What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-04 compared with 2025-03-07 · 183 added, 210 removed, 1563 unchanged (20% of the section changed)

7 unchanged sentences

Cash and cash equivalents

Debt securities available for sale (net of valuation allowance of $ 2,824 as of December 31, 2024 and $ 1,283 as of December 31, 2023)

Debt securities available for sale (net of valuation allowance of $ 0 and $ 2,824 as of December 31, 2025 and December 31, 2024, respectively) (amortized cost of $ 72,474 and $ 100,212 at December 31, 2025 and December 31, 2024, respectively)

Debt securities held to maturity

1 unchanged sentence

Total securities

SBA loans held for sale

Loans held for sale

SBA loans held for investment

SBA PPP loans

Commercial loans

Commercial construction loans

Residential mortgage loans

7 unchanged sentences

Accrued interest receivable

Other real estate owned ("OREO")

Prepaid expenses and other assets

26 unchanged sentences

Total securities

SBA PPP loans

Commercial loans

Commercial construction loans

Residential mortgage loans

12 unchanged sentences

Provision for credit losses, off-balance sheet

Provision for credit losses, AFS securities

(Release) provision for credit losses, securities

Net interest income after provision for credit losses

29 unchanged sentences

Unrealized holding gains on securities arising during the period

reclassification adjustments on securities included in net income

reclassification for losses on securities included in net income

Total unrealized gains on securities available for sale

27 unchanged sentences

Dividends on common stock ($ 0.52 per share)

Effect of adopting Accounting Standards Update ("ASU") No.

2016-13 ("CECL") (2)

Share-based compensation (1)

5 unchanged sentences

Treasury stock purchased, at cost

Treasury stock retirement

Balance, December 31, 2025

(1) Includes the issuance of common stock under employee benefit plans, which includes nonqualified stock options and restricted stock expense related entries, employee option exercises and the tax benefit of options exercised.

(2) See further disclosure surrounding CECL transition in Note 1 to the Consolidated Financial Statements.

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

5 unchanged sentences

Provision for credit losses, loans

Provision for credit losses, AFS securities

(Release) Provision for credit losses, AFS securities

Net accretion of purchase premiums and discounts on securities

Depreciation and amortization, net

SBA PPP deferred fees and costs

Deferred income tax benefit

Net securities realized gains

Net securities gains

Stock compensation expense

7 unchanged sentences

Purchases of securities available for sale

Proceeds from sale of FHLB stock, at cost

(Purchases) redemption from sale of FHLB stock, at cost

Maturities and principal payments on debt securities held to maturity

Maturities and principal payments on debt securities available for sale

Proceeds from sales of securities available for sale

Proceeds from sales of equity securities

Net decrease in SBA PPP loans

Net increase in loans

Proceeds from BOLI

Purchases of premises and equipment, net

2 unchanged sentences

Net increase in deposits

Repayments of short-term borrowings, net

Proceeds (repayments) of short-term borrowings, net

Proceeds from long-term borrowings, net

3 unchanged sentences

Net cash provided by financing activities

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

4 unchanged sentences

Noncash investing activities:

Establishment of lease liability and right-of-use asset, net of terminations

Capitalization of servicing rights

9 unchanged sentences

Its wholly-owned subsidiary, the Bank, is chartered by the New Jersey Department of Banking and Insurance.

The Bank provides a full range of commercial and retail banking services through twenty-one branch offices located in Bergen, Hunterdon, Middlesex, Morris, Ocean, Somerset, Union and Warren counties in New Jersey and Northampton County in Pennsylvania.

The Bank provides a full range of commercial and retail banking services through twenty-two branch offices located in Bergen, Hunterdon, Middlesex, Morris, Ocean, Somerset, Union and Warren counties in New Jersey and Northampton County in Pennsylvania.

These services include the acceptance of demand, savings and time deposits and the extension of consumer, real estate, SBA and other commercial credits.

9 unchanged sentences

For additional information on Unity (NJ) Statutory Trust II, see Note 7 to the Consolidated Financial Statements.

In 2023, the Company dissolved Unity Risk Management, Inc.

which was the Company’s captive insurance company that insured risks to the Bank not insured by the traditional commercial insurance market.

Use of Estimates in the Preparation of Financial Statements

9 unchanged sentences

This balance can be adjusted periodically to reflect actual transaction volume and seasonal factors.

The Company classifies its securities into three categories, debt securities available for sale (“AFS”), debt securities held to maturity (“HTM”) and equity securities with readily determinable fair values ("equity securities").

The Company classifies its securities into three categories, debt securities available for sale (“AFS”), debt securities held to maturity (“HTM”) and equity securities held at fair value ("equity securities").

Debt securities that are classified as available for sale are stated at fair value.

9 unchanged sentences

Activity in this portfolio is undertaken primarily to manage liquidity and interest rate risk, to take advantage of market conditions that create economically attractive returns and as an additional source of earnings.

Periodic net gains and losses on equity investments are recognized in the Consolidated Statements of Income as realized gains and losses.

Periodic net gains and losses on equity investments are recognized in the Consolidated Statements of Income as realized gains and losses carried at fair value with changes recognized in net income.

For additional information on securities, see Note 2 to the Consolidated Financial Statements.

32 unchanged sentences

Loans Held for Sale

Loans held for sale represent the guaranteed portion of certain SBA loans, other than loans originated under the Paycheck Protection Program (“PPP”), that the Company has elected to hold for sale and are reflected at the lower of aggregate cost or market value.

Loans held for sale represent the guaranteed portion of certain SBA loans and Mortgage loans, that the Company has elected to hold for sale and are reflected at the lower of aggregate cost or market value.

The Company originates loans to customers under an SBA program that historically has provided for SBA guarantees of up to 90 percent of each loan.

14 unchanged sentences

Loans held for investment are stated at the unpaid principal balance, net of unearned discounts, deferred loan origination fees and costs and net charge-offs.

In accordance with the level yield method, loan origination fees, net of direct loan

origination costs, are deferred and recognized over the estimated life of the related loans as an adjustment to the loan yield.

In accordance with the level yield method, loan origination fees, net of direct loan origination costs, are deferred and recognized over the estimated life of the related loans as an adjustment to the loan yield.

Interest is credited to operations primarily based upon the principal balance outstanding.

15 unchanged sentences

Allowance for Credit Losses for Loans and Reserve for Unfunded Loan Commitments

Effective January 1, 2023, the Company adopted the provisions of ASC 326 and modified its accounting policy for the allowance for credit losses on loans.

The allowance for credit losses represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the Balance Sheet date.

15 unchanged sentences

Such segments include SBA, Commercial, Residential mortgage, Consumer and Residential construction.

The Commercial segment is further sub-segmented into SBA 504, Commercial & industrial, Commercial real estate and Commercial

construction.

The Commercial segment is further sub-segmented into SBA 504, Commercial & industrial, Commercial real estate and Commercial construction.

The Consumer segment is further bifurcated into Home equity and Consumer other.

53 unchanged sentences

For derivatives designated as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows), the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings.

Those derivative financial instruments that do not meet the hedging criteria discussed below would be classified as undesignated derivatives and would be recorded at fair value with changes in fair value recorded in income.

Those derivative financial instruments that do not meet the hedging criteria would be classified as undesignated derivatives and would be recorded at fair value with changes in fair value recorded in income.

The Company discontinues hedge accounting when (a) it determines that a derivative is no longer effective in offsetting changes in cash flows of a hedged item;

15 unchanged sentences

The portion of benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

The Company participates in federal and state income tax credit programs.

Tax credits are accounted for within the scope of ASC 740 and are reflected as a reduction of income tax expense when the related tax benefit is realized or realizable.

Tax credits are recognized in the period when the Company concludes that it has met the more-likely-than-not recognition threshold under ASC 740.

Interest and penalties associated with unrecognized tax benefits are recognized in income tax expense on the Consolidated Statements of Income.

17 unchanged sentences

Operating Segments

While Management, whom includes the President and Chief Executive Officer and acts as the Chief Operating Decision Maker (“CODM”), monitors the revenue streams of its various products and services, operating results and financial performance are evaluated on a company-wide basis.

While Management, whom includes the Chief Executive Officer and acts as the Chief Operating Decision Maker (“CODM”), monitors the revenue streams of its various products and services, operating results and financial performance are evaluated on a company-wide basis.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

2 unchanged sentences

The Company adopted ASU 2023-07 during the year ended December 31, 2024 noting no material impact.

For further description of the Company’s products and services, refer to Item 1.

Revenue Recognition

7 unchanged sentences

Payments for such performance obligations are generally received at the time the performance obligations are satisfied.

● Other non-interest income primarily includes items such as loan-related fees, bank owned life insurance income, dividends on FHLB and FRB stock and other general operating income, none of which are subject to the requirements of ASC 606.

● Other non-interest income primarily includes items such as loan-related fees, investment gains/losses, bank owned life insurance income, dividends on FHLB and FRB stock and other general operating income, none of which are subject to the requirements of ASC 606.

Recent Accounting Pronouncements

3 unchanged sentences

Effect on the Company’s Financial Statements

ASU 2023-09, Income Taxes (Topic 740)

Fiscal years beginning after December 15, 2024

Improve transparency of certain income tax related disclosures, including the rate reconciliation and taxes paid disclosures.

No significant impact

ASU 2024-03, Income Statement – Reporting comprehensive income – Expense Disaggregation Disclosures (Subtopic 220-40)

2 unchanged sentences

No significant impact

ASU 2025-08, Financial Instruments – Credit Losses (Topic 326):

Purchased Loans

Fiscal years beginning after December 15, 2026

Expands the “gross-up” method to more types of purchased loans and reduce day-1 credit loss expense volatility on purchased credit-deteriorated (“PCD”) assets.

No significant impact

ASU 2025-09, Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements

Fiscal years beginning after December 15, 2026

To more closely align hedge accounting with the economics of an entity’s risk management activities.

No significant impact

This table provides the major components of debt securities AFS, HTM and equity securities at amortized cost and estimated fair value at December 31, 2025 and December 31, 2024:

31 unchanged sentences

Total equity securities

For the year ended December 31, 2024, the provision for credit losses on AFS debt securities was $ 1.5 million, compared to $ 1.3 million for the year ended December 31, 2023.

For the year ended December 31, 2025, there was a release in credit losses on AFS debt securities of $ 2.8 million, compared to a provision of $ 1.5 million for the year ended December 31, 2024.

The following table summarizes the amortized cost of HTM debt securities by external credit rating at December 31, 2025 and 2024:

28 unchanged sentences

The number of securities in an unrealized loss position as of December 31, 2025 totaled 67 , compared to 75 at December 31, 2024.

This decrease is primarily due to market interest rate fluctuations.

This decrease is primarily due to payoffs and market interest rate fluctuations.

As of December 31, 2025, the company had accrued interest receivable of $ 0.8 million relating to debt securities, compared to $ 1.2 million at December 31, 2024.

During the year ended December 31, 2024, $ 125 thousand in interest income was reversed relating to nonaccrual debt securities compared to none during the year ended December 31, 2023.

year ended December 31, 2024, $ 213 thousand in interest payments were recorded as a reduction of principal relating to nonaccrual debt securities compared to none during the year ended December 31, 2023.

During the year ended December 31, 2025, there was no interest income reversed relating to nonaccrual debt securities compared to $ 125 thousand during the year ended December 31, 2024.

year ended December 31, 2025, there were no interest payments recorded as a reduction of principal relating to nonaccrual debt securities compared to $ 213 thousand during the year ended December 31, 2024.

At the year-end 2025 and 2024, there were no holdings of securities of any one issuer, other than the U.S.

33 unchanged sentences

Realized Gains and Losses

There were no available for sale or held to maturity gross realized gains or losses relating to sales in 2024 or 2023.

There was an $ 11 thousand gross realized loss on available for sale securities due to sales in 2025 compared to no gross realized gains or losses relating to sales in 2024.

Pledged Securities

14 unchanged sentences

SBA loans held for investment

SBA PPP loans

Commercial loans

2 unchanged sentences

Commercial real estate (1)

Commercial real estate construction

Commercial construction loans

Residential mortgage loans

3 unchanged sentences

Total loans held for investment

SBA loans held for sale

Loans held for sale

(1) Commercial real estate includes Commercial Mortgage – Owner Occupied, Commercial Mortgage – Nonowner Occupied and Commercial Mortgage – Other.

5 unchanged sentences

A description of the Company’s different loan segments follows:

SBA 7(a) loans, on which the SBA has historically provided guarantees of up to 90 percent of the principal balance, are considered a higher risk loan product for the Company than its other loan products.

The guaranteed portion of the Company’s SBA loans is generally sold in the secondary market with the nonguaranteed portion held in the portfolio as a loan held for investment.

SBA loans are for the purpose of providing working capital, business acquisitions, financing the purchase of equipment, inventory or commercial real estate and for other business purposes.

Loans are guaranteed by

the businesses’ major owners.

SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided.

Loans held for sale represent the guaranteed portion of SBA loans and are reflected at the lower of aggregate cost or market value.

When sales of SBA loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets are recognized in income.

Loans Held for Sale:

Loans held for sale represent the guaranteed portion of SBA loans and qualified residential mortgage loans.

These loans are reflected at the lower of aggregate cost or market value.

When sales of loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets are recognized in income.

All criteria for sale accounting must be met in order for the loan sales to occur.

5 unchanged sentences

Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets, in the accompanying Consolidated Statements of Income.

The guaranteed portion of the Company’s SBA loans is generally sold in the secondary market with the nonguaranteed portion held in the portfolio as a loan held for investment.

SBA loans are for the purpose of providing working capital, business acquisitions, financing the purchase of equipment, inventory or commercial real estate and for other business purposes.

Loans are guaranteed by the businesses’ major owners.

SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided.

Commercial Loans:

6 unchanged sentences

The Company originates mortgage and consumer loans including principally residential real estate, home equity lines and loans and residential construction lines.

The Company originates qualified mortgages which are generally sold in the secondary market and nonqualified mortgages which are generally held for investment.

Each loan type is evaluated on debt to income, type of collateral, loan to collateral value, credit history and Company relationship with the borrower.

Risks in these loan categories are dependent on overall economic conditions and the housing market.

Inherent in the lending function is credit risk, which is the possibility a borrower may not perform in accordance with the contractual terms of their loan.

7 unchanged sentences

Credit Ratings

The Company places all SBA, commercial and residential construction loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt.

The Company places all SBA, commercial, commercial construction and residential construction loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt.

The assessment considers numerous factors including, but not limited to, current financial information on the borrower, historical payment experience, strength of any guarantor, nature of and value of any collateral, acceptability of the loan structure and documentation, relevant public information and current economic trends.

6 unchanged sentences

If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.

These loans are inadequately protected by the current net worth and/or paying capacity of the obligor or of the collateral pledged, if any.

Loans so classified have a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt.

These loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans classified as Substandard have a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the institution may sustain some loss if the deficiencies are not corrected.

1 unchanged sentence

Once a borrower is deemed incapable of repayment of unsecured debt, the loan is termed a “Loss” and charged off immediately, subject to government guarantee.

These loans are considered uncollectible and hold minute value that their continuance as bankable loans is no longer warranted.

This classification does not imply zero possible recovery or salvage value;

rather, it is neither practical nor desirable to postpone writing off the asset despite some partial recovery occurring later.

For residential mortgage and consumer loans, Management uses performing versus nonperforming as the best indicator of credit quality.

1 unchanged sentence

These credit quality indicators are updated on an ongoing basis, as a loan is placed on nonaccrual status as soon as Management believes there is sufficient doubt as to the ultimate ability to collect interest on a loan.

The following table shows the internal loan classification risk by loan portfolio classification by origination year as of December 31, 2024:

The following table shows the internal loan classification risk by loan portfolio classification by origination year and gross writeoffs as of December 31, 2025:

Amortized Cost Basis by Origination Year

7 unchanged sentences

Current-period gross writeoffs

SBA PPP loans

Total SBA PPP loans

Commercial loans

3 unchanged sentences

Current-period gross writeoffs

Commercial Construction loans

Total commercial construction loans

Commercial Construction loans

Current-period gross writeoffs

Residential mortgage loans

4 unchanged sentences

Consumer loans

Nonperforming

Total consumer loans

6 unchanged sentences

Total loans held for investment

The following table shows the internal loan classification risk by loan portfolio classification by origination year as of December 31, 2023:

The following table shows the internal loan classification risk by loan portfolio classification by origination year and gross writeoffs as of December 31, 2024:

Amortized Cost Basis by Origination Year

7 unchanged sentences

Current-period gross writeoffs

SBA PPP loans

Total SBA PPP loans

Commercial loans

9 unchanged sentences

Consumer loans

Nonperforming

Total consumer loans

14 unchanged sentences

The Company values its collateral through the use of appraisals, broker price opinions and knowledge of its local market.

The Bank’s nonaccrual policy requires stopping interest accrual and amortization of fees and costs on any loan that shows serious doubt about collectability, such as loans in default for 90 days or more, loans not expected to be repaid in full, or loans maintained on a cash basis due to borrower deterioration.

A loan may return to accrual status only when repayment is reasonably assured, or it becomes well secured and in process of collection, supported by documented borrower performance and a current credit evaluation.

The following tables set forth an aging analysis of past due and nonaccrual loans as of December 31, 2025 and December 31, 2024:

6 unchanged sentences

Commercial real estate

Commercial real estate construction

Commercial other

Commercial construction loans

Residential mortgage loans

3 unchanged sentences

Total loans held for investment

SBA loans held for sale

Total loans, excluding SBA PPP

Loans held for sale

December 31, 2024

5 unchanged sentences

Commercial real estate

Commercial real estate construction

Commercial construction loans

Residential mortgage loans

3 unchanged sentences

Total loans held for investment

SBA loans held for sale

Total loans, excluding SBA PPP

(1) At December 31, 2024 and 2023, the Company had no SBA PPP loans past due.

Loans held for sale

As of December 31, 2025 and 2024, the Company had accrued interest receivable of $ 12.0 million and $ 11.3 million relating to loans receivable, respectively.

15 unchanged sentences

Residential mortgage loans

Consumer loans

Total consumer loans

Total individually evaluated loans with no related allowance

14 unchanged sentences

Residential mortgage loans

Consumer loans

Total consumer loans

Residential construction loans

7 unchanged sentences

Commercial loans

Commercial & industrial

Commercial real estate

1 unchanged sentence

Residential mortgage loans

Consumer loans

Total consumer loans

Residential construction loans

Total individually evaluated loans with no related allowance

3 unchanged sentences

Commercial & industrial

Commercial real estate

Total commercial loans

Residential mortgage loans

Residential construction loans

Total individually evaluated loans with a related allowance

6 unchanged sentences

Residential mortgage loans

Consumer loans:

Total consumer loans

Residential construction loans

5 unchanged sentences

The total amount of such loans serviced, but owned by third party investors, amounted to approximately $ 63.5 million and $ 91.2 million at December 31, 2025 and 2024, respectively.

At December 31, 2024 and 2023, the carrying value of

servicing assets was $ 0.7 million and $ 0.9 million, respectively, and is included in Prepaid expenses and other assets.

At December 31, 2025 and 2024, the carrying value of servicing assets was $ 0.5 million and $ 0.7 million, respectively, and is included in Prepaid expenses and other assets.

A summary of the changes in the related servicing assets for the past two years follows:

10 unchanged sentences

In the ordinary course of business, the Company may extend credit to officers, directors or their associates.

These loans are subject to the Company’s normal lending policy.

These loans are subject to the Company’s normal lending policy, and are done on an arms-length basis.

An analysis of such loans, all of which are current as to principal and interest payments, is as follows:

5 unchanged sentences

Loan repayments

Loans removed

Balance, end of year

20 unchanged sentences

Term Extension

Interest Rate Reduction

(In thousands)

1 unchanged sentence

of Loan Class

SBA loans held for investment

of Loan Class

Commercial loans:

2 unchanged sentences

Residential mortgage loans

Consumer loans

Balance, December 31, 2025

Principal Forgiveness

Payment Delay

3 unchanged sentences

of Loan Class

SBA loans held for investment

Commercial loans:

Commercial & industrial

Commercial real estate

Commercial & industrial

Residential mortgage loans

Consumer loans:

2 unchanged sentences

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

One loan, a $ 2.2 million home equity loan, that was modified during the year ended December 31, 2024 was not in compliance with the modified terms as of December 31, 2024 compared to none as of December 31, 2023.

Two loans, a $ 0.6 million residential mortgage loan and a $ 83.8 thousand commercial and industrial loan, that were modified during the year ended December 31, 2025 were not in compliance with the modified terms as of December 31, 2025, compared to one home equity loan for $ 2.2 million as of December 31, 2024.

Allowance for Credit Losses and Reserve for Unfunded Loan Commitments

3 unchanged sentences

The allowance is increased by provisions charged to expense and is reduced by net charge-offs.

For purposes of determining the allowance for credit losses, the Company has segmented the loans in its portfolio by loan type.

Loans are segmented into the following pools:

SBA, commercial, residential mortgages, consumer and residential construction loans.

Certain portfolio segments are further broken down into classes based on the associated risks within those segments and the type of collateral underlying each loan.

Commercial loans are divided into the following four classes:

commercial mortgage, commercial real estate construction, commercial & industrial and SBA 504.

Consumer loans are divided into two classes as follows:

home equity and other.

The standardized methodology used to assess the adequacy of the allowance includes the allocation of specific and general reserves.

4 unchanged sentences

These environmental factors include reasonable and supportable forecasts.

Within the historical net charge-off rate, the Company weights the data dating back to 2015 on a straight line basis and projects the losses on a weighted average remaining maturity basis for each segment.

Within the historical net charge-off rate, the Company weights the data dating back 10 years on a straight line basis and projects the losses on a weighted average remaining maturity basis for each segment.

All of the environmental factors are ranked and assigned a basis points value based on the following scale:

low, low moderate, moderate, high moderate and high risk.

low, low moderate,

moderate, high moderate and high risk.

Each environmental factor is evaluated separately for each class of loans and risk weighted based on its individual characteristics.

● For SBA 7(a), commercial and residential construction loans, the estimate of loss based on pools of loans with similar characteristics is made through the use of a standardized loan grading system that is applied on an individual loan level and updated on a continuous basis.

The loan grading system incorporates reviews of the financial performance of the borrower, including cash flow, debt-service coverage ratio, earnings power, debt level and equity position, in conjunction with an assessment of the borrower’s industry and future prospects.

It also incorporates analysis of the type of collateral and the relative loan to value ratio.

● For residential mortgage and consumer loans, the estimate of loss is based on pools of loans with similar characteristics.

Factors such as delinquency status and type of collateral are evaluated.

Factors are updated frequently to capture the recent behavioral characteristics of the subject portfolios, as well as any changes in loss mitigation or credit origination strategies, and adjustments to the reserve factors are made as needed.

According to the Company’s policy, a loss (“charge-off”) is to be recognized and charged to the allowance for credit losses as soon as a loan is recognized as uncollectable.

5 unchanged sentences

The total allowance is available to absorb losses from any segment of the portfolio.

The following tables detail the activity in the allowance for credit losses by portfolio segment for the past two years:

The following tables detail the activity in the allowance for credit losses by portfolio segment held for investment for the past two years:

For the year ended December 31, 2025

7 unchanged sentences

Balance, beginning of period

Impact of adoption of ASU 2016-13 ("CECL")

Net charge-offs

1 unchanged sentence

Balance, end of period

The following tables present loans and related allowance for credit losses, by portfolio segment, as of December 31 st for the past two years:

December 31, 2024

(In thousands)

for Investment

Allowance for credit losses ending balance:

Individually evaluated for impairment

Collectively evaluated for impairment

Loan ending balances:

Individually evaluated for impairment

Collectively evaluated for impairment

Total loans held for investment

December 31, 2023

(In thousands)

for Investment

Allowance for credit losses ending balance:

Individually evaluated for impairment

Collectively evaluated for impairment

Loan ending balances:

Individually evaluated for impairment

Collectively evaluated for impairment

Total loans held for investment

The Company allocated an additional reserve for loans with a substandard rating, not otherwise considered for specific reserves.

The change in the allowance for credit losses for the year-ended December 31, 2024 was mainly due to loan growth, partially offset by charge-offs.

The change in the allowance for credit losses for the year-ended December 31, 2025 was mainly due to loan growth and an increase in nonperforming assets, partially offset by charge-offs.

Reserve for Unfunded Loan Commitments

3 unchanged sentences

As noted above, the allowance for credit losses on unfunded loan commitments is included in Other liabilities on the Consolidated Balance Sheet.

At December 31, 2024 and 2023, a $ 0.6 million commitment reserve was reported.

At December 31, 2025, a $ 0.7 million commitment reserve was reported, compared to $ 0.6 million at 2024.

Valuation Allowance:

2 unchanged sentences

Adjustments to the reserve are made through provision for credit losses and applied to the reserve which is classified in “Debt securities available for sale” on the Consolidated Balance Sheet.

At December 31, 2024, a $ 2.8 million reserve was reported, compared to $ 1.3 million at December 31, 2023.

At December 31, 2025, there was no reserve, compared to $ 2.8 million at December 31, 2024.

The decrease was due to a security that went into nonaccrual status in 2024.

The debt security was converted into common stock and Unity realized a $ 3.5 million gain resulting in a release in reserve.

The Company maintains a valuation allowance on HTM debt securities at a level that Management believes is adequate to absorb estimated probable losses.

18 unchanged sentences

$250,000 or more

Total by maturity

At December 31, 2024:

1 unchanged sentence

$250,000 or more

Total by maturity

The following table presents the expected maturities of time deposits over the next five years:

4 unchanged sentences

Borrowed Funds, Subordinated Debentures and Derivatives

The following table presents the period-end and weighted average rate for borrowed funds and subordinated debentures as of the past two year end dates:

The following table presents the period-end and weighted average rate for borrowed funds and subordinated debentures as of the two most recent fiscal year end-dates:

(In thousands)

59 unchanged sentences

Number of contracts

In the third quarter of 2024, to hedge floating rate liability exposure, the Company entered into a forward starting pay-fix, receive-float interest rate swap which will commence in the first quarter of 2025, maturing in the first quarter of 2028.

In the third quarter of 2024, to hedge floating rate liability exposure, the Company entered into a forward starting pay-fix, receive-float interest rate swap which commenced in the first quarter of 2025 and matures in the first quarter of 2028.

The interest rate swap, which qualifies for hedge accounting, is tied to the Secured Overnight Financing Rate (SOFR) for a

55 unchanged sentences

At December 31, 2025, $ 270.3 million of these commitments expire within one year, compared to $ 167.1 million a year earlier.

At December 31, 2024, the Company had $ 5.5 million in standby letters of credit, compared to $ 5.7 million at December 31, 2023.

At December 31, 2025, the Company had $ 5.9 million in standby letters of credit, compared to $ 5.5 million at December 31, 2024, respectively, which are included in the commitments amount noted above.

The estimated fair value of these guarantees is not significant.

The Company believes it has the necessary liquidity to honor all commitments.

Many of these commitments will expire and never be funded.

The Company may, in the ordinary course of business, become a party to litigation involving collection matters, contract claims and other legal proceedings relating to the conduct of its business.

36 unchanged sentences

The timing and amount of additional purchases, if any, will depend upon several factors including the Company’s capital needs, the Company’s liquidity position, the performance of its loan portfolio, the need for additional provisions for credit losses and the market price of the Company’s stock.

Income taxes paid for the past two years are as follows:

For the years ended December 31,

(In thousands)

The components of the provision for income taxes for the past two years are as follows:

5 unchanged sentences

State - current provision

State - deferred (benefit) provision

State - deferred benefit

Total state provision

4 unchanged sentences

Federal income tax provision at statutory rate of 21%

(Decreases) increases resulting from:

Stock option and restricted stock

Bank owned life insurance

State and Local Income Taxes, Net of Federal Income Tax Effect*

Nontaxable or Nondeductible Items**

Tax-exempt income

Bank owned life insurance

Stock option and restricted stock

Meals and entertainment

Captive insurance premium

Non-deductible compensation

State income taxes, net of federal benefit

Other adjustments

Provision for income taxes

Effective tax rate

*State taxes in New Jersey made up the majority (greater than 50%) of the tax effect in this category.

** The nontaxable or nondeductible items category includes items such as other non-deductible expenses.

None of those items individually or in the aggregate exceeded the 5% quantitative threshold for separate disaggregation in the current year.

Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities.

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Net unrealized securities losses

Commitment reserve

Net other deferred tax assets

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Deferred tax liabilities:

Deferred servicing fees

REIT deferral

Bond accretion

Deferred loan fees and costs, net

Interest rate swaps

Net other deferred tax liabilities

Gross deferred tax liabilities

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ASC 740 also includes guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition of income taxes.

The Company did not recognize or accrue any interest or penalties related to income taxes during the years ended December 31, 2024 or 2023.

The Company does not have an accrual for uncertain tax positions as of December 31, 2024 or 2023, as deductions taken or benefits accrued are based on widely understood administrative practices and procedures and are based on clear and unambiguous tax law.

The Company did no t recognize or accrue any interest or penalties related to income taxes during the years ended December 31, 2025, 2024 or 2023.

The Company does no t have an accrual for uncertain tax positions as of December 31, 2025, 2024 or 2023, as deductions taken or benefits accrued are based on widely understood administrative practices and procedures and are based on clear and unambiguous tax law.

Tax returns for all years 2022 and thereafter are subject to future examination by tax authorities.

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* Prompt Corrective Action requirements only apply to the Bank

(1) The Bank elected to cease being subject to the CBLR effective December 31, 2023 and to report its capital ratios using standard regulatory measures.

Employee Benefit Plans

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Exercisable at December 31, 2025

On May 5, 2023, the Company adopted the 2023 Equity Compensation Plan providing for grants of up to 500,000 shares to be allocated between incentive and non-qualified stock options, restricted stock awards, performance units and

deferred stock.

The Plan, along with the 2019 Equity Compensation Plan adopted on April 25, 2019, replaced all previously approved and established equity plans then currently in effect.

As of December 31, 2025, 281,500 options and 404,550 shares of restricted stock have been awarded from the plans.

In addition, 16,162 unvested options and 24,537 unvested shares of restricted stock were cancelled and returned to the plans, leaving 402,574 shares available for future grants.

In addition, 10,812 unvested options and 26,198 unvested shares of restricted stock have been cancelled and returned to the plans, leaving 350,960 shares available for future grants.

There were no options granted during 2025 and 2024.

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The Bank has a 401(k) savings plan covering substantially all employees.

Under the 401(k) plan, an employee can contribute up to 75 percent of their salary on a tax deferred basis.

The Bank may also make discretionary contributions to the 401(k) plan.

The Bank makes a Safe Harbor Matching Contribution to the 401(k) plan.

The Bank contributed $ 1.0 million and $ 0.9 million to the Plan in 2025 and 2024, respectively.

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As of December 31, 2025, the Company had total expenses related to the EIRP of $ 136 thousand, compared to $ 124 thousand in 2024.

The EIRP is reflected on the Company’s Consolidated Balance Sheet as Accrued expenses and other assets.

Certain members of Management are also enrolled in a split-dollar life insurance plan with a post retirement death

benefit of $ 250 thousand.

The EIRP is reflected on the Company’s Consolidated Balance Sheet as Accrued expenses and other assets, with a total of $ 0.9 million as of December 31, 2025, compared to $ 0.8 million in 2024.

Certain members of Management are also enrolled in a split-dollar life insurance plan with a post-retirement death benefit of $ 250 thousand.

Fair Value Measurement

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These inputs can be readily observable, market corroborated or generally unobservable inputs.

The Company utilizes techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy ranks the quality and

reliability of the information used to determine fair values.

The Company utilizes techniques that maximize the

use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.

Financial assets and liabilities carried at fair value will be classified and disclosed as follows:

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If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or models that use unobservable inputs due to limited or no market activity of the instrument (Level 3).

As of December 31, 2024, the fair value of the Company’s AFS debt securities portfolio was $ 93.9 million.

The portfolio contains residential mortgage-backed securities, most of which, are guaranteed by the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”) or the Federal Home Loan Mortgage Corporation (“FHLMC”).

The underlying loans for these securities are residential mortgages that are geographically dispersed throughout the United States.

Most of the Company’s AFS debt securities were classified as Level 2 assets at December 31, 2025.

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It includes model pricing, defined as valuing securities based upon their relationship with other benchmark securities.

Included in the Company’s AFS debt securities are certain corporate bonds which are classified as Level 3 assets at December 31, 2024.

The valuation of these corporate bonds is determined using broker quotes, third-party vendor prices,

or other valuation techniques, such as discounted cash flow techniques.

Included in the Company’s AFS debt securities are select corporate bonds which are classified as Level 3 assets at December 31, 2025.

The valuation of these corporate bonds is determined using broker quotes, third-party vendor prices, or other valuation techniques, such as discounted cash flow techniques.

Market inputs used in the other valuation techniques or underlying third-party vendor prices or broker quotes include benchmark and government bond yield curves, credit spreads and trade execution data.

The following table presents a reconciliation of the Level 3 AFS debt securities measured at fair value on a

recurring basis for the years ended December 31, 2024 and 2023:

Corporate and Other Securities

(In thousands)

Balance of Recurring Level 3 assets at January 1

Unrealized holding gains (losses) included in other comprehensive income

Principal Payments

Transfers into Level 3

Unrealized holding losses included in net income

Balance of recurring Level 3 assets at December 31

Equity Securities with Readily Determinable Fair Values

The fair value of equity securities is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers (Level 1).

If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3).

If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3).

Included in the Company’s equity securities is restricted stock which is classified as a Level 3 asset at December 31, 2025.

The valuation of this restricted stock is determined using observable prices for the restricted and unrestricted stock and models, including Discount for Lack of Marketability.

As of December 31, 2025, the fair value of the Company’s equity securities portfolio was $ 16.6 million.

All of the Company’s equity securities were classified as Level 1 assets at December 31, 2024 and 2023.

Most of the Company’s equity securities were classified as Level 1 assets at December 31, 2025 and 2024.

The valuation of securities using Level 1 inputs was primarily determined by active markets with readily determinable fair value using quoted market prices.

There were no changes in the inputs or methodologies used to determine fair value during the period ended December 31, 2024, as compared to the period ended December 31, 2023.

Included in the Company’s equity securities is restricted stock which are classified as Level 3 assets at December 31, 2025.

The valuation of this restricted stock was determined using broker quotes, third-party vendor prices, or other valuation techniques, such as discounted cash flow techniques.

The following table presents a reconciliation of the Level 3 securities measured at fair value on a recurring basis for the years ended December 31, 2025 and 2024:

Debt and Equity Securities

(In thousands)

Corporate Debt

Restricted Stock

Corporate Debt

Restricted Stock

Balance of Recurring Level 3 assets at January 1

Transfers from Corporate debt to Restricted stock, net

Reversal of valuation allowance

Transfers from Restricted Stock to Unrestricted Stock

Unrealized holding gains included in other comprehensive income

Transfers into Level 3

Principal Payments

Unrealized holding gains (losses) included in net income

Balance of recurring Level 3 assets at December 31

Interest Rate Swap Agreements

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Total debt securities available for sale

Equity securities with readily determinable fair values

Equity securities, at fair value

Total equity securities

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Total debt securities available for sale

Equity securities with readily determinable fair values

Equity securities, at fair value

Total equity securities

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Fair Value on a Nonrecurring Basis

Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

The following is a description of the valuation methodologies used for instruments measured at fair value on a nonrecurring basis:

Collateral-Dependent Loans

Fair value is determined based on the fair value of the collateral.

Partially charged-off loans are measured for impairment based upon a third-party appraisal for collateral-dependent loans.

When an updated appraisal is received for a nonperforming loan, the value on the appraisal may be discounted.

If there is a deficiency in the value after the Company applies these discounts, Management applies a specific reserve and the loan remains in nonaccrual status.

The receipt of an updated appraisal would not qualify as a reason to put a loan back into accruing status.

The Company removes loans from nonaccrual status generally when the ability to collect is reasonably assured and when the loan is brought current as to principal and interest.

Charge-offs are determined based upon the loss that Management believes the Company will incur after evaluating collateral for impairment based upon the valuation methods described above and the ability of the borrower to pay any deficiency.

The valuation allowance for individually evaluated loans is included in the allowance for credit losses in the Consolidated Balance Sheets.

The valuation allowance for individually evaluated loans was $ 0.1 million and $ 1.0 million at December 31, 2025 and December 31, 2024, respectively.

The following tables present the assets and liabilities subject to fair value adjustments on a non-recurring basis carried on the balance sheet by caption and by level within the hierarchy (as described above):

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Collateral-dependent loans

The following is a description of the valuation methodologies used for instruments measured at fair value on a nonrecurring basis:

Collateral-Dependent Loans

Fair value is determined based on the fair value of the collateral.

Partially charged-off loans are measured for impairment based upon a third-party appraisal for collateral-dependent loans.

When an updated appraisal is received for a nonperforming loan, the value on the appraisal may be discounted.

If there is a deficiency in the value after the Company applies these discounts, Management applies a specific reserve and the loan remains in nonaccrual status.

The receipt of an updated appraisal would not qualify as a reason to put a loan back into accruing status.

The Company removes loans from nonaccrual status generally when the ability to collect is reasonably assured or when the loan is brought current as to principal and interest.

The valuation allowance for individually evaluated loans is included in the allowance for credit losses in the Consolidated Balance Sheets.

The valuation allowance for individually evaluated loans was $ 1.0 million at December 31, 2023 and December 31, 2024.

Fair Value of Financial Instruments

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The fair value of securities is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3).

SBA Loans Held for Sale

The fair value of SBA loans held for sale is estimated by using a market approach that includes significant other observable inputs.

Loans Held for Sale

The fair value of loans held for sale is estimated by using a market approach that includes significant other observable inputs.

The fair value of loans is estimated by discounting the future cash flows using current market rates that reflect the interest rate risk inherent in the loan, except for previously discussed individually evaluated loans.

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Debt securities held to maturity

SBA loans held for sale

Loans held for sale

Loans, net of allowance for credit losses

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Debt securities held to maturity

SBA loans held for sale

Loans held for sale

Loans, net of allowance for credit losses

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Cash and cash equivalents

Debit securities, available for sale

Equity securities

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Dividend from Bank

Dividend from Nonbank subsidiary

Gain on sales of securities

Market value appreciation on equity securities

Release of credit losses securities

Interest expenses

Market value depreciation on equity securities

Other expenses

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Income before provision for income taxes and equity in undistributed net income of subsidiary

Income tax expense (benefit)

Income tax expense

Income before equity in undistributed net income of subsidiary

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Equity in undistributed net income of subsidiaries

Release of credit losses securities

Gain on sales of securities

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Purchases of equity securities

Proceeds from business divestitures

Maturities and principal payments on securities available for sale

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Proceeds from sales of securities

Net cash (used in) provided by investing activities

Net cash provided by investing activities

FINANCING ACTIVITIES

Proceeds from exercise of stock based compensation, net of taxes

Repayment of advances from subsidiaries

(Payments) proceeds from exercise of stock based compensation, net of taxes

Purchase of treasury stock

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Net cash used in financing activities

Decrease in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

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Interest paid

Subsequent Events

In February 2026, subsequent to the Company’s fiscal year end of December 31, 2025, the contractual restriction on Patriot Bancorp, Inc.’s equity position, previously converted from a debt instrument, expired.

Prior to the lifting of this restriction, the shares were classified as restricted securities and presented at fair value in the accompanying consolidated financial statements.

Upon expiration of the restriction, the shares became freely tradable.

To the extent that shares remain held by the Company, Management will continue to mark this position to market.

Report of Independent Registered Public Accounting Firm

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We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the collectively evaluated ACL, including controls over the following:

● Model validation of the model for appropriateness of model usage along with recalculation of model results.

● Validation of the model validation for appropriateness of model usage along with recalculation of model results.

● Completeness and accuracy of loan data.

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● Evaluation of the reasonableness and relevance of management’s assumptions including general qualitative factors and economic forecasts.

Addressing the matters above involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures also included, among others, reviewing the Company’s model oversight ensuring appropriate recalculation of the model used along with management’s review of model validation results, testing various assumptions used in the calculation, testing management’s process for determining the qualitative reserve component, evaluating the appropriateness of management’s methodology relating to the qualitative reserve component and testing the completeness and accuracy of data utilized by management.

In addition to the test of controls, addressing the matters above involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

These procedures also included, among others, reviewing the Company’s model oversight ensuring appropriate recalculation of the model used along with management’s review of model validation results, testing significant assumptions used in the calculation, testing management’s process for determining the qualitative reserve component, evaluating the appropriateness of management’s methodology relating to the qualitative reserve component and testing the completeness and accuracy of data utilized by management.

/s/ Wolf & Company, P.C.

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Net interest income

Provision for credit losses

Provision (release) for credit losses

Net interest income after provision for credit losses

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Return on average equity

Efficiency ratio (1)

Net interest spread

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Total risk-based capital ratio

(1) The efficiency ratio is a non-GAAP measure of operational performance.

It is defined as noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on securities.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:

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-K

Item 8. Financial Statements and Supplementary Data