What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2024-11-07 · 192 added, 291 removed, 618 unchanged (44% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

September 30,

(In thousands, except share

5 unchanged sentences

Equity securities

Securities held-to-maturity ( net of allowance for credit losses of $ 126 and $ 136 , fair value of $ 12,623 and $ 13,126 , respectively )

Securities held-to-maturity ( net of allowance for credit losses of $ 126 and $ 126 , respectively )

Loans receivable

Deferred loan (fees) costs, net

Deferred loan fees, net

Allowance for credit losses

19 unchanged sentences

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)

September 30,

(In thousands, except share

16 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except

Three Months Ended March 31,

(In thousands, except

per share amounts)

INTEREST INCOME:

10 unchanged sentences

Earnings on bank owned life insurance

Investment advisory fees

Unrealized gain (loss) on equity securities

15 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

Three Months Ended March 31,

(In thousands)

Other comprehensive income:

Other comprehensive income (loss):

Defined benefit pension:

Reclassification adjustments out of accumulated other comprehensive income:

Reclassification adjustments out of accumulated other comprehensive income (loss):

Amortization of actuarial gain

Actuarial loss arising during period

Actuarial (gain) loss arising during period

Income tax effect¹

Total other comprehensive income

Total other comprehensive income (loss)

Total Comprehensive Income

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three and Nine Months Ended September 30, 2024 and 2023

Three months Ended March 31, 2025 and 2024

Comprehensive

1 unchanged sentence

Balance – December 31, 2024

Other comprehensive income

Other comprehensive loss

Cash dividend declared ($ 0.20 per share)

Stock repurchases

Compensation expense related to restricted stock awards

3 unchanged sentences

Balance – March 31, 2025

Other comprehensive income

Cash dividend declared ($ 0.10 per share)

Stock repurchases

Compensation expense related to restricted stock awards

Compensation expense related to stock options

Stock option exercise

ESOP shares earned

Balance - June 30, 2024

Other comprehensive income

Cash dividend declared ($ 0.15 per share)

Compensation expense related to restricted stock awards

Compensation expense related to stock options

Restricted Stock Award

ESOP shares earned

Balance – September 30, 2024

Comprehensive

6 unchanged sentences

Compensation expense related to stock options

Cumulative effect of adoption of ASU 2016-13

Stock option exercise

ESOP shares earned

Balance - March 31, 2024

Other comprehensive income

Cash dividend declared ($ 0.06 per share)

Stock repurchases

Compensation expense related to restricted stock awards

Compensation expense related to stock options

ESOP shares earned

Balance - June 30, 2023

Other comprehensive income

Cash dividend declared ($ 0.06 per share)

Stock repurchases

Compensation expense related to restricted stock awards

Compensation expense related to stock options

ESOP shares earned

Balance - September 30, 2023

See notes to interim unaudited consolidated financial statements .

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

Net amortization of securities premiums and discounts, net

(Reversal of) provision for credit losses

Provision for (reversal of) credit losses

Net (accretion) amortization of deferred loan fees and costs

1 unchanged sentence

Unrealized (gain) loss recognized on equity securities

Impairment of real estate owned

Earnings on bank owned life insurance

2 unchanged sentences

Compensation expense related to restricted stock

Increase in accrued interest receivable

Decrease (increase) in other assets

Decrease in accounts payable - loan closing

(Decrease) increase in accounts payable and accrued expenses

Decrease (increase) in accrued interest receivable

Decrease in other assets

Increase (decrease) in accounts payable - loan closing

Decrease in accounts payable and accrued expenses

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities:

Net increase in loans

Net decrease (increase) in loans

Proceeds from sale of loans

Proceeds from bank owned life insurance

Principal repayments on securities available-for-sale

Principal repayments on securities held-to-maturity

Purchase of marketable equity securities

Purchase of securities held-to-maturity

Purchase of restricted stock

Redemptions of restricted stock

Purchases of premises and equipment

Net Cash Used in Investing Activities

Net Cash Provided by (Used in) Investing Activities

Cash Flows from Financing Activities:

Net increase in deposits

Proceeds from FRB borrowings

Net (decrease) increase in deposits

Repayment of FRB borrowings

4 unchanged sentences

Cash dividends paid

Net Cash Provided by Financing Activities

Net Cash (Used in) Provided by Financing Activities

Net Increase in Cash and Cash Equivalents

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

Interest paid

Supplementary Disclosure of Non-Cash Investing and Financing Activities:

Dividends declared and not paid

21 unchanged sentences

The Bank also generates revenues from other income including deposit fees and service charges.

The Bank previously offered investment advisory and financial planning services under the name Harbor West Wealth Management Group, a division of the Bank, through a networking arrangement with a registered broker-dealer and investment advisor.

The Bank entered into an agreement to sell all of the Bank’s assets relating to Harbor West Wealth Management Group to a third party in December 2023, and the sale closed in January 2024.

As a result of the transaction, the Bank no longer offers these services and no longer generates investment advisory fees.

New England Commercial Properties LLC (“NECP”), a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2007 to facilitate the purchase or lease of real property by the Bank.

7 unchanged sentences

3 Winterton Realty LLC, a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2021 to facilitate the purchase or lease of real property by the Bank and currently owns the property for the Bank branch located in Bloomingburg, New York.

NECB Real Estate LLC (“NECB Real Estate”), a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2024 to facilitate the purchase or lease of real property by the Bank.

NECB Real Estate currently owns one foreclosed property located in the Bronx, New York.

Principal of Consolidations:

The accompanying unaudited consolidated financial statements include the accounts of the Company, the Bank, NECP, NECB Financial, 72 West Eckerson, 166 Route 59 Realty, and 3 Winterton Realty LLC (collectively the “Company”) and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

The accompanying unaudited consolidated financial statements include the accounts of the Company, the Bank, NECP, NECB Financial, 72 West Eckerson, 166 Route 59 Realty, 3 Winterton Realty LLC, and NECB Real Estate (collectively the “Company”) and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

All significant inter-company accounts and transactions have been eliminated in consolidation.

10 unchanged sentences

The Company’s lending activity is concentrated in construction loans secured by the construction primarily of multi-family, residential condominium properties, and occasionally non-residential properties located in New York State and occasionally by the renovation of multi-family properties in Massachusetts.

As of September 30, 2024 and December 31, 2023, the Company had a majority of construction loans located in New York State, including $ 679.3 million and $ 626.0 million in the Bronx, $ 240.9 million and $ 198.5 million in the Town of Monroe, $ 117.5 million and $ 133.7 million in the Hamlet of Monsey, and $ 135.1 million and $ 105.9 million in the Village of Spring Valley.

At September 30, 2024, the Company had $ 75.9 million, or 5.7 %, of construction loans located in Rockland County, New York, related to office space or commercial use.

As of March 31, 2025 and December 31, 2024, the Company had a majority of construction loans located in New York State, including $ 626.2 million and $ 708.5 million in the Bronx, $ 222.4 million and $ 246.4 million in the Town of Monroe, $ 87.6 million and $ 112.4 million in the Hamlet of Monsey, and $ 140.4 million and $ 141.6 million in the Village of Spring Valley.

At March 31, 2025, the Company had $ 99.5 million, or 7.7 %, of construction loans located in Rockland County, New York, related to office space or commercial use.

Note 2 — Regulatory Capital

3 unchanged sentences

As a result, the Company will not be subject to the consolidated holding company capital requirement until such time as its consolidated assets exceed $3.0 billion.

The Bank met all capital adequacy requirements to which it was subject as of September 30, 2024 and December 31, 2023.

The Bank met all capital adequacy requirements to which it was subject as of March 31, 2025 and December 31, 2024.

The following table presents information about the Bank’s capital levels at the dates presented:

4 unchanged sentences

(Dollars in Thousands)

As of September 30, 2024:

As of March 31, 2025:

Total capital (to risk-weighted assets)

17 unchanged sentences

The following table sets forth the computations of basic and diluted earnings per share:

Three Months Ended September 30,

Nine Months Ended September 30,

(In Thousands, except per share data)

Three Months Ended March 31,

(In Thousands, except per share data)

9 unchanged sentences

Note 4 — Equity Securities

The following table is the schedule of equity securities at September 30, 2024 and December 31, 2023.

The following table is the schedule of equity securities at March 31, 2025 and December 31, 2024.

Our equity securities portfolio consists of our investment in a market-rate bond mutual fund that invests in high quality fixed income bonds, mainly government agency securities whose proceeds are designed to positively impact community development throughout the United States.

5 unchanged sentences

government, are highly rated by major rating agencies and have a long history of no credit losses.

September 30,

(In Thousands)

Equity Securities, at Fair Value

The following is a summary of unrealized gain or loss recognized in net income on equity securities during the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,

Nine Months Ended September 30,

(In Thousands)

The following is a summary of unrealized gain or loss recognized in net income on equity securities during the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In Thousands)

Net gain (loss) recognized on equity securities during the period

Net unrealized gain (loss) recognized on equity securities during the period

Net losses realized on the sale of equity securities during the period

Unrealized net gain (loss) recognized on equity securities held at the reporting date

Unrealized net (loss) gain recognized on equity securities held at the reporting date

Note 5 — Securities Held-to-Maturity

The following table summarizes the Company’s portfolio of securities held-to-maturity at September 30, 2024 and December 31, 2023.

September 30, 2024

The following table summarizes the Company’s portfolio of securities held-to-maturity at March 31, 2025 and December 31, 2024.

March 31, 2025

(In Thousands)

15 unchanged sentences

Municipal Bonds

Contractual final maturities of mortgage-backed securities and municipal bonds were as follows at September 30, 2024:

September 30, 2024

Contractual final maturities of mortgage-backed securities and municipal bonds were as follows at March 31, 2025:

March 31, 2025

(In Thousands)

5 unchanged sentences

Actual maturities will differ from contractual maturities due to scheduled monthly repayments and due to the underlying borrowers having the right to prepay their obligations.

The activity in the allowance for credit losses for debt securities held-to-maturity for the three and nine months ended September 30, 2024 and 2023 was as follows:

The activity in the allowance for credit losses for debt securities held-to-maturity for the three months ended March 31, 2025 and 2024 was as follows:

Municipal Bonds

2 unchanged sentences

Balance – March 31, 2025

Provision for (reversal of) credit loss

Balance – June 30, 2024

Provision for (reversal of) credit loss

Balance – September 30, 2024

Municipal Bonds

Balance – December 31, 2023

Impact of adopting ASC 326

Provision for credit loss

Balance – March 31, 2023

Provision for (reversal of) credit loss

Balance – June 30, 2023

Provision for (reversal of) credit loss

Balance – September 30, 2023

Balance – March 31, 2024

The age of unrealized losses and the fair value of related securities held-to-maturity, for which an allowance for credit losses was not deemed necessary, were as follows:

2 unchanged sentences

(In Thousands)

September 30, 2024:

March 31, 2025:

Mortgage-backed securities - residential:

Government National Mortgage Association

Federal Home Loan Mortgage Corporation

7 unchanged sentences

Mortgage-backed securities - residential:

Government National Mortgage Association

Federal Home Loan Mortgage Corporation

2 unchanged sentences

Total mortgage-backed securities

At September 30, 2024, nineteen mortgage-backed securities had unrealized losses due to interest rate volatility.

At March 31, 2025, thirteen mortgage-backed securities had unrealized losses due to interest rate volatility.

Management concluded that the unrealized loss reflected above was temporary in nature since the unrealized loss was related primarily to market interest rate volatility, and was not related to the underlying credit quality of the issuers of the securities.

Additionally, the Company has the ability and intent to hold the securities for the time necessary to recover

the amortized cost.

At December 31, 2023, there were thirty-two mortgage-backed securities that had unrealized losses due to interest rate volatility.

Additionally, the Company has the ability and intent to hold the securities for the time necessary to recover the amortized cost.

At December 31, 2024, there were sixteen mortgage-backed securities that had unrealized losses due to interest rate volatility.

Credit Quality Indicators

4 unchanged sentences

government, are highly rated by major rating agencies and have a long history of no credit losses.

The seven municipal bonds in the portfolio carry no lower than A ratings from the rating agencies at September 30, 2024 and have no realized losses since they were issued.

The Company regularly monitors the municipal bonds sector of the market and reviews collectability including such factors as the financial condition of the issuers as well as credit ratings in effect as of the reporting period.

The seven municipal bonds in the portfolio carry no lower than A ratings from the rating agencies at March 31, 2025 and have no realized losses since they were issued.

The Company regularly monitors the

municipal bonds sector of the market and reviews collectability including such factors as the financial condition of the issuers as well as credit ratings in effect as of the reporting period.

Note 6 — Loans Receivable and the Allowance for Credit Losses

The composition of loans was as follows at September 30, 2024 and December 31, 2023:

September 30,

The composition of loans was as follows at March 31, 2025 and December 31, 2024:

(In Thousands)

4 unchanged sentences

Commercial and industrial

Deferred loan (fees) costs, net

Deferred loan fees, net

Allowance for credit losses

Loans serviced for the benefit of others totaled approximately $ 50.7 million and $ 40.7 million at September 30, 2024 and December 31, 2023, respectively.

The value of mortgage servicing rights was not material at September 30, 2024 and December 31, 2023.

Loans serviced for the benefit of others totaled approximately $ 52.9 million and $ 52.5 million at March 31, 2025 and December 31, 2024, respectively.

The value of mortgage servicing rights was not material at March 31, 2025 and December 31, 2024.

The allowance for credit losses on loans represents management’s estimate of losses inherent in the loan portfolio as of the statement of financial condition date and is recorded as a reduction to loans.

6 unchanged sentences

This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

The following tables summarize the allocation of the allowance for credit losses and loans receivable by loan class and credit loss method at September 30, 2024 and December 31, 2023:

At September 30, 2024:

The following tables summarize the allocation of the allowance for credit losses and loans receivable by loan class and credit loss method at March 31, 2025 and December 31, 2024:

At March 31, 2025:

(In Thousands)

25 unchanged sentences

collectively evaluated for credit loss

The activity in the allowance for credit loss by loan class for the three and nine months ended September 30, 2024 and 2023 was as follows:

The activity in the allowance for credit loss by loan class for the three months ended March 31, 2025 and 2024 was as follows:

(In Thousands)

Allowance for credit losses:

Balance - June 30, 2024

Balance - December 31, 2024

Provision (reversal of)

Balance - September 30, 2024

(In Thousands)

Allowance for loan losses:

Balance - June 30, 2023

Provision (Benefit)

Balance - September 30, 2023

Balance -March 31, 2025

(In Thousands)

2 unchanged sentences

Provision (reversal of)

Balance - September 30, 2024

(In Thousands)

Allowance for loan losses:

Balance - December 31, 2022

Impact of adopting ASC 326

Provision (Benefit)

Balance - September 30, 2023

During the three months ended September 30, 2024, the reversal of provision recorded for residential real estate loans and commercial and industrial loans was primarily attributed to reduced credit risk.

The reversal of provision recorded for non-residential real estate loans was primarily attributed to decreased loan balances.

Balance - March 31, 2024

During the three months ended March 31, 2025, the provision expense recorded for residential real estate loans was primarily attributed to increased loan balances.

The provision expense recorded for commercial and industrial loans was attributed to increased loan balances and increased credit risk.

The reversal of provision recorded for non-residential real estate loans was primarily attributed to a $ 350,000 recovery from a loan charged off in 2021, and slightly decreased loan balance.

The reversal of provision recorded for constructions loans was primarily attributed to decreased loan balances.

The provision expense recorded for consumer loans was primarily attributed to the increased balance on deposit account overdrafts.

The provision expense recorded for constructions loans was primarily attributed to increased loan balances, offset by improving sub-market housing conditions during the third quarter of 2024.

During the three months ended September 30, 2023, the provision expense recorded for residential real estate loans was primarily attributed to the increased loan balances.

The credit provision recorded for construction loans and commercial and industrial loans was primarily due to decreased loan balances.

The provision expense recorded for consumer loans was due to increased deposit account overdrafts.

During the nine months ended September 30, 2024, the reversal of provision recorded for residential real estate loans and commercial and industrial loans were primarily attributed to reduced credit risk.

The provision expenses recorded for non-residential real estate loans was primarily attributed to increased loan balances.

The provision expenses

recorded for consumer loans was primarily attributed to increased deposit account overdraft balances.

The reversal of provision recorded for constructions loans was primarily attributed to improving economic and sub-market housing conditions during the nine months ended September 30, 2024, offset by increased loan balances.

During the nine months ended September 30, 2023, the provision expenses recorded for construction loans and residential real estate loans were primarily attributed to increased loan balances.

The provision expenses recorded for consumer loans were primarily attributed to increased deposit account overdraft balances.

The Company had two individually evaluated loans, totaling $ 4.4 million, which are collateral-dependent construction loans, secured by multi-family real estate, at September 30, 2024 and December 31, 2023, respectively.

The two loans are secured by the same project located in the Bronx, New York, and were previously placed on non-accrual status.

There was no interest income recognized from non-accrual loans as of September 30, 2024 and 2023.

In October 2024, the Company successfully foreclosed on these two loans.

Following the foreclosure, the total loan balances were reclassed to foreclosed real estate owned on the statement of condition.

There was a $ 60,000 charge-off on the transaction to non-interest expenses on the statement of income for escrows of taxes and legal fees paid by the Company.

During the three months ended March 31, 2024, the reversal of provision recorded for residential real estate loans was primarily attributed to the decreased loan balances and reduced credit risk.

The reversal of provision recorded for non-residential real estate loans and commercial and industrial loans was primarily attributed to the decreased loan balances.

The provision expenses recorded for consumer loans were primarily attributed to the increased deposit account overdraft balances.

The provision expenses recorded for constructions loans were primarily attributed to the increased construction loan balances, offset by improving economic conditions during the first quarter of 2024.

The Company has one individually evaluated loan, totaling $ 241,000 at March 31, 2025 and December 31, 2024.

The underlying business experienced a significant decline in sales revenue since 2024, but the borrower continues to make monthly payments through personal guarantees.

Therefore, this loan was downgraded to substandard in 2024 but still accruing.

There were no non-accrual loans at March 31, 2025 and December 31, 2024.

The following tables provide information about delinquencies in our loan portfolio at the dates indicated.

Age Analysis of Past Due Loans as of September 30, 2024:

Age Analysis of Past Due Loans as of March 31, 2025:

(In Thousands)

22 unchanged sentences

Doubtful – Loans which have all of the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values.

The following table presents the risk category of loans at September 30, 2024 by loan segment and vintage year:

The following table presents the risk category of loans at March 31, 2025 by loan segment and vintage year:

Term Loans Amortized Costs Basis by Origination Year

September 30, 2024

March 31, 2025

Residential real estate

44 unchanged sentences

If the borrower continues to experience financial difficulty, another concession, such as interest rate reduction, may be granted.

There were no loans modified to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024 or the year ended December 31, 2023.

There were no loans modified to borrowers experiencing financial difficulty during the three months ended March 31, 2025 or the year ended December 31, 2024.

Allowance for Credit Losses on Off-Balance Sheet Commitments:

The following table presents the activity in the allowance for credit losses related to off-balance sheet commitments, that is included in accounts payable and accrued expenses on the consolidated statement of financial condition, for the three and nine months ended September 30, 2024 and 2023:

Allowance for Credit Loss

Balance – December 31, 2024

Provision for (reversal of) credit loss

Provision for credit loss

Balance – March 31, 2025

Provision for (reversal of) credit loss

Balance – June 30, 2024

Provision for (reversal of) credit loss

Balance – September 30, 2024

Allowance for Credit Loss

Balance – December 31, 2023

Impact of adopting ASC 326

Provision for (reversal of) credit loss

Reversal of credit loss

Balance – March 31, 2024

Provision for (reversal of) credit loss

Balance – June 30, 2023

Provision for (reversal of) credit loss

Balance – September 30, 2023

Note 7 — Real Estate Owned (“REO”)

The Company owned one foreclosed property valued at approximately $ 978,000 at September 30, 2024 and $ 1,456,000 at December 31, 2023, consisting of an office building located in Pennsylvania.

The property was acquired through foreclosure in December 2014.

The Company owned two foreclosed properties valued at approximately $ 5,120,000 at March 31, 2025 and December 31, 2024, consisting of an office building located in Pennsylvania which was acquired through foreclosure in December 2014, and a land and land improvement located in Bronx which was acquired through foreclosure in October 2024.

Further declines in real estate values may result in impairment charges in the future.

Routine holding costs are charged to expense as incurred and improvements to real estate owned that enhance the value of the real estate are capitalized.

During the third quarter ended September 30, 2024, the Company recorded a $ 478,000 impairment on the value of the property due to the deterioration of the office occupancy rate in the Pittsburgh business district office market due to workers continuing to work remotely post pandemic, the high operating expenses due to inflation, and the increased capitalization rate.

Therefore, REO expense recorded in the consolidated statements of income amounted to $ 488,000 and $ 11,000 for the three months, and $ 527,000 and $ 52,000 for the nine months ended September 30, 2024 and 2023, respectively.

REO expense recorded in the Consolidated Statements of Income, including loss on sales and write-downs, amounted to $ 30,000 and $ 11,000 for the three months ended March 31, 2025 and 2024, respectively.

Note 8 — Borrowings

Our borrowings include Federal Home Loan Bank of New York (“FHLB”) advances and short-term borrowings from the Discount Window at the Federal Reserve Bank of New York (“FRBNY”).

FHLB advances are summarized as follows at September 30, 2024 and December 31, 2023:

September 30,

Weighted Average

Interest Rate

(Dollars in Thousands)

Advances maturing in:

One year or less

After one to three years

After three to four years

After five years (due 2030)

At September 30, 2024, none of the above advances were subject to early call or redemption features.

All advances had fixed interest rates, with a remaining term of six years .

At September 30, 2024, the advances were secured by a pledge of the Company’s investment in the capital stock of the FHLB and a blanket assignment of the Company’s otherwise unpledged qualifying mortgage loans.

At September 30, 2024, these unpledged qualifying mortgage loans were not pledged to any company other than the FHLB.

At September 30, 2024, the Company had the ability to borrow $ 14.8 million, net of $ 7.0 million in outstanding advances, from the FHLB and $ 8.0 million from Atlantic Community Bankers Bank (“ACBB”).

In October 2024, the Company paid off the $ 7.0 million advance at the FHLB.

On August 30, 2023, the FRBNY approved the Company’s eligibility to pledge loans under the Borrower-in-Custody program of the FRBNY thereby allowing the Company to borrow from the Discount Window at the FRBNY.

As of September 30, 2024, there were no outstanding borrowings from the FRBNY.

At December 31, 2023, the borrowing from the FRBNY was $ 50.0 million, bearing an interest rate of 5.5 % .

The Company had an available borrowing limit of $ 832.1 million from the FRBNY as of September 30, 2024.

At March 31, 2025 and December 31, 2024, there were no outstanding borrowings from the FHLB and FRBNY.

At March 31, 2025, the Company had the ability to borrow $ 941.3 million from the FRBNY, $ 15.5 million from the FHLB, and $ 8.0 million from ACBB.

Note 9 — Benefits Plans

1 unchanged sentence

The DRP is an unfunded non-contributory defined benefit pension plan covering all non-employee directors meeting eligibility requirements as specified in the plan document.

The following table sets forth information regarding the components of net pension periodic expense measured as of September 30, 2024 and 2023:

Three Months Ended September 30,

Nine Months Ended September 30,

(Dollars In Thousands)

The following table sets forth information regarding the components of net pension periodic expense measured as of March 31, 2025 and 2024:

Three Months Ended March 31,

(Dollars In Thousands)

3 unchanged sentences

Total net periodic pension expense included in other non-interest expenses

Unrecognized net loss of $ 18,000 for the three months, and $ 54,000 for the nine months ended September 30, 2024 and 2023, were included in accumulated other comprehensive income.

Unrecognized net gain of $ 10,000 for the three months ended March 31, 2025, and unrecognized net loss of $ 18,000 for the three months ended March 31, 2024, were included in accumulated other comprehensive income.

Supplemental Executive Retirement Plan (“SERP”)

4 unchanged sentences

The benefit payment term is the greater of 15 years or the executive’s remaining life.

No benefits are expected to be paid during the next five years .

Expenses of $ 130,000 and $ 51,000 for the three months, and $ 391,000 and $ 162,000 for the nine months ended September 30, 2024 and 2023, respectively, were recorded for this plan and are reflected in the Consolidated Statements of Income under Salaries and Employee Benefits.

Expenses of $ 139,000 and $ 130,000 for the three months ended March 31, 2025 and 2024, respectively, were recorded for this plan and are reflected in the Consolidated Statements of Income under Salaries and Employee Benefits.

Stock-Based Deferral Plan

In June 2021, the Company established a stock-based deferral plan for eligible key executives and members of the Board of Directors of the Company to elect to defer compensation received from the Company for their services and make deemed investments of that deferred compensation in shares of the Company’s common stock.

At September 30, 2024, the Company did not have any obligations under the plan.

At March 31, 2025, the Company did not have any obligations under the plan.

The Company maintains a 401(k) plan for all eligible employees.

Participants are permitted to contribute from 1 % to 15 % or 60 % of their annual compensation up to the maximum permitted under the Internal Revenue Code.

The Company provided no matching contribution during the three and nine months ended September 30, 2024 and 2023.

The Company provided no matching contribution during the three months ended March 31, 2025 and 2024.

Employee Stock Ownership Plan (“ESOP”)

1 unchanged sentence

The ESOP borrowed $ 5,184,200 from the Mid-Tier Holding Company and used those funds to acquire 518,420 shares of Mid-Tier Holding Company common stock at $ 10.00 per share.

The loan from the Mid-Tier Holding Company, which has been assumed by the Company, carries an interest rate of 8.25 % and is repayable in twenty annual installments through 2025.

In conjunction with the Company’s second-step conversion offering, on July 12, 2021, the ESOP borrowed $ 7,827,260 from the Company and used those funds to acquire 782,726 shares of Company common stock at $ 10.00 per share.

The loan from the Mid-Tier Holding Company, which has been assumed by the Company, carries an interest rate of 8.25 % and is repayable in twenty annual installments.

This loan will be paid off by the end of 2025.

The loan from the Company carries an interest rate equal to 3.25 % and is repayable in fifteen annual installments through 2035.

Each year, the Bank makes discretionary contributions to the ESOP equal to the principal and interest payment required on the loan from the Company.

Each year, the Bank makes discretionary contributions to the ESOP equal to the principal and interest payment required on the loans from the Company.

The ESOP may further pay down the principal balance of the loans by using dividends paid, if any, on the shares of Company common stock it owns.

The balance remaining on the first ESOP loan was $ 919,000 at September 30, 2024 and December 31, 2023.

The balance remaining on the second ESOP loan was $ 6,417,000 at September 30, 2024 and December 31, 2023.

The balance remaining on the first ESOP loan was $ 478,000 and $ 919,000 at March 31, 2025 and December 31, 2024, respectively.

The balance remaining on the second ESOP loan was $ 5,991,000 and $ 6,417,000 at March 31, 2025 and December 31, 2024, respectively.

Shares purchased for the ESOP with the loan proceeds serve as collateral for the loan and are held in a suspense account for future allocation among ESOP participants.

3 unchanged sentences

Thereafter, on a monthly basis over the terms of the ESOP loans, approximately 2,894 shares for the ESOP loan made in 2006 and approximately 4,348 shares for the ESOP loan made in 2021 are committed to be released, respectively.

Compensation expense is recorded equal to the shares committed to be released multiplied by the average closing price of the Company’s stock during that month.

expense totaled approximately $ 473,000 and $ 340,000 for the three months, and $ 1,184,000 and $ 960,000 for the nine months ended September 30, 2024 and 2023, respectively.

Dividends on unallocated shares, which totaled approximately $ 209,000 and $ 47,000 for the three months, and $ 348,000 and $ 141,000 for the nine months ended September 30, 2024 and 2023, are recorded as a reduction of the ESOP loan.

Dividends on allocated shares, which totaled approximately $ 235,000 and $ 42,000 for the three months, and $ 391,000 and $ 125,000 for the nine months ended September 30, 2024 and 2023, respectively, are charged to retained earnings.

Compensation expense is recorded in an amount equal to the shares committed to be released multiplied by the average closing price of the Company’s stock during that month.

ESOP expense totaled approximately $ 520,000 and $ 352,000 for the three months ended March 31, 2025 and 2024, respectively.

Dividends on unallocated shares, which totaled approximately $ 122,000 and $ 70,000 for the three months ended March 31, 2025 and 2024, respectively, are recorded as a reduction of the ESOP loan.

Dividends on allocated shares, which totaled approximately $ 174,000 and $ 78,000 for the three months ended March 31, 2025 and 2024, respectively, are charged to retained earnings.

ESOP shares are summarized as follows:

September 30,

Allocated shares

16 unchanged sentences

The level of the asset or liability within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The following table sets forth the Company’s assets that are carried at fair value on a recurring basis and the level that was used to determine their fair value at September 30, 2024 and December 31, 2023:

The following table sets forth the Company’s assets that are carried at fair value on a recurring basis and the level that was used to determine their fair value at March 31, 2025 and December 31, 2024:

Quoted Prices in

4 unchanged sentences

Recurring Basis

September 30,

Marketable equity securities:

There were no transfers between Level 1 and 2 during the three and nine months ended September 30, 2024 or the year ended December 31, 2023.

The Company did no t have any liabilities that were carried at fair value on a recurring basis at September 30, 2024 and December 31, 2023.

The following table sets forth the Company’s assets that are carried at fair value on a non-recurring basis and the level that was used to determine their fair value, at September 30, 2024 and December 31, 2023:

There were no transfers between Level 1 and 2 during the three months ended March 31, 2025 or the year ended December 31, 2024.

The Company did no t have any liabilities that were carried at fair value on a recurring basis at March 31, 2025 and December 31, 2024.

The following table sets forth the Company’s assets that are carried at fair value on a non-recurring basis and the level that was used to determine their fair value, at March 31, 2025 and December 31, 2024:

Quoted Prices in

4 unchanged sentences

Non-Recurring Basis

September 30,

(In Thousands)

Loans individually evaluated

Real estate owned

The following tables present the qualitative information about non-recurring Level 3 fair value measurements of financial instruments at September 30, 2024 and December 31, 2023:

At September 30, 2024

The following tables present the qualitative information about non-recurring Level 3 fair value measurements of financial instruments at March 31, 2025 and December 31, 2024:

At March 31, 2025

(In Thousands)

Loans individually evaluated

Income approach

Capitalization rate

Real estate owned

Sales approach

Adjustment to sales comparison value

- 40 % to - 10 %

Real estate owned

Income approach

2 unchanged sentences

(In Thousands)

Loans individually evaluated

Income approach

Capitalization rate

Real estate owned

Sales approach

Adjustment to sales comparison value

- 40 % to - 10 %

Real estate owned

Income approach

Capitalization rate

The Company did no t have any liabilities that were carried at fair value on a non-recurring basis at September 30, 2024 and December 31, 2023.

The methods and assumptions used to estimate fair value at September 30, 2024 and December 31, 2023 are as follows:

The Company did no t have any liabilities that were carried at fair value on a non-recurring basis at March 31, 2025 and December 31, 2024.

The methods and assumptions used to estimate fair value at March 31, 2025 and December 31, 2024 are as follows:

For real estate owned, fair value is generally determined through independent appraisals or fair value estimations of the underlying properties which generally include various Level 3 inputs which are not identifiable.

11 unchanged sentences

Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated.

The estimated fair value amounts have been measured as of their respective year-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates.

The estimated fair value amounts have been measured as of their respective year-ends

and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates.

As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year-end.

8 unchanged sentences

Fair Value at

September 30, 2024

March 31, 2025

(In thousands)

26 unchanged sentences

A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer.

The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as referral fees based month end reports.

The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as referral fees based on month end reports.

Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized.

The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances.

As of September 30, 2024, the Company did not have any significant contract balances.

The Company does not typically enter into long-term revenue contracts with customers, and

therefore, does not experience significant contract balances.

As of March 31, 2025, the Company did not have any significant contract balances.

All of the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income.

The following table presents the Company’s sources of noninterest income for the three and nine months ended September 30, 2024 and 2023.

The following table presents the Company’s sources of noninterest income for the three months ended March 31, 2025 and 2024.

Sources of revenue outside the scope of ASC 606 are noted as such:

Three Months Ended September 30,

Nine Months Ended September 30,

(In Thousands)

Three Months Ended March 31,

(In Thousands)

4 unchanged sentences

Income from bank owned life insurance (1)

Investment advisory fees

Unrealized gain (loss) on equity securities (1)

12 unchanged sentences

Interchange fees from cardholder transactions are recognized daily, concurrently with the transaction processing services provided by an outsourced technology solution.

Investment Advisory Fees

The Company previously earned fees from investment advisory and financial planning services under the name of Harbor West Wealth Management Group, a former division of the Bank, through a networking arrangement with a registered broker-dealer and investment advisor.

Under this prior arrangement, the registered broker-dealer deducted investment advisory fees and financial planning services fees from the client’s assets under management and remitted the fees, net of administrative fees, to the Bank on a monthly basis.

The Company recognized the fees into non-interest income upon the Bank’s receipt of the monthly remittances.

As previously noted, in January 2024, the Bank sold all of the Bank’s assets relating to Harbor West Wealth Management Group to a third party.

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

Note 12 — Other Non-Interest Expenses

The following is an analysis of other non-interest expenses:

Three Months Ended September 30,

Nine Months Ended September 30,

(In Thousands)

Three Months Ended March 31,

(In Thousands)

Regulatory insurance premium and assessments

Dues and subscriptions

Service contracts

9 unchanged sentences

Management recognizes compensation expense for the fair value of restricted stock on a straight-line basis over the requisite service period for the entire award.

As of September 30, 2024 and December 31, 2023, there were 132,759 shares available for future awards under this plan, which includes 98,311 shares available for stock options and 34,448 shares available for restricted stock awards.

A summary of the Company’s restricted stock activity and related information for the three and nine months ended September 30, 2024 and 2023 follows:

As of March 31, 2025 and December 31, 2024, there were 102,759 shares available for future awards under this plan, which includes 98,311 shares available for stock options and 4,448 shares available for restricted stock awards.

A summary of the Company’s restricted stock activity and related information for the three months ended March 31, 2025 and 2024 follows:

Outstanding at December 31, 2024

Outstanding at March 31, 2025

Outstanding at June 30, 2024

Outstanding at September 30, 2024

Outstanding at December 31, 2023

Outstanding at March 31, 2024

Outstanding at June 30, 2023

Outstanding at September 30, 2023

Compensation expense related to restricted stock was $ 290,000 and $ 241,000 for the three months, and $ 794,000 and $ 723,000 for the nine months ended September 30, 2024 and 2023.

At September 30, 2024 and December 31, 2023, the total compensation cost related to non-vested awards that has not yet been recognized was $ 3.7 million and $ 3.8 million, respectively, which is expected to be recognized over the next three years .

A summary of the Company’s stock option activity and related information for the three and nine months ended September 30, 2024 and 2023 follows:

Compensation expense related to restricted stock was $ 293,000 and $ 252,000 for the three months ended March 31, 2025 and 2024.

At March 31, 2025 and December 31, 2024, the total compensation cost related to non-vested awards that has not yet been recognized was $ 3.0 million and $ 3.3 million, respectively, which is expected to be recognized over the next three years .

A summary of the Company’s stock option activity and related information for the three months ended March 31, 2025 and 2024 follows:

Exercise Price

2 unchanged sentences

Exercisable at March 31, 2025

Outstanding at June 30, 2024

Exercisable at June 30, 2024

Outstanding at September 30, 2024

Exercisable at September 30, 2024

Exercise Price

2 unchanged sentences

Exercisable at March 31, 2024

Outstanding at June 30, 2023

Exercisable at June 30, 2023

Outstanding at September 30, 2023

Exercisable at September 30, 2023

Compensation cost related to stock options is recognized based on the fair value of the stock options at the grant date on a straight line basis over the vesting period.

Compensation expense related to stock options was $ 192,000 and $ 192,000 for the three months, and $ 576,000 and $ 576,000 for the nine months ended September 30, 2024 and 2023.

At September 30, 2024 and December 31, 2023, unrecognized compensation cost related to stock option awards was $ 2.4 million and $ 3.0 million, respectively, which is expected to be recognized over the next three years .

Compensation expense related to stock options was $ 185,000 and $ 192,000 for the three months ended March 31, 2025 and 2024.

At March 31, 2025 and December 31, 2024, unrecognized compensation cost related to stock option awards was $ 1.9 million and $ 2.1 million, respectively, which is expected to be recognized over the next three years .

Note 14 — Business Segments

While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed, and financial performance is evaluated on a Company-wide basis.

Operating segments are aggregated into one as operating results for all segments are similar.

Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Substantially most of the Company’s operations occur through the Bank and involve the delivery of loan and deposit products to customers.

The Company’s chief operating decision maker is the Executive Committee that includes the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.

The Executive Committee assesses performance of the Company on a consolidated basis and decides how to allocate resources based on net income that is also reported as net income on the Consolidated Statement of Income.

The Executive Committee uses net income, which is the measure of segment profit and loss, to evaluate income generated from segment assets (return on assets) and other measures, such as net interest margin, return on average assets, and return on common equity, in deciding how to reinvest profits, such as originating loans, investing in investment securities, or to repurchase shares in the Company’s common stock.

Net income is used to monitor budget versus actual results.

The Executive Committee also uses net income and other measures in comparing the Company to its peer banks.

The comparison of the Company’s net income and other measures to its peer banks, along with the comparison of budgeted versus actual results are used in assessing the Company’s performance and in establishing management compensation.

Loans, investments, and deposits provide the revenues in the banking operations.

Interest expense and payroll provide the significant expenses in the banking operations.

All operations are domestic.

The following table presents the Company’s reported segment revenues, profit or loss and significant segment expenses for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In Thousand)

Total interest income

Total interest expense

Net interest income

Provision for (reversal of) credit loss

Net interest income after provision for credit losses

Total non-interest income

Non-interest expense:

Salaries and employee benefits

Occupancy expense

Outside data processing

Real estate owned expense

Total Non-Interest Expenses

Income before income tax expense

Income tax expense

Segment net income

Reconciliation of profit or loss

Adjustments and reconciling items

Consolidated net income

Earnings per common share - Basis

Earnings per common share - Diluted

The measure of segment assets is reported as total assets on the Consolidated Statement of Condition.

The following table presents the Company’s reported segment assets as of March 31, 2025 and December 31, 2024:

(In Thousand)

Segment assets

Adjustments and reconciling items

Consolidated total assets

Note 15 — Recent Accounting Pronouncements

5 unchanged sentences

That is, financial statements issued after the effective date of each amendment are required to include on a prospective basis the related disclosure incorporated into US GAAP by this ASU.

However, if the SEC does not act to remove its related requirements by June 30, 2027, any related FASB amendments will be removed from the Codification and will not be effective for any entities.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disclosure of the amount of net income taxes paid for federal, state, and foreign taxes, as well as the amount paid to any jurisdiction in which income taxes paid is equal to or greater than a 5% quantitative threshold.

The amendments will require the disclosure of pre-tax income disaggregated between domestic and foreign, as well as income tax expense disaggregated by federal, state, and foreign.

The amendment also eliminates certain disclosures related to unrecognized tax benefits and certain temporary differences.

This ASU is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted in any annual period where financial statements have not yet been issued.

The amendments should be applied on a prospective basis but retrospective application is permitted.

The Company does not expect adoption of the standard to have a material impact on its Consolidated Financial Statements.

In March 2024, the FASB issued ASU 2024-01, Compensation – Stock Compensation (Topic 718), which amended the guidance in ASC 718 to add an example showing how to apply the scope guidance to determine whether profits interest and similar awards should be accounted for as share-based payment arrangements.

For public business entities, the guidance is effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years.

For all other entities, it is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years.

However, if the SEC does

not act to remove its related requirements by June 30, 2027, any related FASB amendments will be removed from the Codification and will not be effective for any entities.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures .

This ASU requires disclosure in the notes to financial statements of specified information about certain costs and expenses.

Specific disclosures are required for (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas producing activities.

The amendments in this Update do not change or remove current expense disclosure requirements.

However, the amendments affect where this information appears in the notes to financial statements because entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments.

The amendments in ASU 2024-03 apply only to public business entities and are effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements.

This ASU removes various references to the FASB’s Concepts Statements from the FASB’s Accounting Standards Codification.

The FASB does not expect these updates to have a significant effect on current accounting practice since, in most cases, the amendments to the Codification remove references to Concept Statements that are extraneous and not required to understand or apply the guidance.

However, the FASB has provided transition guidance if applying the updated guidance results in accounting changes for some entities.

The amendments in ASU 2024-02 are effective for public business entities for fiscal years beginning after December 15, 2024.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2025.

In December 2024, the FASB issued ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments .

This new guidance clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument.

The ASU requires entities to apply a preexisting contract approach.

To qualify for induced conversion accounting under this approach, the inducement offer is required to preserve the form of consideration and result in an amount of consideration that is no less than that issuable pursuant to the preexisting conversion privileges.

The guidance is effective for fiscal years beginning after December 15, 2025, with early adoption permitted, and it can be adopted either on a prospective or retrospective basis.

This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) , which revises the effective date of ASU 2024-03 (on disclosures about disaggregation of income statement expenses) “to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.” Entities within the ASU’s scope are permitted to early adopt the ASU.

This Update is not expected to have a significant impact on the Company’s financial statements.

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 1. Financial Statements