 30, 2024 from $225,000 for the three months ended June 30, 2023 due to an increase in fees and an increase to the amortization of expenses due to the awarding of additional restricted stocks related to the 2022 Equity Incentive Plan.

Directors, officers, and employee expenses increased $13,000, or 19.9%, to $81,000 for the three months ended June 30, 2024 from $68,000 for the three months ended June 30, 2023 due to tuition payments for employees.

Insurance expense increased $12,000, or 12.7%, to $110,000 for the three months ended June 30, 2024 from $97,000 for the three months ended June 30, 2023 due to a general increase in insurance premiums.

Consultant fees decreased $63,000, or 27.1%, to $169,000 for the three months ended June 30, 2024 from $232,000 for the three months ended June 30, 2023 due to less reliance on consultants in 2024.

Recruiting expense decreased $23,000, or 96.9%, to $1,000 for the three months ended June 30, 2024 from $24,000 for the three months ended June 30, 2023 due to less reliance on traditional recruiting firms in 2024 for personnel hirings.

Occupancy expense increased $69,000, or 11.4%, to $674,000 for the three months ended June 30, 2024 from $605,000 for the three months ended June 30, 2023 primarily as a result of the increased cost of operating office space.

Outside data processing expense increased $53,000, or 9.6%, to $607,000 for the three months ended June 30, 2024 from $554,000 for the three months ended June 30, 2023 due to an increase in transactions and additional data processing services.

Real estate owned expense increased $6,000, or 28.6%, to $27,000 for the three months ended June 30, 2024 from $21,000 for the three months ended June 30, 2023 due to the higher cost to maintain the property.

Advertising expense decreased $144,000, or 60.5%, to $94,000 for the three months ended June 30, 2024 from $238,000 for the three months ended June 30, 2023 due mainly to a decrease in promotional products.

Equipment expense decreased $79,000, or 26.3%, to $221,000 for the three months ended June 30, 2024 from $300,000 for the three months ended June 30, 2023 due to a reduced need to purchase additional equipment.

Income Taxes.

We recorded income tax expense of $4.7 million and $4.5 million for the three months ended March 31, 2024 and 2023, respectively.

For the three months ended March 31, 2024, we had approximately $195,000 in tax exempt income, compared to approximately $182,000 in tax exempt income for the three months ended March 31, 2023.

Our effective income tax rates were 29.0% and 28.7% for the three months ended March 31, 2024 and 2023, respectively.

We recorded income tax expense of $4.9 million and $4.5 million for the three months ended June 30, 2024 and 2023, respectively.

For the three months ended June 30, 2024, we had approximately $199,000 in tax exempt income, compared to approximately $587,000 in tax exempt income for the three months ended June 30, 2023.

The decrease in tax exempt income was due to two death claims totaling $1.8 million on BOLI policies during the three

months ended June 30, 2023.

Our effective income tax rates were 27.6% and 28.7% for the three months ended June 30, 2024 and 2023, respectively.

Results of Operations for the Six Months Ended June 30, 2024 and 2023

Financial Highlights

Net income for the six months ended June 30, 2024 was $24.2 million compared to net income of $22.3 million for the six months ended June 30, 2023.

The increase in net income of $1.8 million, or 8.2%, between periods was primarily due to an increase in net interest income and a credit loss expense reduction, partially offset by a decrease in non-interest income, an increase in non-interest expense, and an increase in income tax expense.

Net Interest Income

Net interest income totaled $51.2 million for the six months ended June 30, 2024 as compared to $46.9 million for the six months ended June 30, 2023.

The increase in net interest income of $4.4 million, or 9.3%, was primarily due to an increase in interest income that exceeded an increase in interest expense.

The increase in interest income is attributable to increases in loans and interest-bearing deposits, partially offset by decreases in investment securities and FHLB stock.

The increase in interest income is 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, 2024 was due to an increase in the cost of funds on our deposits and borrowed money.

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

Total interest and dividend income increased $18.1 million, or 30.1%, to $78.4 million for the six months ended June 30, 2024 from $60.2 million for the six months ended June 30, 2023.

The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $358.3 million, or 25.3%, to $1.8 billion for the six months ended June 30, 2024 from $1.4 billion for the six months ended June 30, 2023 and an increase in the yield on interest earning assets by 33 basis points from 8.50% for the six months ended June 30, 2023 to 8.83% for the six months ended June 30, 2024.

Interest expense increased $13.8 million, or 103.1%, to $27.2 million for the six months ended June 30, 2024 from $13.4 million for the six months ended June 30, 2023.

The increase in interest expense was due to an increase in the cost of interest bearing liabilities by 126 basis points from 3.05% for the six months ended June 30, 2023 to 4.31% for the six months ended June 30, 2024, and an increase in average interest bearing liabilities of $383.0 million, or 43.6%, to $1.3 billion for the six months ended June 30, 2024 from $877.8 million for the six months ended June 30, 2023.

Net interest margin decreased 85 basis points, or 12.8%, during the six months ended June 30, 2024 to 5.77% compared to 6.62% during the six months ended June 30, 2023.

Credit Loss Expense

The Company recorded a credit loss expense reduction totaling $391,000 for the six months ended June 30, 2024 compared to a credit loss expenses totaling $611,000 for the six months ended June 30, 2023.

The credit loss expense reduction of $391,000 for the six months ended June 30, 2024 was comprised of a credit loss expense reduction for off-balance sheet commitments of $236,000, a credit loss expense reduction for loans of $145,000, and a credit loss expense reduction for held-to-maturity investment securities of $10,000.

The credit loss expense reduction for off-balance sheet commitments of $236,000 for the six months ended June 30, 2024 was primarily attributed to a reduction of $27.2 million in the level of off-balance sheet commitments and favorable trends in the economy.

The credit loss expense reduction for loans of $145,000 for the six months ended June 30, 2024 was primarily attributed to favorable trends in the economy.

We charged-off $32,000 during the six months ended June 30, 2024 as compared to charge-offs of $214,000 during the six months ended June 30, 2023.

The charge-offs of $32,000 during the six months ended June 30, 2024 were against various unpaid overdrafts in our demand deposit accounts.

The charge-offs of $214,000 during the six months ended June 30, 2023 were primarily due to the 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 $55,000 for the 2023 period 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, 2024 and 2023.

Non-Interest Income

Non-interest income for the six months ended June 30, 2024 was $1.3 million compared to non-interest income of $2.1 million for the six months ended June 30, 2023.

The decrease of $850,000, or 39.8%, in total non-interest income was primarily due to decreases of $385,000 in BOLI income, $229,000 in investment advisory fees, $204,000 in unrealized losses on equity securities, $29,000 in other loan fees and service charges, and $3,000 in miscellaneous other non-interest income.

The decrease 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 six months ended June 30, 2023.

The decrease in investment advisory fees was due to the disposition in January 2024 of the Bank’s assets relating to the Harbor West Wealth Management Group.

As a result of the transaction, the Bank no longer generates investment advisory fees.

The decrease in unrealized gain (loss) on equity was due to an unrealized loss of $102,000 on equity securities during the six months ended June 30, 2024 compared to an unrealized gain of $102,000 on equity securities during the six months ended June 30, 2023.

The unrealized loss of $102,000 on equity securities during the 2024 period was due to market interest rate volatility during the six months ended June 30, 2024.

The decrease of $29,000 in other loan fees and service charges was due to a decrease of $46,000 in other loan fees and loan servicing fees, partially offset by increases of $14,000 in ATM/debit card/ACH fees and $2,000 in savings account fees.

Non-Interest Expense

Non-interest expense increased $2.1 million, or 12.3%, to $19.2 million for the six months ended June 30, 2024 from $17.1 million for the six months ended June 30, 2023.

The increase resulted primarily from increases of $1.2 million in salaries and employee benefits, $840,000 in other operating expense, $174,000 in outside data processing expense, and $107,000 in occupancy expense, partially offset by decreases of $130,000 in equipment expense, $106,000 in advertising expense, and $2,000 in real estate owned expense.

Salaries and employee benefits increased $1.2 million, or 13.1%, to $10.6 million for the six months ended June 30, 2024 from $9.4 million for the six months ended June 30, 2023 primarily due to the hiring of additional personnel to support the growth of the Company and a decrease in loan origination expenses related to loan origination fees due to a decrease in loan originations.

Other non-interest expense increased $840,000, or 19.0%, to $5.3 million for the six months ended June 30, 2024 from $4.4 million for the six months ended June 30, 2023 due mainly to increases of $559,000 in miscellaneous other non-interest expense, $168,000 in service contracts expense, $59,000 in audit and accounting fees, $37,000 in directors compensation, $32,000 in directors, officers, and employee expenses, $20,000 in insurance expense, $19,000 in office supplies, $15,000 in telephone expense, and $2,000 in expenses related to the hiring of personnel.

These increases were partially offset by decreases of $50,000 in legal fees and $21,000 in consulting fees.

The increase of $559,000 in miscellaneous other non-interest expense was mainly due to increases of $509,000 in regulatory insurance premiums and assessments due to an increase in our total assets, $48,000 in dues and subscriptions, $32,000 in check and correspondence bank charges, and $16,000 in miscellaneous expenses.

These increases were partially offset by decreases of $28,000 in miscellaneous charge-offs, $16,000 in public company expenses, and $4,000 in postage expense.

Service contracts expense increased $169,000, or 25.0%, to $845,000 for the six months ended June 30, 2024 from $676,000 for the six months ended June 30, 2023 due to the increased cost to support the growth of the Company.

Audit and accounting expense increased $59,000, or 27.3%, to $276,000 for the six months ended June 30, 2024 from $217,000 for the six months ended June 30, 2023 due to the Company’s growth.

Directors’ compensation increased $37,000, or 8.2%, to $486,000 for the six months ended June 30, 2024 from $449,000 for the six months ended June 30, 2023 due to an increase in fees and an increase to the amortization of expenses due to the awarding of additional restricted stocks related to the 2022 Equity Incentive Plan.

Directors, officers, and employee expenses increased $32,000, or 24.9%, to $160,000 for the six months ended June 30, 2024 from $128,000 for the six months ended June 30, 2023 due to tuition payments for employees.

Insurance expense increased $20,000, or 10.2%, to $212,000 for the six months ended June 30, 2024 from $192,000 for the six months ended June 30, 2023 due to a general increase in insurance premiums.

Office supplies increased $19,000, or 22.0%, to $108,000 for the six months ended June 30, 2024 from $88,000 for the six months ended June 30, 2023 due to the growth of the Company.

Telephone expense increased $15,000, or 4.6%, to $333,000 for the six months ended June 30, 2024 from $319,000 for the six months ended June 30, 2023 due to increased usage in 2024.

Recruiting expense increased $2,000, or 9.7%, to $27,000 for the six months ended June 30, 2024 from $25,000 for the six months ended June 30, 2023 due to the hiring of additional personnel in 2024.

Legal fees decreased $51,000, or 21.5%, to $185,000 for the six months ended June 30, 2024 from $236,000 for the six months ended June 30, 2023 due to reduced usage of attorney services in 2024.

Consultant fees decreased $21,000, or 4.9%, to $400,000 for the six months ended June 30, 2024 from $421,000 for the six months ended June 30, 2023 due to less reliance on consultants in 2024.

Outside data processing expense increased $174,000, or 16.3%, to $1.2 million for the six months ended June 30, 2024 from $1.1 million for the six months ended June 30, 2023 due to an increase in transactions and additional data processing services.

Occupancy expense increased $107,000, or 8.4%, to $1.4 million for the six months ended June 30, 2024 from $1.3 million for the six months ended June 30, 2023 primarily as a result of the increased cost of operating office space.

Equipment expense decreased $130,000, or 21.5%, to $474,000 for the six months ended June 30, 2024 from $604,000 for the six months ended June 30, 2023 due to a reduced need to purchase additional equipment.

Advertising expense decreased $106,000, or 36.8%, to $182,000 for the six months ended June 30, 2024 from $288,000 for the six months ended June 30, 2023 due mainly to a decrease in promotional products.

We recorded income tax expense of $9.5 million and $9.0 million for the six months ended June 30, 2024 and 2023, respectively.

For the six months ended June 30, 2024, we had approximately $394,000 in tax exempt income, compared to approximately $770,000 in tax exempt income for the six months ended June 30, 2023.

The decrease in tax exempt income was due to two death claims totaling $1.8 million on BOLI policies during the six months ended June 30, 2023.

Our effective income tax rates were 28.3% and 28.7% for the six months ended June 30, 2024 and 2023, 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 March 31,

Three Months Ended June 30,

Loans receivable

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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 6/30/2024

Six Months Ended 6/30/2023

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 $5.8 million at March 31, 2024 and December 31, 2023.

At March 31, 2024 and December 31, 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 March 31, 2024 and December 31, 2023.

During the three months ended March 31, 2024, 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 2023.

Non-performing assets totaled $5.9 million at June 30, 2024 and $5.8 million at December 31, 2023.

At June 30, 2024 and December 31, 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, 2024 and December 31, 2023.

During the six months ended June 30, 2024 and 2023, we did not collect any interest income from loans that were in non-accrual status.

From time to time, as part of our loss mitigation strategy, we may modify loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay, or interest rate reduction.

When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

There were no new loan modifications to borrowers experiencing financial difficulties during the three months ended March 31, 2024 or 2023.

At March 31, 2024 and December 31, 2023, we had no loans modified to borrowers experiencing financial difficulty.

There were no new loan modifications to borrowers experiencing financial difficulties during the six months ended June 30, 2024 or 2023.

At June 30, 2024 and December 31, 2023, we had no loans modified to borrowers experiencing financial difficulty.

The following table sets forth an analysis of the activity in the allowance for credit losses related to loans for the periods indicated:

2 unchanged sentences

Impact of adopting ASC 326

Provision for credit losses

Provision for (reversal of) credit loss

Net Charge-offs:

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Non-performing loans

The Company’s allowance for credit losses related to loans totaled $4.9 million, or 0.30% of total loans as of March 31, 2024 compared to $5.1 million, or 0.32% of total loans as of December 31, 2023.

In addition, the Company’s allowance for credit losses related to off-balance sheet commitments totaled $1.0 million and an allowance for credit losses related to held-to-maturity debt securities totaled $133,000 as of March 31, 2024 compared to $1.0 million and $136,000, respectively, at December 31, 2023.

The allowance for credit losses related to loans decreased by $166,000 to $4.9 million at March 31, 2024 from $5.1 million at December 31, 2023.

The Company’s allowance for credit losses related to loans totaled $4.9 million, or 0.29% of total loans as of June 30, 2024 compared to $5.1 million, or 0.32% of total loans as of December 31, 2023.

In addition, the Company’s allowance for credit losses related to off-balance sheet commitments totaled $802,000 and an allowance for credit losses related to held-to-maturity debt securities totaled $126,000 as of June 30, 2024 compared to $1.0 million and $136,000, respectively, at December 31, 2023.

The allowance for credit losses related to loans decreased $178,000 to $4.9 million at June 30, 2024 from $5.1 million at December 31, 2023.

The decrease in the allowances for credit losses was due primarily to a credit loss expense reduction for loans of $145,000 and charge-offs of $33,000 against various unpaid overdrafts in our demand deposit accounts.

The allowance for credit losses related to off-balance sheet commitments decreased by $17,000 to $1.0 million at March 31, 2024 from $1.0 million at December 31, 2023 due to a credit loss expense reduction of $17,000 at March 31, 2024.

The allowance for credit losses related to held-to-maturity of debt securities decreased by $3,000 due to a credit loss expense reduction of $3,000 at March 31, 2024.

The allowance for credit losses related to off-balance sheet commitments decreased $236,000 to $802,000 at June 30, 2024 from $1.0 million at December 31, 2023 due to a credit loss expense reduction of $236,000 at June 30, 2024.

The allowance for credit losses related to held-to-maturity of debt securities decreased $10,000 due to a credit loss expense reduction of $10,000 at June 30, 2024.

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 7.2%, 9.4%, and 71.7%, respectively, for the three months ended March 31, 2024 compared to 6.7%, 9.6%, and 32.7%, respectively, for the year ended December 31, 2023.

Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 6.9%, 9.0%, and 69.9%, respectively, for the six months ended June 30, 2024 compared to 6.7%, 9.6%, and 32.7%, respectively, for the year ended December 31, 2023.

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, 2024 and 2023, our loan originations totaled $180.5 million and $214.7 million, respectively.

Cash received from the maturities and pay-downs on securities totaled $128,000 and $142,000 for the three months ended March 31, 2024 and 2023, respectively.

We did not purchase any securities during the three months ended March 31, 2024 and March 31, 2023.

For the six months ended June 30, 2024 and 2023, our loan originations totaled $364.7 million and $448.0 million, respectively.

Cash received from the maturities and pay-downs on securities totaled $476,000 and $10.5 million for the six months ended June 30, 2024 and 2023, respectively.

We did not purchase any securities during the six months ended June 30, 2024 and June 30, 2023.

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 $32.1 million and $29.7 million from the Federal Home Loan Bank of New York as of March 31, 2024 and December 31, 2023, respectively.

There were $7.0 million and $14.0 million in Federal Home Loan Bank advances at March 31, 2024 and December 31, 2023, respectively.

We had an available borrowing limit of $29.6 million and $29.7 million from the Federal Home Loan Bank of New York as of June 30, 2024 and December 31, 2023, respectively.

There were $7.0 million and $14.0 million in Federal Home Loan Bank advances at June 30, 2024 and December 31, 2023, respectively.

The Federal Reserve Bank of New York (“FRBNY”) approved on August 30, 2023 the Bank’s eligibility to pledge loans under the Borrower-in-Custody program of the FRBNY thereby allowing the Bank to borrow from the Discount Window at the FRBNY.

We had an available borrowing limit of $928.8 million and $865.1 million from the FRBNY as of March 31, 2024 and December 31, 2023, respectively.

There were $40.0 million and $50.0 million in FRBNY borrowings at March 31, 2024 and December 31, 2023, respectively.

We had an available borrowing limit of $841.9 million and $865.1 million from the FRBNY as of June 30, 2024 and December 31, 2023, respectively.

There were $40.0 million and $50.0 million in FRBNY borrowings at June 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023.

At March 31, 2024, we had unfunded commitments on construction and multi-family mortgage loans of $477.0 million, outstanding commitments to originate loans of $136.9 million, unfunded commitments under lines of credit of

$107.1 million, and unfunded standby letters of credit of $10.3 million.

At March 31, 2024, certificates of deposit scheduled to mature in less than one year totaled $692.9 million.

There were no outstanding borrowings with ACBB at June 30, 2024 and December 31, 2023.

At June 30, 2024, we had unfunded commitments on construction and multi-family mortgage loans of $472.3 million, outstanding commitments to originate loans of $111.5 million, unfunded commitments under lines of credit of $105.2 million, and unfunded standby letters of credit of $11.9 million.

At June 30, 2024, certificates of deposit

scheduled to mature in less than one year totaled $769.7 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.

4 unchanged sentences

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, 2024, the Company had liquid assets of $2.4 million and $14.1 million in loan participations originated by the Bank which are held by the Company.

At June 30, 2024, the Company had liquid assets of $5.1 million and $14.1 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, 2024, 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, 2024, 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