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

The Company is a Delaware-chartered stock holding company whose most significant business activity is ownership of 100% of the common stock of Magyar Bank. Magyar Bank’s principal business is attracting retail deposits from the general public and investing those deposits, together with funds generated from operations, principal repayments on loans and securities and borrowed funds, into one-to four-family residential mortgage loans, multi-family and commercial real estate mortgage loans, home equity loans and lines of credit, commercial business loans and construction loans. Our results of operations depend primarily on our net interest incomeincome, which is the difference between the interest we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our net interest income is primarily affected by the market interest rate environment, the shape of the U.S. Treasury yield curve, the timing of the placement of interest-earning assets and interest-bearing liabilities, and the prepayment rate on our mortgage-related assets. Other factors that may affect our results of operations are general and local economic and competitive conditions, government policies and actions of regulatory authorities.

During the year ended September 30, 2024,2025, the Company’s total assets grew $44.6$45.8 million, or 4.9%,4.8%, to $997.7 million from $951.9 million compared with $907.3 million at September 30, 2023. 2024. The increase was attributable to ana $82.8$77.2 million increase in net loans receivable, aoffset $5.3by an $18.5 million increasedecrease in total cash and cash equivalents, a $7.0 million decrease in bank-ownedinvestment securities, a $4.3 million decrease in bank owned life insurance,insurance and a $3.4$1.6 million increasedecrease in other real estate owned. Offsetting these increases was a $46.9 million decrease in interest-earning deposits with banks.

Total deposits increased $41.2 $17.6 million, or 5.5%,2.2%, to $796.7$814.3 million and stockholders’ equity increased $5.8$8.3 million, or 5.5%,7.5%, to $110.5 $118.8 million during the year ended September 30, 2024.2025 compared with $796.7 million and $110.5 million for the year ended September 30, 2024, respectively.

The Company’s net income increased $74$2.0 thousand,million, or 1.0%,25.4%, to $7.8$9.8 million during the year ended September 30, 20242025 compared with net income of $7.7$7.8 million for the year ended September 30, 20232024 from higher net interest income, lowerpartially provision for credit losses and higher other income, partially offset by higher provisions for credit loss, other expenses and income tax and other expenses.expense.

Throughout fiscal 2025,year 2026, we expect to continue increasing our commercial real estate and commercial business loans while managing non-interest expenses in an effort to increase profitability of the Company.

Comparison of Financial Condition at September 30, 20242025 and 20232024 Total Assets. Total Assets. Total assets increased $44.6$45.8 million, or 4.9%,4.8%, to $951.9$997.7 million during the year ended September 30, 2024 compared with $907.3$951.9 million at September 30, 2023. 2024. The increase was attributable to highera $77.2 million increase in loans receivable, bank-ownednet of deferred loan costs, offset by an $18.5 million decrease in total cash and cash equivalents, a $7.0 million decrease in investment securities, a $4.3 million decrease in bank owned life insurance and a $1.6 million decrease in other real estate owned. Partially offsetting these increases were lower interest-earning deposits with banks, as we used cash and cash equivalents to fund loan growth.

Loans Receivable. Total loans receivable increased $83.0$77.7 million, or 11.9%,9.9%, to $858.9 million during the year ended September 30, 2025 from $781.2 million at September 30, 20242024. from $698.2 million at September 30, 2023. The growth during the year occurred in commercial real estate loans, which increased $72.2$71.9 million, or 15.6%, to $533.2 million, in construction and land loans, which increased $6.6 million, or 18.6%,28.9%, to $461.3$29.3 million, and in one-to four-family residential mortgage loans (including home equity lines of credit), which increased $16.3$3.3 million, or 6.4%,1.2%, to $270.9 million, and in$274.2 construction and land loans, which increased $869 thousand, or 4.0%, to $22.7 million. Offsetting these increases were declines in commercial business loans, which decreased $6.2$4.0 million, or 20.5%,16.5%, to $24.0$20.1 million and in other consumer loans, which decreased $124$116 thousand, or 5.3%, 5.2%, to $2.2$2.1 million.

Given the significance of commercial real estate (“CRE”) loans to our total loan portfolio, the following table further disaggregates these loans by occupied status and by collateral type as of September 30, 2025 and 2024:

The Company obtains an appraisal of the real estate collateral securing a CRE loan prior to originating the loan. The appraised value is used to calculate the ratio of the outstanding loan balance to the value of the real estate collateral, or loan-to-value ratio ("“LTV"”). The original appraisal is used to monitor the LTVs within the CRE portfolio unless an updated appraisal is received, which may happen for a variety of reasons including, but not limited to, payment delinquency, additional loan requests using the same collateral, and loan modifications. The following table presents the ranges in the LTVs of our CRE loans at September 30, 2025 and 2024:

Our asset quality with respect to commercial real estate loans has remained strong despite recent economic and market conditions. As of September 30, 20242025 and 2023, 2024, we had $0 and $116 thousand and $2.2 million of non-performing commercial real estate loans, respectively. Such amounts totaled 0.00% and 0.03% and 0.60% of total commercial real estate loans as of September 30, 20242025 and 2023,2024, respectively.

SecuritiesBank-Owned Life held-to-maturity Insurance. Bank owned life insurance (“BOLI”) decreased $6.0$4.3 million, or 7.0%,18.4%, to $79.8$19.0 million at September 30, 20242025 from $85.8the millionsurrender atof September 30, 2023. The decrease was the attributable to principal repaymentspolicies totaling $12.5$5.0 million andmillion, partially offset by purchasesincreases in the cash surrender value of the retained policies totaling $6.5$673 million.thousand.

Other Real Estate Owned. Other real estate owned increaseddecreased $3.4$1.6 million, or 41.8%, to $2.2 million to $3.7 million for the year endedat September 30, 2024.2025. The Company acquired four properties totaling $4.4 million and sold two properties totaling $1.0$1.8 million for a net gain of $229 thousand and reduced the carrying value on its remaining property through a $57 thousand write down during the year ended September 30, 2024. Of the three remaining properties owned at September 30, 2024, two totaling $3.3 million were under contract of sale.2025.

Deposits. Total Total deposits increased $41.2$17.6 million, or 5.5%,2.2%, duringto the$814.3 yearmillion endedat September 30, 2024.2025. The growth in deposits during the year occurred in certificates of deposit (including individual retirement accounts) which increased $55.0$50.3 million, or 52.5%,31.5%, to $159.7$210.0 million, in interest-bearing checking account balances, which increased $31.6 million, or 27.4% to $146.7 million, and in money market account balances, which increased $19.7 $17.0 million, or 6.9%,11.6% to $304.6$163.8 million, and in savings account balances, which increased $1.6 million, or 3.0%, to $54.4 million. Offsetting these increases were declines in money market account balances, which decreased $35.6 million, or 11.7%, to $268.9 million and in non-interest checking account balances, which decreased $55.7 $15.6 million, or 29.6%, 11.7%, to $132.8 million and in savings account balances, which decreased $9.3 million, or 15.0%, to $52.9$117.2 million. Customers sought higher-yielding deposit products during a period of increased interest rates.

The Company’s deposit strategy in 20242025 focused on retaining deposits and managing the overall cost of its interest-bearing liabilitiesliabilities. As duringpart aof periodits with anstrategy invertedto yieldincrease curve.deposits Inand addition,lower its occupancy expense, the Company openedclosed its eighthbranch office in Bridgewater, New Jersey and opened a new retail branch office in Martinsville, New Jersey in October 2024.Jersey.

Stockholders’ Equity. Stockholders’ equity increased $5.7$8.3 million, or 5.5%,7.5%, to $110.5$118.8 million at September 30, 20242025 from $104.8$110.5 million at September 30, 2023.2024. The increase was attributable to the Company’s net income from operations totaling $7.8$9.8 million, partially offset by $1.7$1.8 million in dividends paid and $2.4$844 millionthousand in share repurchases. In addition, other comprehensive income, stock-based compensation expenseincome and thestock-based compensation effect of adopting ASU 2016-13expense increased the Company’s equity by $2.1$1.2 million. The Company’s book value per share increased to $18.34 at September 30, 2025 from $16.98 at September 30, 2024 from $15.70 at September 30, 2023.2024.

Comparison of Operating Results for the Years Ended September 30, 20242025 and 20232024 Net Income. The Company’s net income increased $74$2.0 thousand,million, or 1.0%,25.4%, to $7.8$9.8 million during the year ended September 30, 2024 2025 compared with $7.7 $7.8 million for the year ended September 30, 20232024 from higher net interest income, lower provision for credit losses and higher other income, partially offset by higher provisions for credit loss, other expenses and income tax and other expenses.expense. Earnings per share increased to $1.57 for the year ended September 30, 2025 from $1.23 for the year ended September 30, 2024 from $1.20 for the year ended September 30, 2023.2024.

Net Interest and Dividend Income. Net interest and dividend income increased $240$3.9 thousand,million, or 0.9%,14.0%, to $28.0$31.9 million during the year ended September 30, 2024 2025 compared to $27.7$28.0 million for the year ended September 30, 2023.2024.

The Company’s net interest margin increased 20 basis points to 3.34% for the year ended September 30, 2025 from 3.14% for the year ended September 30, 2024. The increase was attributable to a $63.9 million, or 7.2%, increase in the average balance of interest-earning assets to $954.6 million for the year ended September 30, 2025 from $890.7 million for the year ended September 30, 2024, Average Balance Sheet. The following table presents certain information regarding our financial condition and net interest income for the years ended September 30, 20242025 and 2023.2024. The table presents the average yield on interest-earning assets and the average cost of interest-bearing interest-bearing liabilities. We derived the yields and costs by dividing income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated. Interest income includes fees that we consider adjustments to yields. Interest income on loans includes loan fees, but such amounts were not material for the years ended September 30, 20242025 or 2023.2024.

Interest and Dividend Income. Interest and dividend income increased $10.5$6.1 million, or 27.6%,12.6%, to $54.7 million for the year ended September 30, 2025 from $48.6 million for the year ended September 30, 2024 from $38.1 million for the year ended September 30, 2023.2024. The average balance of interest-earnings assets between the two periods increased increased $99.4$63.9 million, or 12.6%,7.2%, to $890.8$954.6 million from $791.4$890.8 million, while the yield on such assets increased 6428 basis pointpoints to 5.45% for the year ended September 30, 2024 from 4.81%5.73% for the year ended September 30, 2023.2025 from 5.45% for the year ended September 30, 2024.

Interest income on loans increased $7.9 $6.8 million, or 22.4%,15.8%, to $43.1$49.9 million for the year ended September 30, 20242025 from $35.2$43.1 million for the year ended September 30, 2023, 2024, while the average balance of loans increased $65.5$79.1 million, or 9.8%,10.8%, to $734.4$813.5 million from $668.9$734.4 million. The average yield on such loans increased 6027 basis points to 5.87%6.14% at September 30, 20242025 from 5.27%5.87% for the year ended September 30, 2023 2024 from higher marketinterest interest rates.income on loan originations and on adjustable-rate commercial term loans repricing higher.

Interest earned on investment securities, including interest earned on deposits but excluding FHLBNY stock, increaseddecreased $2.5$670 million,thousand, or 94.3%, 12.8%, to $5.2 million for the year ended September 30, 2024 from $2.7$4.6 million for the year ended 2023.September 30, 2025 from $5.2 million for the year ended 2024. The increasedecrease was attributable to a 116 basis nine-basis point increasedecrease in the average yield on investment securities and interest earned on deposits to 3.41%3.32% from 2.25%,3.41%, and $33.6$15.7 million increase decrease in the average balance of investment securities and interest earning deposits to $154.1$138.4 million from $120.5$154.1 million during the year ended September 30, 2023. 2025.

Interest Expense. Interest expense increased $10.3$2.2 million, or 99.3%,10.7%, to $20.6$22.8 million for the year ended September 30, 20242025 from $10.3 $20.6 million for the year ended September 30, 2023.2024. The average balance of interest-bearing liabilities increased $130.7$91.0 million, or 24.8%, 13.8%, to $657.9$748.9 million from $527.3 million between the two periods while the average cost on such interest-bearing liabilities increased 117 basis points to 3.13% for the year ended September 30, 2024 from 1.96% for the year ended September 30, 2023.2025 Higherfrom $657.9 million for the year ended September 30, 2024, while the average cost on such interest-bearing liabilities decreased eight basis points to 3.05% for the year ended September 30, 2025 compared with 3.13% for the year ended September 30, 2024. Lower short-term market interest rates were primarily responsible for the increase in thelower cost of the Company’s interest-bearing liabilities for the year ended September 30, 2024.2025.

The average balance of interest-bearing deposits increased $127.4$84.6 million, or 25.4%,13.5%, to $713.7 million for the year ended September 30, 2025 from $629.1 million for the year ended September 30, 2024 from $501.7 million for the year ended September 30, 2023 while the average cost on such interest-bearing deposits increaseddecreased 125nine basis points to 3.14%3.05% from 1.89%.3.14%. Average expenseAs ona result, the cost of interest-bearing deposits increased $10.2$2.0 million, or 107.9%,10.3%, to 19.7$21.7 million atfor the year ended September 30, 20242025 compared with $9.5$19.7 million at for the year ended September 30, 2023.2024.

Interest expense on advances borrowings increased $26$182 thousand, or 3.1%,20.9%, to $872$1.1 thousandmillion for the year ended September 30, 20242025 from $846$872 thousand for the year ended September 30, 2023.2024. The average cost of borrowings decreased 292 basis points to 3.00% for the year ended September 30, 2025 from 3.02% for the year ended September 30, 2024 from 3.31% for the year ended September 30, 2023 while the average balance of those borrowings increased $3.3$6.3 million to $28.9$35.2 million for the year ended September 30, 20242025 from $25.6$28.9 million the prior year.

Income Tax Expense. Income tax expense increased $285$732 thousand, or 9.4%,22.1%, to $4.0 million for the year ended September 30, 2025 from $3.3 million for the year ended September 30, 2024 from $3.0 million for the year ended September 30, 2023.2024. The increase was attributable to higher pre-tax incomeincome, andwhich aincreased $456$2.7 thousandmillion, or expense24.4%, forto taxable$13.8 gains on surrendered bank-owned life insurance policiesmillion during the year ended September 30, 2024.2025 Thecompared Company’swith effective$11.1 income tax rate was 29.9% for the year ended September 30, 2024 and 28.2%million for the year ended September 30, 2023.2024.

General. The The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate rate risk. Our assets, consistingwhich consist primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income income to changes in market interest rates. Accordingly, our Board of Directors has established ana Board Asset and Liability ManagementCommittee which Committee which is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this this risk consistent with the guidelines approved by the Board of Directors. Senior management monitors the level of interest rate risk on on a regular basisbasis, and the Board Asset and Liability Committee meets at least on a quarterly basis to review our asset/liability policies and interest rate risk position.

Net Interest Income Analysis. The table below sets forth, as of September 30, 2024,2025, the estimated changes in our Net Interest Income (“NII”) for each of the next two years that would result from the designated instantaneous changes in interest rates. These estimates require making certain assumptions including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain and, as a result, we cannot precisely predict the impact of changes in interest rates on net interest income. Actual results may differ significantly due to timing, magnitude and frequency of interest rate changes and changes in market conditions. Further, certain shortcomings are inherent in the methodology used in the interest rate risk measurement. Modeling changes in net interest income requirerequires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.

When used in this filing and in future filings by the Company with the SEC, in the Company’s press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases, “anticipate,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “projected,” “believes”, or similar expressions are intended to identify “forward looking statements.” Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those risks previously disclosed by the Company in Item 1A of its Annual Report on Form 10-K as may be supplemented by Quarterly Reports on Form 10-Q filed with the SEC, general economic conditions, changes in interest rates, regulatory considerations, competition, technological developments, international conflict, retention and recruitment of qualified personnel, and market acceptance of the Company’s pricing, products and services, levels of uninsured deposits, the imposition of tariffs or other domestic or international governmental policies and retaliatory responses, and with respect to the loans extended by the Company and real estate owned, the following: risks related to the economic environment in the market areas in which the Bank operates, particularly with respect to the real estate market in New Jersey; the risk that the value of the real estate securing these loans may decline in value; and the risk that significant expense may be incurred by the Company in connection with the resolution of these loans.

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

Total Assets. Assets. Total assets increased by $70.7$50.8 million, or 7.1%,5.1%, to $1.068$1.048 billion at MarchJune 31,30, 2026 from $997.7 million at September 30, 2025. The increase was attributable to higher balancesloans ofreceivable, investment securities and cash and cash equivalents and loans receivable.equivalents.

InterestTotal cash and cash Earning Deposits.equivalents. Total cash and cash equivalents increased by $40.6$4.4 million, or 572.4%61.9% to $47.6$11.5 million at MarchJune 31,30, 2026 from $7.1 million at September 30, 2025 resulting from higherdeposit deposits,inflows partiallythat offsetexceeded bythe highergrowth in loans receivable during the nine months ended June 30, 2026. The Company’s cash and investments.deposit balances at June 30, 2026 reflect seasonal deposit outflows from municipal accounts that historically return the following calendar quarter.

Investment securities. securities.At InvestmentJune 30, 2026, investment securities totaled $99.2$104.3 million at March 31, 2026,million, reflecting an increase of $10.7$15.9 million, or 12.1%, 17.9%, from $88.4 million at September 30, 2025. The increase resulted from purchases of mortgage-backed securities totaling $14.5$21.9 million, partially offset by paymentsrepayments fromof mortgage-backed securities totaling $3.8$6.0 million during the sixnine months ended MarchJune 31,30, 2026. There waswere no credit losses recorded for the Company’s investment securities during the sixnine months ended MarchJune 31,30, 2026.2026 and June 30, 2025.

Loans Receivable. Receivable. Total loans receivable increased by $21.0$31.1 million, or 2.4%,3.6%, to $879.9$890.0 million duringat theJune six months ended March 31,30, 2026 from $858.9 million at September 30, 2025. The increase in total loans receivable during the nine months ended June 30, 2026 occurred in commercial real estate loans, which increased increased$56.6 bymillion. $24.6Partially million,offsetting andthis inincrease were construction and land loans, which increaseddecreased by$15.7 $6.4 million. Partially offsetting these increases weremillion, one-to four-family residential real estate loans (including home equity lines of credit), which decreased by $9.5$8.4 million, commercial business loans, which decreased by$1.2 $170 thousandmillion and other loans, which decreased by $277$195 thousand.

Given the significance of commercial real estate (“CRE”) loans to our total loan portfolio, the following table further disaggregates these loans by occupied status and by collateral type as of MarchJune 31,30, 2026 and September 30, 2025:

The Company obtains an an appraisal of the real estate collateral securing a CRE loan prior to originating the loan. The appraised value is used to calculate the the ratio of the outstanding loan balance to the value of the real estate collateral, or loan-to-value ratio ("LTV"). The original appraisal appraisal is used to monitor the LTVs within the CRE portfolio unless an updated appraisal is received, which may happen for a variety of reasons including, but not limited to, payment delinquency, additional loan requests using the same collateral, and loan modifications. The following table presents the ranges in the LTVs of our CRE loans at MarchJune 31,30, 2026 and September 30, 2025:

As of MarchJune 31,30, 2026 and and September 30, 2025, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital were were estimated at approximately 275%271% and 267%, respectively. Management believes that Magyar Bank has implemented appropriate risk management practices, including risk assessments, board-approved underwriting policies and related procedures, which include monitoring loan portfolio performance and stressing of the commercial real estate portfolio under adverse economic conditions.

Our asset quality with respect to commercial real estate loans has remained strong despite recent economic and market conditions. As of MarchJune 31,30, 2026 and September 30, 2025, we had no non-performing commercial real estate loans.

Total non-performing loans loans decreased by $157$92 thousand, or 34.8%,thousand to $294$359 thousand at MarchJune 31,30, 2026 from $451 thousand at September 30, 2025. Non-performing loans consisted of one loan secured by one-to four family property and one home equity line of credit. The ratio of non-performing loans to total loans decreased to 0.03%0.04% at MarchJune 31,30, 2026 from to 0.05% at September 30, 2025. Total non-performing assets decreased by $2.3 million to $359 thousand at June 30, 2026 from $2.6 million at September 30, 2025. The ratio of non-performing assets to total assets decreased to 0.03% at June 30, 2026 from 0.26% at September 30, 2025.

Deposits. Total deposits increased by $64.1$39.6 million, or 7.9%,4.9%, to $878.4$853.9 million at March 31, 2026 compared with $814.3 million at SeptemberJune 30, 2025. 2026. The inflow in deposits occurred in certificates of deposit (including brokered deposit and individual retirement accounts), which increased by $28.1 $26.3 million, or 13.4%,12.5%, to $238.0$236.2 million, in non-interest bearing non-interest-bearing checking accounts, which increased by $16.5$24.3 million, or 14.1%,20.7%, to $133.7 million, in money market accounts, which increased by $8.9 million, or 3.3%, to $277.8 million, in interest-bearing checking accounts, which increased by $7.8 million, or 4.8%, to $171.6$141.5 million, and in savings accounts, which increased by $2.8$1.7 million, or 5.2%,3.1%, to $57.3$56.1 million. Partially offsetting these increases was a $9.7 million, or 5.9%, decrease in interest-bearing checking accounts to $154.1 million and a $3.0 million, or 1.1%, decrease in money market accounts to $265.9 million.

TheDuring the nine months ended June 30, 2026, the Company implemented a digital marketing campaign focused on the Bank's primary market area, targeting prospective customers with a competitive rate on short term certificates of deposit. The campaign produced positive results and was a contributor to the increase in deposits during the six months ended March 31, 2026.deposits.

Stockholders’ Equity. Stockholders’ equity increased by $5.3$7.8 million, or 4.5%,6.5%, to $124.1$126.6 million at MarchJune 31,30, 2026 from $118.8 million at September 30, 2025. The increase was dueattributable to the Company’s results from operations, partially offset by $0.18$0.28 per share in dividends paid per share and 10,92525,825 shares repurchased during the sixnine months ended MarchJune 31,30, 2026 at an average price per share price of $17.47. $17.55. The Company’s book value per share increased to $19.19$19.61 at MarchJune 31,30, 2026 from $18.34 at September 30, 2025.

Average Balance Sheets for the Three and SixNine Months Ended MarchJune 31,30, 2026 and 2025

The following tables present present certain information regarding the Company’s financial condition and net interest income for the three and sixnine months ended June March 31,30, 2026 and 2025. The tables present the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods periods indicated. Interest income includes fees that we consider adjustments to yields.

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

Net Income. Net income increased by $349$623 thousand, or 13.0%,25.2%, to $3.0$3.1 million for the three months ended MarchJune 31,30, 2026 compared with net income of $2.7 $2.5 million for the three months ended MarchJune 31,30, 2025. The increase was due to higher net interest income and other income, partially offset offset by higher provisions for credit loss, lowerother non-interestexpenses and income andtax higher other expenses.expense.

Net Interest and Dividend Income. Net interest and dividend income increased by $1.4$1.2 million, or 17.2%,15.2%, to $9.2 million for the three months ended March 31, 2026 from $7.9$9.4 million for the three monthsquarter ended MarchJune 31,30, 2026 from the quarter ended June 30, 2025. The increase was attributable to a 35-basis 30-basis point increase in the Company’s net interest margin to 3.66%3.65% for the three months ended MarchJune 31,30, 2026 from 3.31%3.35% for the three months ended MarchJune 31,30, 2025, as well as a $56.6$57.0 million increase in the average balance of interest-earning assets between the periods.

Interest and Dividend Income. Interest and dividend income increased by $1.4$1.3 million, or 10.6%,9.0%, to $14.9 million for the three months ended March 31, 2026 compared with $13.5$15.3 million for the three months ended MarchJune 31,30, 2026 compared with $14.0 million for the three months ended June 30, 2025. The increase was attributable to a 25-basis 17-basis point increase in the yield on interest earning interest-earning assets to 5.93%5.91% for the three months ended MarchJune 31,30, 2026 from 5.68%5.74% for the three months ended MarchJune 31,30, 2025, as well as ana $51.8 million, or 6.3%, increase in the average balance of net loans receivable between the periods.

The average balance of loans receivable, receivable, net of allowance for credit losses, increased by $65.3$51.8 million, or 8.1%,6.3%, to $868.7$874.3 million during the three months ended March 31,June 30, 2026 from $803.4$822.5 million for the three months ended MarchJune 31,30, 2025, while the yield on loans receivable increased 23by 20 basis points to 6.35% for the three months ended June 30, 2026 from 6.15% for the three months ended MarchJune 31, 2026 from 6.12% for the three months ended March 31,30, 2025. Contributing to the increase in yield on loans receivable are commercial term loan rates adjusting on their five-year anniversary to market rates that are significantly higher higher than they were five years ago.

Interest earned on investment securities, including interest-earning deposits and excluding FHLB stock, decreased by $45$12 thousand, or 3.4%,0.9%, to $1.3 million for the three months ended MarchJune 31,30, 2026. The average balance of investment securities and interest-earning deposits decreasedincreased by $9.6$4.4 million, or 6.0%,2.9%, to $150.0$157.6 million for the three months ended MarchJune 31,30, 2026 from $159.6$153.2 million for the three months ended MarchJune 31,30, 2025, while the average yield on such assets increaseddecreased 11by seven basis points to 3.51%3.43% for the three months ended MarchJune 31,30, 2026 from 3.40%3.50% for the three three months ended MarchJune 31,30, 2025.

Interest Expense. Expense. Interest expense increased by $313$23 thousand, or 2.8%,0.4%, to $11.4$5.8 million for the sixthree months ended MarchJune 31,30, 2026 compared withfrom $11.1$5.8 million for the six three months ended MarchJune 31,30, 2025. The average balance of interest-bearing liabilities increased by $44.8$24.3 million, or 6.1%,3.1%, to $779.1$796.4 million for the three months ended June 30, 2026 from $772.1 million fromfor $734.3the million,three months ended June 30, 2025, while the average cost ofon such interest-bearing liabilities decreased nineby eight basis points to 2.94% for the sixthree months ended MarchJune 31,30, 2026 compared with 3.03%3.02% for the sixthree months ended MarchJune 31,30, 2025.

The average balance of interest-bearing deposits increased by $26.6$9.3 million, or 3.8%,1.3%, to $730.0$747.4 million for the sixthree months ended MarchJune 31,30, 2026 from $703.4$738.1 million for the sixthree months ended MarchJune 31,30, 2025,2025. while theThe average cost of such deposits decreased 12nine basis points to 2.92% from 3.04%.3.01%, Asand a result,the interest paid on interest-bearing deposits decreased by$116 $59 thousand, or 0.6%,thousand to $10.6$5.4 million for the sixthree months ended MarchJune 31,30, 2026 fromcompared $10.7with $5.5 million million for the sixthree months ended MarchJune 31,30, 2025.

Interest expense on borrowings increased by $372$139 thousand, or 86.3%,53.1%, to $803$401 thousand for the sixthree months ended MarchJune 31,30, 2026 from $431$262 thousand for the sixthree months ended ended MarchJune 31,30, 2025. The cost of borrowings increased 48 basis points to 3.28% for the six months ended March 31, 2026 compared with 2.80% for the six months ended March 31, 2025, while the average balance of borrowings increased by $18.3$15.0 million, or 59.2%,44.1%, to $49.1 million for the six months ended March 31, 2026 from $30.8$49.0 million for the sixthree months ended June 30, 2026 compared with $34.0 million for the three months ended MarchJune 31,30, 2025.2025 while the average cost of borrowings increased by 20 basis points to 3.28% from 3.08%, respectively.

Other Income. Other income decreasedincreased by $606$180 thousand, or 27.2%,28.3%, to $1.6$816 millionthousand during the sixthree months ended MarchJune 31,30, 2026 compared with $636 thousand to $2.2 million for the sixthree months ended MarchJune 31,30, 20252025. fromThe lowerincrease was primarily due to higher gains on the sale of SmallSBA Businessloans, Administrationpartially offset by lower service charge and otherinterest realrate estate ownedswap loans.fee income.

Other Expenses. Other expenses increased by $76$292 thousand, or 0.7%,5.6%, to $10.9$5.5 million during the sixthree months ended MarchJune 31,30, 2026 from $10.8compared with $5.2 million during for the sixthree months ended MarchJune 31,30, 20252025. fromThe increase was primarily attributable to higher compensation,compensation employeeand benefit expense, which increased $255 thousand, or 8.2%, to $3.4 million, due to higher medical benefits and dataincentive processingaccruals expenses.as well as annual merit increases.

Income Tax Expense. The Company recorded income tax expense of $2.4$1.3 million on pre-tax income of $8.5$4.4 million for the sixthree months ended March 31,June 30, 2026, compared with to $1.9$1.0 million on pre-tax income of $6.7$3.5 million for the sixthree months ended MarchJune 31,30, 2025. The increase in income tax expense was driven by higher pre-tax income during the sixthree months ended MarchJune 31,30, 2026. The Company’s effective tax rate for the three months ended sixJune 30, 2026 was 28.9% compared with 29.0% for the three months ended MarchJune 31, 2026 was 27.8% compared with 28.5% for the six months ended March 31,30, 2025.