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

The Bank and the Company are certified as CDFIs and MDIs by the United States Department of the Treasury.Treasury ("Treasury") and the Bank is also designated as an MDI by the OCC. Such status increases a financial institution’s potential for receiving grantsgrants, deposits and awards that, in turn, enable the financial institution to increase the level of community development financial services that it provides to communities. We reinvest the proceeds from such grantsgrants, deposits and awards back into the communities we serve. While we believe we will be able to meet the certification criteria required to continue our CDFI and MDI status, there is no certainty that we will be able to do so. If we do not meet one or more of the criteria, we may be provided an opportunity for us to cure deficiencies prior to issuing a notice of termination of certification. A loss of CDFI and/or MDI status, and the resulting inability to obtain certain grantsgrants, deposits and awards received in the past, could have an adverse effect on our financial condition, results of operations or business. Additionally, such grants and awards are offered at the discretion of the Treasury. To the extent the current Presidentialpresidential Administration,administration, or any future administration, seeks to reduce the amounts of such grants and awards available, we may be negatively impacted.

Our focus is primarily on prudently growing our multifamily, nonresidential and construction and land loan portfolio. At December 31, 2024,2025, $1.79$2.14 billion, or 77.7%,81.4%, of our loan portfolio consisted of multifamily, nonresidential and construction and land loans as compared to $1.40$1.79 billion, or 72.7%,77.7%, of our loan portfolio at December 31, 2023.2024. Because the repayment of multifamily, nonresidential and construction and land loans depends on the successful management and operation of the borrower’s properties or related businesses, or their sale, repayment of such loans can be affected by adverse conditions in the local real estate market or economy. A downturn in the real estate market or the local economy could adversely impact the value of properties securing the loan or the revenues from the borrower’s business, thereby increasing the risk of non-performing loans. In addition, many of our commercial real estate loans are not fully amortizing and require large balloon payments upon maturity. Such balloon payments may require the borrower to either sell or refinance the underlying property in order to make the payment, which may increase the risk of default or nonpayment. Further, the physical condition of non-owner occupied properties may be below that of owner occupied properties due to lax property maintenance standards, which have a negative impact on the value of the collateral properties. As our multifamily, nonresidential and construction and land loan portfolios increase, the corresponding risks and potential for losses from these loans may also increase.

At December 31, 20242025 and 2023,2024, our ACL totaled $22.5$25.4 million and $26.2$22.5 million, which represented 0.97%, and 1.36%0.97% of total loans, respectively. Included in the allowance for credit losses at December 31, 2023, was $6.8 million related to microloans. There was no allowance for credit losses related to microloans at December 31, 2024 as these microloans were charged-off. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for many of our loans. In determining the amount of the allowance for credit losses, we review our loans, loss and delinquency experience, and business and commercial real estate peer data, and we evaluate other factors including, but not limited to, current economic conditions. There is also the possibility that we have failed or will fail to accurately identify the appropriate economic indicators, to accurately estimate the timing of future changes in economic conditions, or to estimate accurately the impacts of future changes in economic conditions to our borrowers, which similarly could impact the accuracy of our loss forecasts and allowance estimates. If our assumptions are incorrect, or if delinquencies or non-performing loans increase, our allowance for credit losses may not be sufficient to cover losses inherent in our loan portfolio, which would require additions to our allowance, which in turn, could materially decrease our net income. The allowance for credit losses is our best estimate of expected credit losses; however, there is no guarantee that it will be sufficient to address credit losses, particularly if the economic outlook deteriorates significantly and quickly. In such an event, we may increase our allowance for credit losses, which would reduce earnings. Additionally, to the extent that economic conditions worsen, impacting our borrowers or the underlying collateral of loans, and credit losses are worse than expected, as may be caused by inflation, an economic recession or otherwise, we may increase our provision for loan losses, which could have an adverse effect on our business, financial condition, and results of operations. Although we believe our allowance for credit losses is adequate to absorb expected losses in our loan portfolio, we cannot predict the timing or severity of such losses nor give any assurance that our allowance will be adequate in the future.

Moreover, a significant decline in general economic conditions caused by inflation, recession, legislative and regulatory changes, changes in governmental monetary and fiscal policies, level and volatility of interest rates, acts of terrorism, an outbreak of hostilities, or other international or domestic calamities, unemployment or other factors beyond our control could further impact these local economic conditions and could further negatively affect the financial results of our banking operations. In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing their loans, which could negatively affect our financial performance.

Additionally, the current Presidentialpresidential Administrationadministration ishas seekingbeen, and continues to, seek to enact significant changes that may impact economic conditions, ‎including changes to the size and scope of the federal government.government and changes to internal relations. These changes, if implemented and taken as a whole, may have ‎varied effects on the economy that are difficult to predict. To the extent such changes have an adverse impact on the ‎local economies where we operate, our business, financial condition and results of operations may be adversely impacted.

Our business strategy includes growth in assets, loans, deposits and the scale of our operations. Achieving such growth will require us to attract customers that currently bank at other financial institutions in our market area. Our ability to successfully grow will depend on a variety of factors, including our ability to attract and retain experienced bankers, the continued availability of desirable business opportunities, competition from other financial institutions in our market area andarea, our ability to manage our growth.growth, and economic conditions in the markets in which we operate as well as in the U.S. and globally. Growth opportunities may not be available or we may not be able to manage our growth successfully. Our ability to manage growth successfully depends on a variety of factors, including whether we can maintain adequate capital levels, maintain cost controls, effectively manage asset quality, and effectively manage increasing regulatory compliance requirements. If we do not manage our growth effectively, we may experience compliance and operational problems, have to slow the pace of growth, or have to incur additional expenses to support such growth, any of which could adversely affect our financial condition and operating results could be negatively affected.results. Furthermore, there can be considerable costs involved in expanding deposit and lending capacity that generally require a period of time to generate the necessary revenues to offset their costs, especially in areas in which we do not have an established presence and require alternative delivery methods. Accordingly, any such business expansion can be expected to negatively impact our earnings for some period of time until certain economies of scale are reached. Our expenses could be further increased if we encounter delays in modernizing existing facilities, opening of new branches or deploying new services.

Our non-interest expense totaled $66.7$67.0 million and $68.7$67.5 million for the years ended December 31, 20242025 and 2023,2024, respectively. Although we continue to analyze our expenses and pursue efficiencies where available, our efficiency ratio remains high as a result of the implementation of our business strategy combined with operating in an expensive market. Our efficiency ratio was 79.66%61.35% and 90.96%80.60% for the years ended December 31, 20242025 and 2023,2024, respectively. Our efficiency ratio for the year ended December 31, 20242025 improved compared with prior year due to an increase in net interest income. If we are unable to successfully implement our business strategy and increase our revenues and decrease our total non-interest expense, our profitability could be adversely affected.

We have received an investment under the ECIP from the U.S. Treasury, in exchange for the issuance of senior perpetual preferred stock, which preferred stock has certain rights and preferences as compared to shares of our common stock. We are subject to certain contractual and regulatory restrictions under the ECIP which may hinder our operations.

On June 7, 2022 (the “Original Closing Date”), the Company issued 225,000 shares of the Company’s Preferred Stock‎, par value $0.01 (the “Preferred Stock”) for an aggregate purchase price equal to $225,000,000 in cash to the Treasury, pursuant to the Treasury’s ECIP. Under the ECIP, Treasury provided investment capital directly to depository institutions that are CDFIs or MDIs or their holding companies, to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, in low-income and underserved communities. No dividends will accrueaccrued or bewere due for the first two years after issuance. For years three through ten, depending upon the level of qualified and/or deep impact lending made in targeted communities, as defined in the ECIP guidelines, dividends will be at an annual rate of either 2.0%, 1.25% or 0.5% and, thereafter, will be fixed at one of the foregoing rates. If we are unable to make qualified and/or deep impact loans at required levels, we will be required to pay dividends at the higher annual rates. Additionally, we may make qualified and/or deep impact loans that are riskier than we otherwise would in an effort to meet the lending requirements for the lower dividend rates and/or to qualify for the purchase option under the Repurchase Agreement (as described below).

As a participant in the ECIP, the Company must comply with certain operating requirements. Specifically, the Company must adopt the Treasury's standards for executive compensation and luxury expenses for the period during which the Treasury holds equity issued under the ECIP. These restrictions may make it difficult to adequately compensate our management team, which could impact our ability to retain qualified management. Additionally, under the ECIP regulations, the Company cannot pay dividends or repurchase its common stock unless it meets certain income-based tests and has paid the required dividends on the Preferred Stock. TheIn ‎June 2024, the Company began paying dividends on its Preferred StockStock, inwhich thedividends amountwere of$1.1 million and $0.6 million for the yearyears ended December 31, 2024.2025 and 2024, respectively.

The earliest possible date by which a Threshold Condition may be met is June 30, 2026, which is the end of the sixteenth consecutive quarter following the Original Closing Date. However, the Company does not currently meet any of the Threshold Conditions to exercise the purchase option, and there can be no assurance if and when the Threshold Conditions will be met. The closing of the repurchase of the Preferred Stock, if consummated, would occur between thirty and ninety days following the satisfaction of the Threshold Condition and all other applicable conditions. At present, the Company has reported 914 consecutive quarters for which it has met both the Deep Impact and Qualified Lending Conditions. The Preferred Stock currently has a dividend rate of 0.5%.

In addition to the requirement that a Threshold Condition be met, the Repurchase Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Preferred Stock, maintaining qualification as either a CDFI or an MDI, and meeting other legal and regulatory criteria. Although the Company currently meets the general eligibility criteria, other than satisfying one of the Threshold Conditions, there can be no assurance that the Company will meet such criteria, or any amended or additional criteria that may be imposed, in the future.

We may be dependent on borrowingsadvances from the FHLBNY and borrowings from the FRBNY to grow our lending activities, which may negatively impact our results of operations.

In recent periods, we have relied on non-core funding sources, primarily borrowingsadvances from the FHLBNY and borrowings from the FRBNY, to fund a portion of our lending activities when we do not have sufficient core deposits. BorrowingsSuch from the FHLBNYadvances and FRBNYborrowings are generally higher cost as compared to core deposits, which will generally lead to decreases in our net interest margin and lower net revenues. Additionally, the Bank’s FHLBNY and FRBNY membership does not represent a legal commitment to extend credit to the Bank. The amount that the Bank can potentially borrow is currently dependent on the amount of unencumbered eligible securities and loans that the Bank can use as collateral and the collateral margins required by the lenders. The Bank’s borrowing capacity may be adjusted by the FHLBNY and FRBNY and may take into account factors such as the Bank’s tangible common equity ratio, collateral margins required by the lender or other factors. A possible future downgrade of securities and loans pledged as collateral could also impact the amount of available funding. If we are unable to obtain funding through the FHLBNY and FRBNY, we may be forced to seek additional alternative funding sources, which may be higher cost, in order to fund our loan growth.

There are current proposals from the Federal Housing Finance Agency (“FHFA”), the regulatory of the Federal Home Loan Bank (“FHLB”) system, to adopt certain changes to its eligibility criteria for borrowing to refocus on the FHLB’s housing mission. Additionally, the Company must maintain a satisfactory rating pursuant to the Community Reinvestment Act (“CRA”) to maintain its ability to access FHLB funding. Additionally, the current Presidentialpresidential Administrationadministration may seek to make regulatory changes, including modifying or eliminating the FHFA. If the FHFA makes significant changes to the eligibility criteria to maintain access to FHLB funding, if the Company fails to maintain its satisfactory rating under the CRA or if the FHFA is significantly modified or eliminated, this could impact the Company’s ability to borrow from the FHLB and require it to find other sources of credit, including borrowing directly from the FRB.

The rates we earn on our assets and the rates we pay on our liabilities are generally fixed for a contractual period of time. Like many savings institutions, our liabilities generally have shorter contractual maturities than our assets. This imbalance can create significant earnings volatility because market interest rates change over time. In a period of risingAs interest rates,rates change, we expect that we will periodically experience “gaps” in the interest incomerate wesensitivities earn onof our assets and liabilities, meaning that either our interest-bearing liabilities (usually deposits and borrowings) will be more sensitive to changes in market interest rates than our interest-earning assets (usually loans and investment securities), or vice versa. In either event, if market interest rates should move contrary to our position, this “gap” may work against us, and our results of operations and financial condition may be negatively affected. We attempt to manage our risk from changes in market interest rates by adjusting the rates, maturity, repricing characteristics, and balances of the different types of our interest-earning assets and interest-bearing liabilities. Interest rate risk management techniques are not increaseexact. asFrom rapidlytime asto the interesttime, we pay on our liabilities as the demand for loans may decrease materially. Inreposition a periodportion of declining interest rates, the interest income we earn on our assets may decrease more rapidly than the interest we pay on our liabilities, as borrowers prepay mortgage loans, and mortgage-backed securities and callable investment securities areportfolio called,in requiringan useffort to reinvestbetter thoseposition cashour flowsbalance atsheet lowerfor interestpotential changes in short-term rates.

We employ the use of models and modeling techniques to quantify the levels of risks to net interest income. For example, we monitor interest rate risk through the use of simulation models, including estimates of the amounts by which the economic value of our assets and liabilities (the Economic Value of Equity Model “EVE”) and our net interest income would change in the event of a range of assumed changes in market interest rates. At December 31, 2024,2025, in the event of an instantaneous 100 basis point increase in interest rates, we estimate that we would experience a 5.67%4.24% decrease in EVE and a 4.63%0.57% decrease in net interest income. However, these models inherently involve the use of assumptions, judgments and estimates. While we strive to ensure the accuracy of our modeled interest rate risk profile, there are inherent limitations and imprecisions in this determination, and actual results may differ. For further discussion of how changes in interest rates could impact us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk—Net Interest Income Simulation Models and—Economic Value of Equity Model.”

At December 31, 20242025 and 2023,2024, our securities portfolio totaled $472.9$365.2 million and $581.7$472.9 million, which represented 15.6%11.3% and 21.1%15.6% of total assets, respectively. The securities portfolio as of December 31, 20242025 and 20232024 were classified as available-for-sale securities, at fair value, in the amount of $105.0$92.2 and $119.9$105.0 million and held-to-maturity securities, at amortized costs, in the amount of $367.9$273.0 million and $461.7$367.9 million, respectively. A decline in the fair value of our available-for-sale securities could cause a material decline in our reported equity and/or net income. Increases in market interest rates have in the past, and may in the future, cause the market value of our securities portfolio to decline significantly. At least quarterly, and more frequently when warranted by economic or market conditions, management evaluates all securities with a decline in fair value below the amortized cost of the investment to determine whether the impairment is deemed to be credit related impairment. For impaired debt securities that are intended to be sold, or more likely than not will be required to be sold, the full amount of market decline is recognized through earnings. Credit-related impairment for all other impaired debt securities is recognized through earnings. Non-credit related impairment for debt securities is recognized in other comprehensive income net of applicable taxes for all securities classified as available-for-sale. A decline in the market value of our securities portfolio could adversely affect our earnings.

The Bank is subject to extensive regulation, supervision and examination by the OCC, and the Company is subject to extensive regulation, supervision and examination by the Federal Reserve Board. Such regulation and supervision governs the activities in which the Bank and the Company may engage and are intended primarily for the protection of the Federal Deposit Insurance Fund, the depositors and borrowers of the Bank and consumers, rather than for our stockholders. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and influencing the level of our allowance for credit losses. These regulations, along with existing tax, accounting, securities, insurance and monetary laws, rules, standards, policies, and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. Failure to comply with these laws and regulations could result in financial, structural and operational penalties, including receivership.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) significantly changed the regulation of banks and savings institutions and affects the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies, including the establishment of the CFPB as an additional regulatory agency. The various federal agencies have adopted a broad range of rules and regulations in compliance with the Dodd-Frank Act. Compliance with the Dodd-Frank Act and its regulations and policies has resulted in changes to our business and operations, as well as additional costs, and has diverted management’s time from other business activities, all of which have adversely affected our financial condition and results of operations. The current leadership of the CFPB has indicated intentions to rescind or revise many regulations, as well as to narrow its enforcement and supervision. We cannot currently predict the nature and timing of future developments that may potentially impact CFPB rules, proposals, enforcement and supervision.

The current Presidentialpresidential Administrationadministration has and may in the future seek to make further changes to our current regulatory framework and the agencies ‎that regulate our business, which changes may include combining or disbanding certain regulatory agencies. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. The legislative and regulatory environment is beyond our control, may change rapidly and unpredictably and may negatively influence our revenues, costs, earnings, and capital levels. In addition, the Company’s results of operations could be adversely affected by changes in the way in which existing statutes and regulations are interpreted or applied by courts and government agencies, or as a result of changes in supervision, examination and enforcement priorities and policies of government agencies. Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in interpretation by us. These changes could materially impact, potentially even retroactively, how we report our financial condition and results of operationsoperations. See “Regulation and Supervision” in Item 1. Business of this Annual Report on Form 10-K for a more detailed description of the current regulatory requirements applicable to the Company and the Bank.

Multi-family real estate loans generally involve a greater risk than 1-4 family residential real estate loans in ‎part because of legislation and government regulations involving rent regulation, such as rent control and rent ‎stabilization, which are outside the control of the borrower or the Bank and could impairadversely impact the value of the security ‎for the loan or the future cash flow of such properties. FederalIncreases regulation ofin interest rates could also impair the ‎future cash flows of such properties that have variable- or adjustable-rate mortgages or whose existing mortgages ‎are maturing. ‎ The State of New York, on June 14, 2019, enacted legislation increasing the restrictions on rent increases in ‎a rent-regulatedrent-stabilized apartment building, including, among other provisions, (i) repealing the vacancy bonus and ‎longevity bonus, which allowed a property owner to raise rents as much as 20% each time a rental unit became ‎vacant, (ii) eliminating high-rent vacancy deregulation and high-income deregulation, which allowed a rental unit to ‎be removed from rent stabilization once it crossed a statutory high-rent threshold and became vacant, or the ‎tenant’s income exceeded the statutory amount in the preceding two years, and (iii) eliminating an exception that ‎allowed a property owner who offered preferential rents to tenants to raise the rent to the full legal rent upon ‎renewal. The legislation still permits a property owner to charge up to the full legal rent once the tenant vacates. As a ‎result of this legislation as well as previously existing laws and regulations, it is possible that rental income might not ‎rise sufficiently over time to satisfy increases in the loan rate at repricing or increases in overhead expenses (e.g., ‎utilities, taxes, maintenance, etc.). ‎ Additionally,Further, the New York City Rent Guidelines Board established the maximum rent increaseincreases on certain ‎rent‑stabilized apartments atof 3.0% for aone‑year one-year leaseleases beginning on or after October 1, 20232025 and onbefore October 1, 2026. Additionally, the current New York City mayoral administration has indicated that it will seek to implement a “rent freeze” as of the next determination period, and may implement other changes or afterpolicies Septemberthat 30,impact 2024,rental ‎whilerates. theThe overallcurrent inflationlimits, rateor any such future limits, may prevent rent increases from keeping pace with inflation, overhead expenses or increased atfinancing acosts. greater rate. In addition, overhead (including maintenance) expenses ‎often increase significantly during inflationary periods. Finally, ifIf the cash flow from a collateral property is reduced ‎‎(e.g., if leases are not obtained or renewed at sufficient rates), the borrower’s ability to repay the loan and the value of the security for ‎the loan may be impaired. At the same time, the Federal Reserve Board has increased the discount rate repeatedly ‎since 2022, resulting in substantial increases in mortgage rates since 2022, which rate increases adversely affect the ‎cash flows of real estate properties that are financed with adjustable and variable interest rate mortgages or that ‎require refinancings due to maturities of existing mortgages. To the extent our borrowers cannot implement rent ‎increases that are sufficient to cover expenses, including increased mortgage rates, there will be an increased risk of ‎default for these loans.‎

InThe 2006, the Office of the Comptroller of the Currency,OCC, the FDIC and the Board of Governors of the Federal Reserve System (collectively, the “Agencies”) have issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”). Although the CRE Guidance did not establish specific construction lending limits, it provides that a bank’s commercial real estate lending exposure could 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. Construction and land loans represented 145.0% of the Bank’s total risk-based capital at December 31, 2024,2025, and our multifamily, mixed-use and nonresidential real estate loan portfolio represented 196.8% of the Bank’s total risk-based capital on that same date.

In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”). In the 2015 Statement, the Agencies, among other things, indicate the intent to continue “to pay special attention” to commercial real estate lending activities and concentrations going forward. While we monitor our concentration limits with respect to our construction, multifamily, mixed-use and non-residential real estate loans closely and have implemented various risk management practices to manage our exposure for such loans, if the OCC, our primary federal regulator, were to impose restrictions on the amount of such loans we can hold in our portfolio or require us to implement additional compliance measures, our earnings would be adversely affected.

Our ability to originate loans could be restricted by recently adopted federal regulations.

The Bank’s minimum capital requirements are: (i) a common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 to risk-basedrisk-weighted assets capital ratio of 6.0%; (iii) a total capital ratio of 8.0%; and (iv) a Tier 1 leverage ratio of 4.0%. The capital requirements also establish a “capital conservation buffer” of 2.5%, which results in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 to risk-basedrisk-weighted assets capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. An institution will be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if its capital level falls below the buffer amount.

Federal law requires that a holding company act as a source of financial and managerial strength to its subsidiary bank and to commit resources to support such subsidiary bank. Under the “source of strength” doctrine, the Federal Reserve Board may require a holding company to make capital injections into a troubled subsidiary bank and may charge the holding company with engaging in unsafe and unsound practices for failure to commit resources to a subsidiary bank. A capital injection may be required at times when the holding company may not have the resources to provide it and therefore may be required to borrow the funds or raise capital. Any loans by a holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank. In the event of a holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the institution’s general unsecured creditors, including the holders of its note obligations. Thus, any borrowing that must be done by the Company to make a required capital injection becomes more difficult and expensive and could have an adverse effect on our business, financial condition and results of operations.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate the money supply and credit conditions.conditions in the United States. Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.deposits and can affect the value of financial instruments that we hold. Changes in those policies are beyond our control and are difficult to predict. Policies of the Federal Reserve Board can also affect our borrowers, potentially increasing the risk that they may fail to repay their loans. For example, a tightening of the money supply by the Federal Reserve Board could reduce the demand for a borrower’s products and services. This could adversely affect the borrower’s earnings and ability to repay a loan, which could have an adverse effect on our financial condition and results of operations. Alternatively, an expansion of the money supply could make it easier for a borrower to obtain a loan from another financial institution at a lower interest rate, resulting in a payoff of that borrower’s higher rate loan with us, and which could have an adverse effect on our financial condition and results of operations.

Risk Related to our Operations.Operations and Technology.

We operate in diverse markets and rely on the ability of our employees and systems to process a high number of transactions and to collect, process, transmit and store significant amounts of confidential information regarding our customers, employees and others and concerning our own business, operations, plans and strategies. Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud by employees or persons outside our company, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, systems failures or interruptions, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. Despite the security measures the Company takes, its computer systems and infrastructure may be vulnerable to attacks by hackers or may be breached due to employee error, malfeasance or other disruptions. We, our customers, regulators and other third parties, including other financial services institutions and companies engaged in data processing, have been subject to, and are likely to continue to be the target of, cyber-attacks. As cyber threats continue to evolve, the Company may be required to expend significant additional resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities or incidents. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits. This risk of loss also includes the potential legal and regulatory actions that could arise as a result of operational deficiencies or as a result of non-compliance with applicable regulatory standards or customer attrition due to potential negative publicity. In addition, we outsource some of our data processing to certain third-party providers. If these third-party providers encounter difficulties, including as a result of cyber-attacks or information security breaches, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected. We are also subject to risks related to the cyber vulnerabilities of our partners. We may experience negative impacts to our financial condition and results of operations if our partners are subject to cyber fraud or other security breaches.

Negative developments in the U.S. or in our primary markets may adversely impact our results in the future.

Although economic conditions have improved in most of our markets, we continue to focus on growing earning assets, and we believe that it is possible we will continue to experience an uncertain and volatile economic environment during 2025,2026, including as a result of issues of national security, international conflicts, inflation and supply chain disruptions. There can be no assurance that these conditions will improve in the near term or that conditions will not worsen. Such conditions could adversely affect our business, financial condition, and results of operations.

Our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date to file periodic reports under the Securities and Exchange Act of 1934,Act, including our consolidated financial statements. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. Areas requiring significant estimates and assumptions by management include our evaluation of the adequacy of our allowance for credit losses, the valuation of loans held for sale, the valuation of deferred tax assets and investment securities, the estimates relating to the valuation for share-based awards, and our determinations with respect to amounts owed for income taxes.

The following management’s discussion and analysis of the financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those described below. Such risks and uncertainties include, but are not limited to, those identified below and those described in Part I, Item 1A. “Risk Factors,” within this Annual Report on Form 10-K. Discussion and analysis of our 20232024 fiscal year specifically, as well as the year-over-year comparison of our 20232024 financial performance to 2022,2023, are located under Part II, Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 20232024 filed with the SEC on March 19,13, 2024,2025 (the "2024 Form 10-K"), which is available on our investor relations website at poncebank.gcs-web.com and the SEC's website at sec.gov.

On June 7, 2022 (the “Original Closing Date”), the Company issued 225,000 shares of the Company’s Preferred Stock‎, par value $0.01 (the “Preferred Stock”) for an aggregate purchase price equal to $225,000,000 in cash to the Treasury, pursuant to the Treasury’s ECIP. Under the ECIP, Treasury provided investment capital directly to depository institutions that are CDFIs or MDIs or their holding companies, to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, in low-income and underserved communities. No dividends will accrueaccrued or bewere due for the first two years after issuance. For years three through ten, depending upon the level of qualified and/or deep impact lending made in targeted communities, as defined in the ECIP guidelines, dividends will be at an annual rate of either 2.0%, 1.25% or 0.5% and, thereafter, will be fixed at one of the foregoing rates. If we are unable to make qualified and/or deep impact loans at required levels, we will be required to pay dividends at the higher annual rates. Additionally, we may make qualified and/or deep impact loans that are riskier than we otherwise would in an effort to meet the lending requirements for the lower dividend rates and/or to qualify for the purchase option under the Repurchase Agreement (as described below).

As a participant in the ECIP, the Company must comply with certain operating requirements. Specifically, the Company must adopt the Treasury's standards for executive compensation and luxury expenses for the period during which the Treasury holds equity issued under the ECIP. These restrictions may make it difficult to adequately compensate our management team, which could impact our ability to retain qualified management. Additionally, under the ECIP regulations, the Company cannot pay dividends or repurchase its common stock unless it meets certain income-based tests and has paid the required dividends on the Preferred Stock. TheIn ‎June 2024, the Company began paying dividends on its Preferred StockStock, inwhich thedividends amountwere of$1.1 million and $0.6 million for the yearyears ended December 31, 2024.2025 and 2024, respectively.

The earliest possible date by which a Threshold Condition may be met is June 30, 2026, which is the end of the sixteenth consecutive quarter following the Original Closing Date. However, the Company does not currently meet any of the Threshold Conditions to exercise the purchase option, and there can be no assurance if and when the Threshold Conditions will be met. The closing of the repurchase of the Preferred Stock, if consummated, would occur between thirty and ninety days following the satisfaction of the Threshold Condition and all other applicable conditions. At present, the Company has reported 914 consecutive quarters for which it has met both the Deep Impact and Qualified Lending Conditions. The Preferred Stock currently has a dividend rate of 0.5%.

In addition to the requirement that a Threshold Condition be met, the Repurchase Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Preferred Stock, maintaining qualification as either a CDFI or an MDI, and meeting other legal and regulatory criteria. Although the Company currently meets the general eligibility criteria, other than satisfying one of the Threshold Conditions, there can be no assurance that the Company will meet such criteria, or any amended or additional criteria that may be imposed, in the future.

On SeptemberFebruary 26,6, 2023,2025, the Bank received a $3.7$1.3 million grant from the U.S. Treasury as part of the CDFI EquitableFinancial RecoveryAssistance ProgramAward ("ERP")Program. whichThis aimsaward is given to helpCDFIs CDFI'sto furthersupport their mission of helping lowoperations and low-to-moderateexpand incomeservices communitiesin recovereconomically fromdistressed the impact of the COVID-19 pandemic.communities.

The Ponce Bank Westchester Avenue Branch located at 2244 Westchester Avenue in the Castle Hill area of the Bronx was approved as a Banking Development District ("BDD"). New York State’s BDD Program, administered by the Department of Financial Services ("DFS"), supports the establishment of bank and credit union branches in areas across New York State where there is a demonstrated need for banking services. To encourage participation, approved BDD branches receive access to subsidized and market rate deposits from New York State. On July 30, 2024, Ponce Bank received total program deposits of $35.0 million. On June 24, 2025, the Bank received an additional $10.0 million from the DFS resulting in a total BDD Program deposit of $45.0 million.

The transformation relaunched a process aimed at reinforcing the role of each banking branch as a "community hub"’ that attracts new depositors and business customers, but anchors Ponce Bank branches as community-centric destinations. The revitalization efforts include Open Tellers that invite a more consultative experience, managers located at a central hub of the branch, private space for sensitive conversations, and meeting spaces as well as open areas with teleconferencing and AV equipment to encourage community-wide gatherings.

PonceBankDirectPonce Bank Conversion

Critical Accounting Policies and Estimates

The allowance for credit losses is established as probable incurred losses are estimated to have occurred through a provision for credit losses charged to earnings. Credit losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. If our loss rate factor was to increase 10 basis points, our reserve would increase by approximately $2.3$2.6 million. Likewise, if our loss rate factor was to decrease 10 basis points, our reserve would decrease by approximately $2.3$2.6 million.

The Company has deployed a Fintech-based small business automated lending technology in partnership with LendingFront Technologies, Inc. The technology is a mobile application that digitizes the lending workflow from pre-approval to servicing and enables the Company to originate, close and fund small business loans within very short spans of time, without requiring a physical presence within banking offices and with automated underwriting using both traditional and non-traditional methods. The application was developed by Lending Front, a fintech in which the Company has fullacquired loana originationfinancial and servicing capabilities and is integrated with Salesforce.interest. All Commercial Relationship Officers and BusinessBanking DevelopmentBranch Managers will utilize these capabilities. The Company is seeking to establish loan origination partnerships with non-profit and community-based organizations to ensure penetration in underserved and underbanked markets.

The Company alsocontinues established aits relationship with Raisin Solutions US LLC ("Raisin") (formerly known as SaveBetter, LLC), a fintech startupthat focusingfocuses on deposits.gathering deposits for financial institutions through the Internet. As of December 31, 2025 and 2024, the Company had $643.9 million and $574.1 millionmillion, respectively, in such deposits.deposits, The recent regulatory easing of brokered deposit rules enableswhich the Company to classify such depositsclassifies as core deposits.

At December 31, 2018, the first year after our initial public offering, the Company had approximately $1.06 billion in assets, $918.5 million in loans receivable,loans, net of allowance for credit losses of $12.7 million, and $809.8 million in deposits. The Company has since grown to $3.04$3.22 billion in assets, $2.29$2.60 billion in loans receivable,loans, net of allowance for credit losses of $22.5$25.4 million, and $1.88$2.05 billion in deposits at December 31, 2024,2025, all while investing in infrastructure, implementing digital banking,banking adopting GPS,and diversifying its product offeringoffering. and partnering with Fintech companies. Now, theThe Company believes that it is poised to enhance its presence, locally and in similar communities outside New York, as a leading CDFI and MDI financial institution holding company.

Total Assets. Total consolidated assets increased $289.2$184.0 million, or 10.5%,6.1%, to $3.22 billion at December 31, 2025 from $3.04 billion at December 31, 2024 from $2.75 billion at December 31, 2023.2024. The increase in total assets is largely attributable to increases of $390.7$312.7 million in net loans receivable,receivable $9.8and $10.7 million in FHLBNYpurchases of FRBNY stock, $0.8partially offset by decreases of $95.0 million in held-to-maturity securities, $13.7 million in cash and cash equivalents, $12.8 million in available-for-sale securities, $7.6 million in other assets, $7.3 million in mortgage loans held for sale, $0.7 million in premises and equipment and $0.6 million in cash and cash equivalents, partially offset by decreases of $93.8 million in held-to-maturity securities, $14.9 million in available-for-sale securities, $2.3 million in deferred tax assets and $2.2$1.5 million in right of use assets, $1.2 million in premises and equipment, net and $0.6 million in deferred tax assets.

Securities. The Company securities portfolio decreased $93.8$12.8 million, or 12.2%, to $92.2 million in available-for-sale at December 31, 2025 from $105.0 million December 31, 2024 and decreased $95.0 million, or 25.8%, to $273.0 million in held-to-maturity andat $14.9December 31, 2025 from $367.9 million in available-for-sale during the year endedat December 31, 2024. The decreases were the results of one available-for-sale securitydecrease in the securities portfolio was primarily due to four available-for-sale securities in the total amount of $4.0$8.3 million and twothree held-to-maturity securities in the total amount of $50.0 million that matured and/or were called.called during the year ended December 31, 2025 and changes in principal amount of the securities.

ACL werewas $22.5$25.4 million and $26.2$22.5 million at December 31, 20242025 and 2023,2024, respectively.

Multifamily residential loans increased $119.6$86.4 million, or 21.7%, and nonresidential properties loans increased $47.6 million, or 13.9%,12.9%, when compared to December 31, 2023.2024. The majority of the increases in multifamily residential loans and nonresidential properties loans that were refinanced from construction and land loans to a new permanent loan facility.facilities.

The majority of the $229.7 million growth in construction and land mortgage loans is related to funding of existing commitments prior to 2024 as opposed to new originations in 2024. Our commitments to grant new mortgage loans decreased by $170.6$212.6 million as of December 31, 20242025 compared to December 31, 2023.2024. See Note 1413 ("Commitments, Contingencies and Credit Risk") of Notes to the Consolidated Financial Statements.

Management’s discussion and analysis of the financial condition at MarchJune 31,30, 2026 and December 31, 2025, and results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025, is intended to assist in understanding the financial condition and results of operations of Ponce Financial Group, Inc. (the “Company”). The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1, of this quarterly report on Form 10-Q.

Our principal business is attracting retail deposits from the general public and investing those deposits together with funds generated from ongoing operations and borrowings, primarily in (1) loan originations for purchases and construction of multi-family residential properties, commercial business loans, commercial real estate mortgage loans, one-to-four family (focusing onincluding mixed-use properties, which are properties that contain both residential dwelling units and commercial units); (2) construction loans; (3) SBA loans; (4) mortgage-backed securities; and (5) U.S. government securities, corporate fixed-income securities and other marketable securities. We also originate certain other consumer loans including overdraft lines of credit. Our results of operations depend primarily on net interest income, which is the difference between the income earned on its interest-earning assets and the cost of our interest-bearing liabilities. We also generate non-interest income mainly from service charges and fees, late and prepayment charges, income on sale of mortgage loans and grant income. Our non-interest expense consists principally of employee compensation and benefits, occupancy and equipment costs, data processing expenses, direct loan expenses, professional fees, other operating expenses and income tax expense. Our results of operations can also be significantly affected by our periodic provision for credit losses.

On June 7, 2022 (the “Original Closing Date”), the Company issued 225,000 shares of the Company’s Preferred Stock‎, par value $0.01 (the “Preferred Stock”) for an aggregate purchase price equal to $225,000,000 in cash to the Treasury, pursuant to the Treasury’s ECIP. Under the ECIP, Treasury provided investment capital directly to depository institutions that are CDFIs or MDIs or their holding companies, to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, in low-income and underserved communities. No dividends accrued or were due for the first two years after issuance. For years three through ten, depending upon the level of qualified and/or deep impact lending made in targeted communities, as defined in the ECIP guidelines, dividends will be at an annual rate of either 2.0%, 1.25% or 0.5% and, thereafter, will be fixed at one of the foregoing rates. If we are unable to make qualified and/or deep impact loans at required levels, we will be required to pay dividends at the higher annual rates. Additionally, we may make qualified and/or deep impact loans that are riskier than we otherwise would in an effort to meet the lending requirements for the lower dividend rates and/or to qualify for the purchase option under the Repurchase Agreement (as described below).

As a participant in the ECIP, the Company must comply with certain operating requirements. Specifically, the Company must adopt the Treasury's standards for executive compensation and luxury expenses for the period during which the Treasury holds equity issued under the ECIP. These restrictions may make it difficult to adequately compensate our management team, which could impact our ability to retain qualified management. Additionally, under the ECIP regulations, the Company cannot pay dividends or repurchase its common stock unless it meets certain income-based tests and has paid the required dividends on the Preferred Stock. In June 2024, the Company began paying dividends on its Preferred Stock, which dividends were $0.3$0.6 million and $0.6 million for the threesix months ended MarchJune 31,30, 2026 and $1.12025, million for the year ended December 31, 2025.respectively.

The earliest possible date by which a Threshold Condition may be met is June 30, 2026, which is the end of the sixteenth consecutive quarter following the Original Closing Date. However, theThe Company doesbelieves notit currentlyhas meet any ofmet the Threshold Conditions to exercise the purchase option,option and there can be no assurance if and when the Threshold Conditions will be met. The closing of the repurchase of the Preferred Stock, if consummated, would occur between thirty and ninety days following the satisfaction of the Threshold Condition and all other applicable conditions. At present,because the Company has reported 15sixteen consecutive quarters for which it has met both the Deep Impact and Qualified Lending Conditions. . The Preferred Stock currently has a dividend rate of 0.5%.

The closing of the repurchase of the Preferred Stock, if consummated, would occur between thirty and ninety days following the satisfaction of all applicable conditions, including the Threshold Condition. In addition to the requirement that a Threshold Condition be met, the Repurchase Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Preferred Stock, maintaining qualification as either a CDFI or an MDI, and meeting other legal and regulatory criteria. Although the Company currently meetsexpects thethat generalit eligibilitywill criteria,satisfy all other thannecessary satisfying one of the Threshold Conditions,conditions, there can be no assurance thatif theand Companywhen such repurchase will meet such criteria, or any amended or additional criteria that may be imposed,consummated inwith the future.Treasury.

The Company believes that consummation of the repurchase of the Preferred Stock as contemplated by the Repurchase Agreement would be beneficial to its stockholders. As such, the Company expects itto continue to emphasize its qualified Deep Impact Lending.

The purchase option granted under the agreement is a freestanding financial instrument under GAAP. The Company analyzed the fair value of the repurchase option in accordance with ASC Topic 820 “Fair Value Measurements” and determined that the purchase option value is de minimis as of December 20, 2024, December 31, 2025 and MarchJune 31,30, 2026.

The Bank's Westchester Avenue Branch located at 2244 Westchester Avenue in the Castle Hill area of the Bronx was approved as a Banking Development District ("BDD"). New York State’s BDD Program, administered by the Department of Financial Services ("DFS"), supports the establishment of bank and credit union branches in areas across New York State where there is a demonstrated need for banking services. To encourage participation, approved BDD branches receive access to subsidized and market rate deposits from New York State. On July 30, 2024, Poncethe BankBank's Westchester Avenue Branch received total program deposits of $35.0 million. On June 24, 2025, the BankBank's Westchester Avenue Branch received $10.0 million from the New York City Department of Finance. On June 23, 2026, the Bank's Westchester Avenue Branch received an additional $10.0 million from the New York City Department of Finance resulting in a total BDD Program deposit of $45.0$55.0 million.

On February 4, 2026, the Bank's Inwood Branch location 3879 9th Avenue in the Inwood area of New York was approved as a BDD by the DFS. In April of 2026, the BankBank's Inwood Branch received additionala program depositsdeposit of $35.0 million forfrom DFS. On June 23, 2026, the Bank's Inwood location.Branch received $10.0 million from the New York City Department of Finance resulting in a total BDD Program deposit of $45.0 million.

Allowance for credit losses in accordance with ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), was a critical accounting policy in the preparation of the consolidated financial statements as of and for the period ended MarchJune 31,30, 2026.

The Company continues its relationship with Raisin Solutions US LLC ("Raisin"), a fintech that focuses on gathering deposits for financial institutions through the Internet. As of MarchJune 31,30, 2026 and December 31, 2025, the Company had $678.4$671.5 million and $643.9 million, respectively, in such deposits, which the Company classifies as core deposits.

At December 31, 2018, the first year after our initial public offering, the Company had approximately $1.06 billion in assets, $918.5 million in loans, net of allowance for credit losses of $12.7 million, and $809.8 million in deposits. The Company has since grown to $3.30$3.49 billion in assets, $2.70$2.88 billion in loans, net of allowance for credit losses of $26.2$27.6 million, and $2.13$2.27 billion in deposits at MarchJune 31,30, 2026, all while investing in infrastructure, implementing digital banking and diversifying its product offering. Now, the Company believes that it is poised to enhance its presence, locally and in similar communities outside New York, as a leading CDFI and MDI financial institution holding company.

Allowance for credit losses on loans as a percentage of nonperforming loans increased for the three months ended MarchJune 31,30, 2026 as a result of an increase in allowance for credit losses on loans to $26.2$27.6 million and a decrease in nonperforming loans to $20.4$23.6 million.

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

Total Assets. Total consolidated assets increased $76.8$270.7 million, or 2.4%,8.4%, to $3.30$3.49 billion at MarchJune 31,30, 2026 from $3.22 billion at December 31, 2025. The increase in total assets is largely attributable to increases of $99.4$280.5 million in net loans receivable, $2.0 million in other assets, $1.4 million in accrued interest receivable and $0.2 million in deferred tax assets, partially offset by decreases of $9.5 million in held-to-maturity securities, $8.9$13.9 million in cash and cash equivalents, $5.0$2.0 million in available-for-saleaccrued securities,interest $1.3receivable, $1.5 million in mortgagedeferred loanstax heldassets, for sale, $1.1$1.4 million in Federal Home Loan Bank of New York stock and $0.5$0.1 million in other assets, partially offset by decreases of $19.4 million in held-to-maturity securities, $7.4 million in available-for-sale securities, $1.0 million in premises and equipment, net.net, $0.5 million in right of use assets and $0.3 million in mortgage loans held for sale, at fair value.

Cash and Cash Equivalents. Cash and cash equivalents decreasedincreased $8.9$13.9 million, or 7.1%,11.0%, to $117.2$140.0 million at MarchJune 31,30, 2026, compared to $126.2 million at December 31, 2025. The decreaseincrease in cash and cash equivalents was primarily the result of an increase of $101.8$225.2 million in net loansdeposits, $27.0 million in proceeds from maturities and principal repayment on securities, $25.0 million in net repaymentproceeds in borrowings and $4.2 million from sale of borrowings, increases of $2.0 million in other assets and $1.4 million in accrued interest receivable.loans. The decreaseincrease in cash and cash equivalents was offset primarily by an increaseincreases of $87.2$287.6 million in net deposits,loans $14.7and $2.0 million in proceedsaccrued frominterest maturities, callsreceivables and principal repayment on securities, an increase of $3.8 million in other liabilities, decreases of $1.4 million in loansnet held(purchases) for sale and $1.1 million from saleredemption of loans.FHLBNY stock.

Securities. The Company securities portfolio decreased $5.0$7.4 million, or 5.5%,8.1%, to $87.2$84.8 million in available-for-sale at MarchJune 31,30, 2026 from $92.2 million December 31, 2025 and decreased $9.5$19.4 million, or 3.5%,7.1%, to $263.5$253.6 million in held-to-maturity at MarchJune 31,30, 2026 from $273.0 million at December 31, 2025. The decrease in the securities portfolio was primarily due to regular principal payments and the maturity of one available-for-sale security in the amount of $3.0 million.

Portfolio Maturities and Yields. The composition and maturities of the investment securities portfolio at MarchJune 31,30, 2026 are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. Adjustable-rate mortgage-backed securities are included in the period in which interest rates are next scheduled to adjust. The weighted average yield is calculated based on the yield to maturity weighted for the size of each debt security over the entire portfolio of debt securities. The weighted average yields on tax-exempt obligations have been computed on a tax-equivalent basis.

Gross Loans Receivable. The composition of gross loans receivable at MarchJune 31,30, 2026 and at December 31, 2025 and the percentage of each classification to total loans are summarized as follows:

Contractual Maturities. The following table sets forth the contractual maturities of the Bank’s total loan portfolio, excluding mortgage loans held for sale, at MarchJune 31,30, 2026. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The table presents contractual maturities and does not reflect repricing or the effect of prepayments. Actual maturities may differ.

The follow table sets forth the Bank's fixed and adjustable-rate loans at MarchJune 31,30, 2026 that are contractually due after MarchJune 31,30, 2027.

Our commitments to grant new mortgage loans increased by $48.1$161.5 million as of MarchJune 31,30, 2026 compared to December 31, 2025. See Note 10 ("Commitments, Contingencies and Credit Risk") of Notes to the Consolidated Financial Statements.

The Company had 6873 construction and land mortgage loans with balances of $764.0$817.1 million as indicated in the table above. Of those loans, 2924 loans with aggregate balances of $380.2$339.4 million, or 49.8%,32.9%, of the total, have a percentage of completion of 80% or more. Within those 2924 loans there are 1412 loans with balances of $193.3$161.0 million that are 100% completed and 13 of these properties received their certificates of occupancy.

Commercial real estate loans, as defined by applicable banking regulations, include multifamily residential, nonresidential properties, and construction and land mortgage loans. At MarchJune 31,30, 2026 and December 31, 2025, approximately 2.9%2.7% and 3.1%, respectively, of the outstanding principal balance of the Bank’s commercial real estate mortgage loans were secured by owner-occupied commercial real estate. Owner-occupied commercial real estate is similar in many ways to commercial and industrial lending in that these loans are generally made to businesses predominantly on the basis of the cash flows of the business rather than on valuation of the real estate.

Banking regulations have established guidelines relating to the amount of construction and land mortgage loans and investor- owned commercial real estate mortgage loans of 100% and 300% of total risk-based capital, respectively. Should a bank’s ratios be in excess of these guidelines, banking regulations generally require an increased level of monitoring in these lending areas by bank management. The Bank’s policy is to operate within the 200% guideline for construction and land mortgage loans and up to 450% for investor-owned commercial real estate mortgage loans. Both ratios are calculated by dividing certain types of loan balances for each of the two categories by the Bank’s total risk-based capital. At MarchJune 31,30, 2026 and December 31, 2025, the Bank’s construction and land mortgage loans as a percentage of total risk-based capital was 137.2%143.5% and 156.7%, respectively. Investor-owned commercial real estate mortgage loans as a percentage of total risk-based capital was 399.0%416.0% and 393.1% as of MarchJune 31,30, 2026 and December 31, 2025, respectively. At MarchJune 31,30, 2026, the Bank was above the 100% guidelines established by the banking regulations and under the 200% guidelines set by the Bank for construction and land mortgage loans and above the 300% guideline established by banking regulators but under the 450% guidelines set by the Bank for investor owned commercial real estate mortgage loans. Management believes that it has established the appropriate level of controls to monitor the Bank’s lending in these areas.

Loans Held For Sale. Loans held for sale, at fair value, at MarchJune 31,30, 2026 decreased $1.3$0.3 million, or 37.2%,10.0%, to $2.1$3.1 million from $3.4 million at December 31, 2025.

Deposits. The composition of deposits at MarchJune 31,30, 2026 and December 31, 2025 and changes in dollars and percentages are summarized as follows:

As of MarchJune 31,30, 2026 and December 31, 2025, there were $0.3$50.2 million eachand $0.3 million, respectively, in brokered deposits.

At MarchJune 31,30, 2026 and December 31, 2025, there were no individual listing service deposits amounting to $250,000 or more. All other brokered certificates of deposit individually amounted to less than $250,000.

When wholesale funding is necessary to complement the Company's core deposit base, management determines which source is best suited to address both liquidity risk and interest rate risk in line with management objectives. The Company’s Interest Rate Risk Policy imposes limitations on overall wholesale funding and noncore funding reliance. The overall reliance on wholesale funding and noncore funding were within those policy limitations as of MarchJune 31,30, 2026 and December 31, 2025. The Management Asset/Liability Committee generally meets on a monthly basis to review funding needs, if any, and to ensure the Company operates within the approved limitations.

The following table presents the time deposits with balances exceeding the $250,000 Federal Deposits Insurance Corporation ("FDIC") insurance limit by maturity at MarchJune 31,30, 2026.

At MarchJune 31,30, 2026, the portion of uninsured deposits in excess of $250,000 FDIC insurance limit was $471.3$459.4 million.

Borrowings. The Bank had outstanding borrowings at MarchJune 31,30, 2026 and December 31, 2025 of $571.1$621.1 million and $596.1 million in term advances from the FHLBNY. The Bank had no overnight line of credit advance from the FHLBNY at MarchJune 31,30, 2026 and December 31, 2025. Additionally, the Bank had two unsecured lines of credit in the amount of $75.0 million with two correspondent banks for both periods at MarchJune 31,30, 2026 and December 31, 2025. The Bank did not have any term and overnight line of credit advances from the FRBNY at MarchJune 31,30, 2026 and December 31, 2025.

Stockholders’ Equity. The Company’s consolidated stockholders’ equity increased $9.8$19.4 million, or 1.8%,3.6%, to $551.4$561.0 million as of MarchJune 31,30, 2026 from $541.5 million as of December 31, 2025. The $9.8$19.4 million increase in stockholders’ equity was largely attributable to $8.6$17.1 million in net income, $0.6$1.3 million impact to additional paid in capital as a result of share-based compensation, $0.6$1.2 million from release of ESOP shares andshares, $0.2 million from exercise of stock options and $0.1 million in other comprehensive income, offset by $0.3$0.6 million related to the dividend paid on preferred shares during the threesix months ended MarchJune 31,30, 2026.

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

The discussion of the Company’s results of operations for the three months ended MarchJune 31,30, 2026 and 2025 are presented below. The results of operations for interim periods may not be indicative of future results.

Overview. Net income available to common stockholders was $8.3$8.2 million for the three months ended MarchJune 31,30, 2026 compared to net income available to common stockholders of $5.7$5.8 million for the three months ended MarchJune 31,30, 2025. Earnings per basic share was $0.36 and diluted share was $0.36$0.35 for the three months ended MarchJune 31,30, 2026 compared to earnings per basic share of $0.26 and diluted share of $0.25 for the three months ended MarchJune 31,30, 2025. The $2.7$2.4 million increase of net income available to common stockholders from the three months ended MarchJune 31,30, 2025, was due to increases of $6.0$5.6 million in net interest income, partially offset by increases of $1.9$1.3 million in non-interest expense, $0.9 million in provision for income taxes and $0.5 million in provision for credit losses, $0.7 million in provision for income taxes, $0.4 million in non-interest expenselosses and a decrease of $0.3$0.5 million in non-interest income. Net income for the three months ended MarchJune 31,30, 2026 and 2025, which excludes $0.3 million and $0.3 million, respectively, in dividends on preferred shares, were $8.6$8.5 million and $6.0$6.1 million, respectively.

Interest and Dividend Income. Interest and dividend income increased $4.7$5.8 million, or 10.6%,12.6%, to $48.7$51.7 million for the three months ended MarchJune 31,30, 2026 from $44.0$45.9 million for the three months ended MarchJune 31,30, 2025. Interest income on loans receivable, which is the Company’s primary source of income, increased $6.8$6.5 million, or 18.4%,16.2%, to $44.0$46.8 million for the three months ended MarchJune 31,30, 2026 from $37.1$40.3 million for the three months ended MarchJune 31,30, 2025.

Total interest and dividend income on securities, FHLBNY stock and deposits due from banks decreased $2.2$0.8 million or 31.8%,13.5%, to $4.7$4.8 million for the three months ended MarchJune 31,30, 2026 from $6.9$5.6 million for the three months ended MarchJune 31,30, 2025. The decrease was primarily attributable to decreasesa decrease of $1.3$1.1 million in interest on securitiessecurities, offset by increases of $0.2 million in dividend on FHLBNY and $0.9FRBNY stocks and $0.1 million in interest on deposits due from banks.

Interest Expense. Interest expense decreasedincreased $1.4$0.2 million, or 6.2%,0.7%, to $20.4$21.6 million for the three months ended MarchJune 31,30, 2026 from $21.8$21.4 million for the three months ended MarchJune 31,30, 2025.

Net Interest Income. Net interest income increased $6.0$5.6 million, or 27.1%,23.1%, to $28.2$30.1 million for the three months ended MarchJune 31,30, 2026 from $22.2$24.4 million for the three months ended MarchJune 31,30, 2025. The $6.0$5.6 million increase in net interest income for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was attributable to an increase of $4.7$5.8 million in total interest and dividend income primarily due to increases in average loans receivablereceivable, andoffset aby decreasean increase of $1.4$0.2 million in interest expense due primarily to a lower average cost of funds on interest bearing liabilities.expense.

Net interest rate spread increased by 6642 basis points to 2.85%2.89% for the three months ended MarchJune 31,30, 2026 from 2.19%2.47% for the three months ended MarchJune 31,30, 2025. The increase in the net interest rate spread for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was primarily due to an increase in the average yields on interest-earning assets of 3216 basis points to 6.23%6.29% for the three months ended MarchJune 31,30, 2026 from 5.90%6.13% for the three months ended MarchJune 31,30, 2025, and a decrease in the average rates paid on interest-bearing liabilities of 3326 basis points to 3.38%3.40% for the three months ended MarchJune 31,30, 2026 from 3.71%3.66% for the three months ended MarchJune 31,30, 2025.

Net interest margin increased 6339 basis points for the three months ended MarchJune 31,30, 2026, to 3.61%3.66% from 2.98%3.27% for the three months ended MarchJune 31,30, 2025.

Non-Interest Income. Non-interest income decreased $0.3$0.5 million, or 14.2%,25.9%, to $2.0$1.5 million for the three months ended MarchJune 31,30, 2026 from $2.4$2.1 million for the three months ended MarchJune 31,30, 2025. The $0.3$0.5 million decrease in non-interest income for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was largely attributable to a decreasedecreases of $0.4 million in late and prepayment charges and $0.4 million in grant income recognized in the second quarter of sale2025, offset by an increase of SBA$0.2 loans.million in other non-interest income.

Non-Interest Expense. Non-interest expense increased $0.4$1.3 million, or 2.1%,7.5%, to $17.2$18.1 million for the three months ended MarchJune 31,30, 2026 from $16.9 million for the three months ended MarchJune 31,30, 2025. The $0.4$1.3 million increase in non-interest expense was mainly attributable to increasesan increase of $0.8$1.4 million in compensation and benefitbenefits, andpartially offset by a decrease of $0.1 million in marketingfederal deposit insurance and promotionalregulatory expenses, partially offset by decreases of $0.3 million in direct loan expenses, $0.2 million in occupancy and equipment and $0.2 million in other operating expenses.assessment.

Income Tax Provision. The Company had a provision for income taxes of $2.7$2.8 million for the three months ended MarchJune 31,30, 2026 compared to a provision for income taxes of $2.0$1.9 million for the three months ended MarchJune 31,30, 2025.

(3) (4)

For the three months ended MarchJune 31,30, 2025, Advance payments by borrowers for taxes and insurance in the amount of $12.4$14.9 million, were reclassified to Savings.