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

As a financial services organization, we are subject to a number of risks inherent in our transactions and present in the business decisions we make. Set forth below is a summary of those risks, and then a more detailed discussion of the primary risks and uncertainties thatthat, if realizedrealized, could have a material and adverse effect on our business, financial condition, results of operations, cash flows, liquidity and the value of our securities. The risks and uncertainties described below are not the only risks we face.

Inflation rose sharply at the end of 2021 and remained at ana slightly elevated level through 2024.2025. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses. Consequently, the ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely impact our results of operations and financial condition. Furthermore, a prolonged period of inflation could cause wages and other costs to the Company to increase, which could adversely affect our results of operations and financial condition.

If we are unable to adequately manage our liquidity, deposits, capital levels and interest rate risk, we may experience a material adverse effect on our financial condition and results of operations. We must maintain sufficient funds to respond to the needs of depositors and borrowers. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also receive funds from loan repayments, investment maturities and income on other interest-earning assets. While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area. Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff. Accordingly, as a part of our liquidity management, we must use a number of funding sources in addition to deposits and repayments and maturities of loans and investments, which may include Federal Home Loan Bank of New York advances, Federal Reserve Bank of New York’sYork discount window advances, federal funds purchased and brokered certificates of deposit. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources.

Our financial flexibility would be severely constrained if we were unable to maintain our access to funding or if adequate financing were not available at acceptable interest rates. Further, if we were required to rely more heavily on more expensive funding sources to support liquidity, our revenues may not increase proportionately to cover our increased costs. In this case, our operating margins and profitability would be adversely affected. If alternative funding sources were no longer available to us, we may need to sell a portion of our investment and/or loan portfolio to raise funds, which, depending upon market conditions, could result in us realizing a loss on the sale of such assets. As of December 31, 2024,2025, we had a net unrealized loss of $1.3$0.3 million on our available for-sale investment securities portfolio as a result of the higher interest rate environment.portfolio. Our investment securities totaled $87.5$100.6 million, or 3.8%4.2% of total assets, at December 31, 2024.2025. The details of this portfolio are included in Note 2 to the consolidated financial statements.

A substantial portion of our business is in the New York metro area,area; therefore, our business is particularly vulnerable to an economic downturn in our primary market area.

In addition, the market value of the real estate securing loans as collateral could be adversely affected by unfavorable changes in market and economic conditions. As of December 31, 2024,2025, 67%94% of our commercial real estate loan portfolio was secured by real estate located in the five boroughs of New York Citymetro and Nassau County, New York.area. Adverse developments affecting commerce or real estate values in the local economies in our primary market areas could increase the credit risk associated with our loan portfolio and have an adverse impact on our revenues and financial condition. In particular, we may experience increased loan delinquencies, which could result in a higher provision for credit losses and increased charge-offs. Any sustained period of increased non-payment, delinquencies, foreclosures or losses caused by adverse market or economic conditions in our market area could adversely affect the value of our assets, revenues, financial condition and results of operations.

Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate. Although we held no OREO properties at December 31, 2024, it is possible that in future periods we may take title to OREO properties in the event of defaults on outstanding loans. The amount that we, as a mortgagee, may realize after a default depends on factors outside of our control, including, but not limited to, general or local economic conditions, environmental cleanup liabilities, assessments, interest rates, real estate tax rates, operating expenses of the mortgaged properties, our ability to obtain and maintain adequate occupancy of the properties, zoning laws, governmental and regulatory rules, and natural disasters. Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate, or writedownswrite-downs in the value of OREO, could have an adverse effect on our business, financial condition and results of operations.

We arehave expandingexpanded the geographic scope of our SBA, and other government guaranteed lending, and this may expose us to greater and additional risks than lending in our primary trade area.

In 2006, the OCC, the FDIC, and the FRB,FRB or (collectively, the Agencies,“Agencies”) issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices,” or the “CRE Guidance.” Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure will receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months. Our commercial real estate and multi-familymultifamily loans balance have decreased 4%3% combinedin the aggregate for the year ended December 31, 20242025 and commercial real estate loans represent 385%360% of our risk-based capital at December 31, 2024,2025, a decrease from 432%385% at December 31, 2023 and 448% at September 30, 2023.2024.

The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and more risky.riskier.

Our loan portfolio includes a significant concentration of one- to four- family residential mortgage loans. As of December 31, 2024,2025, we had $729.3$777.0 million in one- to four- family residential mortgage loans, representing 37%39% of our total loan portfolio. Approximately 91%96% of these loans are secured by properties in the five boroughs of New York CityCity, Nassau County and NassauSuffolk County, New York and 66%64% of these loans are rental properties and are not owner-occupied. These loans expose us to credit risks that may be different from those related to loans secured by owner-occupied properties or commercial loans. Adverse developments affecting commerce or real estate values in the local economies in our primary market areas could increase the credit risk associated with our loan portfolio and have an adverse impact on our revenues and financial condition. In addition, economic downturns in New York City could affect levels of employment in the New York metro area, which may affect the demand for rental housing. Any increase in rental vacancies, or reductions in rental rates, could adversely impact our borrowers and their ability to repay their loans. Any sustained period of increased non-payment, delinquencies, foreclosures or losses caused by adverse market or economic conditions in our market area could adversely affect the value of our assets, revenues, financial condition and results of operations.

A significant portion of our lending activity is related to certain niche lending products, such as loans secured by investor owned, non-owner occupied one- to four-family properties and loans without third-party income verifications, which are considered non-qualified mortgage loans and which may expose us to greater risk of credit loss than that associated with more traditional lending products. Non-qualified mortgage loans are considered to have a higher degree of risk and are less liquid than qualified mortgage loans. For the yearyears ended December 31, 20242025 and fiscal year ended September 30, 2023,2024, we originated $130.4$246.4 million and $196.0$130.4 million in non-qualified mortgage loans, respectively. During the yearyears ended December 31, 2025 and 2024 we sold into the secondary market $92.3 million and $37.6 millionmillion, respectively of our non-qualified mortgages. There were no such sales for the fiscal year ended September 30, 2023. Although we have developed underwriting standards and procedures designed to reduce the risk of loss, we can provide no assurance that these standards and procedures will be effective in reducing losses. Should we incur credit losses, it could adversely affect our results of operations.

We maintain an allowance for credit losses thatwhich represents management’s judgment of expected credit losses and risks inherent in our loan portfolio. As of December 31, 2024,2025, our allowance for credit losses totaled $22.8$18.7 million, which represented approximately 1.15%0.93% of our total loans held for investment. The level of the allowance reflects management’s continuing evaluation of general economic conditions, diversification and seasoning of the loan portfolio, historic loss experience, identified credit problems, delinquency levels, adequacy of collateral and historical peer charge-off data. The determination of the appropriate level of our allowance for credit losses is inherently highly subjective and requires management to make significant estimates of and assumptions regarding current credit risks and future trends, all of which may undergo material changes.

At December 31, 2024,2025, our non-performing assets, which consist of non-performing loans and OREO (of which we had none at December 31, 2024),OREO, were $16.4$22.3 million, or 0.71%0.93% of total assets. Our non-performing assets adversely affect our net income in various ways:

Our success depends in large part on the performance of our key personnel at the BankBank, thatwho have substantial experience and tenure with the Bank and in the markets that we serve. Our continued success and growth depend in large part on the efforts of these key personnel, the support of our Directors, and ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees to complement and succeed to our core senior management team.

Pandemics, natural disasters, global climate change, acts of terrorism, global conflicts or other similar events have occurred in the past, and may in the future have, a negative impact on our business and operations. These events impact us negatively to the extent that they result in reduced capital markets activity, lower asset price levels, or disruptions in general economic activity in the United States or abroad, or in financial market settlement functions. In addition, these or similar events may impact economic growth negatively, which could have an adverse effect on our business and operations and may have other adverse effects on us in ways that we are unable to predict.

Our business operations could be disrupted if significant portions of our workforce were unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic. Further, work-from-home and other modified business practices may introduce additional operational risks, including cybersecurity and execution risks, which may result in inefficiencies or delays, and may affect our ability to, or the manner in which we,we conduct our business activities. Disruptions to our clients could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans.

The following is a discussion of our financial condition and results or our operations for the years ended December 31, 2025 and 2024, respectively. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from our consolidated financial statements. Unless the context otherwise specifies or requires, references herein to “we” or “us” include Hanover Bancorp, Inc. and Hanover Bank on a consolidated basis.

WeThe areCompany currentlyis a New YorkMaryland corporation whichand becameis the holding company for the Bank in 2016.Bank. The Bank, a community commercial bank focusing on highly personalized and efficient services and products responsive to local needs, commenced operations in 2009 and wasis incorporated under the laws of the State of New York. As a New York State chartered bank, the Bank is subject to regulation by the DFS and the FDIC. As a bank holding company, wethe areCompany is subject to regulation and examination by the FRB.

The Bank offers a full range of financial services including a complete suite of consumerconsumer, commercial, and commercialmunicipal banking products and services, including multi-familymultifamily and commercial mortgages, government guaranteed loans, residential loans, business loans and lines of credit. The Bank also offers its customers, among other things, access to 24-hour ATM service with no fees, free checking with interest, telephone banking, advanced technologies in mobile and internet banking for its consumer and business customers and safe deposit boxes. Our corporate administrative office is located in Mineola, New York where the Bank also operates a full-service branch office. Additional branches are located in Garden City Park, Hauppauge, Port Jefferson, Forest Hills, Flushing, Sunset Park, ManhattanRockefeller Center and Chinatown,Bowery, New York and Freehold, New Jersey. TheIt Bankis hasexpected receivedthat regulatorythe approvalCompany towill openonce again expand its geographic footprint with the opening of a full-service branch in Porta Jefferson,state-of-the-art facility in downtown Riverhead, New York. Business development staff have already joined the BankCompany in anticipation of the opening of this location. TheSubject to regulatory approvals, the Bank expects thisto siteopen tothe branch in late 2026. The Company expects that a temporary office location in Riverhead will be fully operational inby the end of the first halfquarter of 2025.2026.

On October 1, 2023, the Company adopted ASU 2016-13 (Topic 326), which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. The allowance for credit losses (“ACL”) is a valuation allowance for management’s estimate of expected credit losses in the loan portfolio. The process to determine expected credit losses utilizes analytic tools and judgment and is reviewed on a quarterly basis. When management is reasonably certain that a loan balance is not fully collectable, an analysis is completed and an allowance may be established or a full or partial charge offcharge-off could be recorded against the allowance. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance via a quantitative analysis which considers available information from internal and external sources related to past loan loss and prepayment experience and current conditions, as well as the incorporation of reasonable and supportable forecasts. Management evaluates a variety of factors including available published economic information in arriving at its forecast. Expected credit losses are estimated over the contractual term of the loans and adjusted for expected prepayments when appropriate. Also included in the allowance for credit losses are qualitative reserves that are expected, but, in management’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above. Factors may include changes in lending policies and procedures, size and composition of the portfolio, experience and depth of lending management and the effect of external factors such as competition, legal and regulatory requirements, among others. The allowance is available for any loan that, in management’s judgment, should be charged off.charged-off. Although management uses the best information available, the level of the allowance for credit losses remains an estimate, which is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for credit losses. Such agencies may require the Company to make additional provisions for credit losses based upon information available to them at the time of their examination. The Bank considers its primary lending area to be the New York metro area. A substantial portion of the Bank’s loans are secured by real estate in this area. Accordingly, the ultimate collectability of the loan portfolio is susceptible to changes in market and economic conditions in this region. Future adjustments to the provision for credit losses and allowance for credit losses may be necessary due to economic, operating, regulatory and other conditions beyond the Company’s control.

Results of Operations for the year ended December 31, 2024 (“calendar 2024”)2025 compared to fiscalthe year ended SeptemberDecember 30,31, 2023 (“fiscal 2023”)2024

For calendarthe 2024,year ended December 31, 2025, we recognized net income of $7.5 million, or $1.00 per diluted share (including Series A preferred shares), compared to net income of $12.3 million, or $1.66 per diluted share (including Series A preferred shares), compared to net income of $15.2 million, or $2.05 per diluted share (including Series A preferred shares) for fiscalthe 2023.year ended December 31, 2024. The decrease in net income recorded for calendarthe 2024year ended December 31, 2025 from fiscalthe 2023year ended December 31, 2024 resulted from a decrease in net interest income, an increase in the provision for credit losseslosses, a decrease in non-interest income, and an increase in non-interest expense,expense. whichThese were partially offset by an increase in non-interestnet interest income. The increase in the provision for credit losses was primarilylargely relatedimpacted toby the recording of a $4.0$14.2 million provisionin fornet credit lossescharge-offs in June 2024 that was mainly attributable to an ACL on an individually evaluated loan of $2.5 million and $1.1 million related to ongoing enhancements to the CECL model.2025. The increasedecrease in non-interest income is primarily related to the increasesdecrease in the gain on sale of loans held-for-sale andwhich was partially offset by the increases in loan servicing and fee income which were partially offset by a decrease in other operating income. In September 2023, the Company settled ongoing litigation and receivedservice acharges settlementon paymentdeposit of $975 thousand which was recorded in other income.accounts. The increase in non-interest expense was primarily attributedrelated to additionalthe staffincrease forin salaries and employees benefits and the SBA,one-time C&Icore Bankingsystem andconversion Operations teams.expenses.

The provision for credit losses was $10.4 million (including a $0.3 million provision for unfunded commitments) for the year ended December 31, 2025 compared to $4.9 million (including a $0.2 million provision for unfunded commentscommitments) for calendarthe 2024year comparedended toDecember $3.431, million (including no provision for unfunded comments) for fiscal 2023.2024. Total net charge-offs were $14.2 million and $1.6 million for boththe calendaryears 2024ended December 31, 2025 and fiscal2024, 2023.respectively. SeeFor additionalmore discussioninformation, undersee "Asset Quality - Allowance for Credit LossesLosses.” section.

Non-interest income was $12.8 million for the year ended December 31, 2025, a decrease of $2.5 million from $15.3 million for calendarthe 2024,year anended increaseDecember of31, $6.5 million from $8.8 million for fiscal 2023.2024. The increasedecrease in non-interest income is primarily related to thea increases$3.6 million decrease in the net gain on sale of loans held for sale andwhich was partially offset by a $0.6 million increase in loan servicing and fee income which were partially offset byincome, a decrease$0.3 million increase in otherservice income.charges Inon Septemberdeposit 2023, the Company settled ongoing litigationaccounts and received a settlement$0.2 paymentmillion of $975 thousand which was recordedincrease in othernet income.gain on sale on securities available-for-sale.

Income tax expense was $4.0$2.5 million for calendarthe 2024,year ended December 31, 2025, a decrease from $5.0$4.0 million for fiscalthe 2023.year ended December 31, 2024. The decline in income tax expense reflects lower net income in calendarthe 2024.year ended December 31, 2025. The effective income tax rate for calendarthe 2024year ended December 31, 2025 was 24.6%24.8% compared to 24.9%24.6% for fiscalthe 2023.year ended December 31, 2024.

Our investment securities available-for-sale portfolio included gross unrealized gains of $0.6 million and gross unrealized losses of $0.9 million at December 31, 2025, compared to gross unrealized gains of $0.3 million and gross unrealized losses of $1.6 million at December 31, 2024, compared to gross unrealized gains of $0.1 million and gross unrealized losses of $2.0 million at December 31, 2023.2024. Management believes that all of itsthe unrealized losses on individual investment securities at December 31, 20242025 and 20232024 are the result of fluctuations in interest rates and do not reflect deterioration in the credit quality of these investments. Accordingly, management considers these unrealized losses to be temporary in nature. We do not have the intent to sell these investment securities with unrealized losses and, more likely than not, will not be required to sell these investment securities before fair value recovers to amortized cost.

At December 31, 2024,2025, our loan portfolio totaled $1.99$2.00 billion, an increase of $28.3$15.2 million from $1.96$1.99 billion at December 31, 2023. Growth was concentrated primarily in residential, SBA and C&I loans.2024.

At December 31, 2024,2025, the Company’s residential loan portfolio (including home equity loans) amounted to $729.3$777.0 million, with an average loan balance of $483$491 thousand and a weighted average loan-to-value ratio of 57%.56%. Commercial real estate, multi-familymultifamily and construction loans totaled $1.09$1.08 billion at December 31, 2024,2025, with an average loan balance of $1.5 million and a weighted average loan-to-value ratio of 59%. As will be discussed below, approximately 37%36% of the multifamily portfolio is subject to rent regulation. The Company’s commercial real estate concentration ratio continuedcontinues to improve, decreasing to 385%360% of capital at December 31, 20242025 from 432% of capital385% at December 31, 2023,2024, with loans secured by office space accounting for 2.45%2.48% of the total loan portfolio and totaling $48.7$49.6 million.million at December 31, 2025.

A significant portion of the Bank’s commercial real estate portfolio consists of loans secured by Multi-FamilyMultifamily and CRE-Investor owned real estate that are predominantly subject to fixed interest rates for an initial period of 5 years. The Bank’s exposure to Land/Construction loans as of December 31, 2025 is minornot significant at $13.5$11.1 million, all at floating interest rates, and CRE-owner occupied loans have a mix of floating rates. As shown below, 23%as of December 31, 2025, 25% of the loan balances in these combined portfolios will either have a rate reset or mature in 2025 and 2026, with another 55%56% with rate resets or maturing in 2027.

RentalStabilized breakdownMultifamily ofPro Multi-FamilyForma portfolioStress Results

The table below segments our portfolio of loans secured by Multi-FamilyMultifamily properties based on rental terms and location.location as of December 31 2025. As shown below, 63%as of December 31, 2025, 64% of the combined portfolio is secured by properties subject to free market rental terms, which is the dominant tenant type. Both the Market Rent and Stabilized Rent segments of our portfolio present very similar average borrower profiles. The portfolio is primarily located in the New York City boroughs of Brooklyn, the Bronx and Queens.

The Bank’s exposure to the Office market is minornot atsignificant. $49Loans million.secured Thisby office space accounted for 2.48% of the total loan portfolio as of December 31, 2025, with a total balance of $49.6 million, of which less than 1% is located in Manhattan. At December 31, 2025, this portfolio has a 2.27x2.30x weighted average DSCR, a 54%52% weighted average LTV and less than $400,000$350,000 of exposure in Manhattan.

The following table presents information regarding nonperforming assets for the periods presented. The Company did not own any repossessed property for the periods presented.

Total nonaccrual loans were $16.4$21.6 million at December 31, 2024,2025, an increase from total nonaccrual loans of $14.5$16.4 million at December 31, 2023.2024. The Bank had one other real estate owned property at December 31, 2025 with a $650 thousand carrying value. There were no properties in OREO at December 31, 2024.

The allowance for credit losses was $18.7 million at December 31, 2025, a decrease of $4.1 million from $22.8 million at December 31, 2024, an increase of $3.1 million from $19.7 million at December 31, 2023.2024. The ratio of the allowance for credit losses to total portfolioloans (excluding loans held for sale) was 0.93% at December 31, 2025, inclusive of a $2.1 million allowance on individually analyzed loans, versus 1.15% at December 31, 2024, inclusive of a $3.2 million allowance on individually analyzed loans, versus 1.00% at December 31, 2023, which does not include the aforementioned allowance for individually analyzed loans.

The Company experienced $1.6$14.2 million in net charge-offs bothduring forthe calendaryear 2024ended andDecember fiscal31, 2023.2025, an increase of $12.6 million compared to net charge-offs of $1.6 million during the year ended December 31, 2024. The Company has recorded recoveries of $18$34 thousand and $103$18 thousand forduring calendarthe 2024years ended December 31, 2025 and fiscal 2023,2024, respectively.

Liquidity management is defined as the ability of the Company and the Bank to meet their financial obligations on a continuous basis without material loss or disruption of normal operations. These obligations include the withdrawal of deposits on demand or at their contractual maturity, the repayment of borrowings as they mature, funding new and existing loan commitments and the ability to take advantage of business opportunities as they arise. Asset liquidity is provided by short-term investments, such as fed funds sold, the marketability of securities available-for-sale and interest-bearing deposits due from the Federal Reserve Bank of New York, Federal Home Loan Bank (the “FHLB”) and correspondent banks, which totaled $246.6$308.5 million and $238.6$246.6 million at December 31, 20242025 and 2023,2024, respectively. These liquid assets may include assets that have been pledged primarily against municipal deposits or borrowings. Liquidity is also provided by the maintenance of a base of core deposits, cash and non-interest-bearing deposits due from banks, the ability to sell or pledge marketable assets and access to lines of credit.

Our sources of wholesale funding included brokered certificates of deposit, listing service certificates of deposit and insured cash sweep (“ICS”) reciprocal deposits in excess of 20% of total liabilities, which balances totaled approximately $85.0$110.0 million, $2.7$1.0 million and $5.5 million,$0, or 4.4%,5.4%, 0.1%0.0% and 0.3%0.0% of total deposits, respectively, at December 31, 2024.2025. We utilized brokered certificates of deposit and listing service certificates of deposit as alternatives to other forms of wholesale funding, including borrowings, when interest rates and market conditions favor the use of such deposits. For a portion of our brokered certificates of deposit, we utilized interest rate swap contracts to effectively extend their duration and to fix their cost.

As of December 31, 20242025 and 2023,2024, we held $106.4$108.2 million and $107.3$106.4 million, respectively, of time deposits thatof meetmore orthan exceed the FDIC insurance limit.$250,000. The following table sets forth the maturity of these time deposits that meet or exceed the FDIC insurance limit of as of December 31, 20242025:

The total carrying value of our borrowings was $125.5 million at December 31, 2025, a decrease of $7.0 million from $132.5 million at December 31, 2024, adue decreaseto the payoff of $21.1 million from $153.6 million at December 31, 2023. The Company added $100.7 million of extended durationtwo FHLB termadvances advancesthat matured in March 2023 to provide additional liquidity and enhance the interest rate sensitivity profile.2025. At December 31, 2024,2025, $7.1$40.5 million of these borrowings were classified as short-term, while the remaining was classified as long- term.long-term. Short-term borrowings are comprised of short-term FHLB advances.advances due within 12 months. Long-term funding is comprised of long-term FHLB advances and subordinated debentures. The Company will prepay FHLB advances from time to time as funding needs change. See Note 7, “Borrowings” and Note 8, “Subordinated Debentures” to the accompanying Consolidated Financial Statements contained in Item 8 for additional details.

In October 2020, the Company completedissued the$25 private placementmillion of $25.0 million in aggregate principal amount of10-year fixed-to-floating rate subordinated notes duewith ina 2030. The Notes bear interest, payable semi-annually, at thecoupon rate of 5.00% perfixed annum,for untilthe first five years. The Notes may now be redeemed by the Company and have a stated maturity of October 15, 2025. From2030, and includingbear Octoberinterest 15, 2025 through maturity,until the interestmaturity date or early redemption date at a variable rate applicable to the outstanding principal amount due will reset quarterlyequal to the then currentbenchmark three-monthrate, which is a Three-Month Term Secured Overnight Financing Rate (SOFR) plus 487.4 basis points. TheAs Companyof may,December at31, its option, beginning with2025, the interest payment date of October 15, 2025, but not generally prior thereto, and on any scheduledvariable interest paymentrate datewas thereafter, redeem the Notes, in whole or in part, subject to the receipt of any required regulatory approval. The Notes are not subject to redemption at the option of the holder.8.76%. The Company used a portion of the net proceeds to pay off an existing holding company note in October 2020 and used the remainder of the net proceeds for acquisition financing and general corporate purposes, including contributing equity capital to the Bank.

At December 31, 2024,2025, the Bank had a total borrowing capacity of $698.0$814.3 million at the FHLB, of which $492.1$704.5 million was used to collateralize municipal deposits and $107.8$100.7 million was utilized for term advances. At December 31, 2024,2025, the Bank had a $247.2$97.3 million collateralized line of credit from the Federal Reserve Bank of New York’sYork discount window with no outstanding borrowings. At December 31, 2024,2025, the Bank had access to approximately $92 million in unsecured lines of credit extended by correspondent banks, if needed, for short-term funding purposes. No borrowings were outstanding under lines of credit with correspondent banks at December 31, 2024.2025.

Letters of credit are conditional commitments guaranteeing payments of drafts in accordance with the terms of the letter of credit agreements. Commercial letters of credit are used primarily to facilitate trade or commerce and are also issued to support public and private borrowing arrangements, bond financings and similar transactions. Collateral may be required to support letters of credit based upon management’s evaluation of the creditworthiness of each customer. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. At December 31, 20242025 and 2023,2024, letters of credit outstanding were both approximately $0.8 million and $3.9 million, respectively.million.

On October 5, 2023, the Company announced that the Board of Directors approved a stockshare repurchase program. Under the repurchase program, the Company may repurchase up to 366,050 shares of its common stock, or approximately 5% of its then outstanding shares. The timing and amount of purchases will be dictated by a number of factors. The repurchase program permits shares to be repurchased in the open market as conditions allow, or in privately negotiated transactions, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. TheDuring the year ended December 31, 2025, the Company hasrepurchased not81,975 madeshares anyof its common stock repurchasesat an aggregate cost of $1.8 million. As of December 31, 2025, 284,075 shares remained available for repurchase under the program. The remaining buyback authority under theCompany’s share repurchase program therefore remained at 366,050 shares as of March 14, 2025, the filing date of this Annual Report on Form 10-K.program.

The Company was added to the Russell 2000 Index in late June 2025. The Russell 2000 Index encompasses thetracks 2,000 largestsmall-cap U.S.-traded stocks by objective, market-capitalization rankings, and style attributes. The Russell Indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies.

The Bank operates as a locally headquartered, community-oriented bank serving customers throughout the New York metro area from offices in Nassau, Suffolk, Queens, Kings (Brooklyn) and New York (Manhattan) Counties, New York, and Freehold, Monmouth County, New Jersey. We opened the Bank’s Hauppauge Business Banking Center in Hauppauge, Suffolk County, New York in May 2023. This location is the nexus of our expanded commercial lending and deposit activities that are integral to the ongoing diversification of our balance sheet as we fill the void left by the diminishing number of commercial banks in the NYC Metro area. In June 2025, we opened a full-service branch in Port Jefferson, Suffolk County, New York to serve the thriving Suffolk County area. RegulatoryOur authorization has been received for the opening of anew full-service branch in a state-of-the-art facility in downtown Riverhead, New York.York Inis anticipationcurrently ofscheduled to open for business in the branchthird openingquarter later this year, a temporary loan production office in Riverhead with business development staff became operational in Marchof 2026. We offer personal and business loans on a secured and unsecured basis, SBA and USDA guaranteed loans, revolving lines of credit, commercial mortgage loans, and one- to four-family non-qualified mortgages secured by primary and secondary residences that may be owner occupied or investment properties, home equity loans, bridge loans and other personal purpose loans.

The Bank remains focused on expanding its core verticals and continues to originate loans for its portfolio and for sale in the secondary market under its residential flow origination program. During the quarters ended MarchJune 31,30, 2026 and 2025, the Company sold $35.2$27.2 million and $18.3$23.7 million, respectively, of residential loans under its flow origination program and recorded gains on sale of loans held-for-sale of $0.9$0.7 million and $0.4$0.5 million, respectively.

During the quarters ended MarchJune 31,30, 2026 and 2025, the Company sold approximately $6.3$8.3 million and $23.4$22.3 million, respectively, inof government guaranteed SBA loans and recorded gains on sale of loans held-for-sale of $0.5$0.7 million and $1.9$1.8 million, respectively. SBA loan originations and gains on salessale continue to be lower due to a less favorable economic outlook for many business owners along with the Bank’s ongoing prudent decision to tighten credit. Together, these factors contributed to lower SBA loan volume, approval levels, and related gain-on-sale income.

On March 12, 2026, the Company issued $35 million of 10-year fixed-to-floating rate subordinated notes with a fixed coupon rate of 7.25% for the first five years. The Company used the net proceeds to provide capital to support growth of the consolidated entity and to redeemredeemed in full,full its previously outstanding $25 million of 8.54% floating rate subordinated notes on April 15, 2026, thereby reducing the Company’s cost of funds.

As of or for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands, except per share data)

At MarchJune 31,30, 2026 the Company, on a consolidated basis, had total assets of $2.4$2.3 billion, total deposits of $2.0 billion and total stockholders’ equity of $201.4$202.7 million. The Company recorded net income of $1.9$4.1 million, or $0.25$0.55 per diluted share (including Series A preferred shares) for the three months ended MarchJune 31,30, 2026 compared to net income of $1.5$2.4 million, or $0.20$0.33 per diluted share (including Series A preferred shares), for the same period in 2025.

During the quarter ended MarchJune 31,30, 2026, net interest income increased $1.7$2.0 million and non-interestprovision expensefor credit losses decreased $0.4$1.9 million, compared to the MarchJune 31,30, 2025 quarter. These were partially offset by a decrease of $1.0$0.8 million in non-interest income, particularly a decrease in gain on sale of loans held for sale of $0.9 million, a $1.0 million increase in non-interest expense, which includes $240 thousand debt extinguishment charges in the 2026 quarter and a $0.8$0.4 million increase in income tax expense, resulting in a $0.4$1.6 million increase in net income between these periods.

The Company’s return on average assets and return on average stockholders’ equity were 0.33%0.73% and 3.74%,8.01%, respectively, for the three months ended MarchJune 31,30, 2026, versus 0.27%0.44% and 3.11%,4.93%, respectively, for the comparable 2025 quarter.

Total non-accrual loans at MarchJune 31,30, 2026 were $24.6$28.3 million, or 1.23%1.42% of total loans, compared to $21.6 million, or 1.08% of total loans at December 31, 2025 and $11.7$12.7 million, or 0.60%0.64% of total loans, at MarchJune 31,30, 2025. The allowance for credit losses as a percentage of total non-accrual loans amounted to 78%,68%, 87% and 196%171% at MarchJune 31,30, 2026, December 31, 2025 and MarchJune 31,30, 2025, respectively.

The Company’s efficiency ratio was 81.68%69.75% for the three months ended MarchJune 31,30, 2026, versus 87.12%68.73% in the MarchJune 31,30, 2025 quarter.

Critical Accounting Policies, Judgments and Estimates - To prepare financial statements in conformity with U.S. GAAP, the Company’s management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. Critical accounting estimates are accounting estimates where (a) the nature of the estimate is material due to levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and (b) the impact of the estimate on financial condition or operating performance is material. At MarchJune 31,30, 2026, there have been no material changes to the Company’s critical accounting policies as compared to the critical accounting policies disclosed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2025.

Financial Condition – Total assets of the Company were $2.4$2.3 billion at MarchJune 31,30, 2026 and $2.4 billion at December 31, 2025. Total securities available for sale at MarchJune 31,30, 2026 were $105.8$135.0 million, an increase of $6.2$35.5 million from December 31, 2025, primarily driven by growth in U.S. GSE residential mortgage-backed securitiessecurities, collateralized loan obligations and corporate bonds, offset by decreases in U.S. Treasury securities and collateralized loanmortgage obligations. Total loans at MarchJune 31,30, 2026 and December 31, 2025 were $2.0 billion. Total deposits were $2.0 billion at MarchJune 31,30, 2026 and at December 31, 2025. Total borrowings and subordinated debt at MarchJune 31,30, 2026 were $118.8$94.0 million, including $59.8 million (net of $470$440 thousand deferred prepayment penalty) of outstanding FHLB advances, compared to $125.5 million at December 31, 2025.

At MarchJune 31,30, 2026, the residential loan portfolio amounted to $764.1$764.2 million, or 38.3%38.2% of total loans. Commercial real estate loans, including multifamily loans and construction and land development loans, totaled $1.1 billion or 54.2% of total loans at MarchJune 31,30, 2026. Commercial and industrial loans totaled $147.9$150.4 million or 7.4%7.5% of total loans at MarchJune 31,30, 2026.

Total deposits were $2.0 billion at MarchJune 31,30, 2026 and at December 31, 2025. Our loan to deposit ratio was 99% at MarchJune 31,30, 2026 and at December 31, 2025. Core deposit balances, which consist of demand, NOW, savings and money market deposits, represented 74.4%74.8% and 74.9% of total deposits at MarchJune 31,30, 2026 and December 31, 2025, respectively. At those dates, demand deposit balances represented 11.7%12.6% and 12.2% of total deposits. The Company’s municipal deposit program is built on long-standing relationships developed in the local marketplace. We believe that this core deposit business will continue to provide a stable source of funding for the Company’s lending products at costs lower than both consumer deposits and market-based borrowings. The Company continues to broaden its municipal deposit program. At MarchJune 31,30, 2026, total municipal deposits were $665.6$577.4 million, representing 32.4%28.7% of total deposits, compared to $700.7 million, or 34.5% of total deposits at December 31, 2025. The weighted average rate on the municipal deposit portfolio was 3.04%2.98% at MarchJune 31,30, 2026 and 3.01% at December 31, 2025. The aggregate amount of the Company’s outstanding uninsured deposits was $296.9$258.2 million or 14.5%12.8% of total deposits as of MarchJune 31,30, 2026 and $304.8 million or 15.0% of total deposits as of December 31, 2025.

Borrowings at MarchJune 31,30, 2026 and December 31, 2025 were $59.8 million (net of $470$440 thousand deferred prepayment penalty) and $100.7 million, respectively, comprised of outstanding FHLB advances. The Company had no borrowings outstanding under lines of credit with correspondent banks at MarchJune 31,30, 2026 and December 31, 2025.

The Company continues to actively manage its Multifamily and Commercial Real Estate portfolios which resulted in a reduction in the commercial real estate concentration ratio to 354%346% of capital at MarchJune 31,30, 2026. The Company will selectively explore Commercial Real Estate opportunities with an emphasis on relationship based Commercial Real Estate lending.

A significant portion of the Bank’s commercial real estate portfolio consists of loans secured by Multifamily and CRE-Investor owned real estate that are predominantly subject to fixed interest rates for an initial period of 5 years. The Bank’s exposure to Land/Construction loans as of MarchJune 31,30, 2026 is not significant at $11.5$10.3 million, all at floating interest rates. As shown below, as of MarchJune 31,30, 2026, 21%16% of the loan balances in these combined portfolios will either have a rate reset or mature in 2026, with another 55%54% with rate resets or maturing in 2027.

The table below reflects a a pro forma stressed evaluation of the Bank’s Multifamily stabilized loan portfolio as of MarchJune 31,30, 2026, using the primary assumption for a revised Debt Service Coverage Ratio (“DSCR”) calculation, for all loans where the current interest rate is below 5.75%.6.00%. The current balance for these loans is recast at 5.75%6.00% with a 30-year amortization. The chart below reflects the impact of these adjustments on the portfolio. The projected loan to value (“LTV”) assumption resets all loans using a 6%6.25% cap rate (despite lower current cap rates) and the last reported property net operating income (“NOI”) to determine an implied property valuation and based on the current loan balance, the resultant LTV.

As reflected above, only 65 loans totaling $11$16 million in the multifamily rent stabilized portfolio would have a pro forma DSCR less than 1x1x, while maintaining projected weighted average LTV’s under 100%. Thiswhich represents 2%3% of the total multifamily portfolio. The remainder of this portfolio, totaling $180$194 million, representing 33%34% of the entire multifamily portfolio, would possess DSCR’s greater than 1x while maintaining a projected weighted average LTV well within our policy guidelines. Additionally, 73% of the rent stabilized loans and 73%74% of the entire multifamily portfolio are further secured with personal guarantees from the borrowers. Based on the maturities and rate resets in the previous 12 months, we believe the overall demand for multifamily housing in our market will allow our borrowers to address any adverse impact proactively. The Bank continues to successfully manage multifamily loans with scheduled rate repricing or maturities. Matured loans that qualified for renewal have been retained while others have paid off in full through refinances. The majority of the rate resetting loans remain as performing loans at the new higher interest rate.

The table below segments our portfolio of loans secured by Multifamily properties based on rental terms and location as of MarchJune 31,30, 2026. As shown below, 65%63% of the combined portfolio is secured by properties subject to free market rental terms, which is the dominant tenant type. Both the Market Rent and Stabilized Rent segments of our portfolio present very similar average borrower profiles. The portfolio is primarily located in the New York City boroughs of Brooklyn, the Bronx and Queens.

The Bank’s exposure to the Office market is not significant. Loans secured by office space accounted for 2% of the total loan portfolio at MarchJune 31,30, 2026, with a total balance of $41.5$40.2 million, of which less than 1% is located in Manhattan. The pool has a 2.41x2.44x weighted average DSCR and a 54% weighted average LTV.

Liquidity and Capital Resources – Liquidity management is defined as the ability of the Company and the Bank to meet their financial obligations on a continuous basis without material loss or disruption of normal operations. These obligations include the withdrawal of deposits on demand or at their contractual maturity, the repayment of borrowings as they mature, funding new and existing loan commitments and the ability to take advantage of business opportunities as they arise. Asset liquidity is provided by short-term investments, such as fed funds sold, the marketability of securities available for sale and interest-bearing deposits due from the Federal Reserve Bank of New York, FHLB and correspondent banks, which totaled $300.2$276.3 million and $308.5 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. These liquid assets may include assets that have been pledged primarily against municipal deposits or borrowings. Liquidity is also provided by the maintenance of a base of core deposits, cash and non-interest-bearing deposits due from banks, the ability to sell or pledge marketable assets and access to lines of credit. At MarchJune 31,30, 2026, undrawn liquidity sources, which include cash and unencumbered securities and secured and unsecured funding capacity, totaled $763.0$742.6 million or approximately 257%288% of uninsured deposit balances.

The Company’s primary sources of funds are cash provided by deposits, which may include brokered and listing service deposits, borrowings, proceeds from maturities and sales of securities and cash provided by operating activities. At MarchJune 31,30, 2026, total deposits were $2.0 billion, of which $508.0$496.5 million were time deposits scheduled to mature within the next 12 months. Based on historical experience, the Company expects to be able to replace a substantial portion of those maturing deposits with comparable deposit products. Insured and collateralized deposits, which include municipal deposits, accounted for approximately 86%87% of total deposits at MarchJune 31,30, 2026. At MarchJune 31,30, 2026 and December 31, 2025, the Company had $59.8 million (net of $470$440 thousand deferred prepayment penalty) and $100.7 million, respectively, in borrowings outstanding.

The Liquidity and Wholesale Funding Policy of the Bank establishes specific policies and operating procedures governing liquidity levels to assist management in developing plans to address future and current liquidity needs. Management monitors the rates and cash flows from loan and investment portfolios while also examining the maturity structure and volatility characteristics of liabilities to develop an optimum asset/liability mix. Available funding sources include retail, commercial and municipal deposits, purchased liabilities and stockholders’ equity. Daily, management receives a current cash position update to ensure that all obligations are satisfied. On a weekly basis, appropriate senior management receives a current liquidity position report and a ninety day forecasted cash flow to ensure that all short-term obligations will be met and there is sufficient liquidity available. At MarchJune 31,30, 2026, the Bank had a total borrowing capacity of $814.1$829.3 million at the Federal Home Loan Bank of New York, of which $647.3$553.6 million was used to collateralize municipal deposits anddeposits, $60.3 million was utilized for term advances.advances and $0.2 million was used for MPF-CMA Credit enhancements. At MarchJune 31,30, 2026, the Bank had aan $91.2$85.2 million collateralized line of credit from the Federal Reserve Bank of New York’s discount window with no outstanding borrowings. At MarchJune 31,30, 2026, the Bank had access to approximately $92 million in unsecured lines of credit extended by correspondent banks, if needed, for short-term funding purposes. No borrowings were outstanding under lines of credit with correspondent banks at MarchJune 31,30, 2026.

Our sources of wholesale funding included brokered deposits, listing service certificates of deposit and insured cash sweep (“ICS”) reciprocal deposits in excess of 20% of total liabilities, which balances totaled approximately $152.2$126.9 million, $0.3 million and $0, or 7.4%,6.3%, 0.0% and 0.0% of total deposits, respectively, at MarchJune 31,30, 2026. We utilized brokered certificates of deposit and listing service certificates of deposit as alternatives to other forms of wholesale funding, including borrowings, when interest rates and market conditions favor the use of such deposits. For a portion of our brokered certificates of deposit, we utilized interest rate swap contracts to effectively extend their duration and to fix their cost.

The Company strives to maintain an efficient level of capital, commensurate with its risk profile, on which a competitive rate of return to stockholders will be realized over the short and long terms. Capital is managed to enhance stockholder value while providing flexibility for management to act opportunistically in a changing marketplace. Management continually evaluates the Company’s capital position in light of current and future growth objectives and regulatory guidelines. Total stockholders’ equity was $201.4$202.7 million at MarchJune 31,30, 2026 and $200.3 million at December 31, 2025. Retained earnings increased by $1.1$4.4 million due primarily to net income of $1.9$5.9 million for the threesix months ended MarchJune 31,30, 2026, which was offset by $0.7$1.5 million of dividends declared. The accumulated other comprehensive loss at MarchJune 31,30, 2026 was 0.33%0.28% of total equity and was comprised of a $0.4$0.5 million after tax net unrealized loss on the investment portfolio and a $0.2$0.1 million after tax net unrealized loss on derivatives.

The Bank is subject to regulatory capital requirements. The Bank’s tier 1 leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios were 9.20%,9.76%, 13.32%,13.59%, 13.32%13.59% and 14.57%,14.84%, respectively, at MarchJune 31,30, 2026, exceeding all regulatory guidelines for a well-capitalized institution, the highest regulatory capital category. Moreover, capital rules also place limits on capital distributions and certain discretionary bonus payments if a banking organization does not maintain a buffer of common equity tier 1 capital above the minimum capital requirements. At MarchJune 31,30, 2026, the Bank’s capital buffer was in excess of requirements.

On October 5, 2023, the Company announced that the Board of Directors approved a stock repurchase program. Under the repurchase program, the Company may repurchase up to 366,050 shares of its common stock, or approximately 5% of its then outstanding shares. The repurchase program permits shares to be repurchased in the open market as conditions allow, or in privately negotiated transactions, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. During the six months ended June 30, 2026, the Company repurchased 112,346 shares of its common stock at an aggregate cost of $2.6 million. There were no share repurchases of common stock during the threesix months ended MarchJune 31,30, 2026.2025. As of MarchJune 31,30, 2026, 284,075171,729 shares remained available for repurchase under the program. See “Part II – Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds” for additional information about repurchases of common stock.

The Company’s total stockholders’ equity to total assets ratio and tangible common equity to tangible assets ratio (“TCE ratio”) were 8.50%8.68% and 7.74%,7.91%, respectively, at MarchJune 31,30, 2026, versus 8.40% and 7.65%, respectively, at December 31, 2025. The TCE ratio is a non-GAAP ratio. The ratio of total stockholders’ equity to total assets is the most comparable U.S. GAAP measure to this non-GAAP ratio. The ratio of tangible common equity to tangible assets, or TCE ratio, is calculated by dividing total stockholders’ equity by total assets, after reducing both amounts by intangible assets. The TCE ratio is not required by U.S. GAAP or by applicable bank regulatory requirements, but is a metric used by management to evaluate the adequacy of our capital levels. Since there is no authoritative requirement to calculate the TCE ratio, our TCE ratio is not necessarily comparable to similar capital measures disclosed or used by other companies in the financial services industry. Tangible common equity and tangible assets are non-GAAP financial measures and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with U.S. GAAP. Set forth below are the reconciliations of tangible common equity to U.S. GAAP total stockholders’ equity and tangible assets to U.S. GAAP total assets at MarchJune 31,30, 2026 (in thousands). (See also Non-GAAP Disclosure contained herein.)

The Company’s Board of Directors approved the declaration of a $0.10 per share cash dividend on both common shares and Series A preferred shares payable on MayAugust 18,13, 2026 to stockholders of record on MayAugust 11,6, 2026.

Commitments to extend credit are agreements to lend to customers provided there are no violations of material conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the customer. Collateral required varies, but may include accounts receivable, inventory, equipment, real estate and income-producing commercial properties. At MarchJune 31,30, 2026 and December 31, 2025, commitments to originate loans and commitments under unused lines of credit for which the Bank is obligated amounted to approximately $137.2$168.3 million and $160.9 million, respectively.

Letters of credit are conditional commitments guaranteeing payments of drafts in accordance with the terms of the letter of credit agreements. Commercial letters of credit are used primarily to facilitate trade or commerce and are also issued to support public and private borrowing arrangements, bond financings and similar transactions. Collateral may be required to support letters of credit based upon management’s evaluation of the creditworthiness of each customer. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. At MarchJune 31,30, 2026 and December 31, 2025, letters of credit outstanding were approximately $1.0 million and $0.8 million, respectively.

Results of Operations – Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025 – The Company recorded net income of $1.9$4.1 million during the three months ended MarchJune 31,30, 2026, versus net income of $1.5$2.4 million in the 2025 comparable quarter. During the quarter ended MarchJune 31,30, 2026, net interest income increased $1.7$2.0 million and non-interestprovision expensefor credit losses decreased $0.4$1.9 million, compared to the MarchJune 31,30, 2025 quarter. These were partially offset by a decrease of $1.0$0.8 million in non-interest income, particularly a decrease in gain on sale of loans held for sale of $0.9 million, a $1.0 million increase in non-interest expense, which includes $240 thousand debt extinguishment charges in the 2026 quarter, and a $0.8$0.4 million increase income tax expense.

The $1.7$2.0 million increase in net interest income for the three months ended MarchJune 31,30, 2026, versus the comparable 2025 quarter was due to improvement in the Company’s net interest margin to 2.96%3.10% in the 2026 quarter from 2.68%2.76% in the comparable 2025 quarter. The cost of interest-bearing liabilities decreased to 3.51%3.46% in the 2026 quarter from 4.01%3.94% in the comparable 2025 quarter, a decrease of 5048 basis points. This decrease was partially offset by a 175 basis point decrease in the yield on interest earning assets to 5.84%5.93% in the 2026 quarter from 6.01%5.98% in the firstsecond quarter of 2025. Net interest income on a linked quarter basis increased $0.5$0.4 million or 3.36%,2.50%, resulting from a 169 basis point increase in the yield on interest earning assets and a 5 basis point decrease in cost of interest-bearing liabilities.

The following table, “Net Interest Income Analysis”, presents for the three months ended MarchJune 31,30, 2026 and 2025, the Company’s average assets, liabilities and stockholders’ equity. The Company’s net interest income, net interest spread and net interest margin are also reflected.

For the Three Months Ended MarchJune 31,30, 2026 and 2025 (dollars in thousands)

The Company recorded a provision for credit losses of $530$500 thousand for the three months ended June 30, 2026, versus $2.4 million (including a $30$187 thousand provision for credit losses on unfunded commitments) for the three months ended March 31, 2026, versus $600 thousand in the quarter ended MarchJune 31,30, 2025. Net charge-offs of $45$510 thousand were incurred during the quarter ended MarchJune 31,30, 2026. The MarchJune 31,30, 2026 allowance for credit losses was $19.1 million versus $18.7 million at December 31, 2025. The allowance for credit losses as a percentage of total loans was 0.96% at MarchJune 31,30, 2026 and 0.93% at December 31, 2025. (See also Critical Accounting Policies, Judgments and Estimates and Asset Quality contained herein.)

The Company maintains a reserve, recorded in other liabilities, associated with unfunded loan commitments accepted by borrowers. The amount of the reserve was $0.7 million at MarchJune 31,30, 2026 and $0.6 million at December 31, 2025. This reserve is determined based upon the outstanding volume of loan commitments at the end of each period. Any increases or reductions in this reserve are recognized in the provision for credit losses.

Non-interest income decreased by $1.0$0.8 million for the three months ended MarchJune 31,30, 2026 versus the comparable 2025 quarter. The decrease in non-interest income is primarily related to the decrease in the net gain on sale of loans held for sale of $0.9 million, which was partially offset by an increaseincreases in serviceloan chargesservicing onand depositfee accounts.income and other income.

For the three and six months ended MarchJune 31,30, 2026 and 2025

For the three and six months ended MarchJune 31,30, 2026 and 2025

The Company recorded a provision for credit losses of $530$1.0 thousandmillion (including a $30 thousand provision for credit losses on unfunded commitments) for the threesix months ended MarchJune 31,30, 2026, versus $600$3.0 million (including a $187 thousand provision for credit losses on unfunded commitments) recorded for the comparable period in 2025. Additional information regarding the ACL and the associated provisions recognized during the quarters ended March 31, 2026 and 2025 is presented in Note 4 to the unaudited consolidated financial statements. (See also Critical Accounting Policies, Judgments and Estimates and Asset Quality contained hereinherein.).