Ponce Financial Group, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. General Management’s discussion and analysis of the financial condition at March 31, 2025 and December 31, 2024, and results of operations for the three months ended March 31, 2025 and 2024, is intended to assist in understanding the financial condition and results of operations of Ponce Financial Group, Inc. (the “Company”). The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1, of this quarterly report on Form 10-Q. Cautionary Note Regarding Forward-Looking Statements This quarterly report contains forward-looking statements, which can be identified by the use of words such as "estimate," "project," "intend," "anticipate," "assume," "plan," "seek," "expect," "will," "may," "should," "indicate," "would," "believe," "contemplate," "continue," "target" and words of similar meaning. These forward-looking statements include, but are not limited to: • statements of the Company’s goals, intentions and expectations; • statements regarding its business plans, prospects, growth and operating strategies; • statements regarding the quality of its loan and investment portfolios; and • estimates of the risks and future costs and benefits; These forward-looking statements are based on current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: • the scope, duration and severity of rising interest rates, and its effects on our business and operations, our customers, including their ability to make timely payments on loans, our service providers, and on the economy and financial markets in general; • changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, and their related impacts on the economy; • changes in consumer spending, borrowing and savings habits; • general economic conditions, either nationally or in the market areas, that are worse than expected; • the Company’s ability to manage market risk, credit risk and operational risk in the current economic environment; • changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; • the ability to access cost-effective funding; • fluctuations in real estate values and real estate market conditions; • demand for loans and deposits in the market area; • the Company’s ability to implement and change its business strategies; • competition among depository and other financial institutions; • inflation and changes in the interest rate environment that reduce the Company’s margins and yields, its mortgage banking revenues, the fair value of financial instruments or the level of loan originations, or increase the level of defaults, losses and prepayments on loans the Company have made and make; • adverse changes in the securities or secondary mortgage markets; • changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; • adverse changes related to the businesses of our partners; • changes in the quality or composition of the Company’s loan or investment portfolios; 30 Table of Contents • technological changes that may be more difficult or expensive than expected; • the inability of third party providers to perform as expected; • the Company’s ability to enter new markets successfully and capitalize on growth opportunities; • the Company’s ability to successfully integrate into its operations, any assets, liabilities, customers, systems and management personnel the Company may acquire and management’s ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto; • changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; • the Company’s ability to retain key employees; • the Company’s compensation expense associated with equity allocated or awarded to its employees; and • changes in the financial condition, results of operations or future prospects of issuers of securities that the Company may own. Additional factors that may affect the Company’s results are discussed in our Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Risk Factors” filed with the Securities and Exchange Commission (“SEC”) on March 13, 2025. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. The Company is under no duty to and does not assume any obligation to update any forward-looking statements after the date they were made, whether as a result of new information, future events or otherwise. Federal Economic Relief Funds To Aid Lending Emergency Capital Investment Program On June 7, 2022 (the “Original Closing Date”), the Company issued 225,000 shares of the Company’s Preferred Stock‎, par value $0.01 (the “Preferred Stock”) for an aggregate purchase price equal to $225,000,000 in cash to the Treasury, pursuant to the Treasury’s ECIP. Under the ECIP, Treasury provided investment capital directly to depository institutions that are CDFIs or MDIs or their holding companies, to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, in low-income and underserved communities. No dividends will accrue or be due for the first two years after issuance. For years three through ten, depending upon the level of qualified and/or deep impact lending made in targeted communities, as defined in the ECIP guidelines, dividends will be at an annual rate of either 2.0%, 1.25% or 0.5% and, thereafter, will be fixed at one of the foregoing rates. If we are unable to make qualified and/or deep impact loans at required levels, we will be required to pay dividends at the higher annual rates. Additionally, we may make qualified and/or deep impact loans that are riskier than we otherwise would in an effort to meet the lending requirements for the lower dividend rates and/or to qualify for the purchase option under the Repurchase Agreement (as described below). Holders of Preferred Stock generally do not have any voting rights, with the exception of voting rights on certain matters as outlined in the Certificate of Designations. The Treasury is the holder of the Preferred Stock and a governmental entity, and the Treasury may hold interests that are different from a private investor in exercising its voting and other rights. In the event of a liquidation, dissolution or winding up of the Company, the Preferred Stock will be entitled to a liquidation preference, subject to certain limitations, in the amount of the sum of $1,000 per share plus declared and unpaid dividends (without accumulation of undeclared dividends) on each share. As a participant in the ECIP, the Company must comply with certain operating requirements. Specifically, the Company must adopt the Treasury's standards for executive compensation and luxury expenses for the period during which the Treasury holds equity issued under the ECIP. These restrictions may make it difficult to adequately compensate our management team, which could impact our ability to retain qualified management. Additionally, under the ECIP regulations, the Company cannot pay dividends or repurchase its common stock unless it meets certain income-based tests and has paid the required dividends on the Preferred Stock. In June 2024, the ‎Company began paying dividends on its Preferred Stock in the amount of $0.3 million for the three months ended March 31, 2025 and $0.6 million for the year ended December 31, 2024. On December 20, 2024, the Company entered into an ECIP Securities Purchase Option Agreement (the “Repurchase Agreement”) with Treasury. Pursuant to the Repurchase Agreement, Treasury has granted the Company an option to purchase all of the Preferred Stock during the Option Period, which is the first fifteen years following the Original Closing Date. The purchase price for the Preferred Stock pursuant to the purchase option is determined based on a formula equal to the present value of the Preferred Stock, calculated as set forth in the Repurchase Agreement, together with any accrued and unpaid dividends thereon, as of the closing date. Subject to 31 Table of Contents variations in interest rates and the equity risk premium, which are components included in the purchase price calculation, the Company presently expects that the purchase price will be at a substantial discount from the face value of the Preferred Stock. The purchase option may not be exercised unless and until at least one of the Threshold Conditions under the Repurchase Agreement has been met. The Threshold Conditions are as follows: during the ten years that follow the Original Closing Date (the “ECIP Period”) either (1) over any sixteen consecutive quarters, an average of at least 60% of the Company’s Total Originations, as defined pursuant to the terms of the ECIP, qualifies as “Deep Impact Lending,” as defined pursuant to the terms of the ECIP (the “Deep Impact Condition”); (2) over any twenty-four consecutive quarters, an average of at least 85% of the Company’s Total Originations qualifies as “Qualified Lending,” as defined pursuant to the terms of the ECIP (the “Qualified Lending Condition”); or (3) the Preferred Stock has a dividend rate of no more than 0.5%, which dividend rate is calculated pursuant to the ECIP and the terms thereof, at each of six consecutive Reset Dates, as defined in the ECIP. The earliest possible date by which a Threshold Condition may be met is June 30, 2026, which is the end of the sixteenth consecutive quarter following the Original Closing Date. However, the Company does not currently meet any of the Threshold Conditions to exercise the purchase option, and there can be no assurance if and when the Threshold Conditions will be met. At present, the Company has reported 11 consecutive quarters for which it has met both the Deep Impact and Qualified Lending Conditions. The Preferred Stock currently has a dividend rate of 0.5%. In addition to the requirement that a Threshold Condition be met, the Repurchase Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Preferred Stock, maintaining qualification as either a CDFI or an MDI, and meeting other legal and regulatory criteria. Although the Company currently meets the general eligibility criteria, other than satisfying one of the Threshold Conditions, there can be no assurance that the Company will meet such criteria in the future. The Company believes that consummation of the repurchase of the Preferred Stock as contemplated by the Repurchase Agreement would be beneficial to its stockholders. As such, the Company expects it continue to emphasize its qualified Deep Impact Lending. Banking Development District The Ponce Bank Westchester Avenue Branch located at 2244 Westchester Avenue in the Castle Hill area of the Bronx was approved as a Banking Development District ("BDD"). New York State’s BDD Program, administered by the Department of Financial Services ("DFS"), supports the establishment of bank and credit union branches in areas across New York State where there is a demonstrated need for banking services. To encourage participation, approved BDD branches receive access to subsidized and market rate deposits from New York State. On July 30, 2024, Ponce Bank received total program deposits of $35.0 million. Westchester Avenue Branch Re-Design On February 27, 2025, Ponce Bank officers and administrators and members of the public celebrated the Bank’s transformed Westchester Avenue Branch at its grand reopening. The transformed Branch is the result of the State-of-the-art Banking Technologies combined with Community Centric Banking that is customer friendly and supportive. The transformation relaunched a process aimed at reinforcing the role of each banking branch as a "community hub"’ that attracts new depositors and business customers, but anchors Ponce Bank branches as community-centric destinations. The revitalization efforts include Open Tellers that invite a more consultative experience, managers located at a central hub of the branch, private space for sensitive conversations, and meeting spaces as well as open areas with teleconferencing and AV equipment to encourage community-wide gatherings. Coral Gables, Florida Office On June 1, 2024, Ponce Bank opened its first-ever representative office in the state of Florida located at 1600 Ponce de Leon Drive in the Miami suburb of Coral Gables. This new office is home to a Commercial Relationship Officer who will split time between the new location and his former Bergen County, New Jersey territory. Many of our customers have businesses in Florida or spend their winter months here, and the large Hispanic community fits one of our primary demographics. Critical Accounting Policies Accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management 32 Table of Contents and that could have a material impact on the carrying value of certain assets, liabilities or on income under different assumptions or conditions. Management believes that the most critical accounting policy relates to the allowance for credit losses. The allowance for credit losses is established as probable incurred losses are estimated to have occurred through a provision for credit losses charged to earnings. Credit losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. If our loss rate factor was to increase 10 basis points, our reserve would increase by approximately $2.4 million. Likewise, if our loss rate factor was to decrease 10 basis points, our reserve would decrease by approximately $2.4 million. The discussion and analysis of the financial condition and results of operations are based on the Company’s consolidated financial statements, which are prepared in conformity with GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. The estimates and assumptions used are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations. Company's Growth The Company has deployed a mobile application that digitizes the lending workflow from pre-approval to servicing and enables the Company to originate, close and fund small business loans within very short spans of time, without requiring a physical presence within banking offices and with automated underwriting using both traditional and non-traditional methods. The application was developed by Lending Front, a fintech in which the Company has acquired a financial interest. All Commercial Relationship Officers and Banking Branch Managers utilize these capabilities. The Company is seeking to establish loan origination partnerships with non-profit and community-based organizations to ensure penetration in underserved and underbanked markets. The Company continues its relationship with Raisin Solutions US LLC ("Raisin"), a fintech that focuses on gathering deposits for financial institutions through the Internet. As of March 31, 2025, the Company had $611.9 million in such deposits, which the Company classifies as core deposits. Because the Company, through Ponce Bank, is an MDI and a CDFI, deposits made by other financial institutions may be treated as CRA credits by those depository institutions. At December 31, 2018, the first year after our initial public offering, the Company had approximately $1.06 billion in assets, $918.5 million in loans, net of allowance for credit losses of $12.7 million, and $809.8 million in deposits. The Company has since grown to $3.09 billion in assets, $2.37 billion in loans receivables, net of allowance for credit losses of $23.0 million, and $2.00 billion in deposits at March 31, 2025, all while investing in infrastructure, implementing digital banking and diversifying its product offering. Now, the Company believes that it is poised to enhance its presence, locally and in similar communities outside New York, as a leading CDFI and MDI financial institution holding company. Comparison of Financial Condition at March 31, 2025 and December 31, 2024 Total Assets . Total consolidated assets increased $49.9 million, or 1.6%, to $3.09 billion at March 31, 2025 from $3.04 billion at December 31, 2024. The increase in total assets is largely attributable to increases of $84.3 million in net loans receivable, $1.2 million in accrued interest receivable and $0.4 million in right of use assets, partially offset by decreases of $9.9 million in cash and cash equivalents, $9.9 million in held-to-maturity securities, $8.4 million in other assets, $3.4 million in FHLBNY stock, $2.2 million in mortgage loans held for sale, $1.4 million in available-for-sale securities, $0.4 million in deferred tax assets and $0.4 million in premises and equipment, net. Cash and Cash Equivalents . Cash and cash equivalents decreased $9.9 million, or 7.1%, to $129.9 million at March 31, 2025, compared to $139.8 million at December 31, 2024. The decrease in cash and cash equivalents was primarily the result of an increase of $90.4 million in net loans and a $75.0 million net repayment of borrowings. The decrease in cash and cash equivalents was offset primarily by an increase of $120.1 million in net deposits, $13.6 million in proceeds from maturities, calls and principal repayment on securities, $3.4 million in net redemption of FHLB stock and $2.6 million in advance payments by borrowers. Securities. The Company securities portfolio decreased $1.4 million in available-for-sale and $9.9 million in held-to-maturity during the three months ended March 31, 2025. The decrease in the securities portfolio was primarily due to the call of one available-for-sale security in the amount of $1.0 million and changes in principal amount of the securities. 33 Table of Contents Gross Loans Receivable. The composition of gross loans receivable at March 31, 2025 and at December 31, 2024 and the percentage of each classification to total loans are summarized as follows: March 31, 2025 December 31, 2024 Increase (Decrease) Amount Percent Amount Percent Dollars Percent (Dollars in thousands) Mortgage loans: 1-4 Family residential Investor-Owned $ 325,866 13.6 % $ 330,053 14.3 % $ (4,187 ) (1.3 %) Owner-Occupied 137,676 5.8 % 142,363 6.2 % (4,687 ) (3.3 %) Multifamily residential 675,541 28.2 % 670,159 29.0 % 5,382 0.8 % Nonresidential properties 390,681 16.4 % 389,898 16.9 % 783 0.2 % Construction and land 815,425 34.1 % 733,660 31.8 % 81,765 11.1 % Total mortgage loans 2,345,189 98.1 % 2,266,133 98.2 % 79,056 3.5 % Nonmortgage loans: Business loans 46,329 1.9 % 40,849 1.8 % 5,480 13.4 % Consumer loans 997 0.0 % 1,038 0.0 % (41 ) (3.9 %) 47,326 1.9 % 41,887 1.8 % 5,439 13.0 % Total $ 2,392,515 100.0 % $ 2,308,020 100.0 % $ 84,495 3.7 % Based on current internal loan reviews, the Company believes that the quality of our underwriting, our weighted average loan-to-value ratio of 56.4% and our customer selection processes have served us well and provided us with a reliable base with which to maintain a well-protected loan portfolio. Multifamily residential loans increased $5.4 million, or 0.8%, when compared to December 31, 2024. The majority of the increases in multifamily residential loans that were refinanced from construction and land loans to a new permanent loan facility. Construction and land loans increased $81.8 million, or 11.1%, when compared to December 31, 2024. The majority of the $81.8 million growth in construction and land mortgage loans is related to funding of existing commitments prior to 2025 as opposed to new originations in 2025. Our commitments to grant new mortgage loans decreased by $28.7 million as of March 31, 2025 compared to December 31, 2024. See Note 10 ("Commitments, Contingencies and Credit Risk") of Notes to the Consolidated Financial Statements. Within the construction and land mortgage loans, as indicated in the composition of gross loans receivable table above, there are 64 projects as of March 31, 2025. Of these 64 projects, 51 projects are more than 50% complete and 13 projects are less than 50% complete. Of the 51 projects that are more than 50% complete, 22 projects have been issued a certificate of occupancy or a temporary certificate of occupancy, 29 projects are without certificate of occupancy or a temporary certificate of occupancy. Commercial real estate loans, as defined by applicable banking regulations, include multifamily residential, nonresidential properties, and construction and land mortgage loans. At March 31, 2025 and December 31, 2024, approximately 3.3% and 3.5%, respectively, of the outstanding principal balance of the Bank’s commercial real estate mortgage loans were secured by owner-occupied commercial real estate. Owner-occupied commercial real estate is similar in many ways to commercial and industrial lending in that these loans are generally made to businesses predominantly on the basis of the cash flows of the business rather than on valuation of the real estate. Banking regulations have established guidelines relating to the amount of construction and land mortgage loans and investor- owned commercial real estate mortgage loans of 100% and 300% of total risk-based capital, respectively. Should a bank’s ratios be in excess of these guidelines, banking regulations generally require an increased level of monitoring in these lending areas by bank management. The Bank’s policy is to operate within the 200% guideline for construction and land mortgage loans and up to 450% for investor-owned commercial real estate mortgage loans. Both ratios are calculated by dividing certain types of loan balances for each of the two categories by the Bank’s total risk-based capital. At March 31, 2025 and December 31, 2024, the Bank’s construction and land mortgage loans as a percentage of total risk-based capital was 159.1% and 145.0%, respectively. Investor-owned commercial real estate mortgage loans as a percentage of total risk-based capital was 354.6% and 341.7% as of March 31, 2025 and December 31, 2024, respectively. At March 31, 2025, the Bank was above the 100% guidelines established by the banking regulations and under the 200% guidelines set by the Bank for construction and land mortgage loans and above the 300% guideline established by banking regulators but under the 450% guidelines set by the Bank for investor owned commercial real estate mortgage loans. Management believes that it has established the appropriate level of controls to monitor the Bank’s lending in these areas. Loans Held For Sale . Loans held for sale, at fair value, at March 31, 2025 decreased $2.2 million, or 20.2%, to $8.6 million from $10.7 million at December 31, 2024. 34 Table of Contents Deposits. The composition of deposits at March 31, 2025 and December 31, 2024 and changes in dollars and percentages are summarized as follows: March 31, 2025 December 31, 2024 Increase (Decrease) Percent Percent Amount of Total Amount of Total Dollars Percent (Dollars in thousands) Demand $ 212,139 10.5 % $ 169,178 9.0 % $ 42,961 25.4 % Interest-bearing deposits: NOW/IOLA accounts 74,430 3.7 % 62,616 3.3 % 11,814 18.9 % Money market accounts 692,753 34.6 % 636,219 33.8 % 56,534 8.9 % Reciprocal deposits 141,838 7.1 % 130,677 6.9 % 11,161 8.5 % Savings accounts 106,122 5.3 % 105,870 5.6 % 252 0.2 % Total NOW, money market, reciprocal and savings 1,015,143 50.7 % 935,382 49.6 % 79,761 8.5 % Certificates of deposit of $250K or more 219,721 11.0 % 204,293 10.8 % 15,428 7.6 % Brokered certificates of deposit (1) 84,531 4.2 % 94,531 5.0 % (10,000 ) (10.6 %) Listing service deposits (1) 6,140 0.3 % 7,376 0.4 % (1,236 ) (16.8 %) Certificates of deposit less than $250K 467,273 23.3 % 474,104 25.2 % (6,831 ) (1.4 %) Total certificates of deposit 777,665 38.8 % 780,304 41.4 % (2,639 ) (0.3 %) Total interest-bearing deposits 1,792,808 89.5 % 1,715,686 91.0 % 77,122 4.5 % Total deposits $ 2,004,947 100.0 % $ 1,884,864 100.0 % $ 120,083 6.4 % (1) At March 31, 2025 and December 31, 2024, there were no individual listing service deposits amounting to $250,000 or more. There was one brokered certificates of deposit in the amount of $1.5 million amounting to $250,000 or more. All other brokered certificates of deposit individually amounted to less than $250,000. When wholesale funding is necessary to complement the Company's core deposit base, management determines which source is best suited to address both liquidity risk and interest rate risk in line with management objectives. The Company’s Interest Rate Risk Policy imposes limitations on overall wholesale funding and noncore funding reliance. The overall reliance on wholesale funding and noncore funding were within those policy limitations as of March 31, 2025 and December 31, 2024. The Management Asset/Liability Committee generally meets on a bi-weekly basis to review funding needs, if any, and to ensure the Company operates within the approved limitations. Borrowings . The Bank had outstanding borrowings at March 31, 2025 and December 31, 2024 of $521.1 million and $571.1 million in term advances from the FHLBNY. The Bank did not have any overnight line of credit advance at March 31, 2025 and had one overnight line of credit advance in the amount of $25.0 million from the FHLBNY at December 31, 2024. Additionally, the Bank had two unsecured lines of credit in the amount of $75.0 million with two correspondent banks for both periods at March 31, 2025 and December 31, 2024. The Bank did not have any term and overnight line of credit advances from the FRBNY at March 31, 2025 and December 31, 2024. Stockholders’ Equity . The Company’s consolidated stockholders’ equity increased $8.4 million, or 1.7%, to $513.9 million as of March 31, 2025 from $505.5 million as of December 31, 2024. The $8.4 million increase in stockholders’ equity was largely attributable to $6.0 million in net income, $1.8 million in other comprehensive income, $0.5 million impact to additional paid in capital as a result of share-based compensation and $0.4 million from release of ESOP shares, offset by $0.3 million in dividends on preferred shares. 35 Table of Contents Comparison of Results of Operations for the Three Months Ended March 31, 2025 and 2024 The discussion of the Company’s results of operations for the three months ended March 31, 2025 and 2024 are presented below. The results of operations for interim periods may not be indicative of future results. Overview. Net income available to common stockholders was $5.7 million for the three months ended March 31, 2025 compared to net income available to common stockholders of $2.4 million for the three months ended March 31, 2024. Earnings per basic and diluted share was $0.25 for the three months ended March 31, 2025 compared to earnings per basic and diluted share of $0.11 for three months ended March 31, 2024. The $3.3 million increase of net income available to common stockholders from the three months ended March 31, 2024, was due to increases of $3.4 million in net interest income, $0.7 million in non-interest income and $0.3 million in benefit for credit losses, partially offset by increases of $0.7 million in provision for income taxes, $0.3 million in dividends on preferred shares and $0.1 million in non-interest expense. Net income for the three months ended March 31, 2025, which excludes $0.3 million in dividends on preferred shares, was $6.0 million. There was no dividend on preferred shares for the three months ended March 31, 2024. The following table presents the results of operations for the periods indicated: For the Three Months Ended March 31, Increase (Decrease) 2025 2024 Dollars Percent (Dollars in thousands) Interest and dividend income $ 43,997 $ 39,666 $ 4,331 10.9 % Interest expense 21,794 20,843 951 4.6 % Net interest income 22,203 18,823 3,380 18.0 % Benefit for credit losses (1) (285 ) (16 ) (269 ) 1,681.3 % Net interest income after benefit for credit losses 22,488 18,839 3,649 19.4 % Non-interest income 2,381 1,707 674 39.5 % Non-interest expense (1) 16,888 16,786 102 0.6 % Income before income taxes 7,981 3,760 4,221 112.3 % Provision for income taxes 2,022 1,346 676 50.2 % Net income 5,959 2,414 3,545 146.9 % Dividends on preferred shares 281 — 281 — % Net income available to common stockholders $ 5,678 $ 2,414 $ 3,264 135.2 % Earnings per common share: Basic $ 0.25 $ 0.11 $ 0.14 127.3 % Diluted $ 0.25 $ 0.11 $ 0.14 127.3 % (1) For the three months ended March 31, 2024, provision for contingencies in the amount of $0.2 million were reclassified from total non-interest expense to benefit for credit losses. Interest and Dividend Income. Interest and dividend income increased $4.3 million, or 10.9%, to $44.0 million for the three months ended March 31, 2025 from $39.7 million for the three months ended March 31, 2024. Interest income on loans receivable, which is the Company’s primary source of income, increased $6.5 million, or 21.1%, to $37.1 million for the three months ended March 31, 2025 from $30.7 million for the three months ended March 31, 2024. Total interest and dividend income on securities, FHLBNY stock and deposits due from banks decreased $2.1 million, or 23.8%, to $6.9 million for the three months ended March 31, 2025 from $9.0 million for the three months ended March 31, 2024. The decrease was primarily attributable to decreases of $1.2 million in interest on deposits due from banks and $1.1 million in interest on securities, offset by an increase of $0.2 million in dividend on FHLBNY stock. The following table presents interest income on loans receivable for the periods indicated: For the Three Months Ended March 31, Change 2025 2024 Amount Percent (Dollars in thousands) 1-4 Family residential $ 7,092 $ 7,546 $ (454 ) (6.0 %) Multifamily residential 9,150 6,921 2,229 32.2 % Nonresidential properties 5,677 4,359 1,318 30.2 % Construction and land 14,602 11,224 3,378 30.1 % Business loans 592 412 180 43.7 % Consumer loans 23 202 (179 ) (88.6 %) Total interest income on loans receivable $ 37,136 $ 30,664 $ 6,472 21.1 % 36 Table of Contents The following table presents interest and dividend income on securities and FHLBNY stock and deposits due from banks for the periods indicated: For the Three Months Ended March 31, Change 2025 2024 Amount Percent (Dollars in thousands) Interest on deposits due from banks $ 1,668 $ 2,911 $ (1,243 ) (42.7 %) Interest on securities 4,521 5,619 (1,098 ) (19.5 %) Dividend on FHLBNY stock 672 472 200 42.4 % Total interest and dividend income $ 6,861 $ 9,002 $ (2,141 ) (23.8 %) Interest Expense. Interest expense increased $1.0 million, or 4.6%, to $21.8 million for the three months ended March 31, 2025 from $20.8 million for the three months ended March 31, 2024 . The following table presents interest expense for the periods indicated: For the Three Months Ended March 31, Change 2025 2024 Amount Percent (Dollars in thousands) Certificates of deposit $ 7,754 $ 6,380 $ 1,374 21.5 % Money market 8,411 6,292 2,119 33.7 % Savings 26 28 (2 ) (7.1 %) NOW/IOLA 115 218 (103 ) (47.2 %) Advance payments by borrowers 2 2 — — % Borrowings 5,486 7,923 (2,437 ) (30.8 %) Total interest expense $ 21,794 $ 20,843 $ 951 4.6 % Net Interest Income. Net interest income increased $3.4 million, or 18.0%, to $22.2 million for the three months ended March 31, 2025 from $18.8 million for the three months ended March 31, 2024. The $3.4 million increase in net interest income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was attributable to an increase of $4.3 million in total interest and dividend income primarily due to increases in average loans receivable, offset by an increase of $1.0 million in interest expense due primarily to a higher average cost of funds on interest bearing liabilities. Net interest rate spread increased by 37 basis points to 2.19% for the three months ended March 31, 2025 from 1.82% for the three months ended March 31, 2024. The increase in the net interest rate spread for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to and an increase in the average yields on interest-earning assets of 19 basis points to 5.90% for the three months ended March 31, 2025 from 5.71% for the three months ended March 31, 2024, and a decrease in the average rates paid on interest-bearing liabilities of 18 basis points to 3.71% for the three months ended March 31, 2025 from 3.89% for the three months ended March 31, 2024. Net interest margin increased 27 basis points for the three months ended March 31, 2025, to 2.98% from 2.71% for three months ended March 31, 2024. On September 18, 2024, the Federal Reserve announced that the target range for the federal funds rate decreased by 50 basis points to 4.75% to 5.00% effective on September 19, 2024. It marked the first rate cut in over four years and signaled a shift in strategy aimed at bolstering the economy and preventing a rise in unemployment. In November 2024, the Federal Reserve lowered the target range by 25 basis points to 4.50% to 4.75% and in December 2024 another 25 basis points to 4.25% to 4.50%. The Federal Reserve left federal funds rate unchanged at 4.25% to 4.50% during its March 2025 meeting, though it is still anticipated that they may reduce interest rates by around 50bps this year. Our net interest income may be positively impacted if the demand for loans increases due to the lower rates, alone or in tandem with lower inflation. Non-Interest Income. Non-interest income increased $0.7 million, or 39.5%, to $2.4 million for the three months ended March 31, 2025 from $1.7 million for the three months ended March 31, 2024. The $0.7 million increase in non-interest income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was attributable to increases of $0.4 million in income on sale of SBA loans and $0.3 million in late and prepayment charges, partially offset by a decrease of $0.2 million in income on the sale of mortgage loans. 37 Table of Contents The following table presents non-interest income for the periods indicated: For the Three Months Ended March 31, Change 2025 2024 Amount Percent (Dollars in thousands) Service charges and fees $ 525 $ 473 $ 52 11.0 % Brokerage commissions 4 8 (4 ) (50.0 %) Late and prepayment charges 697 359 338 94.2 % Income on sale of mortgage loans 148 302 (154 ) (51.0 %) Income on sale of SBA loans 404 — 404 — % Other 603 565 38 6.7 % Total non-interest income $ 2,381 $ 1,707 $ 674 39.5 % Non-Interest Expense. Non-interest expense increased $0.1 million, or 0.6%, to $16.9 million for the three months ended March 31, 2025 from $16.8 million for the three months ended March 31, 2024. The $0.1 million increase in non-interest expense for the three months ended March 31, 2025, compared to the three months ended March 31, 2024 was attributable to increases of $0.5 million in other operating expense and $0.2 million in occupancy and equipment, partially offset by decreases of $0.4 million in professional fees and $0.3 million in direct loan expenses. The following table presents non-interest expense for the periods indicated: For the Three Months Ended March 31, Change 2025 2024 Amount Percent (Dollars in thousands) Compensation and benefits $ 7,780 $ 7,844 $ (64 ) (0.8 %) Occupancy and equipment 3,913 3,667 246 6.7 % Data processing expenses 1,152 1,127 25 2.2 % Direct loan expenses 388 732 (344 ) (47.0 %) Insurance and surety bond premiums 315 253 62 24.5 % Office supplies, telephone and postage 170 249 (79 ) (31.7 %) Professional fees 1,364 1,723 (359 ) (20.8 %) Microloans recoveries — (53 ) 53 — % Marketing and promotional expenses 83 100 (17 ) (17.0 %) Directors' fees and regulatory assessment 461 389 72 18.5 % Other operating expenses 1,262 755 507 67.2 % Total non-interest expense (1) $ 16,888 $ 16,786 $ 102 0.6 % (1) For the three months ended March 31, 2024, provision for contingencies in the amount of $0.2 million were reclassified from total non-interest expense to benefit for credit losses. Income Tax Provision. The Company had a provision for income taxes of $2.0 million for the three months ended March 31, 2025 compared to a provision for income taxes of $1.3 million for three months ended March 31, 2024. Credit Quality. Total non-performing loans, including loans held for sale, were $27.3 million for both periods March 31, 2025 and December 31, 2024. During the three months ended March 31, 2025, a credit loss benefit of $0.3 million on loans was recorded, consisting of $0.7 million charged on the funded portion and a benefit of $1.0 million on the unfunded portion on loans. During the three months ended March 31, 2024, a credit loss benefit of $0.1 million on loans were recorded, consisting of $0.3 million benefit on the funded portion and a $0.2 million charged on the on unfunded portion on loans. 38 Table of Contents Average Balance Sheets The following table sets forth average outstanding balances, average yields and rates, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. Average balances are derived from average daily balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. For the Three Months Ended March 31, 2025 2024 Average Average Outstanding Average Outstanding Average Balance Interest Yield/Rate (1) Balance Interest Yield/Rate (1) (Dollars in thousands) Interest-earning assets: Loans (2) $ 2,369,433 37,136 6.36 % $ 1,979,263 $ 30,664 6.23 % Securities (3) 467,560 4,521 3.92 % 576,235 5,619 3.92 % Other (4) 186,021 2,340 5.10 % 238,432 3,383 5.71 % Total interest-earning assets 3,023,014 43,997 5.90 % 2,793,930 39,666 5.71 % Non-interest-earning assets 109,166 106,566 Total assets $ 3,132,180 $ 2,900,496 Interest-bearing liabilities: NOW/IOLA $ 72,354 $ 115 0.64 % $ 82,849 $ 218 1.06 % Money market 827,948 8,411 4.12 % 544,563 6,292 4.65 % Savings 105,171 26 0.10 % 113,501 28 0.10 % Certificates of deposit 794,270 7,754 3.96 % 629,528 6,380 4.08 % Total deposits 1,799,743 16,306 3.67 % 1,370,441 12,918 3.79 % Advance payments by borrowers 12,445 2 0.07 % 12,886 2 0.06 % Borrowings 568,601 5,486 3.91 % 771,070 7,923 4.13 % Total interest-bearing liabilities 2,380,789 21,794 3.71 % 2,154,397 20,843 3.89 % Non-interest-bearing liabilities: Non-interest-bearing demand 196,627 — 198,862 — Other non-interest-bearing liabilities 43,915 — 54,061 — Total non-interest-bearing liabilities 240,542 — 252,923 — Total liabilities 2,621,331 21,794 2,407,320 20,843 Total equity 510,849 493,176 Total liabilities and total equity $ 3,132,180 3.71 % $ 2,900,496 3.89 % Net interest income $ 22,203 $ 18,823 Net interest rate spread (5) 2.19 % 1.82 % Net interest-earning assets (6) $ 642,225 $ 639,533 Net interest margin (7) 2.98 % 2.71 % Average interest-earning assets to interest-bearing liabilities 126.98 % 129.69 % (1) Annualized where appropriate. (2) Loans include loans and mortgage loans held for sale, at fair value. (3) Securities include available-for-sale securities and held-to-maturity securities. (4) Includes FHLBNY demand account and FHLBNY stock dividends and FRBNY demand deposits. (5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities. (6) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (7) Net interest margin represents net interest income divided by average total interest-earning assets. 39 Table of Contents Rate/Volume Analysis The following table presents the effects of changing rates and volumes on the Company’s net interest income for the periods indicated. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. For the Three Months Ended March 31, 2025 vs. 2024 Increase (Decrease) Due to Total Increase Volume Rate (Decrease) (In thousands) Interest-earning assets: Loans (1) $ 3,507 $ 2,965 $ 6,472 Securities (2) (1,096 ) (2 ) (1,098 ) Other 82 (1,125 ) (1,043 ) Total interest-earning assets 2,493 1,838 4,331 Interest-bearing liabilities: NOW/IOLA 196 (299 ) (103 ) Money market 6,483 (4,364 ) 2,119 Savings (3 ) 1 (2 ) Certificates of deposit 2,302 (928 ) 1,374 Total deposits 8,978 (5,590 ) 3,388 Borrowings (1,187 ) (1,250 ) (2,437 ) Total interest-bearing liabilities 7,791 (6,840 ) 951 Change in net interest income $ (5,298 ) $ 8,678 $ 3,380 (1) Loans include loans and mortgage loans held for sale, at fair value. (2) Securities include available-for-sale securities and held-to-maturity securities. Management of Market Risk General . The most significant form of market risk is interest rate risk because, as a financial institution, the majority of the Bank’s assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of its financial condition and results of operations to changes in market interest rates. The Bank’s Asset/Liability Committee ("ALCO") is responsible for evaluating the interest rate risk inherent in the Bank’s assets and liabilities, for determining the level of risk that is appropriate, given the business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with policies and guidelines approved by the Board of Directors. The Bank currently utilizes a third-party modeling solution that is prepared on a quarterly basis, to evaluate its sensitivity to changing interest rates, given the Bank’s business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. Net Interest Income Simulation Models . Management utilizes a respected, sophisticated third party designed asset liability modeling software that measures the Bank’s earnings through simulation modeling. Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with forecasts of interest rates for the next 12 months and are combined with other factors in order to produce various earnings simulations over that same 12-month period. To limit interest rate risk, the Bank has policy guidelines for earnings risk which seek to limit the variance of net interest income in both gradual and instantaneous changes to interest 40 Table of Contents rates. As of March 31, 2025, in the event of an instantaneous upward and downward change in rates from management's interest rate forecast over the next twelve months, assuming a static balance sheet, the following estimated changes are calculated: Net Interest Income Year 1 Change Rate Shift (1) Year 1 Forecast from Level (Dollars in thousands) +400 $ 93,090 (6.41%) +300 94,880 (4.61%) +200 96,612 (2.87%) +100 97,944 (1.53%) Level 99,470 — % -100 100,089 0.62% -200 100,711 1.25% -300 100,406 0.94% -400 99,742 0.27% (1) Assumes an instantaneous uniform change in interest rates at all maturities. Although an instantaneous and severe shift in interest rates was used in this analysis to provide an estimate of exposure under these scenarios, management believes that a gradual shift in interest rates would have a more modest impact. Further, the earnings simulation model does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, and changing product spreads that could alter any potential adverse impact of changes in interest rates. The behavior of the deposit portfolio in the baseline forecast and in alternate interest rate scenarios set out in the table above is a key assumption in the projected estimates of net interest income. The projected impact on net interest income in the table above assumes no change in deposit portfolio size or mix from the baseline forecast in alternative rate environments. In higher rate scenarios, any customer activity resulting in the replacement of low-cost or noninterest-bearing deposits with higher-yielding deposits or market-based funding would reduce the benefit in those scenarios. At March 31, 2025, the earnings simulation model indicated that the Bank was in compliance with the Board of Directors approved Interest Rate Risk Policy. Economic Value of Equity Model . While earnings simulation modeling attempts to determine the impact of a changing rate environment to net interest income, the Economic Value of Equity Model (“EVE”) measures estimated changes to the economic values of assets, liabilities and off-balance sheet items as a result of interest rate changes. Economic values are determined by discounting expected cash flows from assets, liabilities and off-balance sheet items, which establishes a base case EVE. Rates are then shocked as prescribed by the Interest Rate Risk Policy to measure the sensitivity in EVE values for each of those shocked rate scenarios versus the base case. The Interest Rate Risk Policy sets limits for those sensitivities. At March 31, 2025, the EVE modeling calculated the following estimated changes in EVE due to instantaneous upward and downward changes in rates: EVE as a Percentage of Present Value of Assets (3) Estimated Increase (Decrease) in Increase Change in Interest Estimated EVE EVE (Decrease) Rates (basis points) (1) EVE (2) Amount Percent Ratio (4) (basis points) (Dollars in thousands) +400 $ 422,169 $ (108,730 ) (20.48 %) 14.69 % (2,048 ) +300 451,948 (78,951 ) (14.87 %) 15.45 % (1,487 ) +200 481,088 (49,811 ) (9.38 %) 16.15 % (938 ) +100 507,965 (22,934 ) (4.32 %) 16.77 % (432 ) Level 530,899 — — % 17.25 % — -100 550,268 19,369 3.65 % 17.60 % 365 -200 565,754 34,855 6.57 % 17.83 % 627 -300 585,025 54,126 10.20 % 18.12 % 1,020 -400 605,576 74,677 14.07 % 18.43 % 1,407 (1) Assumes an instantaneous uniform change in interest rates at all maturities. (2) EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts. (3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets. (4) EVE Ratio represents EVE divided by the present value of assets. Although an instantaneous and severe shift in interest rates was used in this analysis to provide an estimate of exposure under these scenarios, management believes that a gradual shift in interest rates would have a more modest impact. Since EVE measures the 41 Table of Contents discounted present value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year). Further, EVE does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, and changing product spreads that could alter the adverse impact of changes in interest rates. At March 31, 2025, the EVE model indicated that the Bank was in compliance with the Board of Directors’ approved Interest Rate Risk Policy. Most Likely Earnings Simulation Models . Management also analyzes a most-likely earnings simulation scenario that projects the expected change in rates based on a forward yield curve adopted by management using expected balance sheet volumes forecasted by management. Separate growth assumptions are developed for loans, investments, deposits, etc. Other interest rate scenarios analyzed by management may include delayed rate shocks, yield curve steepening or flattening, or other variations in rate movements to further analyze or stress the balance sheet under various interest rate scenarios. Each scenario is evaluated by management and weighted to determine the most likely result. These processes assist management to better anticipate financial results and, as a result, management may determine the need to review other operating strategies and tactics which might enhance results or better position the balance sheet to reduce interest rate risk going forward. Each of the above analyses may not, on its own, be an accurate indicator of how net interest income will be affected by changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market rates, while interest rates on other types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as interest rate caps and floors) which limit changes in interest rates. Prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many borrowers to service their debts also may decrease during periods of rising interest rates. The ALCO Committee reviews each of the above interest rate sensitivity analyses along with several different interest rate scenarios as part of its responsibility to provide a satisfactory, consistent level of profitability within the framework of established liquidity, loan, investment, borrowing and capital policies. Management's model governance, model implementation and model validation processes and controls are subject to review in the Bank’s regulatory examinations to ensure they are in compliance with the most recent regulatory guidelines and industry and regulatory practices. Management utilizes a respected, sophisticated third party designed asset liability modeling software to help ensure implementation of management's assumptions into the model are processed as intended in a robust manner. That said, there are numerous assumptions regarding financial instrument behaviors that are integrated into the model. The assumptions are formulated by combining observations gleaned from the Bank’s historical studies of financial instruments and the best estimations of how, if at all, these instruments may behave in the future given changes in economic conditions, technology, etc. These assumptions may prove to be inaccurate. Additionally, given the large number of assumptions built into Bank’s asset liability modeling software, it is difficult, at best, to compare its results to other banks. The ALCO Committee may determine that the Company should over time become more or less asset or liability sensitive depending on the underlying balance sheet circumstances and its conclusions regarding interest rate fluctuations in future periods. The historically low benchmark federal funds interest rate of the last several years implemented in response the turmoil resulting from COVID-19 pandemic has ended . The Federal Reserve announced that the target range for the federal funds rate decreased by 50 basis points to 4.75% to 5.00% effective on September 19, 2024. It marked the first rate cut in over four years and signaled a shift in strategy aimed at bolstering the economy and preventing a rise in unemployment. In November 2024, the Federal Reserve lowered the target range by 25 basis points to 4.50% to 4.75% and in December 2024 another 25 basis points to 4.25% to 4.50%. The Federal Reserve left federal funds rate unchanged at 4.25% to 4.50% during its March 2025 meeting, though it is still anticipated that they may reduce interest rates by around 50bps this year. Our net interest income may also be positively impacted if the demand for loans increases due to the rate decreases, alone or in tandem with the concurrent inflationary pressures. We may be negatively impacted if we are unable to appropriately time adjustments to our funding costs and the rates we earn on our loans. GAP Analysis . In addition, management analyzes interest rate sensitivity by monitoring the Bank’s interest rate sensitivity "gap." The interest rate sensitivity gap is the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest bearing-liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest rate sensitive assets maturing or repricing during a period exceeds the amount of interest rate sensitive liabilities maturing or repricing during the same period, and a gap is considered negative when the amount of interest rate sensitive liabilities maturing or repricing during a period exceeds the amount of interest rate sensitive assets maturing or repricing during the same period. 42 Table of Contents The following table sets forth the Company’s interest-earning assets and its interest-bearing liabilities at March 31, 2025, which are anticipated to reprice or mature in each of the future time periods shown based upon certain assumptions. The amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at March 31, 2025, on the basis of contractual maturities, anticipated prepayments and scheduled rate adjustments. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and as a result of contractual rate adjustments on adjustable-rate loans. March 31, 2025 Time to Repricing Zero to 90 Days Zero to 180 Days Zero Days to One Year Zero Days to Two Years Zero Days to Five Years Five Years Plus Total Earning Assets & Costing Liabilities Non Earning Assets & Non Costing Liabilities Total (Dollars in thousands) Assets: Interest-bearing deposits in banks $ 97,780 $ 97,780 $ 97,780 $ 97,780 $ 97,780 $ — $ 97,780 $ 32,113 $ 129,893 Securities (1) 29,070 80,508 109,610 163,131 282,078 196,910 478,988 (17,394 ) 461,594 Placement with banks 249 249 249 249 249 — 249 — 249 Net loans (includes LHFS) 505,883 766,603 1,126,386 1,575,451 2,290,196 84,937 2,375,133 4,365 2,379,498 FHLBNY stock — — — — — — — 25,807 25,807 Other assets — — — — — — — 92,795 92,795 Total $ 632,982 $ 945,140 $ 1,334,025 $ 1,836,611 $ 2,670,303 $ 281,847 $ 2,952,150 $ 137,686 $ 3,089,836 Liabilities: Non-maturity deposits $ 67,467 $ 134,934 $ 269,868 $ 539,732 $ 959,924 $ 72,920 1,032,844 $ 194,438 $ 1,227,282 Certificates of deposit 328,886 498,901 701,606 726,595 777,665 — 777,665 — 777,665 Borrowings — — 100,000 279,000 521,100 — 521,100 — 521,100 Other liabilities — — — — — — — 49,903 49,903 Total liabilities 396,353 633,835 1,071,474 1,545,327 2,258,689 72,920 2,331,609 244,341 2,575,950 Capital — — — — — — — 513,886 513,886 Total liabilities and capital $ 396,353 $ 633,835 $ 1,071,474 $ 1,545,327 $ 2,258,689 $ 72,920 $ 2,331,609 $ 758,227 $ 3,089,836 Asset/liability gap $ 236,629 $ 311,305 $ 262,551 $ 291,284 $ 411,614 $ 208,927 $ 620,541 Gap/assets ratio 159.70 % 149.11 % 124.50 % 118.85 % 118.22 % 386.52 % 126.61 % (1) Includes available-for-sale securities and held-to-maturity securities. The following table sets forth the Company’s interest-earning assets and its interest-bearing liabilities at December 31, 2024, which are anticipated to reprice or mature in each of the future time periods shown based upon certain assumptions. The amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at December 31, 2024, on the basis of contractual maturities, anticipated prepayments and scheduled rate adjustments. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and as a result of contractual rate adjustments on adjustable-rate loans. December 31, 2024 Time to Repricing Zero to 90 Days Zero to 180 Days Zero Days to One Year Zero Days to Two Years Zero Days to Five Years Five Years Plus Total Earning Assets & Costing Liabilities Non Earning Assets & Non Costing Liabilities Total (Dollars in thousands) Assets: Interest-bearing deposits in banks $ 104,361 $ 104,361 $ 104,361 $ 104,361 $ 104,361 $ — $ 104,361 $ 35,478 $ 139,839 Securities (1) 23,921 56,636 107,958 160,603 288,893 203,742 492,635 (19,727 ) 472,908 Placement with banks 249 249 249 249 249 — 249 — 249 Net loans (includes LHFS) 267,730 415,218 923,776 1,425,128 2,210,873 81,816 2,292,689 4,646 2,297,335 FHLBNY stock 29,182 29,182 29,182 29,182 29,182 — 29,182 — 29,182 Other assets — — — — — — — 100,425 100,425 Total $ 425,443 $ 605,646 $ 1,165,526 $ 1,719,523 $ 2,633,558 $ 285,558 $ 2,919,116 $ 120,822 $ 3,039,938 Liabilities: Non-maturity deposits $ 60,746 $ 121,499 $ 243,005 $ 486,011 $ 870,025 $ 60,680 $ 930,705 $ 173,855 $ 1,104,560 Certificates of deposit 315,709 507,093 670,619 728,383 780,304 — 780,304 — 780,304 Borrowings 75,000 75,000 125,000 325,000 596,100 — 596,100 — 596,100 Other liabilities — — — — — — — 53,474 53,474 Total liabilities 451,455 703,592 1,038,624 1,539,394 2,246,429 60,680 2,307,109 227,329 2,534,438 Capital — — — — — — — 505,500 505,500 Total liabilities and capital $ 451,455 $ 703,592 $ 1,038,624 $ 1,539,394 $ 2,246,429 $ 60,680 $ 2,307,109 $ 732,829 $ 3,039,938 Asset/liability gap $ (26,012 ) $ (97,946 ) $ 126,902 $ 180,129 $ 387,129 $ 224,878 $ 612,007 Gap/assets ratio 94.24 % 86.08 % 112.22 % 111.70 % 117.23 % 470.60 % 126.53 % (1) Includes available-for-sale securities and held-to-maturity securities. Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net interest income and EVE tables presented assume that the composition of the interest-sensitive assets 43 Table of Contents and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net interest income and EVE tables provide an indication of the interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on net interest income and EVE and will differ from actual results. Furthermore, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset. In the event of changes in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the gap table. Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of loans, deposits and borrowings. Liquidity and Capital Resources Liquidity describes the ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of the Company’s customers and to fund current and future planned expenditures. Although maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. The most liquid assets are cash and interest-bearing deposits in banks. The levels of these assets are dependent on operating, financing, lending, and investing activities during any given period. The Bank had $521.1 million and $571.1 million of outstanding term advances from FHLBNY at March 31, 2025 and December 31, 2024, respectively. The Bank had no overnight line of credit advance from the FHLBNY at March 31, 2025 and $25.0 million of overnight line of credit advance from the FHLBNY at December 31, 2024. Net cash provided by operating activities was $13.1 million and $1.5 million for the three months ended March 31, 2025 and 2024, respectively. Net cash used in investing activities, which consists primarily of disbursements for loan originations, purchase of loans, net purchase and redemption of FHLBNY stock and purchase of equipment offset by principal collections on loans and proceeds from maturities, calls and principal repayments on securities was ($67.8) million and ($80.1) million for the three months ended March 31, 2025 and 2024, respectively. Net cash provided by financing activities, consisting of activities in borrowing, deposit accounts and dividends paid on preferred stock, was $44.8 million and $74.2 million for the three months ended March 31, 2025 and 2024, respectively. The Bank’s management took steps to enhance the Company’s liquidity position by increasing its on balance sheet cash and cash equivalents position in order to meet unforeseen liquidity events and to fund upcoming funding needs. At March 31, 2025 and December 31, 2024, all regulatory capital requirements were met, resulting in the Company and the Bank being categorized as well capitalized. Management is not aware of any conditions or events that would change this categorization. Material Cash Requirements Commitments . As a financial services provider, the Company routinely is a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. Although these contractual obligations represent the Company’s future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans originated. At March 31, 2025 and December 31, 2024, the Company had outstanding commitments to originate loans and extend credit of $390.2 million and $411.5 million, respectively. It is anticipated that the Company will have sufficient funds available to meet its current lending commitments. Certificates of deposit that are scheduled to mature in 2025 totaled $610.9 million. Management expects that a substantial portion of the maturing time deposits will be renewed. However, if a substantial portion of these deposits are not retained, the Company may utilize FHLBNY advances, unsecured credit lines with correspondent banks, or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. Contractual Obligations . In the ordinary course of its operations, the Company enters into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities. There have been no material changes in the Company’s material cash requirements under its contractual obligations as discussed in its most recent annual report on Form 10-K. 44 Table of Contents Dividend on Preferred Stock . Pursuant to the terms of its Preferred Stock, the Company is required to pay a quarterly dividend on its Preferred Stock, beginning during the quarter ended June 30, 2024. The floor dividend rate is 0.50% and the ceiling dividend rate is 2.00%, based on achievement of certain qualified lending targets. For quarterly dividends through June 15, 2025, the Company is required to pay quarterly dividends on the Preferred Stock at a rate of 0.50%. The company paid and accrued $0.3 million for the three months ended March 31, 2025 and $0.6 million for the year ended December 31, 2024. Other Material Cash Requirements. In addition to contractual obligations, the Company’s material cash requirements also includes compensation and benefits expenses for its employees, which were $7.8 million for the three months ended March 31, 2025. The Company also has material cash requirements for occupancy and equipment expenses, excluding depreciation and amortization of $0.5 million, related to rental expenses, general maintenance and cleaning supplies, guard services, software licenses and other miscellaneous expenses, which were $3.4 million for the three months ended March 31, 2025. Item 3. Quantitative and Qualitati ve Disclosures About Market Risk. The information required by this item is included in Part I, Item 2 of this report under “Management of Market Risk”.