ECBK 10-K & 10-Q changes, risk factors and insider trading
ECB Bancorp, Inc. · Nasdaq · Savings Institutions, Not Federally Chartered · CIK 1914605 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
The presentation of Risk Factors is not required for smaller reporting companies like ECB Bancorp.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“Securities Valuation and Allowance for Credit Losses. We classify our investments in debt securities as either held-to-maturity or available-for-sale. Securities classified as held-to-maturity are recorded at amortized cost. Available-for-sale securities are carried at fair value. We obtain our fair values from one or more third-party services. This service’s fair value calculations are based on quoted market prices when such prices are available. …”see in full comparison
“Remaining a community-oriented institution and relying on high quality service to maintain and build a loyal local customer base. We were established in 1890 and have been operating continuously in and around Everett, Massachusetts since that time. By using our recognized brand name and the goodwill developed over years of providing timely, efficient banking services, we believe we have been able to attract a solid base of local retail customers on which to continue to build our banking business. …”see in full comparison
Interest and Dividend Income. Interest and dividend income increasedsee in full comparison$12.3$11.1 million, or22.4%,16.6%, to $78.2 million for the year ended December 31, 2025 from $67.0 million for the year ended December 31, 2024fromdriven$54.8bymillionanfor the year ended December 31, 2023 due to a $9.5$11.2 million increase in interest and fees on loans,aan$485,000$822,000 increase in interest and dividends on securities and a$2.3 million$114,000 increase in interest onshortinterest-bearingtermtime deposits, partially offset by a $1.0 million decrease in interest on short-term investments. The increase in interest and fees on loans was driven by an increase of$109.5$158.5 million in the average balance of the loan portfolio to $1.26 billion for the year ended December 31, 2025 from $1.10 billion for the year ended December 31,2024 from $994.8 million for the year ended December 31, 2023,2024, as well as an increase in the yield of3823 basis points to 5.47% during the year ended December 31, 2025 from 5.24% during the year ended December 31,2024 from 4.86% during the year ended December 31, 2023.2024. The yield for the year ended December 31,20242025 benefited from new loans with higher rates as well as loans repricing higher. Interest and dividends on securities increased$485,000,$822,000, or18.0%,25.8%, to $4.0 million for the year ended December 31, 2025 from $3.2 million for the year ended December 31,2024 from $2.7 million for the year ended December 31, 2023.2024. This increase was driven by an increase in the yield of investment securities of3982 basis points to 3.77% for the year ended December 31, 2025, from 2.95% for the year ended December 31,2024,2024fromand2.56%anfor the year ended December 31, 2023 resulting from the higher market interest rate environment, partially offset by a decreaseincrease in the average balance of$1.2$6.2 million from$81.3 million during the year ended December 31, 2023 to$80.1 million during the year ended December 31,2024.2024 to $86.2 million during the year ended December 31, 2025. Interest on short term investmentsincreaseddecreased$2.3$1.0 million, or60.4%17.2%, to $5.0 million for the year ended December 31, 2025 from $6.0 million for the year ended December 31,20242024. This decrease was driven by the yield of short-term investments decreasing 92 basis points to 4.33% for the year ended December 31, 2025 from$3.75.25% for the year ended December 31, 2024. The increase in interest on interest-bearing time deposits was driven by an increase in the average balance of $2.6 million to $2.7 million for the year ended December 31,2023.2025,Thisfromincrease was driven by the average balance of short-term investments increasing $42.4 million to $114.3 million$64,000 for the year ended December 31,2024 from $71.9 million for the year ended December 31, 2023.2024.
Cash and Cash Equivalents. Cash and cash equivalentssee in full comparisonincreaseddecreased$38.6$70.7 million, or32.4%,44.9%, to $86.9 million at December 31, 2025 from $157.6 million at December 31,20242024.fromThe$119.0decreasemillioninat December 31, 2023. Cashcash and cash equivalentsincreasedwasprimarilydrivenduebyto increasesgrowth indepositsboth loans and investments thatwerein aggregate was greater than ourloangrowthasinwedepositshaveandfocused on maintaining strong levels of liquidity.borrowings.
“continuing to diversify our loan portfolio by adding more commercial-related loans, which typically have shorter maturities and/or balloon payments; and beginning in January of 2024 we began to utilize interest rate swaps to help manage our interest rate risk.”see in full comparison
“Continuing to focus on enhancing our commercial real estate and multifamily real estate lending. In order to increase the yield on our loan portfolio and reduce the term to maturity of our loan portfolio, we intend to continue our focus on growing the originations of commercial real estate loans and multifamily real estate loans while maintaining what we believe are prudent underwriting standards and we expect that these loan categories will comprise a greater percentage of our total loan portfolio. …”see in full comparison
Full comparison: every changed paragraph (74)
Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one-to-four family residential real estate loans, commercial real estate loans, multifamily real estate loans, construction loans, home equity lines of credit and loans and commercial loans. At December 31, 2024,2025, $422.8$473.4 million, or 36.9%,34.2%, of our total loan portfolio was comprised of one-to-four family residential real estate loans, $344.0$425.4 million, or 30.0%,30.8%, of our total loan portfolio was comprised of multifamily real estate loans, $229.0$336.4 million, or 20.0%,24.3%, of our total loan portfolio was comprised of commercial real estate loans, $90.9$89.0 million, or 7.9%,6.4%, of our total loan portfolio was comprised of construction loans, $45.2$49.9 million, or 4.0%,3.6%, of our total loan portfolio was comprised of home equity lines of credit and loans and $13.8$7.9 million, or 1.2%0.6% of our total loan portfolio was comprised of commercial loans. We also invest in securities, consisting primarily of U.S. government and federal agency obligations, collateralized mortgage obligations, mortgage-backed securities and corporate bonds. We offer a variety of deposit accounts, including certificate of deposit accounts, individual retirement accounts, money market accounts, savings accounts and interest-bearing and noninterest-bearing checking accounts. At December 31, 2025, $728.3 million, or 64.3%, of our total deposit accounts was comprised of certificate of deposit accounts, $211.8 million, or 18.7%, of our total deposit accounts was comprised of money market accounts, $91.4 million, or 8.1%, of our total deposit accounts was comprised of savings accounts, $81.5 million, or 7.2% of our total deposit accounts was comprised of noninterest bearing demand deposit accounts and $19.4 million, or 1.7%, of our total deposit accounts was comprised of interest-bearing demand deposit accounts. In addition to customer deposits, in recent years, we have also accepted brokered deposits as a non-retail funding source to supplement our customer deposits and fund our operations. At December 31, 2024,2025, we had $125.6$134.0 million of brokered deposits. We also have utilized advances from the Federal Home Loan Bank of Boston (the “FHLB”) as an additional funding source to fund our operations and we had $234.0$284.8 million of FHLB advances outstanding at December 31, 2024.2025.
Continuing to focus on enhancing our commercial real estate and multifamily real estate lending. In order to increase the yield on our loan portfolio and reduce the term to maturity of our loan portfolio, we intend to continue our focus on growing the originations of commercial real estate loans and multifamily real estate loans while maintaining what we believe are prudent underwriting standards and we expect that these loan categories will comprise a greater percentage of our total loan portfolio. In order to execute on this strategy, in January 2022 we hired a new Chief Lending Officer as well as some additional commercial lending and credit analyst personnel throughout 2022 and 2023. The capital raised in the offering has and will continue to allow us to increase our commercial lending capacity by enabling us to originate and retain all or a greater portion of loans that we historically participated out to other local institutions. Given that our regulatory loans to one borrower limits have increased with our increase in capital, we have revised our lending policies and loans to one borrower limitations to increase our lending limits and the type and size of loans we choose to originate and hold in our portfolio. Our commercial real estate and multifamily real estate loan portfolios increased to $229.0 million and $344.0 million, respectively, at December 31, 2024 from $196.4 million and $287.4 million, respectively, at December 31, 2023.
Reduced emphasis on one-to-four family residential real estate lending. We have been, and will continue to be, a one-to-four family residential real estate lender for borrowers in our market area and such lending will remain a core focus, but we expect that our lending strategy will result in a decrease to one-to-four family residential loans as a percentage of our total loan portfolio as we increase our focus on commercial real estate and multifamily real estate lending. As of December 31, 2024, $422.8 million, or 36.9%, of our total loan portfolio, consisted of one-to-four family residential real estate loans and at that date an additional $45.2 million, or 4.0%, of our total loan portfolio, consisted of home equity lines of credit and loans. We expect that one-to-four family residential real estate lending will remain one of our primary lending activities.
Maintaining our strong asset quality through prudent loan underwriting. As we seek to grow our loan portfolio, we intend to maintain prudent loan underwriting and credit monitoring processes. At December 31, 2024 and 2023, non-performing assets totaled $2.0 million and $1.2 million, respectively, which represented 0.14% and 0.09% of total assets at those dates, respectively.
Continuing to attract and retain customers in our market area and build our “core” deposits consisting of interest-bearing and noninterest-bearing checking, savings and money market accounts. Our strategy to enhance and grow our commercial real estate and multifamily real estate lending in a diligent and orderly manner is also designed to encourage relationship banking and increase our core deposits, including noninterest-bearing transaction accounts, and decrease our dependence on certificates of deposit. We plan to leverage our increased focus on commercial real estate and commercial lending efforts to also increase our opportunities to develop commercial business deposit relationships. Additionally, we believe the recent hire of our Senior Vice President of Retail Operations, who brings 38 years of banking experience to our retail sales and administrative team, will be invaluable to the implementation of the added product delivery channels and technological services such as additional electronic and mobile banking applications and cash management services, which we believe will increase our core deposits.
Remaining a community-oriented institution and relying on high quality service to maintain and build a loyal local customer base. We were established in 1890 and have been operating continuously in and around Everett, Massachusetts since that time. By using our recognized brand name and the goodwill developed over years of providing timely, efficient banking services, we believe we have been able to attract a solid base of local retail customers on which to continue to build our banking business. Additionally, we believe that the establishment and funding of the charitable foundation will further promote our relationships and exposure in our market area through our support of charitable organizations operating in our local community now and in the future.
Expanding our banking franchise as opportunities arise through de novo branching and/or branch acquisitions. We historically operated from our two full-service banking offices in Everett, MA and Lynnfield, MA. During 2023 we successfully opened our third branch which is located in Woburn, MA. We believe there are branch expansion opportunities that exist within our primary market area. We intend to evaluate branch expansion opportunities, including through establishing one or more de novo branches and/or branch acquisitions as such opportunities arise.
Allowance for Credit Losses. On January 1, 2023, the Company adopted the ASU 2016-13a Current Expected Credit Loss (CECL) methodology for estimating the credit losses for loans. This methodology replaced the incurred loss and impairment methodology. The CECL methodology reflects expected credit losses and requires consideration of historical experience, current conditions, and reasonable and supportable forecasts of future economic conditions. Management uses forward-looking information to estimate the expected credit loss on a loan at the time of origination. The change from the incurred loss methodology to the CECL methodology was recognized through an adjustment to retained earnings.
Income Taxes. We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments may require us to make projections of future taxable income and/or to carryback to taxable income in prior years. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.
Securities Valuation and Allowance for Credit Losses. We classify our investments in debt securities as either held-to-maturity or available-for-sale. Securities classified as held-to-maturity are recorded at amortized cost. Available-for-sale securities are carried at fair value. We obtain our fair values from one or more third-party services. This service’s fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations and cash flows. For available-for-sale debt securities with a fair value less than amortized cost basis, management will determine whether it has the intent to sell the debt security or whether it is more likely than not it will be required to sell the debt security before the recovery of its amortized cost basis. If either condition is met, management will recognize a write-down to fair value through a charge to earnings. For all other debt securities, management evaluates their expected credit losses over the remaining term. The majority of the Company’s debt securities consist of mortgage-backed securities, U.S. Treasury securities and debt securities issued by U.S. government-sponsored enterprises. These securities carry an explicit or implicit guarantee from the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Accordingly, the Company applies a zero-credit loss assumption and has not recorded any allowance for these securities. For corporate bonds classified as held-to-maturity, a probability of default and loss given default analysis is performed to determine the allowance for credit losses. We monitor the investment portfolio and credit performance on a quarterly basis to determine if any allowance is considered necessary.
Total Assets. Total assets increased $137.8$187.5 million, or 10.8%,13.2%, to $1.61 billion at December 31, 2025 from $1.42 billion at December 31, 2024 from $1.28 billion at December 31, 2023.2024. The increase was primarily the result of increases in loans and cash and cash equivalents.loans.
Cash and Cash Equivalents. Cash and cash equivalents increaseddecreased $38.6$70.7 million, or 32.4%,44.9%, to $86.9 million at December 31, 2025 from $157.6 million at December 31, 20242024. fromThe $119.0decrease millionin at December 31, 2023. Cashcash and cash equivalents increasedwas primarilydriven dueby to increasesgrowth in depositsboth loans and investments that werein aggregate was greater than our loan growth asin wedeposits haveand focused on maintaining strong levels of liquidity.borrowings.
Interest-Bearing Time Deposits. Interest-bearing time deposits were $8.0 million at December 31, 2025, as compared to $100,000 at December 31, 2024, or an increase of $7.9 million. This increase was due to purchases of new interest-bearing time deposits.
Investments in Securities Available for Sale. Investments in securities available for sale were $34.3 million at December 31, 2025, as compared to $6.6 million at December 31, 2024, or an increase of $27.8 million, or 422.8%. This increase was due to purchases of new securities.
Investments in Securities Held to Maturity. Investments in securities held to maturity were $55.8 million at December 31, 2025, as compared to $73.2 million at December 31, 2024, or a $17.5 million, or 23.8%, decrease. This decrease was due to maturities and principal paydowns of securities.
Loans. Total gross loans increasedwere $97.2$1.38 million,billion orat 9.3%,December 31, 2025, as compared to $1.15 billion at December 31, 20242024, fromor $1.05an billionincrease atof December$237.0 31,million, 2023.or 20.7%.
Multi-family real estate loans increased $56.6 million, or 19.7%, to $344.0 million at December 31, 2024, from $287.4 million at December 31, 2023.
Commercial real estate loans increased $32.6 million, or 16.6%, to $229.0 million at December 31, 2024, from $196.4 million at December 31, 2023.
Residential real estate loans increased $12.7 million, or 3.1%, to $422.8 million at December 31, 2024, from $410.1 million at December 31, 2023.
Home equity lines of credit increased $11.8 million, or 35.4%, to $45.2 million at December 31, 2024, from $33.4 million at December 31, 2023.
Commercial loans increased $4.6 million, or 50.2%, to $13.8 million at December 31, 2024, from $9.2 million at December 31, 2023.
Construction loans decreased $21.1 million, or 18.8%, to $90.9 million at December 31, 2024, from $112.0 million at December 31, 2023.
Deposits. DepositsTotal increaseddeposits $130.3were million,$1.13 orbillion 15.0%,at December 31, 2025, as compared to $998.5 million at December 31, 20242024, fromor $868.2an millionincrease atof December$133.8 31,million, 2023.or 13.4%.
Federal Home Loan Bank Advances. FHLB advances increased $50.8 million, or 21.7%, to $284.8 million at December 31, 2025 from $234.0 million at December 31, 2024. The increase in FHLB advances was used primarily to fund loan growth.
Certificates of deposit increased $107.0 million, or 21.5%, to $605.5 million at December 31, 2024 from $498.5 million at December 31, 2023;
Money market deposit accounts increased $53.2 million, or 40.5%, to $184.6 million at December 31, 2024 from $131.4 million at December 31, 2023;
Demand deposit accounts increased $6.6 million, or 8.4%, to $85.0 million at December 31, 2024 from $78.3 million at December 31, 2023;
Savings accounts decreased $34.9 million, or 25.3%, to $102.9 million at December 31, 2024 from $137.8 million at December 31, 2023; and Interest-bearing checking accounts decreased $1.6 million, or 7.3%, to $20.5 million at December 31, 2024 from $22.2 million at December 31, 2023.
Federal Home Loan Bank Advances. Advances from the Federal Home Loan Bank remained the same at $234.0 million at December 31, 2024 and December 31, 2023.
Shareholders’ Equity. Total shareholders’shareholders' equity increased $3.4$3.7 million, or 2.0%,2.2%, to $171.9 million as of December 31, 2025 from $168.3 million atas of December 31, 2024 from $164.9 million at December 31, 2023.2024. This increase is primarily the result of net incomeearnings of $4.0$7.8 millionmillion. andPartially aoffsetting $1.5 millionthe increase from earnings were decreases in additional paid-in capital related("APIC") toand stock-basedaccumulated compensation.other Partiallycomprehensive offsettingincome this("AOCI") wasof a$3.2 million and $1.3 million, respectively. The decrease in additionalAPIC paid-inwas capitaldriven ofby $2.7$4.6 million related toin shares repurchased under our share repurchase plan.plan, partially offset by an increase in APIC of $1.5 million related to stock-based compensation and ESOP shares committed to be released. The bookdecrease in AOCI was driven by a decrease in the fair value of cash flow hedges. Book value per share increased $0.75$1.05 to $19.55 at December 31, 2025 from $18.50 at December 31, 2024 from $17.75 at December 31, 2023.2024.
Net Income. Net income was $7.8 million for the year ended December 31, 2025, compared to net income of $4.0 million for the year ended December 31, 2024, comparedan to net incomeincrease of $4.5$3.8 million for the year ended December 31, 2023, a decrease of $465,000,million, or 10.4%.94.7%.
Interest and Dividend Income. Interest and dividend income increased $12.3$11.1 million, or 22.4%,16.6%, to $78.2 million for the year ended December 31, 2025 from $67.0 million for the year ended December 31, 2024 fromdriven $54.8by millionan for the year ended December 31, 2023 due to a $9.5$11.2 million increase in interest and fees on loans, aan $485,000$822,000 increase in interest and dividends on securities and a $2.3 million$114,000 increase in interest on shortinterest-bearing termtime deposits, partially offset by a $1.0 million decrease in interest on short-term investments. The increase in interest and fees on loans was driven by an increase of $109.5$158.5 million in the average balance of the loan portfolio to $1.26 billion for the year ended December 31, 2025 from $1.10 billion for the year ended December 31, 2024 from $994.8 million for the year ended December 31, 2023,2024, as well as an increase in the yield of 3823 basis points to 5.47% during the year ended December 31, 2025 from 5.24% during the year ended December 31, 2024 from 4.86% during the year ended December 31, 2023.2024. The yield for the year ended December 31, 20242025 benefited from new loans with higher rates as well as loans repricing higher. Interest and dividends on securities increased $485,000,$822,000, or 18.0%,25.8%, to $4.0 million for the year ended December 31, 2025 from $3.2 million for the year ended December 31, 2024 from $2.7 million for the year ended December 31, 2023.2024. This increase was driven by an increase in the yield of investment securities of 3982 basis points to 3.77% for the year ended December 31, 2025, from 2.95% for the year ended December 31, 2024,2024 fromand 2.56%an for the year ended December 31, 2023 resulting from the higher market interest rate environment, partially offset by a decreaseincrease in the average balance of $1.2$6.2 million from $81.3 million during the year ended December 31, 2023 to $80.1 million during the year ended December 31, 2024.2024 to $86.2 million during the year ended December 31, 2025. Interest on short term investments increaseddecreased $2.3$1.0 million, or 60.4%17.2%, to $5.0 million for the year ended December 31, 2025 from $6.0 million for the year ended December 31, 20242024. This decrease was driven by the yield of short-term investments decreasing 92 basis points to 4.33% for the year ended December 31, 2025 from $3.75.25% for the year ended December 31, 2024. The increase in interest on interest-bearing time deposits was driven by an increase in the average balance of $2.6 million to $2.7 million for the year ended December 31, 2023.2025, Thisfrom increase was driven by the average balance of short-term investments increasing $42.4 million to $114.3 million$64,000 for the year ended December 31, 2024 from $71.9 million for the year ended December 31, 2023.2024.
Interest Expense. Total interest expense increased $12.1$4.2 million, or 40.3%,10.0%, to $46.3 million for the year ended December 31, 2025 from $42.1 million for the year ended December 31, 20242024. fromInterest $30.0expense on deposit accounts increased $3.6 million, or 10.8%, to $37.1 million for the year ended December 31, 2023.2025 Interest expense on deposit accounts increased $12.0 million, or 56.1%, tofrom $33.4 million for the year ended December 31, 2024 from $21.4 million for the year ended December 31, 2023,2024, due to an increase in the average balance of interest-bearing deposits of $155.8$143.2 million, or 22.2%,16.7%, to $1.0 billion for the year ended December 31, 2025 from $858.4 million for the year ended December 31, 20242024, frompartially $702.5offset millionby fora the year ended December 31, 2023, as well as an increasedecrease in the weighted average rate on interest-bearing deposits of 8520 basis points to 3.70% for the year ended December 31, 2025 from 3.90% for the year ended December 31, 2024 from 3.05% for the year ended December 31, 2023.2024.
Interest expense on Federal Home Loan Bank advances increased $49,000,$580,000, or 0.57%,6.7%, to $8.62$9.2 million for the year ended December 31, 20242025 from $8.57$8.6 million for the year ended December 31, 2023.2024. The average balance of Federal Home Loan Bank advances decreasedincreased $684,000,$16.5 million, or 0.3%,7.6%, to $233.5 million for the year ended December 31, 2025 from $217.1 million for the year ended December 31, 2024 from $217.8 million for the year ended December 31, 2023.2024. For the year ended December 31, 2024,2025, the weighted average cost of Federal Home Loan Bank Advances was 3.97%,3.94%, as compared to 3.94%3.97% for the year ended December 31, 2023.2024.
Net Interest and Dividend Income. Net interest and dividend income before provision for credit losses was $25.0 million for the year ended December 31, 2024, compared to $24.8 million for the year ended December 31, 2023, or an increase of $198,000, or 0.8%. The net interest margin for the year ended December 31, 2024 was 1.86% as compared to 2.11% for the year ended December 31, 2023. The decrease in the net interest margin was driven by increases in the cost of interest bearing liabilities that were higher than increases in yields on interest earning assets during 2024.
Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, a provision for credit losses of $174,000 was recorded for the year ended December 31, 2024 in accordance with the CECL standard, compared to a provision for credit losses of $803,000 for the year ended December 31, 2023. The $629,000, or 78.3%, decrease in the provision was driven by lower loan growth during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
NoninterestNet Interest and Dividend Income. NoninterestNet interest and dividend income before provision for credit losses was $1.2$31.9 million for the year ended December 31, 2025, as compared to $25.0 million for the year ended December 31, 2024, as compared to $1.1 million for the year ended December 31, 2023, or an increase of $174,000,$6.9 million, or 16.5%.27.7%. TheThis increase was primarily due to increases in netthe gainsaverage balance and yields on salesloans as well as a decrease in the average cost of loans.interest-bearing liabilities. The tableresulting belownet setsinterest forthmargin ourexpanded noninterest26 incomebasis points to 2.12% for the yearsyear ended December 31, 20242025 andas 2023:compared to 1.86% for the year ended December 31, 2024.
Provision for Credit Losses. The provision for credit losses was $1.5 million for the year ended December 31, 2025, as compared to $174,000 for the year ended December 31, 2024. The increase in the provision was driven by higher loan growth during the year ended December 31, 2025 as compared to the year ended December 31, 2024.
Noninterest Expense.Income. Noninterest expenseincome increasedwas $1.6 million, or 8.5%, to $20.7$1.3 million for the year ended December 31, 20242025, fromas $19.1compared to $1.2 million for the year ended December 31, 2023.2024, Significantor changesan areincrease asof follows$100,000, or 8.2%. The table below sets forth our noninterest income for the years ended December 31, 2025 and 2024:
Salaries and employee benefits increased $1.4 million, or 11.8%, driven by $974,000 in stock based compensation recorded during the year ended December 31, 2024, related to the 2023 Equity Incentive Plan, as compared to $165,000 in stock based compensation recorded during the year ended December 31, 2023. The employee stock awards were granted in the fourth quarter of 2023;
Director compensation increased $253,000, or 43.5%, driven by $332,000 in stock-based compensation recorded in the year ended December 31, 2024, as compared to $103,000 in stock-based compensation costs recorded during the year ended December 31, 2023. The director stock awards were granted at the end of the third quarter of 2023; and Advertising and promotions decreased $243,000, or 30.6%, as we have streamlined our advertising efforts.
The table below sets forth our noninterest expense for the years ended December 31, 2024 and 2023:
Income TaxNoninterest Expense. Income taxNoninterest expense decreasedwas $149,000,$21.3 ormillion 9.7%,for year ended December 31, 2025, as compared to $1.4$20.7 million for the year ended December 31, 20242024, fromor $1.5an millionincrease forof the$661,000, yearor ended December 31, 2023.3.2%. The effectivetable taxbelow ratesets wasforth 25.7%our andnoninterest 25.5%expense for the years ended December 31, 20242025 and 2023, respectively.2024:
Income Tax Expense. Income tax expense was $2.6 million for the year ended December 31, 2025, as compared to $1.4 million for the year ended December 31, 2024, reflecting effective tax rates of 25.1% and 25.7%, respectively.
(1)
Excludes interest and dividends on cost method investments of $823,000 and $622,000 for the years ended December 31, 2024 and 2023, respectively.
(2)
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3)
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4)
Net interest margin represents net interest income divided by average total interest-earning assets.
General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. OurThe chiefAsset-Liability financialManagement officerCommittee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. The Asset-Liability Management Committee meets at least quarterly and is comprised of senior management and a member of the Board of Directors and reports to the full Board of Directors on at least a quarterly basis. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the boardBoard of directors.Directors.
maintaining capital levels that exceed the thresholds for well-capitalized status under federal regulations;
maintaining a prudent level of liquidity;
growing our volume of core deposit accounts;
managing our investment securities portfolio to maintain a prudent balance between enhancing profitability and protecting the balance sheet against sensitivity to changes in interest rates;
managing our utilization of wholesale funding with borrowings from the Federal Home Loan Bank and brokered deposits in a prudent manner;
continuing to diversify our loan portfolio by adding more commercial-related loans, which typically have shorter maturities and/or balloon payments; and beginning in January of 2024 we began to utilize interest rate swaps to help manage our interest rate risk.
____________________
What changed in the latest 10-Q
Risk Factors
Not applicable, as the Registrant is a smaller reporting company.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Comparison of Operating Results for the Six Months Ended June 30, 2026 and June 30, 2025”
Largest changes
“Comparison of Operating Results for the Six Months Ended June 30, 2026 and June 30, 2025”see in full comparison
“Interest and Dividend Income. Interest and dividend income was $43.8 million for the six months ended June 30, 2026, as compared to $36.7 million for the six months ended June 30, 2025, or an increase of $7.0 million, or 19.1%. This increase was driven by a $7.3 million increase in interest and fees on loans, a $477,000 increase in interest and dividends on securities and a $230,000 increase in interest on interest-earning time deposits, partially offset by a $998,000 decrease in interest on short-term investments. …”see in full comparison
Interest and Dividend Income. Interest and dividend income wassee in full comparison$21.6$22.1 million for the three months endedMarchJune31,30, 2026, as compared to$17.6$19.1 million for the three months endedMarchJune31,30, 2025, or an increase of$4.0$3.0 million, or22.7%.15.9%. This increase was driven by a$4.4$2.9 million increase in interest and fees on loans, a$277,000$199,000 increase in interest and dividends on securities and a$92,000$138,000 increase in interest oninterest-bearinginterest-earning time deposits, partially offset byana$811,000$186,000 decrease in interest on short-term investments. The increase in interest and fees on loans was driven by an increase of$224.3$148.6 million in the average balance of the loan portfolio to$1.38$1.39 billion for the three months endedMarchJune31,30, 2026 from$1.16$1.24 billion for the three months endedMarchJune31,30, 2025, as well as an increase in the average yield of4426 basis points to5.74%5.69% during the three months endedMarchJune31,30, 2026 from5.30%5.43% during the three months endedMarchJune31,30, 2025. The yield for the three months endedMarchJune31,30, 2026 benefited primarily from new loans with higherrates.rates as well as the repricing of existing loans. The increase in interest and dividends on securities was driven by an increase in the average yield of10174 basis points to4.38%4.44% during the three months endedMarchJune31,30, 2026 from3.37%3.70% during the three months endedMarchJune31,30, 2025 as well as an increase of$6.5$1.5 million in the average balance of the investment portfolio to$87.4$89.5 million for the three months endedMarchJune31,30, 2026 from$80.9$88.0 million for the three months endedMarchJune31,30, 2025. The increase in interest income oninterest-bearinginterest-earning time deposits was driven by an increase in the average balance ofinterest-bearinginterest-earning time deposits to$8.9$13.6 million for the three months endedMarchJune31,30, 2026 from$100,000$38,000 for the three months endedMarchJune31,30, 2025. The decrease in interest income on short-term investments was driven by a decreaseof $58.3 million in the average balance of the short-term investments to $90.0 million for the three months ended March 31, 2026 from $148.3 million for the three months ended March 31, 2025, as well as a decreasein the average yield of7874 basis points to3.67%3.68% during the three months endedMarchJune31,30, 2026 from4.45%4.42% during the three months endedMarchJune31,30, 2025.
“(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.”see in full comparison
Interest Expense. Total interest expense wassee in full comparison$11.8$12.1 million for the three months endedMarchJune31,30, 2026, as compared to$11.0$11.4 million for the three months endedMarchJune31,30, 2025, an increase of$807,000,$662,000, or7.4%.5.8%. The increase was driven by a$468,000$336,000 increase in interest expense on deposits as well as a $326,000 increase in interest expense on FHLBadvances as well as a $339,000 increase in interest expense on deposit accounts. The increase in interest expense on FHLB advances was primarily due to an increase in the average balance of FHLB advances of $46.5 million, or 21.4%, to $263.6 million for the three months ended March 31, 2026 from $217.1 million for the three months ended March 31, 2025.advances. The increase in interest expense on deposit accounts was due to an increase in the average balance of interest-bearing deposits of$128.6$125.7 million, or13.6%,12.8%, to$1.07$1.10 billion for the three months endedMarchJune31,30, 2026 from$944.4$979.2 million for the three months endedMarchJune31,30, 2025, partially offset by a decrease in the cost of interest-bearing deposits of3231 basis points to3.48%3.43% for the three months endedMarchJune31,30, 2026 from3.80%3.74% for the three months endedMarchJune31,30, 2025. The increase in interest expense on FHLB advances was due to an increase in the average balance of FHLB advances of $33.0 million, or 14.0%, to $269.0 million for the three months ended June 30, 2026 from $236.1 million for the three months ended June 30, 2025.
“Interest Expense. Total interest expense was $23.9 million for the six months ended June 30, 2026, as compared to $22.4 million for the six months ended June 30, 2025, an increase of $1.5 million, or 6.5%. The increase was driven by a $793,000 increase in interest expense on FHLB advances as well as a $675,000 increase in interest expense on deposit accounts. …”see in full comparison
Full comparison: every changed paragraph (51)
Management’s discussion and analysis of the financial condition at MarchJune 31,30, 2026 compared to December 31, 2025 and results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing on Part I, Item 1 of this quarterly report on Form 10-Q.
This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:
Comparison of Financial Condition at MarchJune 31,30, 2026 and December 31, 2025
Total Assets. Total assets were $1.65$1.67 billion at MarchJune 31,30, 2026, as compared to $1.61 billion at December 31, 2025, or an increase of $44.6$65.9 million, or 2.8%.4.1%.
Cash and Cash Equivalents. Cash and cash equivalents were $111.3$124.0 million at MarchJune 31,30, 2026, as compared to $86.9 million at December 31, 2025, or an increase of $24.4$37.0 million, or 28.0%.42.6%. The increase in cash and cash equivalents was driven by strong deposit growth that outpaced our loan growth for the quarter.growth.
Interest-BearingInterest-Earning Time Deposits. Interest-bearingInterest-earning time deposits were $11.5$14.2 million at MarchJune 31,30, 2026, as compared to $8.0 million at December 31, 2025, or an increase of $3.5$6.2 million, or 43.7%.78.1%. This increase was due to purchases of new short-term interest-bearinginterest-earning time deposits.
Investment Securities Available for Sale. Investments in securities available for sale were $37.1$40.1 million at MarchJune 31,30, 2026, as compared to $34.3 million at December 31, 2025, or an increase of $2.7$5.7 million, or 8.0%.16.7%. This increase was due to purchases of new securities.
Investment Securities Held to Maturity. Investments in securities held to maturity were $51.6$50.5 million at MarchJune 31,30, 2026, as compared to $55.8 million at December 31, 2025, or a decrease of $4.1$5.3 million, or 7.4%.9.5%. This decrease was due to maturities and principal paydowns of securities.
Loans. Total gross loans were $1.40 billion at MarchJune 31,30, 2026, as compared to $1.38 billion at December 31, 2025, or an increase of $19.8$21.3 million, or 1.4%.1.5%.
Federal Home Loan Bank stock. The Federal Home Loan Bank (FHLB) is a cooperative bank that provides services to its member banking institutions. The primary reason for our membership in the FHLB is to gain access to a reliable source of wholesale funding and as a tool to manage interest rate risk. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. We purchase and/or are subject to redemption of FHLB stock proportional to the volume of funding received and view the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return. We held an investment in FHLB stock of $11.1$12.2 million and $11.9 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. The amount of stock we are required to purchase is in proportion to our FHLB borrowings and level of total assets.
Bank-owned Life Insurance. We invest in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is nontaxable. Bank-owned life insurance was $15.5$15.7 million at MarchJune 31,30, 2026, as compared to $15.4 million at December 31, 2025, or an increase of $117,000,$236,000, or 0.8%.1.5%. The increase was due to an increase of the cash surrender value of our bank-owned life insurance portfolio.
Deposits. Total deposits were $1.20$1.19 billion at MarchJune 31,30, 2026, as compared to $1.13 billion at December 31, 2025, or an increase of $67.1$60.4 million, or 5.9%.5.3%.
Federal Home Loan Bank Advances. FHLB advances were $260.8$285.0 million at MarchJune 31,30, 2026, as compared to $284.8 million at December 31, 2025, or aan decreaseincrease of $24.0 million,$185,000, or $8.4%.0.1%.
Shareholders' Equity. Total shareholders' equity was $175.9$179.9 million as of MarchJune 31,30, 2026, as compared to $171.9 million as of December 31, 2025, or an increase of $4.0$7.9 million, or 2.3%.4.6%. This increase is primarily the result of earnings of $3.1$6.4 million and aan decreaseincrease in accumulated other comprehensive lossincome ("AOCLAOCI") of $752,000.$1.6 million. The decreaseincrease in AOCLAOCI was driven by an increase in the fair value of cash flow hedges. Our book value per share increased by $0.50$1.01 to $20.05$20.56 at MarchJune 31,30, 2026 from $19.55 at December 31, 2025.
Comparison of Operating Results for the Three Months Ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025
Net Income. We recorded net income of $3.1$3.3 million for the three months ended MarchJune 31,30, 2026, as compared to net income of $1.3$1.4 million for the three months ended MarchJune 31,30, 2025, or an increase of $1.8 million, or 140.7%.126.5%.
Interest and Dividend Income. Interest and dividend income was $21.6$22.1 million for the three months ended MarchJune 31,30, 2026, as compared to $17.6$19.1 million for the three months ended MarchJune 31,30, 2025, or an increase of $4.0$3.0 million, or 22.7%.15.9%. This increase was driven by a $4.4$2.9 million increase in interest and fees on loans, a $277,000$199,000 increase in interest and dividends on securities and a $92,000$138,000 increase in interest on interest-bearinginterest-earning time deposits, partially offset by ana $811,000$186,000 decrease in interest on short-term investments. The increase in interest and fees on loans was driven by an increase of $224.3$148.6 million in the average balance of the loan portfolio to $1.38$1.39 billion for the three months ended MarchJune 31,30, 2026 from $1.16$1.24 billion for the three months ended MarchJune 31,30, 2025, as well as an increase in the average yield of 4426 basis points to 5.74%5.69% during the three months ended MarchJune 31,30, 2026 from 5.30%5.43% during the three months ended MarchJune 31,30, 2025. The yield for the three months ended MarchJune 31,30, 2026 benefited primarily from new loans with higher rates.rates as well as the repricing of existing loans. The increase in interest and dividends on securities was driven by an increase in the average yield of 10174 basis points to 4.38%4.44% during the three months ended MarchJune 31,30, 2026 from 3.37%3.70% during the three months ended MarchJune 31,30, 2025 as well as an increase of $6.5$1.5 million in the average balance of the investment portfolio to $87.4$89.5 million for the three months ended MarchJune 31,30, 2026 from $80.9$88.0 million for the three months ended MarchJune 31,30, 2025. The increase in interest income on interest-bearinginterest-earning time deposits was driven by an increase in the average balance of interest-bearinginterest-earning time deposits to $8.9$13.6 million for the three months ended MarchJune 31,30, 2026 from $100,000$38,000 for the three months ended MarchJune 31,30, 2025. The decrease in interest income on short-term investments was driven by a decrease of $58.3 million in the average balance of the short-term investments to $90.0 million for the three months ended March 31, 2026 from $148.3 million for the three months ended March 31, 2025, as well as a decrease in the average yield of 7874 basis points to 3.67%3.68% during the three months ended MarchJune 31,30, 2026 from 4.45%4.42% during the three months ended MarchJune 31,30, 2025.
Average interest-earning assets increased $181.4$166.3 million to $1.57$1.61 billion for the three months ended MarchJune 31,30, 2026 from $1.39$1.45 billion for the three months ended MarchJune 31,30, 2025. The yield on interest-earning assets increased 4421 basis points to 5.54%5.46% for the three months ended MarchJune 31,30, 2026 from 5.10%5.25% for the three months ended MarchJune 31,30, 2025.
Interest Expense. Total interest expense was $11.8$12.1 million for the three months ended MarchJune 31,30, 2026, as compared to $11.0$11.4 million for the three months ended MarchJune 31,30, 2025, an increase of $807,000,$662,000, or 7.4%.5.8%. The increase was driven by a $468,000$336,000 increase in interest expense on deposits as well as a $326,000 increase in interest expense on FHLB advances as well as a $339,000 increase in interest expense on deposit accounts. The increase in interest expense on FHLB advances was primarily due to an increase in the average balance of FHLB advances of $46.5 million, or 21.4%, to $263.6 million for the three months ended March 31, 2026 from $217.1 million for the three months ended March 31, 2025.advances. The increase in interest expense on deposit accounts was due to an increase in the average balance of interest-bearing deposits of $128.6$125.7 million, or 13.6%,12.8%, to $1.07$1.10 billion for the three months ended MarchJune 31,30, 2026 from $944.4$979.2 million for the three months ended MarchJune 31,30, 2025, partially offset by a decrease in the cost of interest-bearing deposits of 3231 basis points to 3.48%3.43% for the three months ended MarchJune 31,30, 2026 from 3.80%3.74% for the three months ended MarchJune 31,30, 2025. The increase in interest expense on FHLB advances was due to an increase in the average balance of FHLB advances of $33.0 million, or 14.0%, to $269.0 million for the three months ended June 30, 2026 from $236.1 million for the three months ended June 30, 2025.
Net Interest and Dividend Income. Net interest and dividend income increased $3.2$2.4 million, or 47.9%,31.0%, to $9.8$10.0 million for the three months ended MarchJune 31,30, 2026 from $6.6$7.7 million for the three months ended MarchJune 31,30, 2025. This increase was driven by increases in the average balance and yields on loans as well as a decrease in the average cost of interest-bearing deposits. The resulting net interest margin expanded by 6037 basis points to 2.49%2.45% for the three months ended MarchJune 31,30, 2026, as compared to 1.89%2.08% for the three months ended MarchJune 31,30, 2025.
Provision for Credit Losses. The provision for credit losses was $61,000 for the three months ended June 30, 2026, as compared to $1.1 million for the three months ended June 30, 2025. The lower provision primarily reflected lower loan growth during the three months ended June 30, 2026 as well as lower reserve requirements, reflecting the continued strong credit quality of the portfolio. This was partially offset by higher provision for off-balance sheet commitments due to higher levels of loan commitments for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.
Provision for Credit Losses. The provision for credit losses was $153,000 for the quarter ended March 31, 2026, as compared to a benefit of $10,000 for the three months ended March 31, 2025. The three months ended March 31, 2025 benefited from reduced qualitative reserve factors.
Noninterest Income. Noninterest income was $327,000$304,000 for the three months ended MarchJune 31,30, 2026, as compared to $271,000$355,000 for the three months ended MarchJune 31,30, 2025, or ana increasedecrease of $56,000,$51,000, or 20.7%.14.4%. The table below sets forth our noninterest income for the three months ended MarchJune 31,30, 2026 and 2025:
Noninterest Expense. Noninterest expense was $5.7$5.8 million for the three months ended MarchJune 31,30, 2026, as compared to $5.2$5.0 million for the three months ended MarchJune 31,30, 2025, or an increase of $537,000,$832,000, or 10.3%.16.7%. The table below sets forth our noninterest expense for the three months ended MarchJune 31,30, 2026 and 2025:
Income Tax Expense. We recorded a provision for income tax expense of $1.1$1.2 million for the quarter ended March 31, 2026, as compared to $424,000 for the three months ended MarchJune 31,30, 2026, as compared to $475,000 for the three months ended June 30, 2025, reflecting effective tax rates of 26.8%27.0% and 24.6%,24.8%, respectively.
(1) Excludes interest and dividends on cost method investments of $186,000$202,000 and $181,000$182,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.
(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average total interest-earning assets.
(5) Annualized
Rate/Volume Analysis. The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior period volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.
Comparison of Operating Results for the Six Months Ended June 30, 2026 and June 30, 2025
Net Income. We recorded net income of $6.4 million for the six months ended June 30, 2026, as compared to net income of $2.7 million for the six months ended June 30, 2025, or an increase of $3.6 million, or 133.2%.
Interest and Dividend Income. Interest and dividend income was $43.8 million for the six months ended June 30, 2026, as compared to $36.7 million for the six months ended June 30, 2025, or an increase of $7.0 million, or 19.1%. This increase was driven by a $7.3 million increase in interest and fees on loans, a $477,000 increase in interest and dividends on securities and a $230,000 increase in interest on interest-earning time deposits, partially offset by a $998,000 decrease in interest on short-term investments. The increase in interest and fees on loans was driven by an increase of $186.2 million in the average balance of the loan portfolio to $1.39 billion for the six months ended June 30, 2026 from $1.20 billion for the six months ended June 30, 2025, as well as an increase in the average yield of 34 basis points to 5.71% during the six months ended June 30, 2026 from 5.37% during the six months ended June 30, 2025. The yield for the six months ended June 30, 2026 benefited primarily from new loans with higher rates as well as the repricing of existing loans. The increase in interest and dividends on securities was driven by an increase in the average yield of 87 basis points to 4.41% during the six months ended June 30, 2026 from 3.54% during the six months ended June 30, 2025 as well as an increase of $4.0 million in the average balance of the investment portfolio to $88.5 million for the six months ended June 30, 2026 from $84.5 million for the six months ended June 30, 2025. The increase in interest income on interest-earning time deposits was driven by an increase in the average balance of interest-earning time deposits to $11.3 million for the six months ended June 30, 2026 from $69,000 for the six months ended June 30, 2025. The decrease in interest income on short-term investments was driven by a decrease of $27.7 million in the average balance of the short-term investments to $102.8 million for the six months ended June 30, 2026 from $130.4 million for the six months ended June 30, 2025, as well as a decrease in the average yield of 77 basis points to 3.67% during the six months ended June 30, 2026 from 4.44% during the six months ended June 30, 2025.
Average interest-earning assets increased $173.8 million to $1.59 billion for the six months ended June 30, 2026 from $1.42 billion for the six months ended June 30, 2025. The yield on interest-earning assets increased 32 basis points to 5.50% for the six months ended June 30, 2026 from 5.18% for the six months ended June 30, 2025.
Interest Expense. Total interest expense was $23.9 million for the six months ended June 30, 2026, as compared to $22.4 million for the six months ended June 30, 2025, an increase of $1.5 million, or 6.5%. The increase was driven by a $793,000 increase in interest expense on FHLB advances as well as a $675,000 increase in interest expense on deposit accounts. The increase in interest expense on FHLB advances was primarily due to an increase in the average balance of FHLB advances of $39.7 million, or 17.5%, to $266.3 million for the six months ended June 30, 2026 from $226.6 million for the six months ended June 30, 2025. The increase in interest expense on deposit accounts was due to an increase in the average balance of interest-bearing deposits of $127.1 million, or 13.2%, to $1.09 billion for the six months ended June 30, 2026 from $961.9 million for the six months ended June 30, 2025, partially offset by a decrease in the cost of interest-bearing deposits of 32 basis points to 3.45% for the six months ended June 30, 2026 from 3.77% for the six months ended June 30, 2025.
Net Interest and Dividend Income. Net interest and dividend income increased $5.6 million, or 38.9%, to $19.9 million for the six months ended June 30, 2026 from $14.3 million for the six months ended June 30, 2025. This increase was driven by increases in the average balance and yields on loans as well as a decrease in the average cost of interest-bearing deposits. The resulting net interest margin expanded by 48 basis points to 2.47% for the six months ended June 30, 2026, as compared to 1.99% for the six months ended June 30, 2025.
Provision for Credit Losses. The provision for credit losses was $214,000 for the six months ended June 30, 2026, as compared to $1.1 million for the six months ended June 30, 2025. The lower provision primarily reflected lower loan growth during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, as well as lower reserve requirements, reflecting the continued strong credit quality of the portfolio. This was partially offset by higher provision for off-balance sheet commitments due to higher levels of loan commitments at June 30, 2026 as compared to June 30, 2025.
Noninterest Income. Noninterest income was $632,000 for the six months ended June 30, 2026, as compared to $626,000 for the six months ended June 30, 2025, or an increase of $6,000, or 1.0%. The table below sets forth our noninterest income for the six months ended June 30, 2026 and 2025:
Noninterest Expense. Noninterest expense was $11.6 million for the six months ended June 30, 2026, as compared to $10.2 million for the six months ended June 30, 2025, or an increase of $1.4 million, or 13.4%. The table below sets forth our noninterest expense for the six months ended June 30, 2026 and 2025:
Income Tax Expense. We recorded a provision for income tax expense of $2.3 million for the six months ended June 30, 2026, as compared to $899,000 for the six months ended June 30, 2025, reflecting effective tax rates of 26.9% and 24.7%, respectively.
Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. Average balances are daily average balances. Non-accrual loans are included in average balances only. Average yields include the effect of deferred costs and fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.
(1) Excludes interest and dividends on cost method investments of $388,000 and $363,000 for the six months ended June 30, 2026 and 2025, respectively.
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of loans and securities. We are also able to borrow from the Federal Home Loan Bank of Boston ("FHLB"), the Federal Reserve Bank and the Atlantic Community Bankers Bank. At MarchJune 31,30, 2026, we had outstanding advances of $260.8$285.0 million from the FHLB. At MarchJune 31,30, 2026, we had unused borrowing capacitycapacities of $427.9$478.4 million with the FHLB, $71.4$69.9 million with the Federal Reserve Bank and $15.0 million with the Atlantic Community Bankers Bank.
At MarchJune 31,30, 2026, we had $23.8$53.6 million in loan commitments outstanding. In addition to commitments to originate loans, we had $99.5$101.2 million in unused lines of credit to borrowers and $49.1$40.2 million in unadvanced construction loans.
Non-brokered certificates of deposit due within one year of MarchJune 31,30, 2026 totaled $430.9$416.0 million, or 35.9%,34.9%, of total deposits. If these deposits do not remain with us, we may be required to seek other sources of funds, including brokered deposits and FHLB advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before MarchJune 31,30, 2027, or on our savings and money market accounts.
We believe, however, based on historical experience and current market interest rates that we will retain upon maturity a large portion of our certificates of deposit with maturities of one year or less as of MarchJune 31,30, 2026.
Our primary investing activity is originating loans. During the threesix months ended MarchJune 31,30, 2026 and the year ended December 31, 2025, we originated $79.5$119.3 million and $429.6 million of loans, respectively.
Financing activities consist primarily of activity in deposit accounts and FHLB advances. We experienced net increases in deposits of $67.1$60.4 million and $133.8 million for the threesix months ended MarchJune 31,30, 2026 and the year ended December 31, 2025, respectively. At MarchJune 31,30, 2026 and December 31, 2025, the level of brokered time deposits was $152.3$127.3 million and $134.0 million, respectively. Deposit flows are affected primarily by the overall level of interest rates and the interest rates and products offered by us and our competitors. At MarchJune 31,30, 2026 and December 31, 2025, the level of FHLB advances was $260.8$285.0 million and $284.8 million, respectively.
For additional information, see the consolidated statements of cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025 included as part of the consolidated financial statements appearing elsewhere in this Form 10-Q.
At MarchJune 31,30, 2026, Everett Co-operative Bank exceeded all of its regulatory capital requirements, and was categorized as well-capitalized at that date. Management is not aware of any conditions or events since the most recent notification of well-capitalized status that would change our category. See Note 9 of the notes to consolidated financial statements.
ECBK insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 40 shares, about $716) and open-market sales in 0 filings. Net open-market shares: 40 (purchases minus sales); net value about $716.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-04-30 | Lavertu Brandon |
Open-market purchase | 10 | $17.88 | $179 |
| 2026-04-30 | Lavertu Brandon |
Open-market purchase | 10 | $17.91 | $179 |
| 2026-04-30 | Lavertu Brandon |
Open-market purchase | 10 | $17.92 | $179 |
| 2026-04-30 | Lavertu Brandon |
Open-market purchase | 10 | $17.85 | $178 |
Well-known investors holding ECBK (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 83,800 | $1.7M | 0.0% | Reduced 5% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 13,756 | $276.2K | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 10,083 | $202.5K | 0.0% | New position |