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Item 2. Management’s Discussion and Analysis

2026-05-14 compared with 2025-11-14 · 105 added, 210 removed, 320 unchanged (50% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis is intended to enhance your understanding of our financial condition and results of operations.

The financial information in this section is derived from the accompanying unaudited consolidated financial statements and related notes.

You should read the financial information in this section in conjunction with the business and financial information contained in this report and in the Company’s definitive prospectus dated August 12, 2025, as filed with the Securities and Exchange Commission on August 22, 2025.

Management’s discussion and analysis of the financial condition and results of operations at and for the three months ended March 31, 2026 and 2025 is intended to assist in understanding the financial condition and results of operations of the Company.

The information in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing in Part 1, Item 1 of this quarterly report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

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● political instability or civil unrest;

● acts of war or terrorism or public health emergencies such as the recent COVID-19 pandemic;

● acts of war or terrorism or public health emergencies such as the COVID-19 pandemic;

● our ability to control operating costs and expenses, including compensation expense associated with equity allocated or awarded to our employees;

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Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Except as required by applicable law or regulation, we do not undertake, and we

specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Our results of operations depend primarily on our net interest income, which is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans, investment securities and other interest-earning assets (cash and cash equivalents), and the interest we pay on our interest-bearing liabilities, consisting primarily of demand accounts, NOW accounts, savings accounts, money market accounts, certificate of deposit accounts and borrowings.

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Critical accounting estimates include the areas where we have made what we consider to be particularly difficult, subjective, or complex judgments concerning estimates, and where these estimates can significantly affect our financial results under different assumptions and conditions.

These estimates, judgments, and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the years presented.

Actual results could be different from these estimates.

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In addition, various regulatory agencies, as an integral part of their examination process, periodically review our allowance for credit losses.

At each of September 30, 2025 and December 31, 2024, the allowance for credit losses on loans totaled $1.8 million.

Due to the nature and composition of our lending activities, a significant portion of the allowance for credit losses

on loans is allocated to the commercial real estate portfolio.

As of September 30, 2025 and December 31, 2024, the allowance for credit losses on loans allocated to our commercial real estate portfolio was $589,000, or 33.1%, and $432,000, or 24.0%, respectively.

At March 31, 2026, and December 31, 2025, the allowance for credit losses on loans totaled $2.0 million and $1.9 million, respectively.

Due to the nature and composition of our lending activities, a significant portion of the allowance for credit losses on loans is allocated to the commercial real estate portfolio.

As of March 31, 2026, and December 31, 2025, the allowance for credit losses on loans allocated to our commercial real estate portfolio was $672,000, or 34.3%, and $676,000, or 37.3%, respectively.

Our methodology for maintaining our allowance for credit losses is based on historical experience and data, current economic information, and reasonable and supportable forecasts.

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civilian unemployment, and a decrease of 100 basis points in the FOMC’s projected rate of U.S.

GDP growth, this would increase the model’s total calculated allowance for credit losses on loans by $857,000 or 48.2%, representing a 41 basis points increase to the coverage ratio of the allowance for credit losses as a percentage of loans at amortized cost, assuming all other quantitative and qualitative factors are kept at current levels, as of September 30, 2025.

This example is only one of the numerous possible economic scenarios that could be utilized in assessing the sensitivity of the allowance for credit losses and does not represent management’s assumptions or judgment of factors as of September 30, 2025.

GDP growth, this would increase the model’s total calculated allowance for credit losses on loans by $1.1 million or 53.4%, representing a 45 basis points increase to the coverage ratio of the allowance for credit losses as a percentage of loans at amortized cost, assuming all other quantitative and qualitative factors are kept at current levels, as of March 31, 2026.

Unexpected changes in economic growth could adversely affect our results of operations, including causing increases in delinquencies and default rates on loans, which would adversely impact our charge-offs, allowance for credit losses, and provision for credit losses.

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Also, in the ordinary course of business, we may be subject to a concentration of credit risk to a particular industry, counterparty, borrower or issuer.

A deterioration in the financial condition or prospects of a particular industry or a failure or downgrade of, or default by, any particular entity or group of entities could negatively impact our business, perhaps materially, and the systems by which we set limits and monitor the level of our credit exposure to individual entities and industries, may not function as we have anticipated.

Comparison of Financial Condition at September 30, 2025 and December 31, 2024

A deterioration in the financial condition or prospects of a particular industry or a failure or downgrade of, or default

by, any particular entity or group of entities could negatively impact our business, perhaps materially, and the systems by which we set limits and monitor the level of our credit exposure to individual entities and industries, may not function as we have anticipated.

Comparison of Financial Condition at March 31, 2026 and December 31, 2025

Total Assets.

Total assets were $316.5 million as of September 30, 2025 and $280.9 million as of December 31, 2024, an increase of $35.5 million, or 12.6%.

The increase in assets was primarily due to a $12.4 million increase in net loans, a $10.6 million increase in available-for-sale securities, a $7.5 million increase in cash and cash equivalents, a $2.4 million increase in premises and equipment, and a $1.2 million increase in other assets.

Total assets were $315.9 million as of March 31, 2026 and $312.1 million as of December 31, 2025, an increase of $3.7 million, or 1.2%.

The increase in assets was primarily due to a $7.3 million increase in net loans, and a $1.9 million increase in cash and cash equivalents, offset by a $5.6 million decrease in available-for-sale securities.

Cash and Cash Equivalents.

Cash and cash equivalents increased $7.5 million, or 110.6%, to $14.3 million at September 30, 2025 from $6.8 million at December 31, 2024.

The increase primarily resulted from an $27.6 million increase in total deposits, which was partially attributable to stock offering subscription proceeds held in escrow by the Bank during the quarter, partially offset by a $12.4 million increase in net loans, a $10.6 million increase in available for sale securities, a $2.4 million increase in premises and equipment relating to a new branch location in Manlius, New York opened in June 2025, and a $1.2 million increase in other assets relating to prepaid balances.

Cash and cash equivalents increased $1.9 million, or 35.2%, to $7.2 million at March 31, 2026 from $5.3 million at December 31, 2025.

The increase primarily resulted from a $6.4 million increase in total deposits and a $5.6 million decrease in available-for-sale securities, partially offset by a $7.3 million increase in net loans.

Available-for-Sale Securities.

Available-for-sale securities increased by $10.6 million, or 22.7%, to $57.0 million at September 30, 2025 from $46.5 million at December 31, 2024.

This increase was primarily due to $21.7 million in purchases of U.S.

treasury bonds during the nine months ended September 30, 2025, partially offset by maturities of $14.0 million in U.S.

treasury bonds during the first nine months of 2025.

Loans receivable, net of the allowance for credit losses, increased $12.4 million, or 6.1%, to $214.8 million at September 30, 2025 from $202.4 million at December 31, 2024.

The increase in net loans was primarily driven by the origination of $37.1 million of loans, partially offset by $16.9 million of paydowns and $7.8 million of loan sales during the nine months ended September 30, 2025.

Commercial real estate loans increased to $73.4 million at September 30, 2025 from $59.5 million at December 31, 2024, as we hired a new commercial lender in mid-2024 to continue to grow this portfolio.

Commercial and industrial loans increased to $26.4 million at September 30, 2025 as compared to $23.4 million at December 31, 2024.

One- to four-family residential mortgage loans decreased to $93.5 million at September 30, 2025 from $101.2 million at December 31, 2024, as we focused on sales of such loans in the secondary market, while home equity loans and lines of credit increased to $15.2 million at September 30, 2025 from $11.9 million at December 31, 2024.

Consumer and other loans decreased to $4.8 million at September 30, 2025 from $5.4 million at December 31, 2024.

Total deposits increased by $27.6 million, or 13.1%, to $238.1 million at September 30, 2025 from $210.6 million at December 31, 2024.

The increase was primarily a result of an increase in commercial deposits of $9.1 million and an increase in retail deposits of $18.5 million, which was partially attributable to stock offering subscription proceeds held in escrow by the Bank during the quarter, as well as a strategic focus on gathering commercial deposits and investments in advertising and marketing campaigns.

Core deposits (which we define as all deposits other than certificates of deposit and brokered deposits) increased $32.6 million, or 22.8% to $175.8 million at September 30, 2025 from $143.2 million at December 31, 2024.

As of September 30, 2025, money market deposits increased by $24.3 million, NOW and demand deposits increased by $5.8 million, and savings accounts increased by $2.5 million, partially offset by a decrease in time deposits of $5.1 million compared to December 31, 2024.

There were $16.7 million and $16.9 million of brokered deposits included in time deposits at September 30, 2025 and December 31, 2024, respectively.

Available-for-sale securities decreased by $5.6 million, or 11.5%, to $43.0 million at March 31, 2026 from $48.6 million at December 31, 2025.

This decrease was primarily due to maturities of $4.5 million and $838,000 in principal repayments during the first three months of 2026.

Loans receivable, net of the allowance for credit losses, increased $7.3 million, or 3.2%, to $233.3 million at March 31, 2026 from $226.0 million at December 31, 2025.

The increase in net loans was primarily driven by the origination of $13.0 million of loans, partially offset by $4.4 million of paydowns and $1.3 million of loan sales during the three months ended March 31, 2026.

Commercial real estate loans increased to $94.9 million at March 31, 2026 from $88.0 million at December 31, 2025 and commercial and industrial loans increased to $23.7 million at March 31, 2026 as compared to $22.2 million at December 31, 2025 as we continue to focus on growth in these portfolios.

Home equity loans and lines of credit increased to $16.8 million at March 31, 2026 from $15.9 million at December 31, 2025.

One- to four-family residential mortgage loans decreased to $92.3 million at March 31, 2026 from $93.0 million at December 31, 2025.

Residential construction loans decreased to $2.4 million at March 31, 2026 from $3.2 million at December 31, 2025.

Consumer and other loans decreased to $4.0 million at March 31, 2026 from $4.3 million at December 31, 2025.

Total deposits increased by $6.4 million, or 2.7%, to $240.9 million at March 31, 2026 from $234.4 million at December 31, 2025.

Core deposits (which we define as all deposits other than certificates of deposit and brokered deposits) increased $9.2 million, or 5.4% to $181.3 million at March 31, 2026 from $172.1 million at December 31, 2025 primarily due to an increase in business money market accounts.

As of March 31, 2026, money market deposits increased by $8.7 million and NOW and demand deposits increased by $1.1 million, partially offset by decreases in time deposits of $2.8 million and savings accounts of $576,000 as compared to December 31, 2025.

There were $15.7 million and $16.7 million of brokered deposits included in time deposits at March 31, 2026 and December 31, 2025, respectively.

FHLB Advances.

Total FHLB advances were $40.6 million at September 30, 2025 as compared to $41.3 million at December 31, 2024, a decrease of $686,000, or 1.7%.

Total FHLB advances were $34.6 million at March 31, 2026 as compared to $35.6 million at December 31, 2025, a decrease of $1.0 million, or 2.8%.

FHLB advances were paid down using funds obtained through deposit growth.

Stockholders’ Equity .

Stockholders’ equity increased by $556,000, or 2.3%, to $24.4 million at September 30, 2025 from $23.9 million at December 31, 2024.

The increase in stockholders’ equity was primarily due to a $359,000 decrease in net unrealized mark-to-market loss on the available-for-sale securities portfolio recognized in accumulated other comprehensive loss as a result of changes in interest rates during the nine months ended September 30, 2025 in addition to net income of $137,000 recorded during the nine months ended September 30, 2025.

Stockholders’ equity decreased by $193,000, or 0.6%, to $32.6 million at March 31, 2026 from $32.8 million at December 31, 2025.

The decrease in stockholders’ equity was due to a $196,000 increase in net unrealized mark-to-market loss on the available-for-sale securities portfolio recognized in accumulated other comprehensive loss as a result of changes in interest rates during the three months ended March 31, 2026 in addition to a net loss of $50,000 recorded during the three months ended March 31, 2026.

Analysis of Net Interest Income

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Average Balances and Yields .

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated.

The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated.

No tax-equivalent yield adjustments were made, as the effect thereof was not material.

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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 September 30,

(Dollars in thousands)

Interest-earning assets:

Available-for-sale securities

Other interest-earning assets

Total interest-earning assets

Non-interest-earning assets

Interest-bearing liabilities:

Regular savings and demand club accounts

Money market accounts

Certificates of deposit and retirement accounts

Total interest-bearing deposits

FHLB borrowings

Total interest-bearing liabilities

Non-interest-bearing deposits

Other non-interest-bearing liabilities

Total liabilities

Stockholders’ equity

Total liabilities and stockholders’ equity

Net interest income

Net interest rate spread (1)

Net interest-earning assets (2)

Net interest margin (3)

Average interest-earning assets to average interest-bearing liabilities

(1) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by total interest-earning assets.

(4) Annualized.

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(Dollars in thousands)

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Available-for-sale securities

FHLB/FRB stock

Other interest-earning assets

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There were no out-of-period items or adjustments required to be excluded from the table below.

Three Months Ended September 30,

Nine Months Ended September 30,

Increase (Decrease)

Three Months Ended March 31,

Increase (Decrease)

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Available-for-sale securities

FHLB/FRB stock

Other interest-earning assets

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Change in net interest income

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

Net income of $185,000 was recorded for the three months ended September 30, 2025, a decrease of $143,000, or 43.6%, as compared to net income of $328,000 for the three months ended September 30, 2024.

The decrease in net income was attributable to a $269,000 increase in non-interest expense and a $80,000 increase in provision for credit losses on loans during the three months ended September 30, 2025, partially offset by a $137,000 increase in net interest income, a $64,000 increase in non-interest income, and a $5,000 decrease in income tax expense.

Comparison of Results of Operations for the Three Months Ended March 31, 2026 and 2025

A net loss of $50,000 was recorded for the three months ended March 31, 2026, a decrease of $198,000 as compared to net income of $148,000 for the three months ended March 31, 2025.

The decrease in net income was attributable to a $644,000 increase in non-interest expense and a $10,000 increase in provision for credit losses on loans during the three months ended March 31, 2026, partially offset by a $316,000 increase in net interest income, a $118,000 increase in non-interest income, and a $22,000 decrease in income tax expense.

Interest Income.

Interest income increased by $365,000, or 10.7%, for the three months ended September 30, 2025, to $3.8 million as compared to $3.4 million for the three months ended September 30, 2024 primarily due to increases in loan interest income and interest and dividend income earned on the available-for-sale securities portfolio.

Loan interest income increased by $139,000, or 4.6%, to $3.1 million for the three months ended September 30, 2025 as compared to $3.0 million for the three months ended September 30, 2024.

The increase was due to an $8.0 million, or 3.9%, increase in the average balance of the loan portfolio to $213.5 million for the three months ended September 30, 2025 from $205.5 million for the three months ended September 30, 2024.

Interest income increased $391,000, or 11.4%, to $3.8 million for the three months ended March 31, 2026, as compared to $3.4 million for the three months ended March 31, 2025 primarily due to increases in loan interest income and interest and dividend income earned on the available-for-sale securities portfolio.

Interest income on loans increased by $397,000, or 13.6%, to $3.3 million for the three months ended March 31, 2026 as compared to $2.9 million for the three months ended March 31, 2025.

The increase was due to a $28.4 million, or 13.9%, increase in the average balance of the loan portfolio to $232.9 million for the three months ended March 31, 2026 from $204.5 million for the three months ended March 31, 2025.

The increase in the average balance of the loan portfolio was primarily due to an increase in the average balance of commercial real estate loans, partially offset by loan repayments and one- to four-family residential real estate loan sales.

The average yield earned on the loan portfolio increased by four basis points to 5.86% for the three months ended September

30, 2025 from 5.82% for the three months ended September 30, 2024, primarily due to originations of higher yielding commercial real estate and commercial and industrial loans.

Interest income earned on the available-for-sale securities portfolio increased by $210,000, or 75.3%, to $489,000 for the three months ended September 30, 2025 as compared to $279,000 for the three months ended September 30, 2024.

The increase was primarily attributable to a $19.7 million, or 50.5%, increase in the average balance of the available-for-sale securities portfolio to $58.7 million for the three months ended September 30, 2025 as compared to $39.0 million for the three months ended September 30, 2024.

The increase in the average balance of available-for-sale securities was primarily attributable to the purchase of $12.0 million of securities during the three months ended September 30, 2025, as we deployed excess cash from increased deposits into liquid securities.

The average yield earned on the available-for-sale securities portfolio increased by 47 basis points to 3.33% for the three months ended September 30, 2025 from 2.86% for the three months ended September 30, 2024, due to an increase in interest rates earned on the portfolio, resulting from purchases of higher-yielding securities.

The average yield earned on the loan portfolio decreased by two basis points to 5.71% for the three months ended March 31, 2026 from 5.73% for the three months ended March 31, 2025.

Interest income earned on the available-for-sale securities portfolio increased by $24,000, or 6.3%, to $405,000 for the three months ended March 31, 2026 as compared to $381,000 for the three months ended March 31, 2025.

The increase was primarily attributable to a $685,000, or 1.4%, increase in the average balance of the available-for-sale securities portfolio to $48.2 million for the three months ended March 31, 2026 as compared to $47.5 million for the three months ended March 31, 2025.

The average yield earned on the available-for-sale securities portfolio increased by 15 basis points to 3.36% for the three months ended March 31, 2026 from 3.21% for the three months ended March 31, 2025, due to an increase in interest rates earned on the portfolio, resulting from purchases of higher-yielding securities.

Interest Expense.

Interest expense increased $228,000, or 17.2%, to $1.6 million for the three months ended September 30, 2025 from $1.3 million for the three months ended September 30, 2024.

Interest expense on deposits increased $239,000, or 24.9%, to $1.2 million for the three months ended September 30, 2025 from $958,000 for the three months ended September 30, 2024.

The average interest rate paid on deposit accounts increased 10 basis points to 2.37% for the three months ended September 30, 2025 from 2.27% for the three months ended September 30, 2024, primarily due to a 68 basis points increase in interest paid on money market accounts, partially offset by a 65 basis points decrease in interest paid on certificate of deposit and retirement accounts.

The average balance of deposits increased by $33.1 million, or 19.6%, to $201.8 million for the three months ended September 30, 2025 from $168.7 million for the three months ended September 30, 2024.

The increase in the average balance of deposits was primarily attributable to a $1.1 million increase in the average balance of certificate of deposit and retirement accounts, a $26.7 million increase in the average balance of money market accounts, a $3.9 million increase in the average balance of regular savings and demand club deposits, and a $1.5 million increase in the average balance of NOW accounts.

Interest expense paid on FHLB and other borrowings decreased $11,000, or 3.0%, to $356,000 for the three months ended September 30, 2025 from $367,000 for the three months ended September 30, 2024.

The decrease in the interest paid on borrowings was due to a 33 basis points decrease on the average interest rate paid on FHLB borrowings to 3.51% for the three months ended September 30, 2025 from 3.84% for the three months ended September 30, 2024, due to a decrease in interest rates.

The average balance of FHLB borrowings increased $2.4 million, or 6.2%, to $40.6 million for the three months ended September 30, 2025 as compared to $38.2 million for the three months ended September 30, 2024 in order to fund loan growth.

Interest expense increased $75,000, or 5.7%, to $1.4 million for the three months ended March 31, 2026 from $1.3 million for the three months ended March 31, 2025 due to an increase in interest expense on deposits.

Interest expense on deposits increased $166,000, or 17.9%, to $1.1 million for the three months ended March 31, 2026 from $928,000 for the three months ended March 31, 2025.

The average interest rate paid on deposit accounts increased six basis points to 2.12% for the three months ended March 31, 2026 from 2.06% for the three months ended March 31, 2025, primarily due to a 17 basis points increase in interest paid on money market accounts.

The average balance of deposits increased by $26.0 million, or 14.4%, to $206.1 million for the three months ended March 31, 2026 from $180.1 million for the three months ended March 31, 2025.

The increase in the average balance of deposits was primarily attributable to a $27.1 million increase in money market accounts, a $1.9 million increase in NOW accounts, and a $1.6 million increase in regular savings and demand club deposits, partially offset by a $4.6 million decrease in certificate of deposit and retirement accounts.

Interest expense paid on FHLB and other borrowings decreased $91,000, or 23.9%, to $290,000 for the three months ended March 31, 2026 from $381,000 for the three months ended March 31, 2025.

The decrease in the interest paid on borrowings was due to a 47 basis points decrease in the average interest rate paid on FHLB borrowings to 3.34% for the three months ended March 31, 2026 from 3.81% for the three months ended March 31, 2025.

The average balance of FHLB borrowings decreased $5.3 million, or 13.2%, to $34.8 million for the three months ended March 31, 2026 as compared to $40.0 million for the three months ended March 31, 2025 due to an increase in funding from deposits.

Net Interest Income.

Net interest income increased by $137,000, or 6.6%, to $2.2 million for the three months ended September 30, 2025 from $2.1 million for the three months ended September 30, 2024.

Net interest rate spread decreased by 11 basis points to 2.69% for the three months ended September 30, 2025 as compared to 2.80% for the three months ended September 30, 2024, reflecting an 11 basis points decrease in the average yield on interest-earning assets.

The net interest margin decreased by 19 basis points to 3.09% for the three months ended September 30, 2025 from 3.28% for the three months ended September 30, 2024.

The decrease in the average yield on interest-earning assets was primarily due to decreases in dividends paid on FHLB stock and interest earned on other interest-earning assets over the past year.

The average rate paid on interest-bearing liabilities remained unchanged at 2.56% for the three months ended September 30, 2025 and 2024.

Net interest income increased by $316,000, or 14.8%, to $2.4 million for the three months ended March 31, 2026 from $2.1 million for the three months ended March 31, 2025.

Net interest rate spread increased nine basis points to 2.97% for the three months ended March 31, 2026 as compared to 2.88% for the three months ended March 31, 2025, reflecting a one basis point increase in the average yield on interest-earning assets in addition to an eight basis points decrease in the average cost of interest-bearing liabilities.

The net interest margin increased by 11 basis points to 3.36% for the three months ended March 31, 2026 from 3.25% for the three months ended March 31, 2025.

Provision for Credit Losses.

Based on management’s analysis of the allowance for credit losses described under “Summary of Critical Accounting Policies and Critical Accounting Estimates” and in Note 2.

Summary of Significant Accounting Policies of notes to the consolidated financial statements included within this Quarterly Report on Form 10-Q, we recorded a provision for credit losses on loans of $80,000 for the three months ended September 30, 2025 as compared to no provision for credit losses on loans for the three month period ended September 30, 2024.

The increased provision for the three months ended September 30, 2025 related to commercial loan growth.

The allowance for credit losses on loans was $1.8 million at September 30, 2025, or 0.83%, of total loans outstanding, and $1.8 million, or 0.89% of total loans outstanding at December 31, 2024.

Summary of Significant Accounting Policies of notes to the consolidated financial statements included within this Quarterly Report on Form 10-Q, we recorded a provision for credit losses on loans of $120,000 for the three months ended March 31, 2026 as compared to a $110,000 provision for credit losses on loans for the three month period ended March 31, 2025.

The increased provision for the three months ended March 31, 2026 related to commercial loan growth.

The allowance for credit losses on loans was $2.0 million at March 31, 2026, or 0.85%, of total loans outstanding, and $1.9 million, or 0.84% of total loans outstanding at December 31, 2025.

Non-Interest Income.

Non-interest income increased by $64,000, or 12.1%, to $595,000 for the three months ended September 30, 2025 from $531,000 for the three months ended September 30, 2024.

The increase was in part attributable to a $26,000 increase in fee income primarily due to our increased focus on core deposit growth, a $22,000 increase in earnings on bank-owned life insurance

due to higher market interest rates, and a $12,000 increase in net gain on sale of residential mortgage loans during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Non-interest income increased by $118,000, or 24.3%, to $604,000 for the three months ended March 31, 2026 from $486,000 for the three months ended March 31, 2025.

The increase was attributable to a $73,000 increase in fee income primarily due to our increased focus on core deposit growth and a $38,000 increase in income earned from financial services and retirement planning income generated by our subsidiary, Financial Quest.

Non-Interest Expense.

Non-interest expense increased by $269,000, or 12.0%, to $2.5 million for the three months ended September 30, 2025 from $2.2 million for the three months ended September 30, 2024.

Compensation and benefits increased by $138,000, or 11.2%, due to an increase in the number of employees as a result of opening a new branch office in Manlius, New York in June 2025.

Professional fees increased $46,000, or 82.1%, primarily due to increases in consulting, legal, and audit and accounting services in connection with becoming a public company.

Non-interest expense increased by $644,000, or 27.7%, to $3.0 million for the three months ended March 31, 2026 from $2.3 million for the three months ended March 31, 2025.

Compensation and benefits increased by $293,000, or 22.8%, due to an increase in the number of employees as a result of opening a new branch office in Manlius, New York in June 2025 as well as annual salary increases and increases in benefit expenses.

Core processing expense increased $128,000, or 38.2%, as a result of IT managed services.

Professional fees increased $117,000, or 205.3%, primarily due to increases in consulting, legal, and audit and accounting services in connection with becoming a public company.

Premises and equipment expense increased by $87,000, or 39.0%, primarily due to the opening of the new Manlius branch office.

The increase in non-interest expense was partially offset by a $13,000, or 14.9%, decrease in advertising expenses.

Income Tax Expense.

Income tax expense decreased $5,000, or 11.4%, to $39,000 for the three months ended September 30, 2025 as compared to income tax expense of $44,000 for the three months ended September 30, 2024.

The decrease in income tax expense resulted from the decrease in income before taxes.

Comparison of Results of Operations for the Nine Months Ended September 30, 2025 and 2024

Net income of $137,000 was recorded for the nine months ended September 30, 2025, a decrease of $473,000, or 77.5%, as compared to net income of $610,000 for the nine months ended September 30, 2024.

The decrease in net income was primarily attributable to a $686,000 increase in provision for credit losses on loans and a $685,000 increase in non-interest expense, partially offset by a $631,000 increase in net interest income, a $206,000 increase in non-interest income, and a $61,000 decrease in income tax expense.

Interest Income.

Interest income increased by $922,000, or 9.3%, for the nine months ended September 30, 2025, to $10.8 million as compared to $9.9 million for the nine months ended September 30, 2024 primarily due to an increase in loan interest income and interest and dividend income earned on the available for sale securities portfolio.

Loan interest income increased by $525,000, or 6.1%, to $9.2 million for the nine months ended September 30, 2025 as compared to $8.6 million for the nine months ended September 30, 2024.

The increase was due to a $6.8 million, or 3.3%, increase in the average balance of the loan portfolio to $209.3 million for the nine months ended September 30, 2024 from $202.6 million for the nine months ended September 30, 2024.

The average yield earned on the loan portfolio increased by 15 basis points to 5.83% for the nine months ended September 30, 2025 from 5.68% for the nine months ended September 30, 2024, primarily due to originations of higher yielding commercial real estate and commercial and industrial loans.

Interest income earned on the available-for-sale securities portfolio increased by $404,000, or 47.4%, to $1.3 million for the nine months ended September 30, 2025 as compared to $852,000 for the nine months ended September 30, 2024.

The increase was primarily attributable to a $12.3 million, or 31.4%, increase in the average balance of the available-for-sale securities portfolio to $51.5 million for the nine months ended September 30, 2025 as compared to $39.2 million for the nine months ended September 30, 2024.

The increase in the average balance of available for sale securities was primarily attributable to the purchase of $24.7 million of securities during the nine months ended September 30, 2025, as we deployed excess cash from increased deposits into liquid securities.

The average yield earned on the available for sale securities portfolio increased by 35 basis points to 3.25% for the nine months ended September 30, 2025 from 2.90% for the nine months ended September 30, 2024, due to an increase in interest rates earned on the portfolio, resulting from purchases of higher-yielding securities.

Interest Expense.

Interest expense increased by $291,000, or 7.4% to $4.2 million for the nine months ended September 30, 2025 from $3.9 million for the nine months ended September 30, 2024.

Interest expense on deposits increased by $210,000, or 7.2%, to $3.1 million for the nine months ended September 30, 2025 from $2.9 million for the nine months ended September 30, 2024.

The average balance of deposits increased by $20.0 million, or 11.8%, to $189.6 million for the nine months ended September 30, 2025 from $169.6 million for the nine months ended September 30, 2024.

The increase in the average balance of deposits was primarily attributable to a $17.9 million increase in the average balance of money market accounts, a $2.1 million increase in the average balance of regular savings and demand club accounts, and a $1.6 million increase in the average balance of NOW accounts, partially offset by a $1.7 million decrease in the average balance of certificate of deposit and

retirement accounts.

The average interest rate paid on deposit accounts decreased by 10 basis points to 2.19% for the nine months ended September 30, 2025 from 2.29% for the nine months ended September 30, 2024, primarily due to a 53 basis points decrease in interest paid on certificate of deposit and retirement accounts and growth in lower cost core deposits.

Interest expense paid on FHLB and other borrowings increased $81,000, or 7.9%, to $1.1 million for the nine months ended September 30, 2025 from $1.0 million for the nine months ended September 30, 2024.

The increase in the interest paid on borrowings was due to a $3.6 million, or 10.0%, increase in the average balance of FHLB borrowings to $39.3 million for the nine months ended September 30, 2025 as compared to $35.7 million for the nine months ended September 30, 2024, in order to fund loan growth.

The average rate paid on borrowings decreased by seven basis points to 3.76% for the nine months ended September 30, 2025 from 3.83% for the nine months ended September 30, 2024, due to a decrease in borrowing costs.

Net Interest Income.

Net interest income increased by $631,000, or 10.6% to $6.6 million for the nine months ended September 30, 2025 from $6.0 million for the nine months ended September 30, 2024.

Net interest rate spread increased by 14 basis points to 2.83% for the nine months ended September 30, 2025 from 2.69% for the nine months ended September 30, 2024, reflecting a four basis points increase in the average yield on interest-earning assets and a 10 basis points decrease in the average rate paid on interest-bearing liabilities.

The net interest margin increased by six basis points to 3.22% for the nine months ended September 30, 2025 from 3.16% for the nine months ended September 30, 2024.

The increase in the average yield on interest-earning assets was primarily due to an increase in higher yield loans over the past year.

The decrease in the average rate paid on interest-bearing liabilities was due to our continued focus on obtaining lower cost core deposits.

Provision for Credit Losses.

Based on management’s analysis of the allowance for credit losses described under “–Summary of Critical Accounting Policies and Critical Accounting Estimates” and in Note 2.

Summary of Significant Accounting Policies of notes to the consolidated financial statements included within this Quarterly Report on Form 10-Q, we recorded a provision for credit losses on loans of $701,000 during the nine months ended September 30, 2025, as compared to a $15,000 provision for credit losses on loans being recorded during the nine month period ended September 30, 2024.

The increased provision for the nine months ended September 30, 2025 related to one borrowing relationship consisting of three loans, including two commercial and industrial loans and a commercial real estate loan.

At September 30, 2025, the two commercial and industrial loans totaling $599,000 were fully charged off and the commercial real estate loan with a balance of $454,000 was fully paid off.

The allowance for credit losses on loans was $1.8 million at September 30, 2025, or 0.83%, of total loans outstanding, and $1.8 million, or 0.89%, of total loans outstanding at December 31, 2024.

Non-Interest Income.

Non-interest income increased by $206,000, or 14.7%, to $1.6 million for the nine months ended September 30, 2025 from $1.4 million for the nine months ended September 30, 2024.

The increase was primarily attributable to a $56,000 increase in fee income primarily due to our increased focus on core deposit growth, a $55,000 increase in net gain on sale of residential mortgage loans, a $52,000 increase in earnings on bank-owned life insurance due to higher market interest rates, and a $42,000 increase in income earned from financial services and retirement planning income generated by our subsidiary Financial Quest.

Non-Interest Expense.

Non-interest expense increased by $685,000, or 10.3%, to $7.3 million for the nine months ended September 30, 2025 from $6.6 million for the nine months ended September 30, 2024.

Compensation and benefits expense increased by $416,000, or 11.5%, due to an increase in the number of employees as a result of opening a new branch office in Manlius, New York in June 2025 and due to annual salary increases and increases in benefit expenses.

Premises and equipment expense increased by $94,000, or 16.5%, to $662,000 for the nine months ended September 30, 2025 from $568,000 for the nine months ended September 30, 2024 primarily due to the opening of a new branch office in Manlius, New York.

Professional fees increased by $78,000, or 41.7%, to $265,000 for the nine months ended September 30, 2025 from $187,000 for the nine months ended September 30, 2024 due to increases in consulting, legal and audit and accounting services as a result of becoming a public company.

Other expense increased $73,000, or 12.7%, due to an increase in FDIC insurance and subscription due and memberships of $15,000.

Income Tax Expense.

We recorded income tax expense of $33,000 for the nine months ended September 30, 2025, a decrease of $61,000, or 64.9%, as compared to income tax expense of $94,000 for the nine months ended September 30, 2024.

Income tax expense decreased $22,000, or 75.9%, to $7,000 for the three months ended March 31, 2026 as compared to income tax expense of $29,000 for the three months ended March 31, 2025.

The decrease in income tax expense resulted from the decrease in income before taxes.

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We conduct our business through two business segments:

(1) our banking business segment, which primarily involves the delivery of loan and deposit products to our customers through Seneca Savings Bank, National Association (the “Bank”) and generates

net interest income and service fees, and (2) our wealth management business segment, which includes investment management services for individuals and institutions offered through Financial Quest and provides commission income from 401(k) plan management and brokered accounts.

(1) our banking business segment, which primarily involves the delivery of loan and deposit products to our customers through Seneca Savings Bank, National Association (the “Bank”) and generates net interest income and service fees, and (2) our wealth management business segment, which includes investment management services for individuals and institutions offered through Financial Quest and provides commission income from 401(k) plan management and brokered accounts.

The following tables present the statements of income and total assets for our reportable business segments at or for the periods indicated:

At or for the Three Months Ended September 30,

(Dollars in thousands)

Net interest income

Non-interest income

Provision for credit losses on loans

Provision for credit losses on investments

Non-interest expense

(Benefit) provision for income taxes

Net (loss) income

Assets under management (AUM) (market value) (1)

At or for the Nine Months Ended September 30,

(Dollars in thousands)

At or for the Three Months Ended March 31,

(In thousands)

Net interest income

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Provision for credit losses on loans

Provision for credit losses on investments

Non-interest expense

(Benefit) provision for income taxes

Provision for income taxes

Net (loss) income

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(1) Assets under management represents customer assets managed by Financial Quest, and not assets of Financial Quest or the Bank.

Comparison at or for the three months ended September 30, 2025 and 2024 .

The market value of assets under management was $256.6 million at September 30, 2025 compared to $234.1 million at September 30, 2024.

This increase was due to continued organic acquisition of new assets under management combined with an increase in the market value of assets under management.

Income related to our wealth management business segment, which we record as non-interest income, increased $1,000, or 0.4%, to $253,000 for the three months ended September 30, 2025 compared to $252,000 for the three months ended September 30, 2024.

The increase was mainly due to the impact of movement in equity markets and the interest rate environment during the three months ended September 30, 2025 as compared to the same prior year period.

Expenses related to our wealth management business segment, which we record as non-interest expense, increased $30,000, or 17.4%, to $202,000 for the three months ended September 30, 2025 compared to $172,000 for the three months ended September 30, 2024.

The increase was due to the continued growth in our operations and an increase in compensation expense.

Comparison at or for the nine months ended September 30, 2025 and 2024 .

The market value of assets under management was $256.6 million at September 30, 2025 compared to $234.1 million at September 30, 2024.

(2) Reflects intercompany eliminations.

See Footnote 15, Segment Information, for more information.

Comparison at or for the three months ended March 31, 2026 and 2025 .

The market value of assets under management was $254.9 million at March 31, 2026 as compared to $223.1 million at March 31, 2025.

This increase was due to continued organic acquisition of new assets under management combined with an increase in the market value of assets under management.

Income related to our wealth management business segment, which we record as non-interest income, increased $42,000, or 6.1%, to $733,000 for the nine months ended September 30, 2025 compared to $691,000 for the nine months ended September 30, 2024.

The increase was mainly due to the impact of movement in equity markets and the interest rate environment during the nine months ended September 30, 2025 as compared to the same prior year period.

Expenses related to our wealth management business segment, which we record as non-interest expense, increased $59,000, or 11.9%, to $556,000 for the nine months ended September 30, 2025 compared to $497,000 for the nine months ended September 30, 2024.

Income related to our wealth management business segment, which we record as non-interest income, increased $38,000, or 16.4%, to $270,000 for the three months ended March 31, 2026 as compared to $232,000 for the three months ended March 31, 2025.

The increase was mainly due to the impact of changes in equity markets and the interest rate environment during the three months ended March 31, 2026 as compared to the same prior year period.

Expenses related to our wealth management business segment, which we record as non-interest expense, increased $43,000, or 24.6%, to $218,000 for the three months ended March 31, 2026 as compared to $175,000 for the three months ended March 31, 2025.

The increase was due to the continued growth in our operations and an increase in compensation expense.

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Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months.

We did not modify any loans to borrowers experiencing financial difficulty in the three or nine months ended September 30, 2025.

We did not modify any loans to borrowers experiencing financial difficulty during the three months ended March 31, 2026.

We closely monitor the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts.

Loans modified to borrowers experiencing financial difficulty did not have payment default during the three or nine months ended September 30, 2025 and all such loans were current as of September 30, 2025.

Loans modified to borrowers experiencing financial difficulty did not have payment default during the three months ended March 31, 2026 and all such loans were current as of March 31, 2026.

Non-Performing Assets.

The table below sets forth the amounts and categories of our non-performing assets at the dates indicated.

At September 30,

At December 31,

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Total non-performing assets to total assets

Non-accrual loans remained relatively unchanged compared to December 31, 2024.

Non-accrual loans decreased by $553,000, or 18.0%, to $2.5 million at March 31, 2026 as compared to $3.1 million at December 31, 2025, primarily due to a decrease in one- to four family residential loans as two loans transitioned to accrual status during the three months ended March 31, 2026.

Classified Assets.

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When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable accrued losses.

General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not

been allocated to particular problem assets.

General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets.

When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount.

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In connection with the filing of our periodic reports with the OCC and in accordance with our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations.

The following table sets forth our amounts of classified assets and assets designated as special mention as of September 30, 2025 and December 31, 2024.

Generally loans 90 days or more past due are placed on non-accrual status and classified “substandard.” All loans 60 days past due are classified “special mention.”

At September 30,

The following table sets forth our amounts of classified loans and loans designated as special mention as of March 31, 2026 and December 31, 2025 in our commercial real estate and commercial and industrial loan portfolios.

All other loans are assigned a “pass” rating until the loan becomes 90 days past due at which time it is either downgraded to “non-performing” status or charged off.

Generally loans 90 days or more past due are placed on non-accrual status.

At December 31,

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Special Mention

At September 30, 2025, a loan relationship consisting of one commercial real estate loan totaling $735 thousand was downgraded to substandard, offset by four substandard loans that were paid off during the third quarter of 2025, resulting in a decrease of substandard loans by $393 thousand compared to December 31, 2024.

At March 31, 2026, a loan relationship consisting of one commercial real estate loan totaling $576,000 and seven commercial and industrial loans totaling $506,000 were upgraded from special mention to pass, offset by two newly classified special mention loans that were downgraded from pass during the three months ended March 31, 2026 as compared to December 31, 2025.

Allowance for Credit Losses on Loans

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Loans that do not share risk characteristics are evaluated on an individual basis.

Loans evaluated individually are also

not included in the collective evaluation.

Loans evaluated individually are also not included in the collective evaluation.

A collateral-dependent asset is a financial asset for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower, based on management’s assessment, is experiencing financial difficulty.

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The following table sets forth activity in our allowance for credit losses on loans for the periods indicated.

At or For the Nine Months Ended September 30,

At or For the Three Months Ended March 31,

(Dollars in thousands)

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Net charge-offs

Provision (reversal) for credit losses on loans

Provision for credit losses on loans

Balance of allowance at end of period

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The following table sets forth additional information with respect to charge-offs by category for the periods indicated.

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Net (charge-offs) recoveries to average loans outstanding during the period by loan type (annualized):

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We also are able to borrow from the FHLB of New York.

At September 30, 2025, we had an $80.4 million line of credit with the FHLB of New York, a $4.0 million line of credit with Zions Bank, and a $4.0 million line of credit with Pacific Coast Bankers Bank (“PCBB”).

At September 30, 2025, we had outstanding borrowings of $40.6 million from the FHLB of New York.

We did not borrow against the line of credit with Zions Bank or PCBB during the three or nine months ended September 30, 2025.

At March 31, 2026, we had an $85.6 million line of credit with the FHLB of New York, a $5.0 million line of credit with Pacific Coast Bankers Bank (“PCBB”), and a $4.0 million line of credit with Zions Bank.

At March 31, 2026, we had outstanding borrowings of $34.6 million from the FHLB of New York.

We did not borrow against the line of credit with Zions Bank or PCBB during the three months ended March 31, 2026.

We also have the ability to borrow from the Federal Reserve Bank of New York through the discount window lending program.

The board of directors is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies.

We believe that we had sufficient sources of liquidity to satisfy our short and long-term liquidity needs as of September 30, 2025.

The Board of Directors is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists to meet the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies.

We believe that we had sufficient sources of liquidity to satisfy our short and long-term liquidity needs as of March 31, 2026.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition.

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The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period.

At September 30, 2025, cash and cash equivalents totaled $14.3 million.

Securities classified as available-for-sale, which provide additional sources of liquidity, had a total market value of $57.0 million at September 30, 2025.

At March 31, 2026, cash and cash equivalents totaled $7.2 million.

Securities classified as available-for-sale, which provide additional sources of liquidity, had a total market value of $43.0 million at March 31, 2026.

We have loan commitments to borrowers and borrowers have unused overdraft lines of protection, unused home equity lines of credit and unused commercial lines of credit that may require funding at a future date.

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We monitor our liquidity position on a daily basis.

Certificates of deposit due within twelve months of September 30, 2025 totaled $44.4 million, or 18.6% of total deposits.

Certificates of deposit due within twelve months of March 31, 2026 totaled $39.7 million, or 16.5% of total deposits.

If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and FHLB of New York advances.

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The Bank in turn makes loans to small businesses located in the market area with the proceeds.

We do not anticipate any material capital expenditures in 2025 other than remaining construction commitments of $324,000 as of September 30, 2025 for our newly remodeled Liverpool branch.

We anticipate a material capital expenditure in 2026 related to the construction of our Camillus branch which we expect to open in early 2027.

We do not have any balloon or other payments due on any long-term obligations, other than the borrowing agreements noted above.

At September 30, 2025, we exceeded all of our regulatory capital requirements, and we were categorized as “well capitalized” at September 30, 2025, including applicable grace periods.

Management is not aware of any conditions or events since September 30, 2025 that would change our categorization.

At March 31, 2026, we exceeded all of our regulatory capital requirements, and we were categorized as “well capitalized” at March 31, 2026, including applicable grace periods.

Management is not aware of any conditions or events since March 31, 2026 that would change our categorization.

Regulatory Capital Requirements of the notes to our consolidated financial statements for more information.

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Commitments and Contingencies of the notes to our consolidated financial statements.

At September 30, 2025, we had loan commitments to borrowers of approximately $883,000 and overdraft lines of credit, unused home equity lines of credit, unused commercial lines of credit, and commercial and standby letters of credit of approximately $28.5 million.

We do not have any other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

The allowance for credit losses on unfunded loan commitments was immaterial at September 30, 2025.

At March 31, 2026, we had loan commitments to borrowers of approximately $668,000 and overdraft lines of credit, unused home equity lines of credit, unused commercial lines of credit, and commercial and standby letters of credit of approximately $26.3 million.

The allowance for credit losses on unfunded loan commitments was immaterial at March 31, 2026.

Impact of Inflation and Changing Price

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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