What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-09 · 219 added, 119 removed, 154 unchanged (69% of the section changed)

13 unchanged sentences

(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;

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

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

7 unchanged sentences

(xiii) the inability to successfully integrate acquired businesses and financial institutions into our business operations;

(xiv) adverse changes in the securities markets;

(xiv) adverse changes

in the securities markets;

(xv) the impact of failures or disruptions in or breaches of the Company’s operational or security systems, data or infrastructure, or those of third parties, including as a result of cyberattacks or campaigns;

7 unchanged sentences

Balance Sheet Analysis

Total assets decreased $76.2 million, or 3.8%, to $1.9 billion at March 31, 2025, from $2.0 billion at December 31, 2024.

The decrease in assets was primarily due to decreases in net loans of $87.3 million and decreases of $1.0 million in accrued interest receivable, partially offset by increases in cash and cash equivalents of $11.2 million and increases of $1.3 million in equity securities.

Cash and cash equivalents increased $11.2 million, or 14.3%, to $89.5 million at March 31, 2025 from $78.3 million at December 31, 2024.

The increase in cash and cash equivalents was a result of a decrease of $87.3 million in net loans and an increase of $8.9 million in stockholders’ equity, partially offset by a decrease in deposits of $84.4 million.

Equity securities increased $1.3 million, or 5.9%, to $23.3 million at March 31, 2025 from $22.0 million at December 31, 2024.

The increase in equity securities was attributable to the purchase of $1.0 million in equity securities during the three months ended March 31, 2025 and market appreciation of $300,000 due to market interest rate volatility during the quarter ended March 31, 2025.

Securities held-to-maturity decreased $129,000, or 0.9%, to $14.5 million at March 31, 2025 from $14.6 million at December 31, 2024 due to $129,000 in maturities and pay-downs of various investment securities.

Loans, net of the allowance for credit losses, decreased $87.3 million, or 4.8%, to $1.7 billion at March 31, 2025 from $1.8 billion at December 31, 2024.

The decrease in loans consisted of decreases of $138.9 million in construction loans, $248,000 in non-residential loans, and $36,000 in one-to-four family loans.

Total assets decreased $35.7 million, or 1.8%, to $2.0 billion at June 30, 2025, from $2.0 billion at December 31, 2024.

The decrease in assets was primarily due to decreases in cash and cash equivalents of $18.9 million, net loans of $14.9 million, and real estate owned of $4.4 million, partially offset by an increase of $3.4 million in equity securities.

Cash and cash equivalents decreased $18.9 million, or 24.1%, to $59.4 million at June 30, 2025 from $78.3 million at December 31, 2024.

The decrease in cash and cash equivalents was a result of a decrease in deposits of $191.2 million, partially offset by increases of $135.0 million in borrowings, decreases of $14.9 million in net loans, and increases of $3.4 million in equity securities.

Equity securities increased $3.4 million, or 15.2%, to $25.3 million at June 30, 2025 from $22.0 million at December 31, 2024.

The increase in equity securities was attributable to the purchase of $3.0 million in equity securities during the six months ended June 30, 2025 and market appreciation of $351,000 due to market interest rate volatility during the six months ended June 30, 2025.

Securities held-to-maturity decreased $218,000, or 1.5%, to $14.4 million at June 30, 2025 from $14.6 million at December 31, 2024 due to $485,000 in maturities and pay-downs of various investment securities.

Loans, net of the allowance for credit losses, decreased $14.9 million, or 0.8%, to $1.8 billion at June 30, 2025 from $1.8 billion at December 31, 2024.

The decrease in loans consisted of decreases of $102.7 million in construction loans, $1.6 million in consumer loans, $482,000 in mixed-use loans, $475,000 in non-residential loans, and $74,000 in one-to-four family loans.

The decrease in our construction loan portfolio was due to normal pay-downs and principal reductions as construction projects were completed and either condominium units were sold to end buyers or multi-family rental buildings were refinanced by other financial institutions.

The decrease in construction loans was offset by increases of $46.4 million in multi-family loans, $4.4 million in commercial and industrial loans, and $1.5 million in consumer loans.

During the quarter ended March 31, 2025, we originated loans totaling $170.1 million consisting primarily of $110.2 million in construction loans, $49.1 million in multi-family loans, $10.1 million in commercial and industrial loans, and $730,000 in mixed-use loans.

The decrease in construction loans was offset by increases of $85.9 million in multi-family loans of which $43.2 million is attributed to residential cooperative building loans, and $4.3 million in commercial and industrial loans.

During the six months ended June 30, 2025, we originated loans totaling $462.7 million consisting primarily of $338.8 million in construction loans, $95.4 million in multi-family loans of which $32.9 million is attributed to residential cooperative building loans, $27.8 million in commercial and industrial loans, and $730,000 in mixed-use loans.

The $338.8 million in construction loans had 41.6% disbursed at loan closing, with the remaining funds to be disbursed over the terms of the construction loans.

The allowance for credit losses related to loans increased to $5.1 million as of March 31, 2025, from $4.8 million as of December 31, 2024.

The increase in the allowance for credit losses related to loans was due to recoveries totaling $352,000 and provision for credit losses totaling $62,000, offset by charge-offs totaling $117,000.

Premises and equipment increased $84,000, or 0.3%, to $24.9 million at March 31, 2025 from $24.8 million at December 31, 2024 primarily due to the purchases of additional fixed assets.

Federal Home Loan Bank stock was $397,000, foreclosed real estate was $5.1 million, and property held for investment was $1.4 million at both March 31, 2025 and December 31, 2024.

Bank owned life insurance (“BOLI”) increased $167,000, or 0.6%, to $25.9 million at March 31, 2025 from $25.7 million at December 31, 2024 due to increases in the BOLI cash value.

Accrued interest receivable decreased $1.0 million, or 7.9%, to $12.4 million at March 31, 2025 from $13.5 million at December 31, 2024 due to a decrease in the loan portfolio.

Right of use assets — operating decreased $145,000, or 3.6%, to $3.9 million at March 31, 2025 from $4.0 million at December 31, 2024, primarily due to amortization.

Other assets decreased $328,000, or 2.8%, to $11.3 million at March 31, 2025 from $11.6 million at December 31, 2024 due to decreases of $1.7 million in tax assets and $10,000 in miscellaneous assets, partially offset by increases of $1.1 million in suspense accounts and $263,000 in prepaid expenses.

Total deposits decreased $84.4 million, or 5.1%, to $1.6 billion at March 31, 2025 from $1.7 billion at December 31, 2024.

The decrease in deposits was primarily due to decreases in certificates of deposit of $125.1 million, or 12.5%, and non-interest bearing deposits of $9.9 million, or 3.5%, partially offset by increases in NOW/money market accounts of $45.9 million, or 18.8%, and savings account balances of $3.3 million, or 2.4%.

The allowance for credit losses related to loans decreased to $4.7 million as of June 30, 2025, from $4.8 million as of December 31, 2024.

The decrease in the allowance for credit losses related to loans was due to charge-offs totaling $602,000, offset by recoveries totaling $434,000 and provision for credit losses totaling $62,000.

Premises and equipment increased $536,000, or 2.2%, to $25.3 million at June 30, 2025 from $24.8 million at December 31, 2024 primarily due to the purchases of additional fixed assets.

Federal Home Loan Bank stock increased $688,000, or 173.3%, to $1.1 million at June 30, 2025 from $397,000 at December 31, 2024 primarily due to an increase in borrowings from the Federal Home Loan Bank.

Bank owned life insurance (“BOLI”) increased $336,000, or 1.3%, to $26.1 million at June 30, 2025 from $25.7 million at December 31, 2024 due to increases in the BOLI cash value.

Accrued interest receivable decreased $1.4 million, or 10.1%, to $12.1 million at June 30, 2025 from $13.5 million at December 31, 2024 due to a decrease of $14.9 million in the loan portfolio.

Real estate owned decreased $4.4 million, or 85.0%, to $767,000 at June 30, 2025 from $5.1 million at December 31, 2024 due to the sale of a foreclosed property to an independent third party.

Property held for investment was $1.4 million at both June 30, 2025 and December 31, 2024.

Right of use assets — operating increased $382,000, or 9.6%, to $4.4 million at June 30, 2025 from $4.0 million at December 31, 2024, primarily due to the physical expansion of a branch office and the resulting revision to the operating lease, partially offset by the amortization of the right of use assets.

Other assets decreased $1.2 million, or 10.5%, to $10.4 million at June 30, 2025 from $11.6 million at December 31, 2024 due to decreases of $1.2 million in tax assets and $118,000 in prepaid expenses, partially offset by an increase of $116,000 in suspense accounts.

Total deposits decreased $191.2 million, or 11.5%, to $1.5 billion at June 30, 2025 from $1.7 billion at December 31, 2024.

The decrease in deposits was primarily due to a decrease in certificates of deposit of $251.5 million, or 25.1%, partially offset by increases in NOW/money market accounts of $56.4 million, or 23.2%, savings account balances of $3.3 million, or 2.4%, and non-interest bearing deposits of $2.2 million, or 0.8%.

The decrease of $251.5 million in certificates of deposit consisted of a decrease in retail certificates of deposit of $134.2 million, or 26.2%, and a decrease in brokered certificates of deposit of $129.1 million, or 29.7%, partially offset by an increase in non-brokered listing services certificates of deposit of $11.7 million, or 35.0%.

The decrease in retail certificates of deposit was due to a shift in deposits to our retail high yield money market accounts.

The decrease in brokered certificates of deposit was due to management’s strategy to reduce the cost of funds by calling higher rate brokered deposits on their call date.

Advance payments by borrowers for taxes and insurance increased $680,000, or 42.0%, to $2.3 million at March 31, 2025 from $1.6 million at December 31, 2024 due primarily to accumulation of real estate tax payments from borrowers.

Lease liability – operating decreased $136,000, or 3.3%, to $4.0 million at March 31, 2025 from $4.1 million at December 31, 2024, primarily due to amortization.

Accounts payable and accrued expenses decreased $1.3 million, or 8.7%, to $13.3 million at March 31, 2025 from $14.5 million at December 31, 2024 due primarily to a decrease in accrued expense of $2.8 million, partially offset by increases in dividends payable and other payables of $806,000, suspense accounts for loan closings of $346,000, and deferred compensation of $167,000.

The allowance for credit losses for off-balance sheet commitments increased $175,000, or 24.8%, to $879,000 at March 31, 2025 from $704,000 at December 31, 2024 due primarily to an increase of $101.4 million, or 18.0%, in off-balance sheet commitments.

Stockholders’ equity increased $8.9 million, or 2.8% to $327.2 million at March 31, 2025, from $318.3 million at December 31, 2024.

The increase in stockholders’ equity was due to net income of $10.6 million for the quarter ended

March 31, 2025, an increase of $302,000 in earned employee stock ownership plan shares coupled with a reduction of $218,000 in unearned employee stock ownership plan shares, and the amortization expense of $478,000 relating to restricted stock and stock options granted under the Company’s 2022 Equity Incentive Plan, partially offset by dividends declared of $2.7 million and $13,000 in other comprehensive loss.

Results of Operations for the Three Months Ended March 31, 2025 and 2024

The decrease in brokered certificates of deposit was due to management’s strategy to reduce the cost of funds by “calling” higher rate brokered deposits on their call dates.

Advance payments by borrowers for taxes and insurance increased $804,000, or 49.7%, to $2.4 million at June 30, 2025 from $1.6 million at December 31, 2024 due primarily to accumulation of real estate tax payments from borrowers.

Borrowings increased to $135.0 million at June 30, 2025 from none at December 31, 2024 due primarily to management’s strategy to diversify funding sources.

Lease liability – operating increased $389,000, or 9.5%, to $4.5 million at June 30, 2025 from $4.1 million at December 31, 2024, primarily due to the physical expansion of a branch office and the resulting revision to the operating lease, partially offset by the amortization of the lease liability.

Accounts payable and accrued expenses increased $970,000, or 6.7%, to $15.5 million at June 30, 2025 from $14.5 million at December 31, 2024 due primarily to increases in accrued borrowing interest expense of $905,000, accounts payable of $666,000, deferred compensation of $312,000, and suspense accounts for loan closings of $269,000, and the allowance for credit losses for off-balance sheet commitments of $175,000, partially offset by a decrease in accrued expense of $1.4 million.

The allowance for credit losses for off-balance sheet commitments increased $175,000, or 24.8%, to $879,000 at June 30, 2025 from $704,000 at December 31, 2024 due primarily to an increase of $74.5 million, or 13.3%, in off-balance sheet commitments since December 31, 2024.

Stockholders’ equity increased $18.3 million, or 5.8% to $336.7 million at June 30, 2025, from $318.3 million at December 31, 2024.

The increase in stockholders’ equity was due to net income of $21.7 million for the six months

ended June 30, 2025, an increase of $638,000 in earned employee stock ownership plan shares coupled with a reduction of $435,000 in unearned employee stock ownership plan shares, and the amortization expense of $894,000 relating to restricted stock and stock options granted under the Company’s 2022 Equity Incentive Plan, partially offset by dividends declared of $5.4 million and $4,000 in other comprehensive loss.

Results of Operations for the Three Months Ended June 30, 2025 and 2024

Financial Highlights

Net income for the three months ended March 31, 2025 was $10.6 million compared to net income of $11.4 million for the three months ended March 31, 2024.

The decrease in net income of $807,000, or 7.1%, between periods was primarily due to a decrease in net interest income, an increase in the provision for credit losses, and an increase in non-interest expense, partially offset by an increase in non-interest income and a decrease in income tax expense.

Net income for the three months ended June 30, 2025 was $11.2 million compared to net income of $12.8 million for the three months ended June 30, 2024.

The decrease in net income of $1.6 million, or 12.7%, between periods was primarily due to a decrease of $1.1 million in net interest income, an increase of $1.0 million in non-interest expense, and no credit loss expense for the three months ended June 30, 2025 compared to a credit loss expense reduction of $226,000 for the three months ended June 30, 2024, partially offset by an increase of $127,000 in non-interest income and a decrease of $629,000 in income tax expense.

Net Interest Income

Net interest income was $24.3 million for the three months ended March 31, 2025, as compared to $25.0 million for the three months ended March 31, 2024.

The decrease in net interest income of $722,000, or 2.9%, was primarily due to an increase in interest expense that exceeded an increase in interest income and a decrease in the yield on interest earning assets that exceeded a decrease in the cost of funds for interest bearing liabilities.

Total interest and dividend income increased $86,000, or 0.2%, to $38.2 million for the three months ended March 31, 2025 from $38.1 million for the three months ended March 31, 2024.

The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $159.9 million, or 9.2%, to $1.9 billion for the three months ended March 31, 2025 from $1.7 billion for the three months ended March 31, 2024, partially offset by a decrease in the yield on interest earning assets by 72 basis points from 8.77% for the three months ended March 31, 2024 to 8.05% for the three months ended March 31, 2025.

Interest expense increased $808,000, or 6.2%, to $13.9 million for the three months ended March 31, 2025 from $13.1 million for the three months ended March 31, 2024.

The increase in interest expense was due to an increase in average interest bearing liabilities of $149.7 million, or 12.2%, to $1.4 billion for the three months ended March 31, 2025 from $1.2 billion for the three months ended March 31, 2024, partially offset by a decrease in the cost of interest bearing liabilities by 24 basis points from 4.29% for the three months ended March 31, 2024 to 4.05% for the three months ended March 31, 2025.

Our net interest margin decreased 64 basis points, or 11.1%, to 5.11% for the three months ended March 31, 2025 compared to 5.75% for the three months ended March 31, 2024.

The decrease in the net interest margin was due to a decrease in the yield on interest-earning assets that exceeded a decrease in the cost of funds on interest-bearing liabilities.

Net interest income was $25.1 million for the three months ended June 30, 2025, as compared to $26.2 million for the three months ended June 30, 2024.

The decrease in net interest income of $1.1 million, or 4.4%, was primarily due to a decrease in interest income that exceeded a decrease in interest expense and a decrease in the yield on interest earning assets, partially offset by a smaller decrease in the cost of funds for interest bearing liabilities.

Total interest and dividend income decreased $2.2 million, or 5.5%, to $38.0 million for the three months ended June 30, 2025 from $40.2 million for the three months ended June 30, 2024.

The decrease in interest and dividend income was due to a decrease in the yield on interest earning assets by 78 basis points from 8.89% for the three months ended June 30, 2024 to 8.11% for the three months ended June 30, 2025, partially offset by an increase in the average balance of interest earning assets of $64.9 million, or 3.6%, to $1.9 billion for the three months ended June 30, 2025 from $1.8 billion for the three months ended June 30, 2024.

Interest expense decreased $1.1 million, or 7.5%, to $13.0 million for the three months ended June 30, 2025 from $14.0 million for the three months ended June 30, 2024.

The decrease in interest expense was due to a decrease in the cost of interest bearing liabilities by 45 basis points from 4.33% for the three months ended June 30, 2024 to 3.88% for the three months ended June 30, 2025, partially offset by an increase in average interest bearing liabilities of $41.9 million, or 3.2%, to $1.3 billion for the three months ended June 30, 2025 from $1.3 billion for the three months ended June 30, 2024.

Our net interest margin decreased 44 basis points, or 7.6%, to 5.35% for the three months ended June 30, 2025 compared to 5.79% for the three months ended June 30, 2024.

The decrease in the net interest margin was due to a 100 basis points decrease in the Federal Funds rate from September 2024 to December 2024 that resulted in a decrease in the yield on interest-earning assets, partially offset by a smaller decrease in the cost of funds on interest-bearing liabilities.

Credit Loss Expense

The Company recorded a credit loss expense of $237,000 for the three months ended March 31, 2025 compared to a credit loss expense reduction of $165,000 for the three months ended March 31, 2024.

The credit loss expense of $237,000 for the three months ended March 31, 2025 was comprised of credit loss expense for loans of $62,000 and credit loss expense for off-balance sheet commitments of $175,000.

The credit loss expense for loans of $62,000 for the three months ended March 31, 2025 was primarily due to an increase in the multi-family loan portfolio.

The credit loss expense for off-balance sheet commitments of $175,000 for the three months ended March 31, 2025 was primarily due to an increase in unfunded off-balance sheet commitments.

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.

With respect to the allowance for credit losses for loans, we charged-off $117,000 during the three months ended March 31, 2025 as compared to charge-offs of $21,000 during the three months ended March 31, 2024.

The Company recorded no credit loss expense for the three months ended June 30, 2025 compared to a credit loss expense reduction of $226,000 for the three months ended June 30, 2024.

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 $218,000 and a credit loss expense reduction for held-to-maturity investment securities of $8,000.

The credit loss expense reduction for off-balance sheet commitments of $218,000 for the three months ended June 30, 2024 was primarily attributable to a reduction of $30.4 million in the level of off-balance sheet commitments and favorable trends in the economy.

With respect to the allowance for credit losses for loans, we charged-off $485,000 during the three months ended June 30, 2025 as compared to charge-offs of $12,000 during the three months ended June 30, 2024.

The charge-offs during both periods were against various unpaid overdrafts in our demand deposit accounts.

We recorded recoveries of $352,000 during the three months ended March 31, 2025 compared to no recoveries during the three months ended March 31, 2024.

The recoveries of $352,000 during the three months ended March 31, 2025 comprised of recoveries of $350,000 regarding a previously charged-off non-residential mortgage loan and $2,000 from a previously charged-off unpaid overdraft on a demand deposit account.

Based on a review at March 31, 2025 of the loans that were in the loan portfolio, our off-balance sheet credit exposures, and our HTM investment securities, management believes that the allowances for these three components are maintained at a level that represents our best estimate of inherent losses in the loan portfolio, off-balance sheet credit exposures, and HTM investment securities that were both probable and reasonably estimable.

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

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

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

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

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

We recorded recoveries of $82,000 during the three months ended June 30, 2025 compared to no recoveries during the three months ended June 30, 2024.

The recoveries of $82,000 during the three months ended June 30, 2025 comprised of recoveries from a previously charged-off unpaid overdraft on a demand deposit account.

Non-Interest Income

Non-interest income for the three months ended March 31, 2025 was $1.2 million compared to non-interest income of $554,000 for the three months ended March 31, 2024.

The increase of $681,000, or 122.9%, in total non-interest income was primarily due to increases of $382,000 in unrealized gain/(loss) on equity securities, $278,000 in other loan fees and service charges, $11,000 in miscellaneous other non-interest income, and $10,000 in BOLI income.

The increase in unrealized gain/(loss) on equity securities was due to an unrealized gain of $300,000 on equity securities during the three months ended March 31, 2025 compared to an unrealized loss of $82,000 on equity securities during the three months ended March 31, 2024.

The unrealized gain of $300,000 on equity securities during the three months ended March 31, 2025 was due to market interest rate volatility during the three months ended March 31, 2025.

The increase of $278,000 in other loan fees and service charges was due to an increase of $245,000 in other loan fees and loan servicing fees, an increase of $31,000 in ATM/debit card/ACH fees, and an increase of $2,000 in deposit account fees.

Non-interest income for the three months ended June 30, 2025 was $858,000 compared to non-interest income of $731,000 for the three months ended June 30, 2024.

The increase of $127,000, or 17.4%, in total non-interest income was primarily due to increases of $71,000 in unrealized gain on equity securities, $48,000 in other loan fees and service charges, and $8,000 in BOLI income.

The increase in unrealized gain on equity securities was due to an unrealized gain of $51,000 on equity securities during the three months ended June 30, 2025 compared to an unrealized loss of $20,000 on equity securities during the three months ended June 30, 2024.

Both the unrealized gain of $51,000 on equity securities during the three months ended June 30, 2025 and the unrealized loss of $20,000 on equity securities during the three months ended June 30, 2024 were due to market interest rate volatility during both periods.

The increase of $48,000 in other loan fees and service charges was due to an increase of $60,000 in ATM/debit card/ACH fees and an increase of $2,000 in deposit account fees, partially offset by a decrease of $14,000 in other loan fees and loan servicing fees.

The increase in BOLI income of $8,000 was due to an increase in the yield on BOLI assets.

Non-Interest Expense

Non-interest expense increased $938,000, or 9.7%, to $10.6 million for the three months ended March 31, 2025 from $9.7 million for the three months ended March 31, 2024.

The increase resulted primarily from increases of $582,000 in salaries and employee benefits, $221,000 in other operating expense, $98,000 in outside data processing expense, $40,000 in occupancy expense, $19,000 in real estate owned expense, and $14,000 in advertising expense, partially offset by a decrease of $36,000 in equipment expense.

Salaries and employee benefits increased $582,000, or 10.9%, to $5.9 million for the three months ended March 31, 2025 from $5.4 million for the three months ended March 31, 2024 primarily due to an increase in the number of full time equivalent employees to support the growth of the Company and an increase in employee compensation and benefits expense in order to retain key personnel.

Other non-interest expense increased $221,000, or 8.4%, to $2.9 million for the three months ended March 31, 2025 from $2.6 million for the three months ended March 31, 2024 due mainly to increases of $157,000 in miscellaneous other non-interest expense, $106,000 in regulatory fees, $32,000 in legal expense, $8,000 in audit and accounting fees, $5,000 in expenses related to the hiring of personnel, $5,000 in office supplies, and $4,000 in insurance expense.

increases were offset by decreases of $40,000 in consulting fees, $27,000 in telephone expense, $20,000 in directors, officers and employees’ expense, $9,000 in directors’ compensation, and $1,000 in service contracts expense.

Miscellaneous other non-interest expense increased $157,000, or 43.9%, to $516,000 for the three months ended March 31, 2025 from $359,000 for the three months ended March 31, 2024 due to increases of $53,000 in miscellaneous expenses, $48,000 in miscellaneous charge-offs, $41,000 in public company expenses, $6,000 in postage expenses, $5,000 in check and correspondence bank charges, and $5,000 in dues and subscription expense.

Regulatory fees increased $106,000, or 14.2%, to $850,000 for the three months ended March 31, 2025 from $744,000 for the three months ended March 31, 2024 due to an increase in our total assets.

Legal fees increased $32,000, or 48.5%, to $98,000 for the three months ended March 31, 2025 from $66,000 for the three months ended March 31, 2024 due to an increase in transactions requiring legal services.

Audit and accounting expense increased $8,000, or 5.9%, to $143,000 for the three months ended March 31, 2025 from $135,000 for the three months ended March 31, 2024 due to normal increases by the Company’s accounting firms.

Recruitment expense increased by $5,000, or 18.5%, to $32,000 for the three months ended March 31, 2025 from $27,000 for the three months ended March 31, 2024 due to the need to increase personnel.

Office supplies increased by $5,000, or 9.8%, to $56,000 for the three months ended March 31, 2025 from $51,000 for the three months ended March 31, 2024 due to the growth of the Company.

Insurance expense increased $4,000, or 3.9%, to $106,000 for the three months ended March 31, 2025 from $102,000 for the three months ended March 31, 2024 due to a general increase in insurance premiums.

Consulting fees decreased by $40,000, or 17.3%, to $191,000 for the three months ended March 31, 2025 from $231,000 for the three months ended March 31, 2024 due to less reliance on consultants.

Telephone expense decreased by $27,000, or 15.9%, to $143,000 for the three months ended March 31, 2025 from $170,000 for the three months ended March 31, 2024 due to a reduction in telephone usage.

Directors, officers, and employees’ expenses decreased $20,000, or 25.3%, to $59,000 for the three months ended March 31, 2025 from $79,000 for the three months ended March 31, 2024 due to reduction in traveling expense.

Directors’ compensation decreased $9,000, or 3.7%, to $237,000 for the three months ended March 31, 2025 from $246,000 for the three months ended March 31, 2024 due to a reduction in the amortization of expenses related to the 2022 Equity Incentive Plan awards of restricted stocks and options, partially offset by an increase in the quarterly retainer fees.

Outside data processing expense increased $98,000, or 15.4%, to $735,000 for the three months ended March 31, 2025 from $637,000 for the three months ended March 31, 2024 due to additional data processing services to support the growth of the Company.

Occupancy expense increased $40,000, or 5.7%, to $747,000 for the three months ended March 31, 2025 from $707,000 for the three months ended March 31, 2024 primarily as a result of the impact of inflation in operating cost.

Real estate owned expense increased $19,000, or 172.7%, to $30,000 for the three months ended March 31, 2025 from $11,000 for the three months ended March 31, 2024 due to higher operating expenses to maintain two foreclosed properties in 2025 compared to one foreclosed property in 2024.

Advertising expense increased $14,000, or 15.9%, to $102,000 for the three months ended March 31, 2025 from $88,000 for the three months ended March 31, 2024 due mainly to an increase in advertising and promotional products.

Equipment expense decreased $36,000, or 14.2%, to $217,000 for the three months ended March 31, 2025 from $253,000 for the three months ended March 31, 2024 due to a reduced need to purchase additional equipment.

Income Taxes.

We recorded income tax expense of $4.1 million and $4.7 million for the three months ended March 31, 2025 and 2024, respectively.

For the three months ended March 31, 2025, we had approximately $204,000 in tax exempt income, compared to approximately $195,000 in tax exempt income for the three months ended March 31, 2024.

Our effective income tax rates were 27.8% and 29.0% for the three months ended March 31, 2025 and 2024, respectively.

Non-interest expense increased $1.0 million, or 10.6%, to $10.5 million for the three months ended June 30, 2025 from $9.5 million for the three months ended June 30, 2024.

The increase resulted primarily from increases of $398,000 in salaries and employee benefits, $220,000 in real estate owned expense, $151,000 in outside data processing expense, $111,000 in other operating expense, $69,000 in occupancy expense, $32,000 in equipment expense, and $29,000 in advertising expense.

Salaries and employee benefits increased $398,000, or 7.6%, to $5.7 million for the three months ended June 30, 2025 from $5.3 million for the three months ended June 30, 2024 primarily due to the hiring of additional personnel to support the growth of the Company and an increase in employee compensation and benefits expense in order to retain key personnel, partially offset by an increase in loan origination offset expenses.

Real estate owned expense increased $220,000, or 814.8%, to $247,000 for the three months ended June 30, 2025 from $27,000 for the three months ended June 30, 2024 due to closing costs of $231,000 associated with the sale of a foreclosed property during the three months ended June 30, 2025.

Outside data processing expense increased $151,000, or 24.9%, to $758,000 for the three months ended June 30, 2025 from $607,000 for the three months ended June 30, 2024 due to an increase in transactions and additional data processing services.

Other non-interest expense increased $111,000, or 4.2%, to $2.7 million for the three months ended June 30, 2025 from $2.6 million for the three months ended June 30, 2024 due mainly to increases of $117,000 in miscellaneous other non-interest expense, $45,000 in legal fees, $24,000 in expenses related to the recruitment of personnel, $24,000 in service contracts expense, and $7,000 in audit and accounting fees.

These increases were partially offset by decreases of $42,000 in consulting fees, $21,000 in directors compensation, $16,000 in insurance expense, $13,000 in telephone expense, $9,000 in office supplies, and $5,000 in directors, officers, and employee expenses.

The increase of $117,000 in miscellaneous other non-interest expense was mainly due to increases of $54,000 in regulatory insurance premiums and assessments due to an increase in our total assets, $30,000 in dues and subscriptions, $14,000 in miscellaneous charge-offs, $7,000 in check and correspondence bank charges, $6,000 in miscellaneous expenses, $4,000 in public company expenses, and $2,000 in postage expense.

Legal fees increased $45,000, or 37.5%, to $165,000 for the three months ended June 30, 2025 from $120,000 for the three months ended June 30, 2024 due to legal proceedings to resolve problem loans, recovery efforts for losses

incurred from previously charged-off loans and overdrafts, and general legal services.

Recruiting expense increased $24,000, or 2,400.0%, to $25,000 for the three months ended June 30, 2025 from $1,000 for the three months ended June 30, 2024 due to our increased usage of traditional recruiting firms in 2025 for personnel hirings.

Service contracts expense increased $24,000, or 5.7%, to $445,000 for the three months ended June 30, 2025 from $421,000 for the three months ended June 30, 2024 due to the increased cost to support the growth of the Company.

Audit and accounting expense increased $7,000, or 5.0%, to $147,000 for the three months ended June 30, 2025 from $140,000 for the three months ended June 30, 2024 due to normal increases by the Company’s accounting firms.

Consultant fees decreased $42,000, or 24.9%, to $127,000 for the three months ended June 30, 2025 from $169,000 for the three months ended June 30, 2024 due to less reliance on consultants in 2025.

Directors’ compensation decreased $21,000, or 8.8%, to $219,000 for the three months ended June 30, 2025 from $240,000 for the three months ended June 30, 2024 due to a reduction in the amortization expense related to the 2022 Equity Incentive Plan.

Due to efforts to contain cost, insurance expense decreased $16,000, or 14.6%, to $94,000 for the three months ended June 30, 2025 from $110,000 for the three months ended June 30, 2024, telephone expense decreased $13,000, or 8.0%, to $150,000 for the three months ended June 30, 2025 from $163,000 for the three months ended June 30, 2024, office supplies expense decreased $9,000, or 15.8%, to $48,000 for the three months ended June 30, 2025 from $57,000 for the three months ended June 30, 2024, and directors, officers, and employee expenses decreased $5,000, or 6.2%, to $76,000 for the three months ended June 30, 2025 from $81,000 for the three months ended June 30, 2024.

Occupancy expense increased $69,000, or 10.2%, to $743,000 for the three months ended June 30, 2025 from $674,000 for the three months ended June 30, 2024 primarily as a result of the increased cost of operating office space.

Equipment expense increased $32,000, or 14.5%, to $253,000 for the three months ended June 30, 2025 from $221,000 for the three months ended June 30, 2024 due to upgrades of equipment.

Advertising expense increased $29,000, or 30.9%, to $123,000 for the three months ended June 30, 2025 from $94,000 for the three months ended June 30, 2024 due to an increase in various marketing campaigns.

We recorded income tax expense of $4.3 million and $4.9 million for the three months ended June 30, 2025 and 2024, respectively.

For the three months ended June 30, 2025, we had approximately $210,000 in tax exempt income, compared to approximately $199,000 in tax exempt income for the three months ended June 30, 2024.

Our effective income tax rates were 27.6% for the three months ended June 30, 2025 and June 30, 2024.

Results of Operations for the Six Months Ended June 30, 2025 and 2024

Financial Highlights

Net income for the six months ended June 30, 2025 was $21.7 million compared to net income of $24.2 million for the six months ended June 30, 2024.

The decrease in net income of $2.4 million, or 10.1%, between periods was primarily due to a decrease of $1.9 million in net interest income, an increase of $1.9 million in non-interest expense, and an increase of $628,000 in credit loss expense, partially offset by an increase of $808,000 in non-interest income and a decrease of $1.2 million in income tax expense.

Net Interest Income

Net interest income was $49.3 million for the six months ended June 30, 2025 as compared to $51.2 million for the six months ended June 30, 2024.

The decrease in net interest income of $1.9 million, or 3.7%, was primarily due to a decrease in interest income that exceeded a decrease in interest expense and a decrease in the yield on interest earning assets, partially offset by a smaller decrease in the cost of funds for interest bearing liabilities.

Total interest and dividend income decreased $2.1 million, or 2.7%, to $76.2 million for the six months ended June 30, 2025 from $78.4 million for the six months ended June 30, 2024.

The decrease in interest and dividend income was due to a decrease in the yield on interest earning assets by 75 basis points from 8.83% for the six months ended June 30, 2024 to 8.08% for the six months ended June 30, 2025, partially offset by an increase in the average balance of interest

earning assets of $112.3 million, or 6.3%, to $1.9 billion for the six months ended June 30, 2025 from $1.8 billion for the six months ended June 30, 2024.

Interest expense decreased $242,000, or 0.9%, to $26.9 million for the six months ended June 30, 2025 from $27.2 million for the six months ended June 30, 2024.

The decrease in interest expense was due to a decrease in the cost of interest bearing liabilities by 34 basis points from 4.31% for the six months ended June 30, 2024 to 3.97% for the six months ended June 30, 2025, partially offset by an increase in average interest bearing liabilities of $95.7 million, or 7.6%, to $1.4 billion for the six months ended June 30, 2025 from $1.3 billion for the six months ended June 30, 2024.

Net interest margin decreased 54 basis points, or 9.4%, to 5.23% for the six months ended June 30, 2025 compared to 5.77% for the six months ended June 30, 2024.

Credit Loss Expense

The Company recorded a credit loss expense of $237,000 for the six months ended June 30, 2025 compared to a credit loss expense reduction of $391,000 for the six months ended June 30, 2024.

The credit loss expense of $237,000 for the six months ended June 30, 2025 was comprised of credit loss expense for loans of $62,000 and credit loss expense for off-balance sheet commitments of $175,000.

The credit loss expense for loans of $62,000 for the six months ended June 30, 2025 was primarily due to an increase in the multi-family loan portfolio.

The credit loss expense for off-balance sheet commitments of $175,000 for the six months ended June 30, 2025 was primarily due to an increase in unfunded off-balance sheet commitments.

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 $235,000, a credit loss expense reduction for loans of $145,000, and a credit loss expense reduction for held-to-maturity investment securities of $11,000.

The credit loss expense reduction for off-balance sheet commitments of $235,000 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.

With respect to the allowance for credit losses for loans, we charged-off $602,000 during the six months ended June 30, 2025 as compared to charge-offs of $33,000 during the six months ended June 30, 2024.

The charge-offs during both periods were against various unpaid overdrafts in our demand deposit accounts.

We recorded recoveries of $434,000 during the six months ended June 30, 2025 compared to no recoveries during the six months ended June 30, 2024.

The recoveries of $434,000 during the six months ended June 30, 2025 comprised of recoveries of $350,000 with respect to a previously charged-off non-residential mortgage loan and $84,000 from previously charged-off unpaid overdrafts on demand deposit accounts.

Non-Interest Income

Non-interest income for the six months ended June 30, 2025 was $2.1 million compared to non-interest income of $1.3 million for the six months ended June 30, 2024.

The increase of $808,000, or 62.9%, in total non-interest income was primarily due to increases of $453,000 in unrealized gain on equity securities, $326,000 in other loan fees and service charges, $17,000 in BOLI income, and $12,000 in miscellaneous other non-interest income.

The increase in unrealized gain on equity securities was due to an unrealized gain of $351,000 on equity securities during the six months ended June 30, 2025 compared to an unrealized loss of $102,000 on equity securities during the six months ended June 30, 2024.

Both the unrealized gain of $351,000 on equity securities during the 2025 period and the unrealized loss of $102,000 on equity securities during the 2024 period were due to market interest rate volatility during both periods.

The increase of $326,000 in other loan fees and service charges was due to increases of $232,000 in other loan fees and loan servicing fees, $91,000 in ATM/debit card/ACH fees, and $3,000 in deposit account fees.

The increase in BOLI income of $17,000 was due to an increase in the yield on BOLI assets.

Non-Interest Expense

Non-interest expense increased $1.9 million, or 10.2%, to $21.1 million for the six months ended June 30, 2025 from $19.2 million for the six months ended June 30, 2024.

The increase resulted primarily from increases of $980,000 in salaries and employee benefits, $332,000 in other operating expense, $251,000 in outside data processing expense, $238,000 in real estate owned expense, $108,000 in occupancy expense, and $43,000 in advertising expense, partially offset by a decrease of $4,000 in equipment expense.

Salaries and employee benefits increased $980,000, or 9.2%, to $11.6 million for the six months ended June 30, 2025 from $10.6 million for the six months ended June 30, 2024 primarily due to the hiring of additional personnel to support the growth of the Company and an increase in employee compensation and benefits expense in order to retain key personnel, partially offset by an increase in loan origination offset expenses.

Other non-interest expense increased $332,000, or 6.3%, to $5.6 million for the six months ended June 30, 2025 from $5.3 million for the six months ended June 30, 2024 due mainly to increases of $380,000 in miscellaneous other non-interest expense, $78,000 in legal fees, $29,000 in expenses related to the recruitment of personnel, $23,000 in service contracts expense, and $14,000 in audit and accounting fees.

These increases were partially offset by decreases of $82,000 in consulting fees, $40,000 in telephone expense, $30,000 in directors compensation, $25,000 in directors, officers, and employee expenses, $12,000 in insurance expense, and $3,000 in office supplies.

The increase of $380,000 in miscellaneous other non-interest expense was mainly due to increases of $160,000 in regulatory insurance premiums and assessments due to an increase in our total assets, $62,000 in miscellaneous charge-offs, $58,000 in miscellaneous expenses, $45,000 in public company expenses, $35,000 in dues and subscriptions, $12,000 in check and correspondence bank charges, and $8,000 in postage expense.

Legal fees increased $78,000, or 42.2%, to $263,000 for the six months ended June 30, 2025 from $185,000 for the six months ended June 30, 2024 due to legal proceedings to resolve problem loans, recovery efforts for losses incurred from previously charged-off loans and overdrafts, and general legal services.

Recruiting expense increased $29,000, or 103.6%, to $57,000 for the six months ended June 30, 2025 from $28,000 for the six months ended June 30, 2024 due to our increased usage of traditional recruiting firms in 2025 for personnel hirings.

Service contracts expense increased $23,000, or 2.7%, to $868,000 for the six months ended June 30, 2025 from $845,000 for the six months ended June 30, 2024 due to the increased cost to support the growth of the Company.

Audit and accounting expense increased $14,000, or 5.1%, to $290,000 for the six months ended June 30, 2025 from $276,000 for the six months ended June 30, 2024 due to normal increases by the Company’s accounting firms.

Consultant fees decreased $82,000, or 20.5%, to $318,000 for the six months ended June 30, 2025 from $400,000 for the six months ended June 30, 2024 due to less reliance on consultants in 2025.

Directors’ compensation decreased $30,000, or 6.2%, to $456,000 for the six months ended June 30, 2025 from $486,000 for the six months ended June 30, 2024 due to a reduction in the amortization expense related to the 2022 Equity Incentive Plan.

Due to efforts to contain cost, telephone expense decreased $40,000, or 12.0%, to $293,000 for the six months ended June 30, 2025 from $333,000 for the six months ended June 30, 2024, directors, officers, and employee expenses decreased $25,000, or 15.6%, to $135,000 for the six months ended June 30, 2025 from $160,000 for the six months ended June 30, 2024, insurance expense decreased $12,000, or 5.7%, to $200,000 for the six months ended June 30, 2025 from $212,000 for the six months ended June 30, 2024, and office supplies expense decreased $3,000, or 2.8%, to $105,000 for the six months ended June 30, 2025 from $108,000 for the six months ended June 30, 2024.

Outside data processing expense increased $251,000, or 20.2%, to $1.5 million for the six months ended June 30, 2025 from $1.2 million for the six months ended June 30, 2024 due to an increase in transactions and additional data processing services.

Real estate owned expense increased $238,000, or 610.3%, to $277,000 for the six months ended June 30, 2025 from $39,000 for the six months ended June 30, 2024 due to closing costs of $231,000 associated with the sale of a foreclosed property during the six months ended June 30, 2025.

Occupancy expense increased $108,000, or 7.8%, to $1.5 million for the six months ended June 30, 2025 from $1.4 million for the six months ended June 30, 2024 primarily as a result of the increased cost of operating office space.

Advertising expense increased $43,000, or 23.6%, to $225,000 for the six months ended June 30, 2025 from $182,000 for the six months ended June 30, 2024 due to an increase in various marketing campaigns.

Equipment expense decreased $4,000, or 0.8%, to $470,000 for the six months ended June 30, 2025 from $474,000 for the six months ended June 30, 2024 due to a reduced need to purchase additional equipment.

We recorded income tax expense of $8.3 million and $9.5 million for the six months ended June 30, 2025 and 2024, respectively.

For the six months ended June 30, 2025, we had approximately $415,000 in tax exempt income, compared to approximately $394,000 in tax exempt income for the six months ended June 30, 2024.

Our effective income tax rates were 27.7% and 28.3% for the six months ended June 30, 2025 and 2024, respectively.

Average Balances and Yields

expense on average interest-bearing liabilities, and the resulting annualized average yields and costs.

The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs.

The yields and costs for the periods indicated are derived by dividing income or expense by the average daily balances of assets or liabilities, respectively, for the periods presented.

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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

18 unchanged sentences

Average interest-earning assets to interest-bearing liabilities

Six Months Ended June 30,

Loans receivable

Securities (1)

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 6/30/2025

Six Months Ended 6/30/2024

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 $5.1 million at March 31, 2025 and at December 31, 2024, respectively.

These non-performing assets consisted of two foreclosed properties, with one foreclosed property totaling $4.4 million located in the Bronx, New York and one foreclosed property totaling $767,000 located in Pittsburgh, Pennsylvania.

During the three months ended March 31, 2025 and 2024, we did not collect any interest income from loans that were in non-accrual status.

Non-performing assets totaled $767,000 at June 30, 2025 and $5.1 million at December 31, 2024.

The non-performing assets at June 30, 2025 consisted of one foreclosed property located in Pittsburgh, Pennsylvania compared to two foreclosed properties at December 31, 2024.

We sold one foreclosed property totaling $4.3 million located in the Bronx, New York on June 30, 2025 to a third-party buyer at no loss to the Company and in connection therewith we provided the financing to complete the multi-family project.

During the three and six months ended June 30, 2025 and 2024, 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, 2025 or 2024.

At March 31, 2025 and December 31, 2024, we had no loans modified to borrowers experiencing financial difficulty.

There were no new loan modifications to borrowers experiencing financial difficulties during the three and six months ended June 30, 2025 or 2024.

At June 30, 2025 and December 31, 2024, 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:

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Non-performing loans

The Company’s allowance for credit losses related to loans totaled $5.1 million, or 0.30% of total loans as of March 31, 2025 compared to $4.8 million, or 0.27% of total loans as of December 31, 2024.

In addition, the Company’s allowance for credit losses related to off-balance sheet commitments totaled $879,000 as of March 31, 2025 compared to $704,000 at December 31, 2024.

The allowance for credit losses related to held-to-maturity debt securities totaled $126,000 as of March 31, 2025 and December 31, 2024, respectively.

The allowance for credit losses related to loans increased $297,000 to $5.1 million at March 31, 2025 from $4.8 million at December 31, 2024.

The increase in the allowance for credit losses was due primarily to recoveries of $352,000 and a credit loss expense of $62,000, offset by charge-offs totaling $117,000.

The allowance for credit losses related to off-balance sheet commitments increased $175,000 to $879,000 at March 31, 2025 from $704,000 due to a credit loss expense of $175,000 at March 31, 2025.

The Company’s allowance for credit losses related to loans totaled $4.7 million, or 0.26% of total loans as of June 30, 2025 compared to $4.8 million, or 0.27% of total loans as of December 31, 2024.

In addition, the Company’s allowance for credit losses related to off-balance sheet commitments totaled $879,000 as of June 30, 2025 compared to $704,000 at December 31, 2024.

The allowance for credit losses related to held-to-maturity debt securities totaled $126,000 as of June 30, 2025 and December 31, 2024, respectively.

The allowance for credit losses related to loans decreased $106,000 to $4.7 million at June 30, 2025 from $4.8 million at December 31, 2024.

The decrease in the allowance for credit losses was due primarily to charge-offs totaling $603,000, partially offset by recoveries of $434,000 and a credit loss expense of $62,000.

The allowance for credit losses related to off-balance sheet commitments increased $175,000 to $879,000 at June 30, 2025 from $704,000 due to a credit loss expense of $175,000 at June 30, 2025.

Liquidity and Capital Resources

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

Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 6.1%, 8.4%, and 74.2%, respectively, for the three months ended March 31, 2025 compared to 6.7%,

8.8%, and 65.6%, respectively, for the year ended December 31, 2024.

Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 5.7%, 8.0%, and 64.8%, respectively, for the six months ended June 30, 2025 compared to 6.7%, 8.8%, and 65.6%, respectively, for the year ended December 31, 2024.

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

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To calculate quarterly and annual liquidity ratios, we take the average liquidity for the three- or twelve-month period, respectively, and average it.

Given the rapid movement of deposits in today’s banking environment, the Company also manages its liquidity position through a time-series approach to liquidity availability.

Traditional liquidity management focuses on on-balance sheet capacity;

however, converting those assets into cash may involve delays or market-driven losses.

To address this, the Company emphasizes the actual accessibility of liquidity as measured by when cash becomes available in the Company’s Cash Accounts rather than simply its balance sheet presence.

This time-series liquidity framework is analyzed across the following intervals:

Minute 1, Day 1, Week 1, Month 1, and Year 1.

This structure ensures a proactive and disciplined approach to managing liquidity risk.

Represents the amount of cash the Company can immediately access and disperse within one minute while remaining solvent.

It is defined as the cash and cash equivalents currently on the balance sheet and typically covers daily cash needs.

In the event of a liquidity run, this is the amount of cash that the Company can access and disperse within one day.

It includes Minute 1 liquidity plus total borrowing capacity from the Federal Home Loan Bank, Federal Reserve Bank, and other secured and unsecured sources.

In a prolonged liquidity event, this is the amount of cash available over one week.

Week 1 liquidity includes Day 1 liquidity plus the estimated collateral value of unpledged investments that can be pledged or sold, as well as a portion (typically 10% each) of the Company’s brokered and listing service deposit capacity expected to be accessible within the week.

Represents the total cash the Company can access and disperse over a one-month period while remaining solvent.

It includes Week 1 liquidity plus the remaining brokered and listing service deposit capacity not already included in Week 1.

Reflects the amount of liquidity the Company can access and deploy over a one-year time period.

It includes Month 1 liquidity plus the value of unpledged but pledgeable loans available on the balance sheet.

To assess the adequacy of its liquidity, the Company compares time-series liquidity against Total Non-Contractual Deposits defined as total deposits less (1) brokered deposits outstanding, (2) other contractual funding outstanding, and (3) collateralized municipal deposits outstanding.

As of June 30, 2025, the Company’s ratios of Cash and Borrowing Capacity/Total Non-Contractual Deposits and Cash, Borrowing Capacity and Sourced Deposits Capacity/Total Non-Contractual Deposits were 70.9% and 95.9%, respectively.

These figures demonstrate that the Company has sufficient liquidity resources to meet sudden and unexpected deposit outflow.

Our primary sources of liquidity are deposits, prepayment of loans and mortgage-backed securities, maturities of investment securities, other short-term investments, earnings, and funds provided from operations.

While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and rates offered by our competition.

We set the interest rates on our deposits to maintain a desired level of total deposits.

2 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, 2025 and 2024, our loan originations totaled $170.1 million and $180.5 million, respectively.

Cash received from the maturities and pay-downs on securities totaled $128,000 for both the three months ended March 31, 2025 and 2024, respectively.

We purchased $1.0 million in equity securities during the three months ended March 31, 2025 compared to no purchases during the three months ended March 31, 2024.

For the six months ended June 30, 2025 and 2024, our loan originations totaled $462.7 million and $364.7 million, respectively.

Cash received from the maturities and pay-downs on securities totaled $485,000 and $476,000 for the six months ended June 30, 2025 and 2024, respectively.

We purchased $3.0 million in equity securities and $270,000 in municipal securities during the six months ended June 30, 2025 compared to no purchases during the six months ended June 30, 2024.

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 $15.5 million and $18.2 million from the Federal Home Loan Bank of New York as of March 31, 2025 and December 31, 2024, respectively.

We had no Federal Home Loan Bank advances at March 31, 2025 and December 31, 2024.

We had an available borrowing limit of $23.1 million and $18.2 million from the Federal Home Loan Bank of New York as of June 30, 2025 and December 31, 2024, respectively.

We had $15.0 million in Federal Home Loan Bank advances at June 30, 2025 compared to none at December 31, 2024.

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 $941.3 million and $834.7 million from the FRBNY as of March 31, 2025 and December 31, 2024, respectively.

We had no FRBNY borrowings at March 31, 2025 and December 31, 2024.

We had an available borrowing limit of $740.2 million and $834.7 million from the FRBNY as of June 30, 2025 and December 31, 2024, respectively.

We had $120.0 million in FRBNY borrowings at June 30, 2025 compared to none at December 31, 2024.

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, 2025 and December 31, 2024.

At March 31, 2025, we had unfunded commitments on construction and multi-family mortgage loans of $360.7 million, outstanding commitments to originate loans of $205.9 million, unfunded commitments under lines of credit of $81.9 million, and unfunded standby letters of credit of $14.9 million.

At March 31, 2025, certificates of deposit scheduled to mature in less than one year totaled $809.0 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.

There were no outstanding borrowings with ACBB at June 30, 2025 and December 31, 2024.

At June 30, 2025, we had unfunded commitments on construction and multi-family mortgage loans of $426.3 million, outstanding commitments to originate loans of $110.6 million, unfunded commitments under lines of credit of $85.6 million, and unfunded standby letters of credit of $14.0 million.

At June 30, 2025, certificates of deposit scheduled to mature in less than one year totaled $688.8 million.

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

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

3 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, 2025, the Company had liquid assets of $14.9 million and $4.1 million in loan participations originated by the Bank which are held by the Company.

At June 30, 2025, the Company had liquid assets of $12.2 million and $4.1 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, 2025, 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 three and six months ended June 30, 2025, 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