What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-06 · 72 added, 132 removed, 209 unchanged (49% of the section changed)

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the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations;

the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the "Federal Reserve"), inflation, interest rate, market and monetary fluctuations;

the effects of, and changes in, trade, tariff, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the "Federal Reserve"), inflation, interest rate, market and monetary fluctuations;

the potential adverse effects of the Consent Orders and any additional regulatory restrictions that may be imposed by banking regulators;

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Financial institutions can be affected by changing conditions in the real estate and financial markets.

The effects of geopolitical instability, including the conflict between Russia and Ukraine and the war in Israel, foreign currency exchange volatility, volatility in global capital markets, inflationary pressures, and higher interest rates may meaningfully impact loan production, income levels, and the measurement of certain significant estimates such as the allowance for credit losses.

The effects of geopolitical instability, including the conflict between Russia and Ukraine and the war in Israel, foreign currency exchange volatility, volatility in global capital markets, inflationary pressures, higher tariffs, and higher interest rates may meaningfully impact loan production, income levels, and the measurement of certain significant estimates such as the allowance for credit losses.

Moreover, in a period of economic contraction, we may experience elevated levels of credit losses, reduced interest income, impairment of financial assets, diminished access to capital markets and other funding sources, and reduced demand for our products and services.

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Earnings and liquidity depend to a great extent on our interest rates.

Interest rates are highly sensitive to many factors beyond our control, including competition, general economic conditions, geopolitical tensions and monetary and fiscal policies of various governmental and regulatory authorities, including the Federal Reserve.

Interest rates are highly sensitive to many factors beyond our control, including competition, general economic conditions, geopolitical tensions and monetary, trade, tariff, and fiscal policies of various governmental and regulatory authorities, including the Federal Reserve.

Conditions such as inflation, deflation, recession, unemployment and other factors beyond our control may also affect interest rates.

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The Company's non-interest expense primarily consists of employee compensation, administration, and other operating expenses.

At September 30, 2024, we had total assets of $2.07 billion, and total equity of $296.5 million.

Net income available to common shareholders for the three and nine months ended September 30, 2024 was $7.5 million and $20.1 million, respectively.

At March 31, 2025, we had total assets of $2.14 billion, and total equity of $305.9 million.

Net income available to common shareholders for the three months ended March 31, 2025 was $7.8 million.

Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Our net income available to common shareholders for the third quarter of 2024 increased $6.5 million, or 634.1%, to $7.5 million, compared to $1.0 million for the same period last year.

Earnings per share were $0.63 per basic common share and $0.62 per diluted common share for the third quarter of 2024, compared to $0.09 per basic common share and $0.08 per diluted common share for the same period last year.

The increase was primarily due to a decrease in non-interest expense and an increase in interest income, partially offset by higher interest expense, and a decrease in non-interest income.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Our net income available to common shareholders for the first quarter of 2025 increased $1.6 million, or 26.5%, to $7.8 million, compared to $6.1 million for the same period last year.

Earnings per share were $0.66 per basic common share and $0.65 per diluted common share for the first quarter of 2025, compared to $0.51 per basic common share and $0.51 per diluted common share for the same period last year.

The increase was primarily due to an increase in net interest income, partially offset by an increase in provision for credit losses, and a decrease in non-interest income.

Net Interest Income :

Our net interest income was $14.7 million for the third quarter of 2024 compared to $15.7 million for the third quarter of 2023, a decrease of $1.0 million, or 6.1%.

Net interest income decreased during the three months ended September 30, 2024, primarily due to an increase in interest expense on deposits and borrowings, partially offset by an increase in interest and fees on loans.

Interest income increased $3.0 million, or 10.3%, during the three months ended September 30, 2024 as compared to the same period in the prior year.

Our net interest income was $16.6 million for the first quarter of 2025 compared to $14.1 million for the first quarter of 2024, an increase of $2.5 million, or 18.2%.

Net interest income increased during the three months ended March 31, 2025, primarily due to an increase in interest and fees on loans and an increase in interest on deposits with banks, partially offset by an increase in interest expense on deposits and borrowings.

Interest income increased $4.4 million, or 14.8%, during the three months ended March 31, 2025 as compared to the same period in the prior year.

The increase in interest income was primarily due to an increase of $3.4 million in interest and fees on loans, due to higher loan balances and market interest rates.

The increase in interest income was offset by an increase in interest expense during the three months ended September 30, 2024 of $4.0 million, or 29.5%, primarily due to an increase in market interest rates on deposits and the overall mix of deposits of $3.6 million, and increase in market interest rates.

Interest from deposits with banks increased $0.9 million during the three months ended March 31, 2025 as compared to the same period in the prior year, primarily due to higher cash balances held at the Federal Reserve Bank ("FRB").

The increase in interest income was partially offset by an increase in interest expense during the three months ended March 31, 2025 of $1.8 million, or 11.8%, primarily due to an increase in market interest rates on deposits and the overall mix of deposits of $1.7 million.

Provision for credit losses :

For the three months ended September 30, 2024, the provision for credit losses was a recovery of $0.1 million, compared to a provision of $0.3 million for the three months ended September 30, 2023.

The provision recovery for the

three months ended September 30, 2024, was primarily driven by a decrease in the 1 - 4 family investment property loan portfolio qualitative factor rate from the quarter ended June 30, 2024.

For the three months ended March 31, 2025, the provision for credit losses was $0.6 million, compared to $0.2 million for the three months ended March 31, 2024, an increase of $0.4 million.

The increase in the provision for credit losses for the three months ended March 31, 2025, was primarily due to an increase in the commercial non-owner occupied and commercial owner occupied loan portfolio's balances from December 31, 2024.

Non-interest Income :

Our non-interest income was $0.9 million for the three months ended September 30, 2024, a decrease of $0.9 million, compared to $1.8 million for the three months ended September 30, 2023.

Our non-interest income was $0.8 million for the three months ended March 31, 2025, a decrease of $0.2 million, compared to $1.1 million for the three months ended March 31, 2024.

The decrease is primarily attributable to a decrease in service fees on deposit accounts of $0.1 million due to a decrease in cannabis deposit fee income, and a decrease in other non-interest income of $0.1 million.

Non-interest Expense :

Our non-interest expense decreased $9.5 million, or 59.8%, to $6.4 million for the three months ended September 30, 2024, from $15.8 million for the three months ended September 30, 2023.

The decrease in non-interest expense for the three months ended September 30, 2024, was primarily due to a non-recurring $9.5 million loss recorded in the three months ended September 30, 2023.

Income tax expense was $1.9 million on income before taxes of $9.4 million for the three months ended September 30, 2024, resulting in an effective tax rate of 20.1%, compared to income tax expense of $0.3 million on income before taxes of $1.4 million for the same period of 2023, resulting in an effective tax rate of 24.8%.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Our net income available to common shareholders for the nine months ended September 30, 2024 decreased $0.2 million, or 0.8%, to $20.1 million compared to $20.3 million for the nine months ended September 30, 2023.

Earnings per share were $1.68 per basic common share and $1.66 per diluted common share for the nine months ended September 30, 2024 compared to $1.70 per basic common share and $1.67 per diluted common share for the same period last year.

The decrease in net income available to common shareholders primarily resulted from an decrease in net interest income of $5.6 million, an increase in provision for credit losses of $2.1 million, and a decrease in non-interest income of $2.1 million, partially offset by an decrease in non-interest expense of $9.8 million.

Net interest income :

Our net interest income decreased $5.6 million, or 11.5%, to $43.1 million for the nine months ended September 30, 2024, compared to $48.7 million for the same period last year.

Interest income for the nine months ended September 30, 2024, increased $9.4 million to $91.8 million, or 11.4%, from $82.4 million for the same period of 2023.

The increase in interest income was primarily due to an increase in interest and fees on loans of $9.4 million, primarily due to an increase in market interest rates and balances outstanding.

Interest expense increased $15.0 million, or 44.5%, for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase in interest paid on deposits of $14.1 million, or 50.2%, primarily due to an increase in market interest rates and a shift in deposit mix.

Further contributing to the increase in interest expense was an increase in interest on borrowings of $0.9 million, or 16.2%, due to an increase in borrowing levels and higher market interest rates.

Provision for credit losses :

The provision for credit losses was $0.5 million for the nine months ended September 30, 2024, compared to a recovery of provision for credit losses of $1.6 million for the nine months ended September 30, 2023.

The increase in the provision for credit losses for the nine months ended September 30, 2024 was primarily due to an increase in the outstanding loan balance of $52.6 million from the balance at December 31, 2023, specifically in the construction 1 - 4 family, and multi-family loan portfolios .

The provision recovery of $1.6 million during the same period in 2023 was primarily related to decreases in loss factors related to the construction, commercial owner occupied, and residential 1 to 4 family investment portfolios .

For more information about our provision for credit losses and our allowance for loan and lease losses and loss experience, see “Financial Condition-Allowance for Loan and Lease Losses” below and Note 4 - Loans And Allowance For Credit Losses on Loans to the unaudited consolidated financial statements.

Non-interest income :

Our non-interest income was $3.2 million for the nine months ended September 30, 2024, a decrease of $2.0 million, or 39.3%, compared to $5.2 million for the same period last year.

The decrease is primarily attributable to a decrease in service fees on deposit accounts of $2.1 million.

Fee income for the nine months ended September 30, 2024 decreased primarily from commercial deposit accounts of depositors who do business in the cannabis-related industry totaled $0.8 million, compared to $2.9 million for the same period last year.

Fee income is included in service fees on deposit accounts in the accompanying Consolidated Statements of Income.

Non-interest expense:

Our non-interest expense decreased $9.8 million to $19.1 million for the nine months ended September 30, 2024, from $29.0 million for the nine months ended September 30, 2023.

The decrease in non-interest expense was primarily due to a $9.5 million non-recurring loss recorded in the nine months ended September 30, 2023.

Income tax expense was $6.5 million on income before taxes of $26.6 million for the nine months ended September 30, 2024, resulting in an effective tax rate of 24.3%, compared to income tax expense of $6.2 million on income before taxes of $26.5 million for the same period of 2023, resulting in an effective tax rate of 23.5%.

Our non-interest expense was unchanged at $6.5 million for the three months ended March 31, 2025, from the three months ended March 31, 2024.

Income tax expense was $2.5 million on income before taxes of $10.3 million for the three months ended March 31, 2025, resulting in an effective tax rate of 24.5%, compared to income tax expense of $2.2 million on income before taxes of $8.4 million for the same period of 2024, resulting in an effective tax rate of 26.6%.

Net Interest Income

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The following tables presents the average daily balances of assets, liabilities and equity and the respective interest earned or paid on interest-earning assets and interest-bearing liabilities, as well as average annualized rates, for the periods indicated.

For the Three Months Ended September 30,

For the Three Months Ended March 31,

Balance Interest

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** Includes balances of FHLBNY and ACBB stock.

For the Nine Months Ended September 30,

Average Balance Interest Income/ Expense Yield/ Cost Average Balance Interest Income/ Expense Yield/ Cost

(Dollars in thousands)

Loans* $ 1,798,061 $ 86,976 6.46 % $ 1,776,181 $ 77,602 5.84 %

Investment securities** 23,551 761 4.32 % 26,737 745 3.73 %

Interest bearing deposits 103,302 4,050 5.24 % 113,858 4,059 4.77 %

Total interest-earning assets 1,924,914 91,787 6.37 % 1,916,776 82,406 5.75 %

Other assets 66,770 79,467

Allowance for credit losses (32,267) (31,826)

Total assets $ 1,959,417 $ 1,964,417

Liabilities and Shareholders’ Equity

Interest bearing deposits:

Checking $ 65,335 $ 504 1.03 % $ 79,716 $ 627 1.05 %

Money markets 585,959 21,412 4.88 % 368,777 11,023 4.00 %

Savings 69,736 596 1.14 % 140,435 1,231 1.17 %

Time deposits 428,670 13,455 4.19 % 505,109 11,027 2.92 %

Brokered certificates of deposit 151,056 6,156 5.44 % 114,676 4,138 4.82 %

Total interest-bearing deposits 1,300,756 42,123 4.33 % 1,208,713 28,046 3.10 %

Borrowings 158,193 6,575 5.55 % 182,495 5,661 4.15 %

Total interest-bearing liabilities 1,458,949 48,698 4.46 % 1,391,208 33,707 3.24 %

Non-interest bearing deposits 190,684 278,854

Other liabilities 17,532 16,584

Total non-interest bearing liabilities 208,216 295,438

Equity 292,252 277,771

Total liabilities and shareholders’ equity $ 1,959,417 $ 1,964,417

Net interest income $ 43,089 $ 48,699

Interest rate spread 1.91 % 2.51 %

Net interest margin 2.99 % 3.40 %

* The average balance of loans includes loans on nonaccrual.

** Includes balances of FHLBNY and ACBB stock.

Financial Condition

At September 30, 2024, the Company’s total assets were $2.07 billion, an increase of $41.9 million, or 2.1%, from December 31, 2023.

The increase in total assets was primarily attributable to an increase in loans receivable and an increase in FHLBNY restricted stock, partially offset by a decrease in cash and cash equivalent, investment securities, and other assets.

Loans increased $52.6 million, primarily due to increases in the construction, multi-family, and CRE owner portfolios.

FHLBNY restricted stock increased $1.0 million due to an increase in FHLBNY advances.

Cash and cash equivalents decreased $7.9 million, or 4.4%, primarily due to the increase in loans, partially offset by the increase in deposits and borrowings.

Other assets decreased $3.4 million during the nine months ended September 30, 2024, to $7.2 million at September 30, 2024, from $10.5 million at December 31, 2023, primarily driven by a decrease in prepaid taxes.

Total liabilities were $1.77 billion at September 30, 2024.

This represented a $29.8 million, or 1.7%, increase, from $1.74 billion at December 31, 2023.

The increase in total liabilities was primarily due to an increase in deposits of $6.1 million, or 0.4%, to $1.56 billion at September 30, 2024, from $1.55 billion at December 31, 2023, and an increase in borrowings of $20.1 million, or 16.0%, to $188.3 million at September 30, 2024.

The increase in deposits was primarily due to an increase in brokered time deposits of $48.4 million, and time deposits of $21.4 million, partially offset by a decrease in non-interest demand deposits of $33.7 million, and a decrease in savings deposits of $25.5 million.

The increase in borrowings was due to additional FHLBNY advances.

Total equity was $296.5 million and $284.3 million at September 30, 2024 and December 31, 2023, respectively, an increase of $12.1 million from December 31, 2023.

The increase was primarily due to the retention of earnings, partially offset by the payment of $6.4 million of cash dividends, and the repurchase of Company common stock of $2.0 million.

The following table presents certain key condensed balance sheet data as of September 30, 2024 and December 31, 2023 :

September 30,

At March 31, 2025, the Company’s total assets were $2.14 billion, a decrease of $0.4 million, or 0.02%, from December 31, 2024.

The decrease in total assets was primarily attributable to a decrease in cash and cash equivalents of $12.5 million, a decrease in FHLBNY restricted stock of $1.8 million, and a decrease in other assets of $1.0 million, partially offset by an increase in loans receivable of $15.0 million.

Cash and cash equivalents decreased $12.5 million, or 5.6%, primarily due to the increase in loans and a decrease in FHLBNY borrowings of $40.0 million, partially offset by an increase in deposits of $35.6 million.

FHLBNY restricted stock decreased $1.8 million, or 21.0%, due to the repayment of $40.0 million of FHLBNY advances.

Other assets decreased $1.0 million due to a decrease in prepaid expenses.

Loans increased $15.0 million, primarily due to increases in the commercial owner occupied and commercial non-owner occupied portfolio's balances, partially offset by a decrease in the construction portfolio balance.

Total liabilities were $1.84 billion at March 31, 2025.

This represented a $6.3 million, or 0.3%, decrease, from $1.84 billion at December 31, 2024.

The decrease in total liabilities was primarily due to a decrease in FHLBNY borrowings of $40.0 million, or 27.6%, to $105.0 million, partially offset by an increase in deposits of $35.6 million, or 2.2%, to $1.67 billion at March 31, 2025.

The decrease in borrowings was attributed to the repayment of $40.0 million in FHLBNY advances, while the increase in deposits was primarily due to an increase in money market deposits of $128.4 million, partially offset by a decrease in brokered time deposits of $88.9 million.

Total equity was $305.9 million and $300.1 million at March 31, 2025 and December 31, 2024, respectively, an increase of $5.9 million from December 31, 2024.

The increase was primarily due to the retention of earnings, partially offset by the payment of $2.1 million of cash dividends.

The following table presents certain key condensed balance sheet data as of March 31, 2025 and December 31, 2024 :

2025 December 31,

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Cash and cash equivalents

Cash and cash equivalents decreased $7.9 million to $172.4 million at September 30, 2024 from $180.4 million at December 31, 2023, a decrease of 4.4%.

The decrease was primarily due to an increase in loans, partially offset by an increase in deposits and borrowings.

Cash and cash equivalents decreased $12.5 million to $209.0 million at March 31, 2025 from $221.5 million at December 31, 2024, a decrease of 5.6%.

The decrease was primarily due to an increase in loans, and a decrease in FHLBNY borrowings, partially offset by an increase in deposits.

Investment securities

Total investment securities decreased to $15.3 million at September 30, 2024, from $16.4 million at December 31, 2023, a decrease of $1.1 million or 6.8%.

The decrease was attributed to normal pay downs.

Total investment securities decreased to $14.3 million at March 31, 2025, from $14.8 million at December 31, 2024, a decrease of $0.4 million or 2.8%.

The decrease was attributed to normal pay downs of securities.

For detailed information on the composition and maturity distribution of our investment portfolio, see NOTE 3 - Investment Securities in the notes to the unaudited consolidated financial statements.

Our lending relationships are primarily with small to mid-sized businesses and individual consumers residing in and around Southern New Jersey and Philadelphia, Pennsylvania.

We have also expanded our lending footprint in other areas, including New York and South Carolina.

We have also expanded our lending footprint in other areas, including New York and most recently South Carolina.

We focus our lending efforts primarily in three lending areas:

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Loans receivable :

Loans receivable increased to $1.84 billion at September 30, 2024, from $1.79 billion at December 31, 2023, an increase of $52.6 million, or 2.9%.

T he increase was primarily due to increases in the construction, CRE-owner occupied, and Residential - Multifamily loan portfolios.

Loans receivable as of September 30, 2024 and December 31, 2023, consisted of the following:

September 30, 2024 December 31, 2023

Loans receivable increased to $1.88 billion at March 31, 2025, from $1.87 billion at December 31, 2024, an increase of $15.0 million, or 0.8%.

T he increase was primarily due to increases in the commercial-owner occupied, and commercial non-owner occupied, loan portfolios, partially offset by a decrease in the construction loan portfolio.

Loans receivable as of March 31, 2025 and December 31, 2024, consisted of the following:

March 31, 2025 December 31, 2024

Amount Percentage of Loans to total

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Total Loans $ 1,883,175 100.0 % $ 1,868,153 100.0 % $ 15,022 0.8 %

At September 30, 2024, total deposits increased to $1.56 billion from $1.55 billion at December 31, 2023, an increase of $6.1 million, or 0.4%.

The increase in deposits was primarily due to an increase in brokered time deposits of $48.4 million and an increase in time deposits of $21.4 million, partially offset by a decrease in non-interest demand deposits and savings deposits of $33.7 million and $25.5 million, respectively .

The increase in our brokered time deposits was primarily due to our increased usage of brokered funds.

The increase in our time deposit balance is primarily due to an increase in twelve month certificates of deposit of $157.8 million and an increase of $60.0 million in six month certificates of deposit, partially offset by a decrease of $120.3 million and $52.9 million in fifteen month and twenty one month certificates of deposit, respectively.

The decrease in the noninterest-bearing deposit balance was primarily due to a $29.6 million decrease in cannabis checking account.

The decrease in the savings deposits was primarily due to a $11.2 million decrease in our preferred savings accounts, as well as a $6.8 million and $4.0 million decrease in our platinum plus and statement savings accounts, respectively.

September 30, December 31,

At March 31, 2025, total deposits increased to $1.67 billion from $1.63 billion at December 31, 2024, an increase of $35.6 million, or 2.2%.

The increase in deposits was primarily due to an increase in money market deposits of $128.4 million, partially offset by a decrease in brokered time deposits of $88.9 million The increase in our money market deposits was primarily due to the increase of $106.7 million in our premier money market account balance, and an increase of $28.3 million in our municipal money market account balance.

The decrease in the brokered time deposit balance is primarily attributed to $75.0 million in Wells Fargo brokered CD maturities, and $13.2 million in CDARs brokered CD maturities, respectively.

The increase in the estimated uninsured deposits balance is mainly due to an increase in our cannabis and municipal deposit balances.

March 31, December 31,

2025 2024 $ Change % Change

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Total brokered deposits $ 121,794 $ 215,722 $ (93,928) (43.5) %

Total borrowings were $188.3 million at September 30, 2024 and $168.1 million at December 31, 2023.

The increase in borrowings is due to an increase of $20.0 million in FHLBNY advances.

At September 30, 2024, $125.0 million of the outstanding FHLBNY advances have short-term maturities.

Total equity increased to $296.5 million at September 30, 2024 from $284.3 million at December 31, 2023, an increase of $12.1 million, or 4.3%, primarily due to the retention of earnings from the period, partially offset by the payment of $6.4 million of cash dividends, and the repurchase of Company common stock of $2.0 million.

Total borrowings were $148.3 million at March 31, 2025 and $188.3 million at December 31, 2024.

The decrease in borrowings is due to a decrease of $40.0 million in FHLBNY advances.

At March 31, 2025, $85.0 million of the outstanding FHLBNY advances have short-term maturities.

Total equity increased to $305.9 million at March 31, 2025 from $300.1 million at December 31, 2024, an increase of $5.9 million, or 2.0%, primarily due to the retention of earnings from the period, partially offset by the payment of $2.1 million of cash dividends.

Liquidity and Capital Resources

Liquidity is a measure of our ability to generate cash to support asset growth, meet deposit withdrawals, satisfy other contractual obligations, and otherwise operate on an ongoing basis.

At September 30, 2024, our cash position was $172.4 million.

At March 31, 2025, our cash position was $209.0 million.

We invest cash that is in excess of our immediate operating needs primarily in our interest-bearing account at the Federal Reserve.

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We also use brokered deposits as a funding source.

The Bank joined the IntraFi Financial Network to secure an additional alternative funding source.

The Bank primarily utilizes brokered relationships with Wells Fargo, Piper Sandler, and Stonecastle.

As of March 31, 2025, the Company had $121.6 million sourced from these relationships.

For an additional source of brokered liquidity, the Bank joined the IntraFi Financial Network.

IntraFi provides the Bank an additional source of external funds through their weekly CDARS® settlement process, as well as their ICS® money market product.

As of September 30, 2024, the Company had $13.2 million of brokered deposits sourced from IntraFi.

Additionally, we have access to other brokered deposit funding sources that we utilize as a source of additional liquidity.

In addition to IntraFi, we utilize Wells Fargo and Piper Sandler to obtain brokered deposits, and as of September 30, 2024, the Company had $183.7 million sourced from these broker relationships.

As of March 31, 2025, the Company did not have any deposits sourced from IntraFi.

While deposit accounts comprise the vast majority of our funding needs, we maintain secured borrowing lines with the FHLBNY and the Federal Reserve Bank ("FRB").

As of September 30, 2024, the Company had lines of credit with the FHLBNY of $930.5 million, of which $145.0 million was outstanding, and an additional $50.0 million from a letter of credit for securing public funds.

The remaining borrowing capacity was $735.5 million at September 30, 2024.

As of September 30, 2024, the Company had a borrowing capacity through the FRB discount window of $76.3 million.

There were no balances outstanding with the FRB as of September 30, 2024.

We had outstanding loan commitments of $121.5 million at September 30, 2024.

As of March 31, 2025, the Company had lines of credit with the FHLBNY of $685.0 million, of which $105.0 million was outstanding, and an additional $40.0 million from a letter of credit for securing public funds.

The remaining borrowing capacity was $540.0 million at March 31, 2025.

As of March 31, 2025, the Company had a borrowing capacity through the FRB discount window of $283.0 million.

There were no balances outstanding with the FRB as of March 31, 2025.

We had outstanding loan commitments of $137.5 million at March 31, 2025.

Our loan commitments are normally originated with the full amount of collateral.

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The funding requirements for such commitments occur on a measured basis over time and would be funded by normal deposit growth.

The following is a discussion of our cash flows for the nine months ended September 30, 2024 and 2023.

Cash provided by operating activities was $26.6 million in the nine months ended September 30, 2024, compared to $14.0 million for the same period in the prior year.

The increase in operating cash flow was primarily due to the decrease in accrued interest receivable and other assets, the increase in accrued interest payable, and the increase in provision for credit losses, partially.

Cash used in investing activities was $52.3 million in the nine months ended September 30, 2024, compared to cash used in investing activities of $48.0 million in the same period last year.

The increase in cash used in the investing activities during the nine months ended September 30, 2024, was primarily due to the increase in cash outflow from the origination of loans.

Cash provided by financing activities was $17.7 million in the nine months ended September 30, 2024, compared to cash used in financing activities of $21.4 million in the same period last year.

The increase in cash provided by financing activities during the nine months ended September 30, 2024, was primarily due to lower decrease in noninterest-bearing deposits, and the increase in FHLBNY short-term borrowings, partially offset by lower increase in interest-bearing deposits, the decrease in FHLBNY long-term borrowings, and the decrease in Federal Reserve short-term borrowings.

The following is a discussion of our cash flows for the three months ended March 31, 2025 and 2024.

Cash provided by operating activities was $7.0 million in the three months ended March 31, 2025, compared to $8.4 million for the same period in the prior year.

The decrease in operating cash flow was primarily due to the decrease in accrued interest payable and other accrued liabilities, partially offset by a decrease in accrued interest receivable and other assets.

Cash used in investing activities was $13.1 million in the three months ended March 31, 2025, compared to cash provided from investing activities of $3.6 million in the same period last year.

The increase in cash used in the investing activities during the three months ended March 31, 2025, was primarily due to the increase in cash outflow from the origination of loans.

Cash used in financing activities was $6.4 million in the three months ended March 31, 2025, compared to cash used in financing activities of $21.2 million in the same period last year.

The decrease in cash provided by financing activities during the three months ended March 31, 2025, was primarily due to an increase in noninterest-bearing deposits, partially offset by lower increase in interest-bearing deposits, and the net decrease in FHLBNY borrowings.

Capital Adequacy

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We also use other means to manage our capital.

Total equity increased $12.1 million at September 30, 2024, from December 31, 2023, primarily from the Company’s net income of $20.1 million for the period, net of common and preferred stock dividends of $6.5 million and treasury stock repurchases of $2.0 million.

Total equity increased $5.9 million at March 31, 2025, from December 31, 2024, primarily from the Company’s net income of $7.8 million for the period, net of common and preferred stock dividends of $2.1 million.

Banks and bank holding companies are subject to various regulatory capital requirements administered by federal banking agencies.

4 unchanged sentences

Under the capital rules issued by the Federal banking agencies, the Company and the Bank elected to exclude the effects of certain Accumulated Other Comprehensive Income (“AOCI”) items from its regulatory capital calculation.

At September 30, 2024, the Bank and the Company were both considered “well capitalized”.

The following table presents the tier 1 regulatory capital leverage ratios of the Company and the Bank at September 30, 2024:

At March 31, 2025, the Bank and the Company were both considered “well capitalized”.

The following table presents the tier 1 regulatory capital leverage ratios of the Company and the Bank at March 31, 2025:

Amount Ratio Amount Ratio

19 unchanged sentences

The allowance calculation and determination process is dependent on the use of key assumptions.

Key reserve assumptions and estimation processes react to and are influenced by observed changes

in loan portfolio performance experience, the financial strength of the borrower, projected industry outlook, and economic conditions.

Key reserve assumptions and estimation processes react to and are influenced by observed changes in loan portfolio performance experience, the financial strength of the borrower, projected industry outlook, and economic conditions.

The process of determining the level of the allowance for credit losses requires a high degree of judgment.

3 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