GOVB 10-K & 10-Q changes, risk factors and insider trading

Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations. Changes in the level of interest rates also may negatively affect the value of our assets, including the value of our available-for-sale investment securities and interest rate swap derivatives which generally decrease when market interest rates rise, and ultimately affect our earnings. During the years ended September 30, 20242025 and 2023,2024, we incurred other comprehensive (losses) gains of $2.5 million$(581,000) and $165,000,$2.5 million, respectively, related to net changes in unrealized holding gains (losses) in the available-for-sale investment securities portfolio caused by fluctuations in market interest rates during the period and changes in post-retirement benefits.

We depend upon our senior management team to direct our strategy and operations. Effective AprilMay 14,13, 2023,2025, Charles C. Van Vleet, Jr., our former longtime President and Chief Executive Officer and aformer member of our board of directors, was appointed to assume the duties of President and Chief Executive Officer on an interim basis while we undertook a search for a permanent replacement for our former President and Chief Executive Officer, who resigned effective as of that same date. Effective MarchSeptember 27,2, 2024,2025, following the completion of our search, RobertStephen W.M. BarlowJefferies was appointed to succeed Mr. Van Vleet as President and Chief Executive Officer of the Company and the Bank. In addition, Kimberly A. Adams, who served as our Vice President and Chief Financial Officer since 2010, retired from this role in May of 2024. Effective May 31, 2024, James D. Campanaro succeeded Ms. Adams as our Vice President and Chief Financial Officer. The transition to a new executive management team may result in a gap in institutional knowledge relative to our prior management team. In addition, as with any change in personnel at a senior management level, there will be a period of transition as our executive management team assimilates into their new roles. Although our current President and Chief Executive Officer has extensive experience in the financial services industry, we also anticipate that he will need time to develop a full understanding of the detailed operations of our institution, market area and customer base before he reaches full effectiveness. During this transition period, we could experience operational disruptions, and the implementation of our business strategy and growth plans could be negatively affected or delayed. As a result, our ability to successfully transition the operation of our company to new management, and to do so in a timely manner, may have a negative effect on our business results.

Risks Related to OurFuture Recent Acquisition of Citizens Bank of Cape VincentAcquisitions

We are subject to certain risks in connection with our recent2022 acquisition of Citizens Bank of Cape Vincent.

On September 16, 2022, we acquired Citizens Bank of Cape Vincent, a New York-chartered stock commercial bank headquartered in Cape Vincent, New York.York Atand it is possible that we could also acquire other banking institutions, other financial services companies or branches of financial institutions in the effective time of the merger, Citizens Bank of Cape Vincent was merged with and into the Bank and each Citizens Bank of Cape Vincent stockholder became entitled to receive $1,056.11 in cash for each share of Citizens Bank of Cape Vincent common stock that they held at the effective time of the merger.future. Mergers and acquisitions, such as our acquisition of Citizens Bank of Cape Vincent,acquisitions involve a number of risks and challenges, including (1) our ability to achieve planned synergies, such as projected cost savings resulting from increased scale, and to integrate the branches and operations we acquire, and the internal controls and regulatory functions of the acquired entity into our current operations and (2) the diversion of management’s attention from existing operations, despite management devoting sufficient time to the ordinary operations of the business, which may adversely affect our ability to successfully conduct our business and negatively impact our financial results.

It is possible that we couldAcquisitions also acquire other banking institutions, other financial services companies or branches of financial institutions in the future. Acquisitions typically involve the payment of a premium over book and trading values and, therefore, may result in the dilution of our tangible book value per share. Our ability to engage in future mergers and acquisitions depends on various factors, including: (1) our ability to identify suitable merger partners and acquisition opportunities; (2) our ability to finance and complete transactions on acceptable terms and at acceptable prices; and (3) our ability to receive the necessary regulatory and, when required, stockholder approvals. Our inability to engage in an acquisition or merger for any of these reasons could have an adverse impact on the implementation of our business strategies.

OnThe Company’s board of directors has the authority to declare dividends on our shares of common stock, subject to our capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. Most recently, on October 21,20, 2024,2025, the Company declared a semi-annual dividend of $0.08$0.09 per share payable on November 18,17, 20242025 to shareholdershareholders of record as of the close of business on November 4,3, 2024.2025, which represented the third consecutive semi-annual cash dividend for the Company since the completion of the Bank’s conversion from the mutual holding company form of organization to the stock holding company form of organization. The Company is not permitted to pay dividends on its common stock if its stockholders’ equity would be reduced below the amount of the liquidation account established by the Company in connection with the Bank’Bank’s second-step conversion. The source of dividends will depend on the net proceeds of the October 2023 second-step conversion offering retained by the Company and earnings thereon, and dividends from the Bank. In addition, the Company is subject to state law limitations and federal bank regulatory policy on the payment of dividends. Maryland law generally limits dividends if the corporation would not be able to pay its debts in the usual course of business after giving effect to the dividend or if the corporation’s total assets would be less than the corporation’s total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution. Federal Reserve Board policy also provides that a holding company should consult with the Federal Reserve Board supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the holding company is experiencing financial weaknesses or if the repurchase or redemption would result in a net reduction, as of the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. Under New York state banking law, New York State chartered savings associations may declare and pay dividends out of the balance of net profits after net worth exceeds ten percent of capital (which we refer to as the “undivided profits” of the savings and loan association) upon approval by the board of directors, unless there is an impairment of capital. Pursuant to Federal Reserve Board regulations, the Company may not make a distribution that would constitute a return of capital during the three years following the completion of the Bank’s second-step conversion. As a result, we cannot assure you that we will continue to pay dividends in the future, or that any such dividends that we have historically paid will not be reduced or eliminated in the future.

The Financial Accounting Standards Board has delayed the effective date of the Current Expected Credit Loss, or CECL, standard. CECL became effective for the Company and the Bank on October 1, 2023. CECL requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for credit losses. This represents a change from the former method of providing allowances for loan losses that are incurred or probable, and required us to increase our allowance for loan losses, and to greatly increase the types of data we need to collect and review to determine the appropriate level of our allowance for credit losses. Under the former method, there was no reserve calculated for the acquired Citizens Bank of Cape Vincent loans with the net discount covering the calculated reserve amount. According to current CECL guidance, prior discounts are not utilized to offset CECL reserves. We will continue to accrete all of the discount into income. The initial adjustment for the reserve made on October 1, 2023 was for $465,000. Although this adjustment was not reported in earnings and therefore willdid not have any material impact on our consolidated results of operations, it did make an impact on our consolidated financial position at the date of adoption of this ASU. On the adoption date, $367,000 of the adjustment was recognized in retained earnings, with the remaining $98,000 recognized in deferred tax assets.

In preparing our consolidated financial statements, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. Areas requiring significant estimates and assumptions by management include our evaluation of the adequacy of our allowance for loancredit losses and our determinations with respect to amounts owed for income taxes.

●Grow organically and through opportunistic expansion. Following our acquisition of Citizens Bank of Cape Vincent in September 2022, our primary intention is currently to grow our balance sheet organically and use our capital to increase our lending and investment capacity. In addition to organic growth, we may also consider expansion opportunities in our market area or in contiguous markets that we believe would enhance both our franchise value and stockholder returns. These opportunities primarily include establishing loan production offices, establishing new, or de novo, branch offices (including micro branch offices) and/or acquiring branch offices. Consistent with this strategy, in JanuaryApril 2025, we expect to openopened a new loan production office located in Potsdam, New York.

We consider the allowance for credit losses to be a critical accounting policy. Note 2 to the Company’s Consolidated Financial Statements for the fiscal year ended September 30, 20242025 discusses significant accounting policies, including the allowance for credit losses and the adoption of ASC 326, which changes the methodology under which management calculates its reserve for loans and investment securities, now referred to as the allowance for credit losses. Please refer to Note 2 to the Company’s Consolidated Financial Statements for detail regarding the Company’s adoption of ASU 206-132016-13: Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on October 1, 2023 and the allowance for credit losses. Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation.

Management monitors differences between estimated and actual credit losses. This monitoring process includes periodic assessments by senior management of loan portfolios and the models used to estimate the expected credit losses in those portfolios. Additions to the allowance for credit losses are made by changes to the provision for loancredit losses. Credit exposures deemed to be uncollectible are charged against the allowance for loancredit losses. Recoveries of previously charged off amounts are credited to the allowance for credit losses.

Specific Allowances for IdentifiedIndividually ProblemAnalyzed Loans

Goodwill represents the excess cost of the 2022 acquisition of Citizens Bank of Cape Vincent over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. When calculating goodwill in accordance with FASB ASC 805-30-55-3, we evaluateevaluated whether the fair value of equity of the acquired company is a more reliable measure than the fair value of the equity interests transferred. We considerconsidered the assumptions required to calculate the fair value of equity of an acquired company using discounted cash flow models (income approach) and/or change of control premium models (market approach) which are generally based on a higher level of market participant inputs and therefore a lower level of subjectivity when compared to the assumptions required to calculate the fair value of equity interests transferred under a fair value pricing model. As a result, we consider the calculation of the fair value of the equity of an acquired company to be more reliable than the calculation of the fair value of the equity interests transferred. Goodwill is assessed at least annually for impairment and any such impairment will be recognized in the period identified. Goodwill is not amortized but is evaluated annually for impairment.

Cash and cash equivalents decreased by $4.0$1.7 million, or 38.79%,26.86%, to $4.7 million at September 30, 2025 from $6.4 million at September 30, 2024 from $10.4 million at September 30, 2023.2024. The decrease in cash can primarily be attributed to an increase in loans receivable, net of allowance for credit losses, and a decreasenet outflow of customer deposits, partially offset by an increase in Federal Home Loan Bank advances, partially offset by a net inflow of customer depositsadvances and proceeds from securities maturing.maturing and from sales.

Securities available for sale decreased by $1.3$4.4 million, or 2.74%,9.74%, to $40.9 million at September 30, 2025 from $45.3 million at September 30, 2024 from $46.6 million at September 30, 2023.2024. The decrease was primarily due to principal paydownspaydowns, maturities and maturities,sale partiallyproceeds offsetalong bywith ana increasedecrease toin the market value ofas themarket portfolio.rates fluctuate.

There was no foreclosedForeclosed real estate increased to $105,000 at September 30, 2025, up from none at September 30, 2024, down from $101,000 at September 30, 2023primarily due to the saletransfer of two properties into other real estate owned (“REO”), properties.one of which was sold for a gain during the fiscal year. Due to the low number of REO properties, year over year balances can fluctuate significantly.

Total deposits increaseddecreased by $1.1$5.1 million, or 0.71%,3.20%, to $159.9$154.8 million at September 30, 20242025 from $158.8$159.9 million at September 30, 2023. The increasedecrease in deposits can primarily be attributed to a $11.7 million increase in time deposits, partially offset by a $10.6$4.9 million decrease in non-maturing deposits, due to seasonal fluctuations with municipal deposits. The increase in time deposits can primarily be attributed to an increase in offering rates as market and competitoractivity ratesfrom increaseda duringsmall thenumber fiscalof year.larger deposit relationships.

There were no$7.0 million in Federal Home Loan Bank advances at September 30, 20242025 and $14.0 million inno advances at September 30, 2023.2024. The decreaseincrease in advances was primarily due to an increase in loans receivable, net of allowance for credit losses, and a net outflow of customer deposits, partially offset by security principal paydowns, maturities and increasesale in the Bank’s internal accounts from the net stock offering proceeds in October 2023 following the completion of the second-step conversion.proceeds.

Net income for the year ended September 30, 20242025 was $539,000$733,000 compared to net income of $317,000$539,000 for the year ended September 30, 2023.2024. Net income for the year ended September 30, 20242025 was higher than the year ended September 30, 20232024 primarily due to a $562,000$231,000 increasedecrease in the unrealized gain (loss) on interest rate swap agreements. The increase in net income was also impacted by a $13,000$16,000 realized gain on sale of available for sale securities and $75,000a $70,000 realized gain on swapssale unwound.of equity securities. Total interest income increased $403,000$101,000 which was offset by interest expense increasing $848,000$100,000 withresulting marketfrom interesthigher deposit rates andfrom competitorthe ratesrespective increasing.prior year periods.

Net interest income totaled $7.1 million for the yearyears ended September 30, 2024,2025 asand compared2024. toInterest $7.6income millionon forloans theincreased year$315,000 ended September 30, 2023. The decrease in netwhile interest income ofon $445,000,securities ordecreased 5.87%,$222,000 wasfrom primarilythe dueprior toyear. anInterest increaseexpense inon depositdeposits increased $274,000 and interest expenseincome ofon $888,000,the swap agreements hedged against borrowings decreased $132,000, partially offset by ana increase in total interest income of $403,000 and a$306,000 decrease in borrowing interest expense ofon $33,000.FHLB advances.

Interest income increased by $403,000,$101,000, or 4.93%,1.18%, due to an increase in market rates resulting in higher interest rates on loan originations and loan repricing. Interest expense increased by $848,000,$100,000, or 148.77%,7.05%, due to an increase in the weighted average cost of interest-bearing liabilities by 648 basis points from 0.69%0.97% to 1.33%.1.05%. Net interest margin decreasedincreased by 165 basis points, or 0.16%,0.05%, during the year ended September 30, 20242025 to 4.03%4.08% compared to 4.19%4.03% at September 30, 2023.2024.

The increase in total non-interest income was primarily due to the reduction in the unrealized loss on swap agreements resulting from fluctuations with long-term bond rates and projected short-term rates. The unrealized loss on swap agreements was $240,000$9,000 at September 30, 20242025 compared to an unrealized loss of $802,000$240,000 at September 30, 2023.2024. For the year ended September 30, 2025, the Company sold five investments for a gain of $16,000 and sold equity securities for a gain of $70,000. For the year ended September 30, 2024, the Company unwound two off-balance sheet swaps for a realized gain of $75,000 and sold four investments for a gain of $13,000. ForOn November 4, 2024, the Company’s last remaining off-balance sheet swap, $3.0 million in notional value, matured. Other non-interest income increased $49,000 for the year ended September 30, 2023,2025 compared to the Companyprior unwoundyear, fourprimarily off-balancedue sheetto swapsthe forrecognition of additional income from a realizedtax-related gain of $654,000 and sold fourteen investments for a loss of $661,000.refund.

The Company recorded an income tax benefitexpense of $63,000 and $84,000$60,000 for the yearsyear ended September 30, 20242025 and 2023, respectively. The decrease in income tax benefit of $63,000 for the year ended September 30, 2024. The increase in income taxes resulted from an increase in pre-tax book income and a change in interest income in tax-exempt securities. The Company’s effective income tax rates were (13.24%)7.57% and (36.05%13.24%) for the years ended September 30, 20242025 and 2023,2024, respectively. The effective income tax benefitrates in both 20242025 and 20232024 primarily reflects the Company’s tax-exempt income, including earnings from securities and Bank-Owned Life Insurance (BOLI), which reduce the overall tax liability.

The table below sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances only. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees totaled $483,000 and $437,000 for the years ended September 30, 20242025 and 2023.2024, Loan balances exclude loans held for sale.respectively.

Non-Performing Assets. The table below sets forth information regarding our non-performing assets. Non-accrual loans include non-accruing troubled debt restructurings of $402,000 as of September 30, 2023. There were no non-accruing loans modified with financial difficulty as of September 30, 2025 and 2024.

The Bank owned noone foreclosed property at September 30, 2024 as compared to two piecespiece of foreclosed property at September 30, 2023.2025 as compared to no foreclosed property owned at September 30, 2024.

Management monitors differences between estimated and actual credit losses. This monitoring process includes periodic assessments by senior management of loan portfolios and the models used to estimate the expected credit losses in those portfolios. Additions to the allowance for credit losses are made by changes to the provision for loancredit losses. Credit exposures deemed to be uncollectible are charged against the allowance for credit losses. Recoveries of previously charged off amounts are credited to the allowance for credit losses.

Specific Allowances for IdentifiedIndividually ProblemAnalyzed Loans

Loans classified as substandard or worse are considered for impairmenttesting testing.as individually analyzed loans. A substandard loan shows signs of continuing negative financial trends and unprofitability, and therefore is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. The borrower on such loans typically exhibits one or more of the following characteristics: financial ratios and profitability margins are well below industry average; a negative cash flow position exists; debt service capacity is insufficient to the service debt and an improvement in the cash flow position is unlikely within the next twelve months; and secondary and tertiary means of debt repayment are weak. Loans classified as substandard are characterized by the probability that we will not collect amounts due according to the contractual terms or will sustain some loss if the deficiencies are not corrected.

ImpairedIndividually analyzed loans generally include loans that have been classified as substandard or worse. However, certain loans have been paying as agreed and have remained current, with some financial issues related to cash flow that have caused some concern as to the ability of the borrower to perform in accordance with the current loan terms but not to such extent as to require the loan to be put into a non-accruing status. Cash receipts on impairedindividually analyzed loans are recorded as interest income as received, unless the loan is in a nonaccrual status.

As an integral part of their examination process, the Federal Deposit Insurance Corporation and the New York State Department of Financial Services will periodically review our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in the process for establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management. The following table sets forth activity in our allowance for loancredit losses for the periodsyears indicated.

We measure and record the allowance for credit losses based upon a discounted cash flow and weighted average remaining life model. Under this approach, management estimates the lifetime credit losses inherent in loans as of the balance sheet date. The discounted cash flow method calculates the expected cash flows to be received over the life of each individual loan in a pool. The weighted average remaining life methodology uses average charge-off rates and the remaining life of the loan to estimate the loan allowance for credit losses. The average annual charge-off rate is applied to the amortization adjusted remaining life of the loan to determine the unadjusted lifetime historical charge-off rate. Additionally, the allowance for credit losses calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience and risk tolerance, asset quality and portfolio trends, loan review and audit results, loan portfolio growth, industry concentrations, trends in underlying collateral, external factors and economic conditions not already captured.

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, proceeds from the sale of loans and proceeds from sales and maturities of securities. We also rely on borrowings from the Federal Home Loan Bank as supplemental sources of funds. At September 30, 2024,2025, there were no$7.0 million in outstanding advances from the Federal Home Loan Bank and we had the ability to borrow $59.3$54.9 million. Additionally, at September 30, 2024,2025, we had a line of credit with the Federal Reserve Discount Window totaling $5.0 million and a second line of credit with Atlantic Community Banker’s Bank totaling $4.0 million. At September 30, 2024,2025, there were no outstanding balances under any of these additional credit facilities.

Our cash flows are comprised of three primary classifications: cash flows from operating activities; investing activities and financing activities. Net cash provided by (used in) operating activities was $(3.0)$0.9 million and $5.7$(3.0) million for the years ended September 30, 20242025 and 2023,2024, respectively. Net cash (used in) provided by investing activities, which consists primarily of disbursements for loan originations and purchases and the purchase of securities available-for-sale, offset by principal collections on loans, proceeds from sales, maturities and principal payments received on securities available-for-sale, was $6.8$(3.6) million and $1.8$6.8 million for the years ended September 30, 20242025 and 2023,2024, respectively. Net cash provided by (used in) financing activities, consisting primarily of activity in deposit accounts and Federal Home Loan Bank advances, was $7.9$1.0 million and $11.4$(7.9) million for the years ended September 30, 20242025 and 2023,2024, respectively.

For information regarding the Company’s risk factors, refer to the “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended September 30, 2025, filed with the Securities and Exchange Commission on December 19, 2025. Except as set forth below, asAs of MarchJune 31,30, 2026, the risk factors of the Company have not changed materially from those disclosed in the Form 10-K.

The Company cautions readers of this report that a number of important factors could cause the Company’s actual results to differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from those predicted and could affect the future prospects of the Company include, but are not limited to: (i) general economic conditions, either nationally or in our market areas, that are worse than expected including as a result of employment levels and labor shortages, and the effects of inflation, a potential recession or slowed economic growth caused by supply chain disruptions or otherwise; (ii) changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; (iii) our ability to access cost-effective funding; (iv) fluctuations in real estate values and both residential and commercial real estate market conditions; (v) demand for loans and deposits in our market area; (vi) deposit outflows and our ability to successfully manage liquidity; (vii) our ability to implement and change our business strategies, including our branching strategy; (viii) competition among depository and other financial institutions; (ix) inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations or prepayments on loans we have made and make; (x) adverse changes in the securities or secondary mortgage markets; (xi) changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements and insurance premiums; (xii) changes in the quality or composition of our loan or investment portfolios; (xiii) technological changes that may be more difficult or expensive than expected; (xiv) the inability of third-party providers to perform as expected; (xv) our ability to manage market risk, credit risk and operational risk in the current economic environment; (xvi) our ability to enter new markets successfully and to capitalize on growth opportunities; (xvii) our ability to receive all required regulatory approvals necessary for the Bank to convert from a New York chartered stock savings and loan association to a national banking association, and for the merger of GS&L Municipal Bank with and into the Bank immediately following the completion of the charter conversion, and, if such approvals are ultimatey received, our ability to recognize the anticipated benefits of such transactions; (xviii) our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire, and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; (xixxviii) changes in consumer spending, borrowing and savings habits; (xxxix) changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; (xxixx) our ability to attract and retain key employees; and (xxiixxi) changes in financial condition, results of operations or future prospects of issuers of securities that we own; (xxiiixxii) changes in monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; and (xxivxxiii) the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts.

We consider the allowance for credit losses to be a critical accounting policy. Note 2 to the Company’s Consolidated Financial Statements for the three and sixnine months ended MarchJune 31,30, 2026 discusses significant accounting policies, including the allowance for credit losses in accordance with ASC 326, Financial Instruments – Credit Losses. Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation.

Our financial results are affected by the changes in and the level of the allowance for credit losses. This process involves our analysis of complex internal and external variables, and it requires that we exercise judgement to estimate an appropriate allowance for credit losses. As a result of the uncertainty associated with this subjectivity, we cannot assure the precision of the amount reserved, should we experience sizeable loan losses in any particular period. For example, changes in the financial condition of individual borrowers, economic conditions, or the condition of various markets in which collateral may be sold could require us to significantly decrease or increase the level of the allowance for credit losses. Such an adjustment could materially affect net income as a result of the change in provision for credit losses. We also have approximately $1.2$1.4 million as of MarchJune 31,30, 2026 in non-performing assets consisting primarily of $943$1.3 thousandmillion non-performing real estate loans. We continue to assess the collectability of these loans and update our appraisals on these loans as appropriate.

Comparison of Financial Condition at MarchJune 31,30, 2026 and September 30, 2025

Total assets decreasedincreased by $0.2 million, or 0.10%,0.08%, to $198.3$198.7 million at MarchJune 31,30, 2026 from $198.5 million at September 30, 2025. The decreaseincrease in assets was primarily due to an increase in cash and cash equivalents of $1.7 million and an increase in loans receivable, net of $3.8 million, partially offset by a decrease in securities available for sale of $1.6$5.7 million and a decrease in bank-owned life insurance resulting from the receipt of $566 thousand of death benefit proceeds, partially offset by an increase in cash and cash equivalents of $1.3 million and an increase in loans receivable, net of $0.7 million.proceeds.

Cash and cash equivalents increased by $1.3$1.6 million, or 28.18%,36.06%, to $6.0$6.3 million at MarchJune 31,30, 2026 from $4.7 million at September 30, 2025. The increase in cash and cash equivalents can be primarily attributed to an increase in deposits of $5.2$0.9 million along with an increase in advanced payments from borrowers for taxes and insurance of $1.0 million and a decrease in securities available for sale of $1.6$5.7 million, partially offset by an increase in loans receivable, net of $0.7$3.8 million and the repayment of $6.0$3.0 million of Federal Home Loan Bank advances.

Loans receivable, net of the allowance for credit losses, increased by $0.7$3.8 million, or 0.53%,2.53%, to $132.2$135.3 million at MarchJune 31,30, 2026 from $131.5 million at September 30, 2025. The increase in loans receivable, net of the allowance for credit losses, was primarily due to an increase in originated loans by $2.2$6.0 million, partially offset by a decrease in total acquired loans of $1.5$2.2 million due to loan repayments.

Securities available for sale decreased by $1.6$5.7 million, or 3.84%,14.02%, to $39.3$35.2 million at MarchJune 31,30, 2026 from $40.9 million at September 30, 2025. The decrease was primarily due to principal paydowns, maturities and sales, partially offset by reinvested proceeds for municipal deposit collateral requirements along with an increase in the market value on the portfolio. The unrealized loss on securities available for sale included in other comprehensive loss was $1.7$1.8 million at MarchJune 31,30, 2026, compared to $1.9 million at September 30, 2025, primarily due to fluctuations in market rates impacting the fair value of the investment portfolio.

Total deposits increased by $5.2$0.9 million, or 3.36%,0.58%, to $160.0$155.7 million at MarchJune 31,30, 2026 from $154.8 million at September 30, 2025. The increase in deposits can primarily be attributed to a $3.4 million increase in non-maturing deposits and a $1.8$1.6 million increase in time deposits, partially offset by a $0.7 million decrease in non-maturing deposits. The overall increase in deposits can be attributed to seasonal fluctuations with commercial and municipal deposits during the period.period, partially offset by a slight decrease in municipal deposits. Uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit, currently set at $250,000 per insured account, were approximately $35.2$30.3 million at MarchJune 31,30, 2026 and $31.6 million at September 30, 2025. Municipal deposits held at GS&L Municipal Bank accounted for approximately $19.6$14.2 million and $18.0 million of the uninsured deposits at MarchJune 31,30, 2026 and September 30, 2025, respectively. At MarchJune 31,30, 2026, we had $62.7$62.4 million in available liquidity with the Federal Home Loan Bank of New York and $6.0$6.3 million in cash and cash equivalents, which was sufficient to cover 100% of our uninsured and uncollateralized deposits at MarchJune 31,30, 2026. Municipal deposits held by GS&L Municipal Bank are fully collateralized by available for sale government and collateralized mortgage obligation securities.

Federal Home Loan Bank advances decreased by $6.0$3.0 million, or 85.71%,42.86%, to $1.0$4.0 million at MarchJune 31,30, 2026 from $7.0 million at September 30, 2025. The decrease in advances was primarily due to an increase in customer deposits,deposits and decrease in securities available for sale, partially offset by an increase in loans receivable, net of allowance for credit losses.

Shareholders’ equity increased by $0.6 million, or 1.94%,2.00%, to $32.7 million at MarchJune 31,30, 2026 from $32.1 million at September 30, 2025. The increase in shareholders’ equity was primarily a result of net income and a $0.2$0.1 million increase to the market value adjustment on the securities portfolio included in the accumulated other comprehensive loss component, partially offset by the repurchase of common stock of $0.2$0.3 million which was returned to authorized but unissued stock. The Company also declared and paid dividends of $0.09$0.18 per share totaling $94,000$191,000 during the sixnine months ended MarchJune 31,30, 2026.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025

Net income for the three months ended MarchJune 31,30, 2026 was $217,000,$239,000, compared to $118,000$217,000 for the three months ended MarchJune 31,30, 2025. Net income for the three months ended MarchJune 31,30, 2026 was higher than the three months ended MarchJune 31,30, 2025 primarily due to a $101,000$61,000 increase in net interest income.income and a $30,000 gain on sale of a foreclosed property. The Company also recorded a $5,000$12,000 provision for credit losses for the three months ended March 31, 2026 compared to no provision for credit losses forboth the three months ended MarchJune 31,30, 2026 and 2025. Interest expense for the three months ended MarchJune 31,30, 2026 was $376,000$381,000 compared to $390,000$360,000 for the three months ended MarchJune 31,30, 2025, primarily due to a $51,000 decrease in interest expense on deposits, partially offset by a $37,000$34,000 increase in interest expense in Federal Home Loan Bank advances.advances, partially offset by a $13,000 decrease in interest expense on deposits.

Net interest income totaled $1.9 million for the three months ended June 30, 2026, as compared to $1.8 million for the three months ended MarchJune 31, 2026, as compared to $1.7 million for the three months ended March 31,30, 2025. Net interest income for the three months ended MarchJune 31,30, 2026 increased by $101,000,$61,000, or 5.78%,3.37%, primarily due to an increase in interest income on loans of $143,000$150,000 and a decrease in interest expense on deposits of $51,000,$13,000, partially offset by an increase in interest expense in Federal Home Loan Bank advances of $37,000$34,000 and a decrease in interest income on securities of $47,000.$60,000.

Interest income increased by $87,000,$82,000, or 4.07%,3.78%, for the three months ended MarchJune 31,30, 2026 due to an increase in loan income from an increase in loan origination and loan repricing, partially offset by a decrease in interest on taxable securities.

Interest expense decreasedincreased by $14,000,$21,000, or 3.59%,5.83%, due to a decrease in interest expense on deposits, partially offset by an increase in Federal Home Loan Bank borrowing interest expense.expense, partially offset by a decrease in interest expense on deposits.

Net interest margin increased by 1610 basis points, to 4.22% compared to 4.06%4.25% for the three months ended MarchJune 31,30, 2026 driven primarily by an increase in net interest income.

Management recorded a $5,000 provision for credit loss on loans, and no benefit from the provision for unfunded commitments, for the three months ended March 31, 2026, compared to a $5,000$10,000 provision for credit loss on loans, and a $5,000 benefit from the$2,000 provision for credit loss on unfunded commitments, for the three months ended June 30, 2026, compared to a $9,000 provision for credit loss on loans, and a $3,000 provision for credit loss on unfunded commitments for the three months ended MarchJune 31,30, 2025. Based on a review of the loans that were in the loan portfolio at MarchJune 31,30, 2026, management believes that the allowance is maintained at a level that represents its best estimate of inherent credit losses in the loan portfolio that were both probable and reasonably estimable.

Non-performing loans were $959,000$1.4 million and $695,000 at MarchJune 31,30, 2026 and September 30, 2025, respectively. At MarchJune 31,30, 2026 and September 30, 2025, non-performing loans consisted of $851,000$1.3 million and $679,000 of non-performing residential mortgage loans, respectively.

The increasedecrease in total non-interest income for the three months ended MarchJune 31,30, 2026, was primarily due to a $11,000$10,000 increasedecrease in service charge income compared to the same period last year. Earnings on investments in life insurance increased $3,000 and earnings on the deferred fees planplan, decreasedprimarily $1,000due to fluctuations with market rates. Other non-interest income increased $11,000 for the three months ended MarchJune 31,30, 2026, compared to the same period last year, primarily due to fluctuationsa withnon-recurring marketinsurance rates. Other non-interest income increased $5,000 for the three months ended March 31, 2026, compared to the same period last year, primarily due to additional fee income.settlement.

The decreaseincrease in total non-interest expense included a $33,000$100,000 decreaseincrease in salariesother andnon-interest employee benefitsexpense for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. This was primarily due to staffinghigher changessupplemental overretirement plan expenses, increased ATM card processing costs, higher credit bureau fees resulting from increased lending activity, and a year-over-year increase in miscellaneous expense due to the priorrecognition year.of a recovery in the prior-year period that did not recur in the current period. Foreclosed assets, net decreased $6,000$36,000 to a net benefit of $6,000$18,000 for the three months ended MarchJune 31,30, 2026, compared to noan expense of $18,000 for the three months ended MarchJune 31,30, 2025. The change was primarily due to the sale of a foreclosed property during the three months ended MarchJune 31,30, 2026.

The Company recorded an income tax expense of $4,000$14,000 and $51,000 for the three months ended MarchJune 31,30, 2026 and an2025, income tax benefit of $16,000 for the three months ended March 31, 2025.respectively. The increasedecrease in income taxes resulted from ana increasedecrease in pre-tax book income andas awell changeas an increase in tax-exempt income. The Company’s effective income tax rates were 1.81%5.53% and (15.69)%19.03% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increasedecrease in the effective income tax rate for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, was primarily related to the increasedecrease in pre-tax book income and fluctuations in permanent tax differences.differences primarily related to tax-exempt income.

Results of Operations for the SixNine Months Ended MarchJune 31,30, 2026 and 2025

Net income for the sixnine months ended MarchJune 31,30, 2026 was $504,000,$743,000, compared to $278,000$495,000 for the sixnine months ended MarchJune 31,30, 2025. Net income for the sixnine months ended MarchJune 31,30, 2026 was higher than the sixnine months ended MarchJune 31,30, 2025 primarily due to a $103,000 gain recognized from a bank-owned life insurance death benefit and a $165,000$226,000 increase in net interest income. The Company also recorded an $18,000$30,000 provision for credit losses for the sixnine months ended MarchJune 31,30, 2026 compared to a $15,000$27,000 provision for credit losses for the sixnine months ended MarchJune 31,30, 2025. Interest expense forremained therelatively sixconsistent monthsat ended$1.2 Marchmillion, 31,increasing 2026 was $787,000$17,000 compared to $791,000the forsame period in the sixprior monthsyear. endedThe Marchincrease 31, 2025,was primarily due to a $104,000 decrease in interest expense on deposits, partially offset by a $100,000$134,000 increase in interest expense in Federal Home Loan Bank advances.advances, partially offset by a $117,000 decrease in interest expense on deposits.

Net interest income totaled $3.7$5.5 million for the sixnine months ended MarchJune 31,30, 2026, as compared to $3.5$5.3 million for the sixnine months ended MarchJune 31,30, 2025. Net interest income for the sixnine months ended MarchJune 31,30, 2026 increased by $165,000,$226,000, or 4.70%,4.25%, primarily due to an increase in interest income on loans of $276,000$426,000 and a decrease in interest expense on deposits of $104,000,$117,000, partially offset by an increase in interest expense in Federal Home Loan Bank advances of $100,000$134,000 and a decrease in interest income on securities of $86,000.$146,000.

Interest income increased by $161,000,$243,000, or 3.74%,3.75%, for the sixnine months ended MarchJune 31,30, 2026 due to an increase in loan income from an increase in loan origination and loan repricing, partially offset by a decrease in interest on taxable securities.

Interest expense decreasedincreased by $4,000,$17,000, or 0.51%,1.48%, due to a decrease in interest expense on deposits, partially offset by an increase in Federal Home Loan Bank borrowing interest expense.expense, partially offset by a decrease in interest expense on deposits.

Net interest margin increased by 1210 basis points, to 4.14% compared to 4.02%4.17% for the sixnine months ended MarchJune 31,30, 2026 driven primarily by an increase in net interest income.

Management recorded credit loss provisions of $18,000$30,000 and $15,000$27,000 for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively. Based on a review of the loans that were in the loan portfolio at MarchJune 31,30, 2026, management believes that the allowance is maintained at a level that represents its best estimate of inherent credit losses in the loan portfolio that were both probable and reasonably estimable.

Non-performing loans were $959,000$1.4 million and $695,000 at MarchJune 31,30, 2026 and September 30, 2025, respectively. At MarchJune 31,30, 2026 and September 30, 2025, non-performing loans consisted of $851,000$1.3 million and $679,000 of non-performing residential mortgage loans, respectively.

The increase in total non-interest income for the sixnine months ended MarchJune 31,30, 2026, was primarily due to a $103,000 gain recognized from a bank-owned life insurance death benefit. Earnings on investments in life insurance increased $10,000$12,000 and earnings on deferred fees plan increased $28,000$18,000 for the sixnine months ended MarchJune 31,30, 2026, compared to the same period last year, primarily due to fluctuations with market rates. Other non-interest income decreased $48,000$37,000 for the sixnine months ended MarchJune 31,30, 2026, compared to the same period last year, primarily due to additional income from a tax-related refund recognized in the comparable period last year that did not recur this year.

The increase in total non-interest expense included aan $47,000$87,000 increase in building,other non-interest expense for the nine months ended June 30, 2026 compared to the nine months ended June 30, 2025. This was primarily due to the non-recurrence of a recovery recognized in miscellaneous expense during the prior-year period. Building, occupancy and equipment expense increased by $74,000 for the sixnine months ended MarchJune 31,30, 2026 compared to the sixnine months ended MarchJune 31,30, 2025. This was primarily due to higher utility costs and increased snow removal expenses during the winter season.season along with general increases in routine property maintenance and equipment service contracts. Foreclosed assets, net decreased $25,000$61,000 to a net benefit of $24,000$42,000 for the sixnine months ended MarchJune 31,30, 2026, compared to net expense of $1,000$19,000 for the sixnine months ended MarchJune 31,30, 2025. The change was primarily due to a favorable fair value adjustment and subsequent gain on athe sale of one foreclosed property and the sale of a different foreclosed property during the sixnine months ended MarchJune 31,30, 2026.

The Company recorded an income tax expense of $24,000$38,000 and $34,000 for the sixnine months ended MarchJune 31,30, 2026 and an2025, income tax benefit of $17,000 for the six months ended March 31, 2025.respectively. The increase in income taxes resulted from an increase in pre-tax book income andas awell changeas an increase in tax-exempt income. The Company’s effective income tax rates were 4.55%4.87% and (6.51)%6.43% for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively. The increasedecrease in the effective income tax rate for the sixnine months ended MarchJune 31,30, 2026, as compared to the sixnine months ended MarchJune 31,30, 2025, was primarily related to the increase in pre-tax book income and fluctuations in permanent tax differences.differences, specifically the recognition of a tax-exempt $103,000 gain on a bank-owned life insurance death benefit during the current period.

Non-performing loans were $959,000$1.4 million and $695,000 at MarchJune 31,30, 2026 and September 30, 2025, respectively. At MarchJune 31,30, 2026 and September 30, 2025, non-performing loans consisted of $851,000$1.3 million and $679,000 of non-performing residential mortgage loans, respectively.

From time to time, as part of our loss mitigation strategy, we may renegotiate loan terms based on economic or legal reasons related to theloans borrower’swith borrowers experiencing financial difficulties. There were no loans modified to borrowers experiencing financial difficulty during the sixnine months ended MarchJune 31,30, 2026. Loans modified to borrowers experiencing financial difficulty may be considered to be non-performing and, if so, are placed on non-accrual, except for those that have established a sufficient performance history (generally a minimum of six consecutive months of performance) under the terms of the restructured loan.

The following tables set forth average balances, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances only. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees totaled $490,000$489,000 and $455,000$456,000 for the three and sixnine months ended MarchJune 31,30, 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, proceeds from the sale of loans and proceeds from sales and maturities of securities. We also rely on borrowings from the Federal Home Loan Bank as supplemental sources of funds. At MarchJune 31,30, 2026, there $1.0was $4.0 million in outstanding advances from the Federal Home Loan Bank, and we had the ability to borrow an additional $62.7$62.4 million. Additionally, at MarchJune 31,30, 2026, we had a line of credit with the Federal Reserve Discount Window totaling $5.0 million and a second line of credit with Atlantic Community Bankers Bank totaling $4.0 million. At MarchJune 31,30, 2026, there were no outstanding balances under any of these additional credit facilities. During the quarter ended June 30, 2026, the Bank was approved for an increase to $5.0 million on the Atlantic Community Bankers Bank line of credit, with final documentation submitted to the Board of Directors for ratification in July 2026.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities and financing activities. Net cash provided by (used in) operating activities was $0.8$1.0 million and $(0.1)$0.6 million for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively. Net cash provided by investing activities, which consists primarily of disbursements for loan originations and purchases and the purchase of securities available-for-sale, offset by principal collections on loans, proceeds from sales, maturities and principal payments received on securities available-for-sale, was $1.4$2.2 million and $0.3$0.7 million for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively. Net cash (used in) provided by financing activities, consisting primarily of activity in deposit accounts and Federal Home Loan Bank advances, was $(0.9)$1.5 million for the sixnine months ended MarchJune 31,30, 2026 and was $1.3$0.5 million for the sixnine months ended MarchJune 31,30, 2025.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. We have no material commitments for capital expenditures as of MarchJune 31,30, 2026. Our current strategy is to increase core deposits and utilize FHLB advances and brokered deposits to fund loan growth. We did not have any brokered deposits as of MarchJune 31,30, 2026 or September 30, 2025.

Gouverneur Bancorp, Inc. is a separate legal entity from the Bank and must provide for its own liquidity to pay its operating expenses and other financial obligations and to fund repurchases of shares of common stock. Bancorp’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to Bancorp is governed by applicable bank regulations. At MarchJune 31,30, 2026 and September 30, 2025, Bancorp (on an unconsolidated basis) had liquid assets of $0.8$0.6 million and $1.3 million, respectively.

At MarchJune 31,30, 2026 and September 30, 2025, the Bank exceeded all of its regulatory capital requirements. Management is not aware of any conditions or events that would change the Bank’s categorization as well-capitalized.