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What changed in Hanover Bancorp, Inc. /MD's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Hanover Bancorp, Inc. /MD's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+284 added−276 removedSource: 10-K (2026-03-13) vs 10-K (2025-03-14)

Top changes in Hanover Bancorp, Inc. /MD's 2025 10-K

284 paragraphs added · 276 removed · 221 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

57 edited+6 added−10 removed123 unchanged
Biggest changeThe regulatory guidance also states that a bank holding company should consult with FRB supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the bank holding company is experiencing financial weaknesses or the repurchase or redemption would result in a net reduction, at the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. 16 Table of Contents There is a separate requirement that a bank holding company give the FRB prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth.
Biggest changeThe regulatory guidance also states that a bank holding company should consult with FRB supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the bank holding company is experiencing financial weaknesses or the repurchase or redemption would result in a net reduction, at the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred.
Aggregate loans by a state commercial bank or trust company to any single borrower or group of related borrowers are generally limited to 15% of the Bank’s capital stock, surplus fund and undivided profits, plus an additional 10% if secured by specified readily marketable collateral. Federal and state law and regulations limit the Bank’s investment authority.
Aggregate loans by a state commercial bank or trust company to any single borrower or group of related borrowers are generally limited to 15% of the institution’s capital stock, surplus fund and undivided profits, plus an additional 10% if secured by specified readily marketable collateral. Federal and state law and regulations limit the Bank’s investment authority.
Lending Standards and Guidance The federal banking agencies adopted uniform regulations prescribing standards for extensions of credit that are secured by liens or interests in real estate or made for the purpose of financing permanent improvements to real estate.
Lending Standards and Guidance The federal banking agencies have adopted uniform regulations prescribing standards for extensions of credit that are secured by liens or interests in real estate or made for the purpose of financing permanent improvements to real estate.
The lending, investment, deposit-taking, and other business authority of the Bank is governed primarily by state and federal law and regulations, and the Bank is prohibited from engaging in any operations not authorized by such laws and regulations.
The lending, investment, deposit-taking, and other business authority of the Bank is governed primarily by state and federal laws and regulations, and the Bank is prohibited from engaging in any operations not authorized by such laws and regulations.
The Bank is subject to extensive regulation, supervision and examination by, and the enforcement authority of, the New York Department of Financial Services (the “DFS”) and the FDIC, its primary federal regulator.
The Bank is subject to extensive regulation, supervision and examination by, and the enforcement authority of, the New York State Department of Financial Services (the “DFS”) and the FDIC, its primary federal regulator.
In addition, such a failure could result in a restriction on our ability to pay certain cash bonuses to executive officers, negatively impacting our ability to retain key personnel. As of December 31, 2024, the Bank’s current capital levels exceeded the applicable minimum capital requirements, including the capital conservation buffer, as prescribed in the Basel III capital rules.
In addition, such a failure could result in a restriction on our ability to pay certain cash bonuses to executive officers, negatively impacting our ability to retain key personnel. As of December 31, 2025, the Bank’s current capital levels exceeded the applicable minimum capital requirements, including the capital conservation buffer, as prescribed in the Basel III capital rules.
The new definition expanded the ways that a Qualifying Community Bank may meet its capital requirements and be deemed “well capitalized.” The new rule establishes a community bank leverage ratio, or CBLR, equal to the tangible equity capital divided by the average total consolidated assets. Currently the minimum required CBLR is 9.0%.
The new definition expanded the ways that a Qualifying Community Bank may meet its capital requirements and be deemed “well capitalized.” The new rule established a community bank leverage ratio, or CBLR, equal to the tangible equity capital divided by the average total consolidated assets. Currently the minimum required CBLR is 9.0%.
Specifically, the CRE Guidance provides that a bank has a concentration in CRE lending if (1) total reported loans for construction, land development, and other land represent 100% or more of total risk-based capital; or (2) total reported loans secured by multi-family properties, non-farm non-residential properties (excluding those that are owner-occupied), and loans for construction, land development, and other land represent 300% or more of total risk-based capital and the bank’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months.
Specifically, the CRE Guidance provides that a bank has a concentration in CRE lending if (1) total reported loans for construction, land development, and other land represent 100% or more of total risk-based capital; or (2) total reported loans secured by multifamily properties, non-farm non-residential properties (excluding those that are owner-occupied), and loans for construction, land development, and other land represent 300% or more of total risk-based capital and the bank’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months.
The latest New York State CRA rating received by the Bank is “Satisfactory.” USA PATRIOT Act and Money Laundering The Bank is subject to the Bank Secrecy Act (“BSA”), which incorporates several laws, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) and related regulations.
The latest New York State CRA rating received by the Bank is “Satisfactory.” 13 Table of Contents USA PATRIOT Act and Money Laundering The Bank is subject to the Bank Secrecy Act (“BSA”), which incorporates several laws, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) and related regulations.
The LCR and NSFR rules do not apply to us due to our asset size. 9 Table of Contents The final BASEL III capital rules apply to all depository institutions, top-tier bank holding companies with total consolidated assets of $3.0 billion or more, and top-tier savings and loan holding companies, referred to as banking organizations.
The LCR and NSFR rules do not apply to us due to our asset size. The final BASEL III capital rules apply to all depository institutions, top-tier bank holding companies with total consolidated assets of $3.0 billion or more, and top-tier savings and loan holding companies, referred to as banking organizations.
Under this regulation, where a bank is experiencing severe financial distress, its parent bank holding company may be required to make financial contributions to the bank. Dividends and Stock Repurchases The FRB has issued a policy statement regarding the payment of dividends by holding companies.
Under this regulation, where a bank is experiencing severe financial distress, its parent bank holding company may be required to make financial contributions to the bank. ​ 16 Table of Contents Dividends and Stock Repurchases The FRB has issued a policy statement regarding the payment of dividends by holding companies.
Deposits serve as the primary source of funding for our interest-earning assets, but also generate non-interest revenue through insufficient funds fees, stop payment fees, safe deposit rental fees, ATM fees and debit card interchange and other miscellaneous fees. 6 Table of Contents Employees and Human Capital Resources As of December 31, 2024, we employed 185 full-time employees.
Deposits serve as the primary source of funding for our interest-earning assets, but also generate non-interest revenue through insufficient funds fees, stop payment fees, safe deposit rental fees, ATM fees and debit card interchange and other miscellaneous fees. 6 Table of Contents Employees and Human Capital Resources As of December 31, 2025, we employed 194 full-time employees.
The CRE Guidance, which addresses land development, construction, and certain multi-family loans, as well as commercial real estate loans, does not establish specific lending limits but rather reinforces and enhances these agencies’ existing regulations and guidelines for such lending and portfolio management.
The CRE Guidance, which addresses land development, construction, and certain multifamily loans, as well as commercial real estate loans, does not establish specific lending limits but rather reinforces and enhances these agencies’ existing regulations and guidelines for such lending and portfolio management.
Finally, an emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement.
Finally, an emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. We have elected to comply with new or amended accounting pronouncements in the same manner as a private company.
In addition, the Bank is subject to certain state laws and regulations designed to protect consumers. ​ 14 Table of Contents Other Regulations The Bank’s operations are also subject to federal laws applicable to credit transactions, such as: ● The Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; ● The Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one-to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; ● The Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● The Equal Credit Opportunity Act and other fair lending laws, prohibiting discrimination on the basis of race, religion, sex and other prohibited factors in extending credit; ● The Fair Credit Reporting Act, governing the use of credit reports on consumers and the provision of information to credit reporting agencies; ● Unfair or Deceptive Acts or Practices laws and regulations; ● The Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and ● The rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
Other Regulations The Bank’s operations are also subject to federal laws applicable to credit transactions, including but not limited to: ● The Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; ● The Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one-to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; ● The Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● The Equal Credit Opportunity Act and other fair lending laws, prohibiting discrimination on the basis of race, religion, sex and other prohibited factors in extending credit; ● The Fair Credit Reporting Act, governing the use of credit reports on consumers and the provision of information to credit reporting agencies; ● Unfair or Deceptive Acts or Practices laws and regulations; ● The Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and ● The rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
In addition, the Economic Growth Act includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the Volcker Rule, mortgage disclosures and risk weights for certain high-risk commercial real estate loans. 7 Table of Contents Bank Regulation Loans and Investments State commercial banks and trust companies have authority to originate and purchase any type of loan, including commercial, commercial real estate, residential mortgages or consumer loans.
In addition, the Economic Growth Act effected regulatory relief for community banks regarding regulatory examination cycles, call reports, the Volcker Rule, mortgage disclosures and risk weights for certain high-risk commercial real estate loans. 7 Table of Contents Bank Regulation Loans and Investments New York chartered commercial banks and trust companies have authority to originate and purchase any type of loan, including commercial, commercial real estate, residential mortgages or consumer loans.
The operations of the Bank are further subject to the: ● The Truth in Savings Act, which specifies disclosure requirements with respect to deposit accounts; ● The Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; ● The Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; ● The Check Clearing for the 21st Century Act, which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; ● State unclaimed property or escheatment laws; and ● Cybersecurity regulations, including but not limited to those implemented by DFS.
The operations of the Bank are further subject to the: ● The Truth in Savings Act, which specifies disclosure requirements with respect to deposit accounts; ● The Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; ● The Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; ● The Check Clearing for the 21st Century Act, which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; ● State unclaimed property or escheatment laws; and ● Cybersecurity regulations, including but not limited to those implemented by DFS. ​ 15 Table of Contents Holding Company Regulations General The Company, as a bank holding company controlling the Bank, is subject to regulation and supervision by the FRB under the BHCA.
As of December 31, 2024, the Bank was a “well-capitalized” bank, as defined by its primary federal regulator.
As of December 31, 2025, the Bank was a “well-capitalized” bank, as defined by its primary federal regulator.
A Qualifying Community Bank that meets the CBLR is considered to be well capitalized and to have met generally applicable leverage capital requirements, generally applicable risk-based capital requirements, and any other capital or leverage requirements to which such financial institution or holding company is subject. The Bank did not elect into the CBLR framework.
A Qualifying Community Bank that meets the CBLR is considered to be well capitalized and to have met generally applicable leverage capital requirements, generally applicable risk-based capital requirements, and any other capital or leverage requirements to which such financial institution or holding company is subject.
While the Bank is subject to the CFPB regulations, because it has less than $10 billion in total consolidated assets, the FDIC and the DFS are responsible for examining and supervising the Bank’s compliance with these consumer financial laws and regulations.
While the Bank is subject to the CFPB regulations, because it has less than $10 billion in total consolidated assets, the FDIC and the DFS are responsible for examining and supervising the Bank’s compliance with these consumer financial laws and regulations. In addition, the Bank is subject to certain state laws and regulations designed to protect consumers.
The team and relationships we have allow us to compete throughout the Long Island market without the expense constraints of multiple physical locations. As of December 31, 2024, we had $509.3 million in municipal deposits at a weighted average rate of 3.72%.
The team and relationships we have allow us to compete throughout the Long Island market without the expense constraints of multiple physical locations. As of December 31, 2025, we had $700.7 million in municipal deposits at a weighted average rate of 3.01%.
We expect C&I lending to be a key component of our growth going forward. As of December 31, 2024, our commercial and industrial loans comprised $168.9 million, or 8.5%, of total loans held for investment. Small Business Administration Loans . Our SBA loans are secured by commercial real estate and/or business assets. We offer mostly SBA 7(a) variable-rate loans.
We expect C&I lending to be a key component of our growth going forward. As of December 31, 2025, our commercial and industrial loans comprised $145.6 million, or 7.3%, of total loans held for investment. Small Business Administration Loans . Our SBA loans are secured by commercial real estate and/or business assets. We offer mostly SBA 7(a) variable-rate loans.
While the Economic Growth Act maintains most of the regulatory structure established by the Dodd-Frank Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than $10 billion and for large banks with assets of more than $50 billion.
While the Economic Growth Act maintained most of the regulatory structure established by the Dodd-Frank Act, it amended certain aspects of the regulatory framework for small depository institutions with assets of less than $10 billion, such as the Bank, and for large banks with assets of more than $50 billion.
We have elected to comply with new or amended accounting pronouncements in the same manner as a private company. 17 Table of Contents A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by nonaffiliates).
A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.235 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by nonaffiliates).
Safety and Soundness Standards Each federal banking agency, including the FDIC, has adopted guidelines establishing general standards relating to, among other things, internal controls, information and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings, compensation, fees and benefits and information security standards.
The Bank did not elect into the CBLR framework. 10 Table of Contents Safety and Soundness Standards Each federal banking agency, including the FDIC, has adopted guidelines establishing general standards relating to, among other things, internal controls, information and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings, compensation, fees and benefits and information security standards.
If a concentration is present, management must employ heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending.
If a concentration is present, management must employ heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending. ​ 8 Table of Contents Federal Deposit Insurance The Bank is a member of the DIF, which is administered by the FDIC.
Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions, including banks, thrifts, brokers, dealers, credit unions, money transfer agents and parties registered under the Commodity Exchange Act. ​ 13 Table of Contents Among other things, Title III of the USA PATRIOT Act and the related regulations require: ● Establishment of anti-money laundering compliance programs that include policies, procedures, and internal controls; the designation of a BSA officer; a training program; and independent testing; ● Filing of certain reports with Financial Crimes Enforcement Network and law enforcement that are designated to assist in the detection and prevention of money laundering and terrorist financing activities; ● Establishment of a program specifying procedures for obtaining and maintaining certain records from customers seeking to open new accounts, including verifying the identity of customers; ● In certain circumstances, compliance with enhanced due diligence policies, procedures and controls designed to detect and report money- laundering, terrorist financing and other suspicious activity; ● Monitoring account activity for suspicious transactions; and ● A heightened level of review for certain high-risk customers or accounts.
Among other things, Title III of the USA PATRIOT Act and the related regulations require: ● Establishment of anti-money laundering compliance programs that include policies, procedures, and internal controls; the designation of a BSA officer; a training program; and independent testing; ● Filing of certain reports with Financial Crimes Enforcement Network and law enforcement that are designated to assist in the detection and prevention of money laundering and terrorist financing activities; ● Establishment of a program specifying procedures for obtaining and maintaining certain records from customers seeking to open new accounts, including verifying the identity of customers; ● In certain circumstances, compliance with enhanced due diligence policies, procedures and controls designed to detect and report money- laundering, terrorist financing and other suspicious activity; ● Monitoring account activity for suspicious transactions; and ● A heightened level of review for certain high-risk customers or accounts.
In October 2023, the Company’s Board of Directors approved a change in the Company’s fiscal year end from September 30 to December 31. Accordingly, the Company reported a transition quarter that ran from October 1, 2023 through December 31, 2023 (“transition period”).
In October 2023, the Company’s Board of Directors approved a change in the Company’s fiscal year end from September 30 to December 31. Accordingly, the Company reported a transition quarter that ran from October 1, 2023 through December 31, 2023. In June 2025, the Company was added to the Russell 2000 Index.
Commencing in late 2023, the Bank initiated a flow origination program under which the Bank originates individual loans for sale to specific buyers, thereby positioning the Bank to resume residential loan sales. Commercial real estate .
Commencing in late 2023, the Bank initiated a flow origination program under which the Bank originates individual loans for sale to specific buyers, thereby positioning the Bank to resume residential loan sales. Commercial real estate . We offer real estate loans secured by multifamily properties and owner-occupied and non-owner occupied commercial properties.
Separately, the Superintendent of the DFS also has the authority to appoint a receiver or liquidator of any state-chartered bank or trust company under specified circumstances, including where (i) the bank is conducting its business in an unauthorized or unsafe manner, (ii) the bank has suspended payment of its obligations, or (iii) the bank cannot with safety and expediency continue to do business. ​ 12 Table of Contents Federal Reserve System Under federal law and regulations, the Bank is required to maintain sufficient liquidity to ensure safe and sound banking practices.
Separately, the Superintendent of the DFS also has the authority to appoint a receiver or liquidator of any state-chartered bank or trust company under specified circumstances, including where (i) the bank is conducting its business in an unauthorized or unsafe manner, (ii) the bank has suspended payment of its obligations, or (iii) the bank cannot with safety and expediency continue to do business.
Item 1. Business Overview Hanover Bancorp, Inc. (“Hanover”) is currently a New York corporation which is the holding company for Hanover Community Bank (the “Bank”), a New York chartered community commercial bank focusing on highly personalized and efficient services and products responsive to local needs.
Item 1. Business Overview Hanover Bancorp, Inc., a Maryland corporation (the “Company”), is the holding company for Hanover Community Bank (the “Bank”), a New York chartered community commercial bank focusing on highly personalized and efficient services and products responsive to local needs. On June 25, 2025, the Company completed its reincorporation from New York to Maryland.
As of December 31, 2024, 100% of our real estate construction loan portfolio was secured by commercial properties. ​ 5 Table of Contents Commercial and industrial . We provide a mix of variable and fixed rate commercial and industrial loans, which we refer to as C&I loans.
These loans are typically Prime-based and have maturities of fewer than 24 months. As of December 31, 2025, 100% of our real estate construction loan portfolio was secured by commercial properties. ​ 5 Table of Contents Commercial and industrial . We provide a mix of variable and fixed rate commercial and industrial loans, which we refer to as C&I loans.
The Company’s current full fiscal year is the calendar year January 1, 2024 through December 31, 2024 (“calendar 2024”). Our one- to four-family residential mortgage segment has a particular niche focus on non-conforming loans, primarily secured by owner-occupied and investment properties. The segment has proven particularly appealing to Asian American borrowers in the New York City boroughs.
Our one- to four-family residential mortgage segment has a particular niche focus on non-conforming loans, primarily secured by owner-occupied and investment properties. The segment has proven particularly appealing to Asian American borrowers in the New York City boroughs.
Incentive Compensation Guidance The FRB, OCC, FDIC, other federal banking agencies and DFS have issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations, including non-member banks and bank holding companies, do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
To pay a cash dividend, a non-member bank must also maintain an adequate capital conservation buffer under the capital rules discussed above. ​ 11 Table of Contents Incentive Compensation Guidance The FRB, OCC, FDIC, other federal banking agencies and DFS have issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations, including non-member banks and bank holding companies, do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
We now offer these services in New Jersey and may in the future consider opening accounts for licensed entities in other states. 4 Table of Contents Lending Activities Our lending strategy is to maintain a broadly diversified loan portfolio based on the type of customer (i.e., businesses versus individuals), type of loan product (e.g., owner occupied commercial real estate, commercial loans, etc.), geographic location and industries in which our business customers are engaged (e.g., manufacturing, retail, hospitality, wholesale distribution, construction, etc.).
During the fourth calendar quarter of 2023, we began offering business banking services to the legal, licensed cannabis industry, initially in New York state. 4 Table of Contents Lending Activities Our lending strategy is to maintain a broadly diversified loan portfolio based on the type of customer (i.e., businesses versus individuals), type of loan product (e.g., owner occupied commercial real estate, commercial loans, etc.), geographic location and industries in which our business customers are engaged (e.g., manufacturing, retail, hospitality, wholesale distribution, construction, etc.).
The agencies have indicated that they intend, at a subsequent date, to incorporate explicit minimum requirements for interest rate risk into their risk-based capital standards and have proposed a supervisory model to be used together with bank internal models to gather data and propose, at a later date, explicit minimum requirements.
The agencies have indicated that they intend, at a subsequent date, to incorporate explicit minimum requirements for interest rate risk into their risk-based capital standards and have proposed a supervisory model to be used together with bank internal models to gather data and propose, at a later date, explicit minimum requirements. ​ 9 Table of Contents The United States is a member of the Basel Committee on Banking Supervision (the “Basel Committee”) that provides a forum for regular international cooperation on banking supervisory matters.
Transactions with Affiliates and Insiders Sections 23A and 23B of the Federal Reserve Act govern transactions between an insured depository institution and its affiliates, which includes the Company.
Transactions with Affiliates and Insiders Sections 23A and 23B of the Federal Reserve Act govern transactions between an insured depository institution and its affiliates, which includes the Company. The FRB has adopted Regulation W, which implements and interprets Sections 23A and 23B, in part by codifying prior FRB interpretations.
As a result, effective January 1, 2023, assessment rates for institutions of the Bank’s size ranged from 3.5 to 32 basis points. A significant increase in insurance premiums would have an adverse effect on the operating expenses and results of operations of the Bank. We cannot predict what deposit insurance assessment rates will be in the future.
A significant increase in insurance premiums would have an adverse effect on the operating expenses and results of operations of the Bank. We cannot predict what deposit insurance assessment rates will be in the future.
An exception is made for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the bank and that does not give any preference to insiders of the bank over other employees of the bank.
An exception is made for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the bank and that does not give any preference to insiders of the bank over other employees of the bank. 12 Table of Contents Enforcement The DFS and the FDIC have extensive enforcement authority over non-member banks to correct unsafe or unsound practices and violations of law or regulation.
Prompt Corrective Regulatory Action Federal law requires that federal bank regulatory authorities take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements.
Prompt Corrective Regulatory Action Federal law requires that federal bank regulatory authorities take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For these purposes, the statute establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
Among other things, the FRB has authority to restrict activities by a bank holding company that are deemed to pose a serious risk to the subsidiary bank. ​ 15 Table of Contents Permissible Activities A bank holding company is generally prohibited from engaging in non-banking activities or acquiring direct or indirect control of more than 5% of the voting securities of any company engaged in non-banking activities.
Permissible Activities A bank holding company is generally prohibited from engaging in non-banking activities or acquiring direct or indirect control of more than 5% of the voting securities of any company engaged in non-banking activities.
An institution’s assessment rate depends upon the perceived risk of the institution to the DIF, with institutions deemed less risky paying lower rates. Assessments for institutions of less than $10 billion of total assets, such as the Bank, are based on financial measures and supervisory ratings derived from statistical models estimating the probability of failure within three years.
Assessments for institutions of less than $10 billion of total assets, such as the Bank, are based on financial measures and supervisory ratings derived from statistical models estimating the probability of failure within three years. Assessment rates (inclusive of possible adjustments) range from 1.5 to 30 basis points of each institution’s total assets less tangible capital.
The FDIC may increase or decrease the range of assessments uniformly, except that no adjustment can deviate more than two basis points from the base assessment rate without notice and comment rulemaking. 8 Table of Contents By final rule adopted in October 2022, the FDIC increased the initial base deposit insurance assessment rates by 2 basis points beginning in the first quarterly assessment period of 2023.
The FDIC may increase or decrease the range of assessments uniformly, except that no adjustment can deviate more than two basis points from the base assessment rate without notice and comment rulemaking.
The real estate securing our existing non-owner occupied commercial real estate loans is primarily multi-family, mixed-use and commercial properties. Owner-occupied properties comprise a wide variety of property types, including offices, warehouses, retail centers, and hotels. Our construction portfolio is small, representing only $13.5 million in total balances at December 31, 2024.
Owner-occupied properties comprise a wide variety of property types, including offices, warehouses, retail centers, and hotels. Our construction portfolio is small, representing only $11.1 million in total balances at December 31, 2025. Our construction and land development loans are comprised of commercial construction and land acquisition and development loans. Interest reserves are generally established on real estate construction loans.
Consumer Finance Regulations The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit “unfair, deceptive or abusive” acts and practices.
These laws and regulations may also require the Bank to notify law enforcement, regulators or consumer reporting agencies in the event of a data breach, as well as businesses and governmental agencies that own data. 14 Table of Contents Consumer Finance Regulations The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit “unfair, deceptive or abusive” acts and practices.
Emerging Growth Company Status The Jumpstart Our Business Startups Act (the “JOBS Act”), which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets.
Hanover Bancorp, Inc. is a reporting company subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934. 17 Table of Contents Emerging Growth Company Status The Jumpstart Our Business Startups Act (the “JOBS Act”), which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets.
As described above, the Bank has not elected to follow the CBLR so the generally applicable prompt corrective action requirements remain applicable to the Bank.
The final rule that increased regulatory capital standards also adjusted the prompt corrective action tiers as of January 1, 2015 to conform to the revised capital standards. As described above, the Bank has not elected to follow the CBLR so the generally applicable prompt corrective action requirements remain applicable to the Bank.
Federal Deposit Insurance The Bank is a member of the DIF, which is administered by the FDIC. The Bank’s deposit accounts are insured by the FDIC, generally up to a maximum of $250,000 per depositor. The FDIC imposes deposit insurance assessments against all insured depository institutions.
The Bank’s deposit accounts are insured by the FDIC, generally up to a maximum of $250,000 per depositor. The FDIC imposes deposit insurance assessments against all insured depository institutions. An institution’s assessment rate depends upon the perceived risk of the institution to the DIF, with institutions deemed less risky paying lower rates.
The United States is a member of the Basel Committee on Banking Supervision (the “Basel Committee”) that provides a forum for regular international cooperation on banking supervisory matters. The Basel Committee develops guidelines and supervisory standards and is best known for its international standards on capital adequacy.
The Basel Committee develops guidelines and supervisory standards and is best known for its international standards on capital adequacy.
We focus on what we believe to be high quality credits with acceptable loan-to-value ratios, income- producing properties with strong cash flow and collateral profiles. The weighted average LTV was 59% for this portfolio as of December 31, 2024. Within the commercial real estate portfolio, multi-family loans are secured primarily by rent controlled/stabilized multi-family properties located in New York City.
Our management team has extensive knowledge of the markets where we operate and our borrowers. We focus on what we believe to be high quality credits with acceptable loan-to-value ratios, income- producing properties with strong cash flow and collateral profiles. The weighted average LTV was 54% for this portfolio as of December 31, 2025.
The FRB has indicated that it has no plans to re-impose reserve requirements but may do so in the future if conditions warrant. Examinations and Assessments The Bank is required to file periodic reports with and is subject to periodic examination by the DFS and FDIC. Federal and state regulations generally require periodic on-site examinations for all depository institutions.
Examinations and Assessments The Bank is required to file periodic reports with and is subject to periodic examination by the DFS and FDIC. Federal and state regulations generally require periodic on-site examinations for all depository institutions. The Bank is required to pay an annual assessment to the DFS and FDIC to fund the agencies’ operations.
In addition, we have recently received regulatory approval to open a new branch in Port Jefferson, Suffolk County, New York, which we expect to open in early 2025. As of December 31, 2024, we had total assets of $2.31 billion, total loans of $1.99 billion, total deposits of $1.95 billion and total stockholders’ equity of $196.6 million.
In June 2025, we opened a full-service branch in Port Jefferson, Suffolk County, New York. As of December 31, 2025, we had total assets of $2.38 billion, total loans of $2.00 billion, total deposits of $2.03 billion and total stockholders’ equity of $200.3 million.
Holding Company Regulations General The Company, as a bank holding company controlling the Bank, is subject to regulation and supervision by the FRB under the BHCA. The Company is periodically examined by and required to submit reports to the FRB and must comply with the FRB’s rules and regulations.
The Company is periodically examined by and required to submit reports to the FRB and must comply with the FRB’s rules and regulations. Among other things, the FRB has authority to restrict activities by a bank holding company that are deemed to pose a serious risk to the subsidiary bank.
The FRB has adopted Regulation W, which implements and interprets Sections 23A and 23B, in part by codifying prior FRB interpretations. ​ 11 Table of Contents An affiliate of a bank is any company or entity that controls, is controlled by or is under common control with the bank.
An affiliate of a bank is any company or entity that controls, is controlled by or is under common control with the bank.
Enforcement The DFS and the FDIC have extensive enforcement authority over non-member banks to correct unsafe or unsound practices and violations of law or regulation. Such authority includes the issuance of cease-and-desist orders, assessment of civil money penalties and removal of officers and directors.
Such authority includes the issuance of cease-and-desist orders, assessment of civil money penalties and removal of officers and directors.
Federal Securities Laws Hanover Bancorp, Inc.’s common stock is registered with the Securities and Exchange Commission. Hanover Bancorp, Inc. is a reporting company subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.
Federal Securities Laws Hanover Bancorp, Inc.’s common stock is registered with the Securities and Exchange Commission.
Regulation D, promulgated by the FRB, imposes reserve requirements on all depository institutions, including the Bank, which maintain transaction accounts or nonpersonal time deposits. In March 2020, due to a change in its approach to monetary policy due to the COVID-19 pandemic, the FRB implemented a final rule to amend Regulation D requirements and reduce reserve requirement ratios to zero.
In March 2020, due to a change in its approach to monetary policy due to the COVID-19 pandemic, the FRB implemented a final rule to amend Regulation D requirements and reduce reserve requirement ratios to zero. The FRB has indicated that it has no plans to re-impose reserve requirements but may do so in the future if conditions warrant.
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In 2024, our Board and shareholders approved a proposal to redomicile the Company in Maryland, and the Company is in the process of completing the change in its state of incorporation from New York to Maryland.
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The Russell 2000 Index encompasses the 2,000 largest U.S.-traded stocks by objective, market-capitalization rankings, and style attributes. The Russell Indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies.
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During the fourth calendar quarter of 2023, we began offering business banking services to the legal, licensed cannabis industry, initially in New York state.
Added
Within the commercial real estate portfolio, multifamily loans are secured primarily by market rent properties and to a lesser extent rent controlled/stabilized properties located in New York City. The real estate securing our existing non-owner occupied commercial real estate loans is primarily mixed-use and commercial properties.
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We offer real estate loans secured by owner occupied and non-owner occupied commercial properties, including one- to four-family properties and multi-family residential properties and construction and land development loans. Our management team has extensive knowledge of the markets where we operate and our borrowers.
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By final rule adopted in October 2022, the FDIC increased the initial base deposit insurance assessment rates by 2 basis points beginning in the first quarterly assessment period of 2023. As a result, effective January 1, 2023, assessment rates for institutions of the Bank’s size ranged from 3.5 to 32 basis points.
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Our construction and land development loans are comprised of commercial construction and land acquisition and development loans. Interest reserves are generally established on real estate construction loans. These loans are typically Prime-based and have maturities of fewer than 18 months.
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Federal Reserve System Under federal law and regulations, the Bank is required to maintain sufficient liquidity to ensure safe and sound banking practices. Regulation D, promulgated by the FRB, imposes reserve requirements on all depository institutions, including the Bank, which maintain transaction accounts or nonpersonal time deposits.
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Many of these changes could result in meaningful regulatory changes for banks and their holding companies.
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Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions, including banks, thrifts, brokers, dealers, credit unions, money transfer agents and parties registered under the Commodity Exchange Act.
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Assessment rates (inclusive of possible adjustments) range from 1.5 to 30 basis points of each institution’s total assets less tangible capital.
Added
There is a separate requirement that a bank holding company give the FRB prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth.
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For these purposes, the statute establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. 10 Table of Contents The final rule that increased regulatory capital standards also adjusted the prompt corrective action tiers as of January 1, 2015 to conform to the revised capital standards.
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To pay a cash dividend, a non-member bank must also maintain an adequate capital conservation buffer under the capital rules discussed above.
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The Bank is required to pay an annual assessment to the DFS and FDIC to fund the agencies’ operations.
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These laws and regulations may also require the Bank to notify law enforcement, regulators or consumer reporting agencies in the event of a data breach, as well as businesses and governmental agencies that own data.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe primarily serve businesses, municipalities and individuals located in the New York metro area. As a result, we are exposed to risks associated with lack of geographic diversification. The occurrence of an economic downturn in the New York metro area, could impact the credit quality of our assets, the businesses of our customers and the ability to expand our business.
Biggest changeA substantial portion of our business is in the New York metro area; therefore, our business is particularly vulnerable to an economic downturn in our primary market area. We primarily serve businesses, municipalities and individuals located in the New York metro area. As a result, we are exposed to risks associated with lack of geographic diversification.
Accordingly, as a part of our liquidity management, we must use a number of funding sources in addition to deposits and repayments and maturities of loans and investments, which may include Federal Home Loan Bank of New York advances, Federal Reserve Bank of New York’s discount window advances, federal funds purchased and brokered certificates of deposit.
Accordingly, as a part of our liquidity management, we must use a number of funding sources in addition to deposits and repayments and maturities of loans and investments, which may include Federal Home Loan Bank of New York advances, Federal Reserve Bank of New York discount window advances, federal funds purchased and brokered certificates of deposit.
In 2006, the OCC, the FDIC, and the FRB, or collectively, the Agencies, issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices,” or the “CRE Guidance.” Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure will receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months.
In 2006, the OCC, the FDIC, and the FRB (collectively, the “Agencies”) issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices,” or the “CRE Guidance.” Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure will receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months.
Pandemics, natural disasters, global climate change, acts of terrorism, global conflicts or other similar events have in the past, and may in the future have, a negative impact on our business and operations.
Pandemics, natural disasters, global climate change, acts of terrorism, global conflicts or other similar events have occurred in the past, and may in the future have, a negative impact on our business and operations.
Similarly, the loss of key employees, either individually or as a group, could adversely affect our clients’ perception of our abilities and, accordingly, our reputation. ​ 31 Table of Contents REGULATORY AND COMPLIANCE RISKS We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us and our future growth.
Similarly, the loss of key employees, either individually or as a group, could adversely affect our clients’ perception of our abilities and, accordingly, our reputation. ​ 33 Table of Contents REGULATORY AND COMPLIANCE RISKS We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us and our future growth.
Even if we are able to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations. ​ 38 Table of Contents In addition, the Bank’s primary federal regulator, the FDIC, has issued guidance outlining the expectations for third-party service provider oversight and monitoring by financial institutions.
Even if we are able to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations. ​ 40 Table of Contents In addition, the Bank’s primary federal regulator, the FDIC, has issued guidance outlining the expectations for third-party service provider oversight and monitoring by financial institutions.
If this confidential or proprietary information were to be mishandled, misused or lost, we could be exposed to significant regulatory consequences, reputational damage, civil litigation and financial loss. ​ 35 Table of Contents In recent years, several financial services firms suffered successful cyber-attacks launched both domestically and from abroad, resulting in the disruption of services to clients, loss or misappropriation of sensitive or private information, and reputational harm.
If this confidential or proprietary information were to be mishandled, misused or lost, we could be exposed to significant regulatory consequences, reputational damage, civil litigation and financial loss. ​ 37 Table of Contents In recent years, several financial services firms suffered successful cyber-attacks launched both domestically and from abroad, resulting in the disruption of services to clients, loss or misappropriation of sensitive or private information, and reputational harm.
These regulatory authorities may impose conditions on the activities or transactions contemplated by our business strategies, which may negatively impact our ability to realize fully the expected benefits of certain opportunities. ​ 28 Table of Contents Any failure by us to manage acquisitions and other significant transactions successfully may have a material adverse effect on our results of operations, financial condition, and cash flows.
These regulatory authorities may impose conditions on the activities or transactions contemplated by our business strategies, which may negatively impact our ability to realize fully the expected benefits of certain opportunities. ​ 30 Table of Contents Any failure by us to manage acquisitions and other significant transactions successfully may have a material adverse effect on our results of operations, financial condition, and cash flows.
Compliance with these regulations has and may continue to result in additional operating and compliance costs that could have a material adverse effect on our business, financial condition, results of operations and growth prospects. ​ 32 Table of Contents Federal and state regulatory agencies frequently adopt changes to their regulations or change the manner in which existing regulations are applied.
Compliance with these regulations has and may continue to result in additional operating and compliance costs that could have a material adverse effect on our business, financial condition, results of operations and growth prospects. ​ 34 Table of Contents Federal and state regulatory agencies frequently adopt changes to their regulations or change the manner in which existing regulations are applied.
Our success depends in large part on the performance of our key personnel at the Bank that have substantial experience and tenure with the Bank and in the markets that we serve.
Our success depends in large part on the performance of our key personnel at the Bank, who have substantial experience and tenure with the Bank and in the markets that we serve.
Our efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior. ​ 39 Table of Contents COMMON STOCK AND TRADING RISKS The price of our common stock could be volatile.
Our efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior. ​ 41 Table of Contents COMMON STOCK AND TRADING RISKS The price of our common stock could be volatile.
If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating results may be materially adversely affected. ​ 37 Table of Contents We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud and data processing system failures and errors.
If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating results may be materially adversely affected. ​ 39 Table of Contents We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud and data processing system failures and errors.
In the event of any liquidation, dissolution or winding up of our business or of the Bank, our common stock would rank below all claims of debt holders against us. As of December 31, 2024, we had outstanding approximately $25.0 million in aggregate principal amount of subordinated notes. Our debt obligations are senior to our shares of common stock.
In the event of any liquidation, dissolution or winding up of our business or of the Bank, our common stock would rank below all claims of debt holders against us. As of December 31, 2025, we had outstanding approximately $25.0 million in aggregate principal amount of subordinated notes. Our debt obligations are senior to our shares of common stock.
Accordingly, the ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations. ​ 36 Table of Contents OPERATIONAL RISKS Many types of operational risks can affect our earnings negatively. We regularly assess and monitor operational risk in our businesses.
Accordingly, the ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations. ​ 38 Table of Contents OPERATIONAL RISKS Many types of operational risks can affect our earnings negatively. We regularly assess and monitor operational risk in our businesses.
Moreover, it is possible that we will be unable to borrow funds when we need to do so. ​ 34 Table of Contents Our deposit services for businesses in the state licensed cannabis industry could expose us to liabilities and regulatory compliance costs.
Moreover, it is possible that we will be unable to borrow funds when we need to do so. ​ 36 Table of Contents Our deposit services for businesses in the state licensed cannabis industry could expose us to liabilities and regulatory compliance costs.
To the extent that we issue additional debt obligations, the additional debt obligations will be of equal rank with, or senior to, our existing debt obligations and senior to our shares of common stock. ​ 40 Table of Contents Our dividend policy may change without notice and our future ability to pay dividends is subject to restrictions.
To the extent that we issue additional debt obligations, the additional debt obligations will be of equal rank with, or senior to, our existing debt obligations and senior to our shares of common stock. ​ 42 Table of Contents Our dividend policy may change without notice and our future ability to pay dividends is subject to restrictions.
Our inability to compete successfully in the markets in which we operate could have an adverse effect on our business, financial condition or results of operations. ​ 30 Table of Contents We need to invest in innovation, and the inability or failure to do so may affect our business and earnings negatively.
Our inability to compete successfully in the markets in which we operate could have an adverse effect on our business, financial condition or results of operations. ​ 32 Table of Contents We need to invest in innovation, and the inability or failure to do so may affect our business and earnings negatively.
No assurance can be given that we will be able to raise any required capital, or that we will be able to raise capital on terms that are beneficial to stockholders. 29 Table of Contents Attractive acquisition opportunities may not be available to us in the future.
No assurance can be given that we will be able to raise any required capital, or that we will be able to raise capital on terms that are beneficial to stockholders. 31 Table of Contents Attractive acquisition opportunities may not be available to us in the future.
Any sustained period of increased non-payment, delinquencies, foreclosures or losses caused by adverse market or economic conditions in our market area could adversely affect the value of our assets, revenues, financial condition and results of operations. Our niche lending products may expose us to greater risk than traditional lending products.
Any sustained period of increased non-payment, delinquencies, foreclosures or losses caused by adverse market or economic conditions in our market area could adversely affect the value of our assets, revenues, financial condition and results of operations. 27 Table of Contents Our niche lending products may expose us to greater risk than traditional lending products.
There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets Control (“OFAC”). 33 Table of Contents In order to comply with regulations, guidelines and examination procedures in this area, we have dedicated significant resources to our anti-money laundering program.
There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets Control (“OFAC”). In order to comply with regulations, guidelines and examination procedures in this area, we have dedicated significant resources to our anti-money laundering program.
Political and electoral changes, developments, conflicts and conditions (such as fiscal policy changes proposed) have in the past introduced, and may in the future introduce, additional uncertainty that could also affect our operating results negatively. ​ 22 Table of Contents LENDING ACTIVITIES RISKS Small Business Administration lending is an increasingly important part of our business.
Political and electoral changes, developments, conflicts and conditions (such as fiscal policy changes proposed) have in the past introduced, and may in the future introduce, additional uncertainty that could also affect our operating results negatively. LENDING ACTIVITIES RISKS Small Business Administration lending is an increasingly important part of our business.
A failure to effectively measure and manage the credit risk associated with our loan portfolio could lead to unexpected losses and have an adverse effect on our business, financial condition and results of operations. 25 Table of Contents Our emphasis on one- to four- family residential mortgage loans involves risks that could adversely affect our financial condition and results of operations.
A failure to effectively measure and manage the credit risk associated with our loan portfolio could lead to unexpected losses and have an adverse effect on our business, financial condition and results of operations. Our emphasis on one- to four- family residential mortgage loans involves risks that could adversely affect our financial condition and results of operations.
We also cannot be certain that actual results will be consistent with forecasts and assumptions used in our modeling. Any of these occurrences could materially and adversely affect our financial condition and results of operations. If our non-performing assets increase, our earnings will be adversely affected.
We also cannot be certain that actual results will be consistent with forecasts and assumptions used in our modeling. Any of these occurrences could materially and adversely affect our financial condition and results of operations. ​ 28 Table of Contents If our non-performing assets increase, our earnings will be adversely affected.
Additionally, if repurchase and indemnity demands increase on loans that we sell from our portfolio, our liquidity, results of operations and financial condition could be adversely affected. Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations.
Additionally, if repurchase and indemnity demands increase on loans that we sell from our portfolio, our liquidity, results of operations and financial condition could be adversely affected. ​ 26 Table of Contents Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations.
Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making. 27 Table of Contents LIQUIDITY RISKS If we do not manage our liquidity effectively, our business could suffer. Liquidity is essential for the operation of our business.
Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making. LIQUIDITY RISKS If we do not manage our liquidity effectively, our business could suffer. Liquidity is essential for the operation of our business.
We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability. At December 31, 2024, approximately $1.8 billion, or 91%, of our total loan portfolio was secured by real estate, almost all of which is located in our primary lending market.
We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability. At December 31, 2025, approximately $1.8 billion, or 92%, of our total loan portfolio was secured by real estate, almost all of which is located in our primary lending market.
A failure to execute these strategies may impact growth negatively. A failure to grow, whether organically or through strategic acquisitions, may have an adverse effect on our business. The challenges arising from generating organic or strategic growth may include preserving valuable relationships with employees, clients and other business partners and delivering enhanced products and services.
A failure to grow, whether organically or through strategic acquisitions, may have an adverse effect on our business. The challenges arising from generating organic or strategic growth may include preserving valuable relationships with employees, clients and other business partners and delivering enhanced products and services.
Approximately 91% of these loans are secured by properties in the five boroughs of New York City and Nassau County, New York and 66% of these loans are rental properties and are not owner-occupied. These loans expose us to credit risks that may be different from those related to loans secured by owner-occupied properties or commercial loans.
Approximately 96% of these loans are secured by properties in the five boroughs of New York City, Nassau County and Suffolk County, New York and 64% of these loans are rental properties and are not owner-occupied. These loans expose us to credit risks that may be different from those related to loans secured by owner-occupied properties or commercial loans.
In addition, if repurchase and indemnity demands increase on loans that we sell from our portfolio, our liquidity, results of operations and financial condition could be adversely affected. 23 Table of Contents We are expanding the geographic scope of our SBA, and other government guaranteed lending, and this may expose us to greater and additional risks than lending in our primary trade area.
In addition, if repurchase and indemnity demands increase on loans that we sell from our portfolio, our liquidity, results of operations and financial condition could be adversely affected. We have expanded the geographic scope of our SBA, and other government guaranteed lending, and this may expose us to greater and additional risks than lending in our primary trade area.
This could have an adverse effect on our business, financial condition or results of operations. 21 Table of Contents We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of the real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all.
We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of the real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all.
In addition, when we sell the non-conforming residential mortgage loans, we are required to make certain representations and warranties to the purchaser regarding such loans. Under those agreements, we may be required to repurchase the non-conforming residential mortgage loans if we have breached any of these representations or warranties, in which case we may record a loss.
Under those agreements, we may be required to repurchase the non-conforming residential mortgage loans if we have breached any of these representations or warranties, in which case we may record a loss.
Our loan portfolio includes a significant concentration of one- to four- family residential mortgage loans. As of December 31, 2024, we had $729.3 million in one- to four- family residential mortgage loans, representing 37% of our total loan portfolio.
Our loan portfolio includes a significant concentration of one- to four- family residential mortgage loans. As of December 31, 2025, we had $777.0 million in one- to four- family residential mortgage loans, representing 39% of our total loan portfolio.
Non-qualified mortgage loans are considered to have a higher degree of risk and are less liquid than qualified mortgage loans. For the year ended December 31, 2024 and fiscal year ended September 30, 2023, we originated $130.4 million and $196.0 million in non-qualified mortgage loans, respectively.
Non-qualified mortgage loans are considered to have a higher degree of risk and are less liquid than qualified mortgage loans. For the years ended December 31, 2025 and 2024, we originated $246.4 million and $130.4 million in non-qualified mortgage loans, respectively.
The Bank is subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital which it must maintain. From time to time, regulators implement changes to these regulatory capital adequacy guidelines.
Failure to comply with stringent capital requirements could result in regulatory criticism, requirements and restrictions. The Bank is subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital which it must maintain. From time to time, regulators implement changes to these regulatory capital adequacy guidelines.
We maintain an allowance for credit losses that represents management’s judgment of expected credit losses and risks inherent in our loan portfolio. As of December 31, 2024, our allowance for credit losses totaled $22.8 million, which represented approximately 1.15% of our total loans held for investment.
We maintain an allowance for credit losses which represents management’s judgment of expected credit losses and risks inherent in our loan portfolio. As of December 31, 2025, our allowance for credit losses totaled $18.7 million, which represented approximately 0.93% of our total loans held for investment.
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, pay our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. ​ 21 Table of Contents Any decline in available funding could adversely impact our ability to originate loans, invest in securities, pay our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
The determination of these gains is based on assumptions regarding the value of unguaranteed loans retained, servicing rights retained and deferred fees and costs, and net premiums paid by purchasers of the guaranteed portions of U.S. government guaranteed loans.
We expect that gains on the sale of U.S. government guaranteed loans will comprise a meaningful component of our revenue. The determination of these gains is based on assumptions regarding the value of unguaranteed loans retained, servicing rights retained and deferred fees and costs, and net premiums paid by purchasers of the guaranteed portions of U.S. government guaranteed loans.
If the FDIC, 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, for reasons noted above or otherwise, our earnings could be adversely affected as would our earnings per share. ​ 24 Table of Contents The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and more risky.
If the FDIC, 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, for reasons noted above or otherwise, our earnings could be adversely affected as would our earnings per share.
If any of these valuations are inaccurate, our consolidated financial statements may not reflect the correct value of our OREO, and our allowance for credit losses may not reflect accurate loan impairments.
If any of these valuations are inaccurate, our consolidated financial statements may not reflect the correct value of our OREO, and our allowance for credit losses may not reflect accurate loan impairments. This could have an adverse effect on our business, financial condition or results of operations.
Such events could have a material adverse effect on our business, financial condition and results of operations. STRATEGIC RISKS If we do not effectively execute our strategic plans, we will not achieve our growth objectives and our business and results of operations may be negatively affected. Our growth depends upon successful, consistent execution of our business strategies.
STRATEGIC RISKS If we do not effectively execute our strategic plans, we will not achieve our growth objectives and our business and results of operations may be negatively affected. Our growth depends upon successful, consistent execution of our business strategies. A failure to execute these strategies may impact growth negatively.
Inflation rose sharply at the end of 2021 and remained at an elevated level through 2024. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.
Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.
We may also need to hold and operate property or business assets in remote locales, making it more difficult and expensive for management to oversee the assets. We may also have less knowledge of the markets in areas in which we may now lend, making underwriting decisions riskier.
We may also need to hold and operate property or business assets in remote locales, making it more difficult and expensive for management to oversee the assets.
Consequently, as of December 31, 2024, we held $187.4 million of SBA loans on our balance sheet, $134.1 million of which consisted of the non-guaranteed portion of SBA loans and $53.3 million consisted of the guaranteed portion of SBA loans.
Consequently, as of December 31, 2025, we held $181.6 million of SBA loans on our balance sheet, $140.1 million of which consisted of the non-guaranteed portion of SBA loans and $41.5 million consisted of the guaranteed portion of SBA loans.
In addition, any default by the U.S. government on its obligations or any prolonged government shutdown could, among other things, impede our ability to originate SBA loans or sell such loans in the secondary market, which could materially and adversely affect our business, results of operations and financial condition.
In addition, any default by the U.S. government on its obligations or any prolonged government shutdown could, among other things, impede our ability to originate SBA loans or sell such loans in the secondary market, which could materially and adversely affect our business, results of operations and financial condition. ​ 24 Table of Contents The SBA’s 7(a) Loan Program is the SBA’s primary program for helping start-up and existing small businesses, with financing guaranteed for a variety of general business purposes.
For more information on these regulations and other regulatory changes, see the section entitled “ Supervision and Regulation. ” Any substantial, unexpected or prolonged changes in the level or cost of liquidity could affect our business adversely.
For more information on these regulations and other regulatory changes, see the section entitled “ Supervision and Regulation. ” Any substantial, unexpected or prolonged changes in the level or cost of liquidity could affect our business adversely. 29 Table of Contents Our growth strategy may require us to raise additional capital in the future to fund such growth, and the unavailability of additional capital on terms acceptable to us could adversely affect us or our growth.
Our commercial real estate and multi-family loans balance have decreased 4% combined for the year ended December 31, 2024 and commercial real estate loans represent 385% of our risk-based capital at December 31, 2024, a decrease from 432% at December 31, 2023 and 448% at September 30, 2023.
Our commercial real estate and multifamily loans balance have decreased 3% in the aggregate for the year ended December 31, 2025 and commercial real estate loans represent 360% of our risk-based capital at December 31, 2025, a decrease from 385% at December 31, 2024.
If our policies, procedures and systems are deemed deficient, we could be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the inability to obtain regulatory approvals to proceed with certain aspects of our business plans, including acquisitions and de novo branching.
If our policies, procedures and systems are deemed deficient, we could be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the inability to obtain regulatory approvals to proceed with certain aspects of our business plans, including acquisitions and de novo branching. 35 Table of Contents We are subject to numerous laws and regulations of certain regulatory agencies, such as the Consumer Financial Protection Bureau, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
At December 31, 2024, our non-performing assets, which consist of non-performing loans and OREO (of which we had none at December 31, 2024), were $16.4 million, or 0.71% of total assets.
At December 31, 2025, our non-performing assets, which consist of non-performing loans and OREO, were $22.3 million, or 0.93% of total assets.
The small- to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans. We target our business development and marketing strategy primarily to serve the banking and financial services needs of small- to medium-sized businesses and real estate owners.
We target our business development and marketing strategy primarily to serve the banking and financial services needs of small- to medium-sized businesses and real estate owners.
The determination of the appropriate level of our allowance for credit losses is inherently highly subjective and requires management to make significant estimates of and assumptions regarding current credit risks and future trends, all of which may undergo material changes. 26 Table of Contents Our federal and state regulators, as an integral part of their examination process, review our methodology for calculating, and the adequacy of, our allowance for credit losses and may direct us to make additions to the allowance based on their judgments about information available to them at the time of their examination.
Our federal and state regulators, as an integral part of their examination process, review our methodology for calculating, and the adequacy of, our allowance for credit losses and may direct us to make additions to the allowance based on their judgments about information available to them at the time of their examination.
These sales result in premium income for us at the time of sale and create a stream of future servicing income, as we retain the servicing rights to these loans. For the reasons described above, we may not be able to continue originating these loans or selling them in the secondary market.
Typically, we sell the guaranteed portion of our SBA 7(a) loans in the secondary market. These sales result in premium income for us at the time of sale and create a stream of future servicing income, as we retain the servicing rights to these loans.
Approximately 26.1% of our deposits are from municipal customers, although no single municipal customer represents a concentration risk. A prolonged economic downturn which adversely effects tax revenues or other governmental funding sources could have an adverse impact on our ability to gather cost efficient deposits, and fund our loans and other investments, thereby adversely affecting our results of operations.
A prolonged economic downturn which adversely effects tax revenues or other governmental funding sources could have an adverse impact on our ability to gather cost efficient deposits, and fund our loans and other investments, thereby adversely affecting our results of operations. ​ 22 Table of Contents The performance of our New York multifamily real estate loans could be adversely impacted by regulation.
The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans, which are typically considered to have a higher degree of risk and are less liquid than conforming residential mortgage loans. We attempt to address this enhanced risk through our underwriting process, and by generally requiring three months principal, interest, taxes and insurance reserves.
The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and riskier. The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans, which are typically considered to have a higher degree of risk and are less liquid than conforming residential mortgage loans.
Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate, or writedowns in the value of OREO, could have an adverse effect on our business, financial condition and results of operations.
Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate, or write-downs in the value of OREO, could have an adverse effect on our business, financial condition and results of operations. 23 Table of Contents Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expense associated with the foreclosure process or prevent us from foreclosing at all.
Our success significantly depends upon the growth in population, income levels, deposits and housing in our market area. If the communities in which we operate do not grow or if prevailing economic conditions locally or nationally are unfavorable, our business may be negatively affected.
If the communities in which we operate do not grow or if prevailing economic conditions locally or nationally are unfavorable, our business may be negatively affected. In addition, the market value of the real estate securing loans as collateral could be adversely affected by unfavorable changes in market and economic conditions.
These loans also present pricing risk as rates change, and our sale premiums cannot be guaranteed. Further, the criteria for our loans to be purchased by other financial institutions may change from time to time, which could result in a lower volume of corresponding loan originations.
Further, the criteria for our loans to be purchased by other financial institutions may change from time to time, which could result in a lower volume of corresponding loan originations. In addition, when we sell the non-conforming residential mortgage loans, we are required to make certain representations and warranties to the purchaser regarding such loans.
As of December 31, 2024, we had a net unrealized loss of $1.3 million on our available for-sale investment securities portfolio as a result of the higher interest rate environment. Our investment securities totaled $87.5 million, or 3.8% of total assets, at December 31, 2024.
As of December 31, 2025, we had a net unrealized loss of $0.3 million on our available for-sale investment securities portfolio. Our investment securities totaled $100.6 million, or 4.2% of total assets, at December 31, 2025. The details of this portfolio are included in Note 2 to the consolidated financial statements.
Although we have developed underwriting standards and procedures designed to reduce the risk of loss, we can provide no assurance that these standards and procedures will be effective in reducing losses. Should we incur credit losses, it could adversely affect our results of operations.
During the years ended December 31, 2025 and 2024 we sold into the secondary market $92.3 million and $37.6 million, respectively of our non-qualified mortgages. Although we have developed underwriting standards and procedures designed to reduce the risk of loss, we can provide no assurance that these standards and procedures will be effective in reducing losses.
In addition, the market value of the real estate securing loans as collateral could be adversely affected by unfavorable changes in market and economic conditions. As of December 31, 2024, 67% of our commercial real estate loan portfolio was secured by real estate located in the five boroughs of New York City and Nassau County, New York.
As of December 31, 2025, 94% of our commercial real estate loan portfolio was secured by real estate located in the New York metro area.
Removed
Summary of Risk Factors ● Our one- to four- family residential mortgage lending and certain niche loan products could expose us to credit risks that may be different than would apply to a more diversified or traditional loan portfolio. ● Our business and operations are concentrated in the New York metropolitan area, and we are sensitive to adverse changes in the local economy. ● We are subject to the various risks associated with our banking business and operations, including, among others, credit, market, liquidity, interest rate and compliance risks, which may have an adverse effect on our business, financial condition and results of operations if we are unable to manage such risks. ● SBA and other government guaranteed lending programs are an increasingly important part of our business, and changes to SBA or other government guaranteed lending programs, including funding for such programs, or the rules governing such programs or other government guaranteed lending programs, may adversely affect our profitability.
Added
Summary of Risk Factors Economic, Market and Investment Risks: • Inflationary pressures and rising prices may affect our results of operations and financial condition. • If we are unable to adequately manage our liquidity, deposits, capital levels and interest rate risk, we may experience a material adverse effect on our financial condition and results of operations. • A substantial portion of our business is in the New York metro area; therefore, our business is particularly vulnerable to an economic downturn in our primary market area. • The performance of our New York multifamily real estate loans could be adversely impacted by regulation. • We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability. • We engage in lending secured by real estate and may be forced to foreclose on the collateral, subjecting us to the costs and potential risks associated with the ownership of the real property. • Other aspects of our business may be adversely affected by unfavorable economic, market, and political conditions. ​ Lending Activities Risks: • Our SBA lending program is dependent upon the U.S. federal government, and we face specific risks associated with originating SBA loans. • The non-guaranteed portion of SBA loans that we retain could expose us to various credit and default risks. • We have expanded the geographic scope of our SBA, and other government guaranteed lending, and this may expose us to greater and additional risks than lending in our primary trade area. • The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions. • Imposition of limits by bank regulators on CRE lending activities could adversely affect our earnings. • The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and riskier. • Interest rate shifts may reduce net interest income. ​ Credit Risks: • We may not be able to measure and limit our credit risk adequately, which could lead to unexpected losses. • Our emphasis on one- to four- family residential mortgage loans could adversely affect our financial condition. • Our niche lending products may expose us to greater risk than traditional lending products. • The small- to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans. • Our allowance for credit losses may not be adequate to cover actual losses. • If our non-performing assets increase, our earnings will be adversely affected. • We are dependent on the use of data and modeling in our management’s decision-making, and faulty data or modeling approaches could negatively impact our decision-making ability or possibly subject us to regulatory scrutiny in the future. ​ 19 Table of Contents Liquidity Risks: • If we do not manage our liquidity effectively, our business could suffer. • Our growth strategy may require us to raise additional capital in the future to fund such growth, and the unavailability of additional capital on terms acceptable to us could adversely affect us or our growth. • Municipal deposits are an important source of funds for us and a reduced level of such deposits may hurt our profits. ​ Strategic Risks: • If we do not effectively execute our strategic plans, our business and results of operations may be negatively affected. • Any failure by us to manage acquisitions and other significant transactions successfully may have a material adverse effect on our results of operations, financial condition, and cash flows. • We have grown and may continue to grow through acquisitions. • Attractive acquisition opportunities may not be available to us in the future. ​ Competition Risks: • Competition in originating loans and attracting deposits may adversely affect our profitability. • We need to invest in innovation, and the inability or failure to do so may affect our business and earnings negatively. ​ Key Personnel Risks: • We rely heavily on our executive management team and other key personnel for our successful operation, and we could be adversely affected by the unexpected loss of their services. • If we are not able to attract, retain and motivate other key personnel, our business could be negatively affected. ​ Regulatory and Compliance Risks: • We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us and our future growth. • Federal and State banking agencies periodically conduct examinations of our business and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations could adversely affect us. • Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations. • Increases in FDIC insurance premiums could adversely affect our earnings and results of operations. • Changes in tax laws and regulations, or changes in the interpretation of existing tax laws and regulations, may have a material adverse effect on our business, financial condition, results of operations and growth prospects. • Failure to comply with stringent capital requirements could result in regulatory criticism, requirements and restrictions. • Financial institutions, such as the Bank, face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. • We are subject to numerous laws and regulations of certain regulatory agencies, and failure to comply with these laws could lead to a wide variety of sanctions. • The FRB may require us to commit capital resources to support the Bank, and we may not have sufficient access to such capital resources. • Our deposit services for businesses in the state licensed cannabis industry could expose us to liabilities and regulatory compliance costs. ​ Technology Risks: • Cyber-attacks or other security breaches could adversely affect our operations, net income or reputation. • We have a continuing need for technological change, and we may not have the resources to implement new technology effectively, or we may experience operational challenges when implementing new technology or technology needed to compete effectively with larger institutions may not be available to us on a cost-effective basis. ​ 20 Table of Contents Operational Risks: • Many types of operational risks can affect our earnings negatively. • Our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance. • We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud and data processing system failures and errors. • We may be subject to environmental liabilities in connection with the real properties we own and the foreclosure on real estate assets securing our loan portfolio. • Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations. • Pandemics, natural disasters, global climate change, acts of terrorism and global conflicts may have a negative impact on our business and operations. • Legal and regulatory proceedings and related matters could adversely affect us. • Societal responses to climate change could adversely affect our business and performance. ​ Common Stock and Trading Risks: • The price of our common stock could be volatile. • The holders of our existing and future debt obligations will have priority over our common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest. • Our dividend policy may change without notice and our future ability to pay dividends is subject to restrictions. • The inability to receive dividends from our subsidiary bank could impact our ability to maintain or increase the current level of cash dividends we pay to our stockholders.
Removed
In addition, we may incur greater risk on our SBA and other government guaranteed lending as we seek to expand our guaranteed lending activities outside of our primary market area. ● We have begun offering banking services to businesses in the state licensed cannabis industry, and this could expose us to liabilities and regulatory compliance costs. ● Our liquidity and capital needs, particularly given our growth strategy, may suffer if not managed effectively or if capital is not available on terms acceptable to us. ● Our ability to sustain growth will diminish if we are unable to continue to make commercially attractive acquisitions, or if we are unable to realize the benefits of prior or future acquisitions in a reasonable timeframe. ● We operate in a highly competitive market and face increasing competition from traditional and new financial services providers. ● We are dependent on key personnel and the unexpected loss of their services, or if we are unable to attract new personnel as we execute our growth strategy, will adversely impact our financial condition. ● We operate in a highly regulated industry, and the current regulatory framework and any future legislative and regulatory changes, may have an adverse effect on our business, financial condition and results of operations. ● We are subject to risks associated with our dependency on our information technology and telecommunications systems and third-party servicers including exposures to systems failures, interruptions or breaches of security. ● Due to the limited public float and trading volume of our stock, our stock price may be volatile, which could result in substantial losses for investors. ● Anti-takeover provisions in our charter and under New York and Federal law could limit certain shareholder actions. ​ 19 Table of Contents ECONOMIC, MARKET AND INVESTMENT RISKS Inflationary pressures and rising prices may affect our results of operations and financial condition.
Added
Risk Factors ECONOMIC, MARKET AND INVESTMENT RISKS Inflationary pressures and rising prices may affect our results of operations and financial condition. Inflation rose sharply at the end of 2021 and remained at a slightly elevated level through 2025.
Removed
Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources.
Added
The occurrence of an economic downturn in the New York metro area, could impact the credit quality of our assets, the businesses of our customers and the ability to expand our business. Our success significantly depends upon the growth in population, income levels, deposits and housing in our market area.
Removed
The details of this portfolio are included in Note 2 to the consolidated financial statements. ​ 20 Table of Contents A substantial portion of our business is in the New York metro area, therefore, our business is particularly vulnerable to an economic downturn in our primary market area.
Added
Approximately 34.5% of our deposits are from municipal customers, although no single municipal customer represents a concentration risk.
Removed
Although we held no OREO properties at December 31, 2024, it is possible that in future periods we may take title to OREO properties in the event of defaults on outstanding loans.
Added
At December 31, 2025, our total multifamily rent regulated exposure in New York was approximately $175.9 million, or 9%, of our total loan portfolio.
Removed
Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expense associated with the foreclosure process or prevent us from foreclosing at all.
Added
New York has enacted legislation increasing the restrictions on rent increases in a rent-regulated 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 percent 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.
Removed
The SBA’s 7(a) Loan Program is the SBA’s primary program for helping start-up and existing small businesses, with financing guaranteed for a variety of general business purposes. Typically, we sell the guaranteed portion of our SBA 7(a) loans in the secondary market.
Added
This legislation generally limits a landlord’s ability to increase rents on rent-regulated apartments and makes it more difficult to convert rent regulated apartments to market rate apartments.
Removed
The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions. We expect that gains on the sale of U.S. government guaranteed loans will comprise a meaningful component of our revenue.
Added
As a result, the value of the collateral located in New York State securing our multi-family loans or the future net operating income of such properties could potentially become impaired which, in turn, could have a material adverse effect on our financial condition and results of operations.
Removed
During the year ended December 31, 2024 we sold into the secondary market $37.6 million of our non-qualified mortgages. There were no such sales for the fiscal year ended September 30, 2023.
Added
For the reasons described above, we may not be able to continue originating these loans or selling them in the secondary market.
Removed
Our growth strategy may require us to raise additional capital in the future to fund such growth, and the unavailability of additional capital on terms acceptable to us could adversely affect us or our growth.
Added
We may also have less knowledge of the markets in areas in which we may now lend, making underwriting decisions riskier. 25 Table of Contents The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions.
Removed
The net deferred tax asset reported on our balance sheet generally represents the tax benefit of future deductions from taxable income for items that have already been recognized for financial reporting purposes. The bulk of these deferred tax assets consists of deferred loan loss deductions and deferred compensation deductions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Bank’s CEO and SISO annually certify compliance to the NYSDFS as required under DFS regulations. ​ 42 Table of Contents Material Cybersecurity Risks, Threats, and Incidents Our cybersecurity program has been designed to mitigate risks from cyber-attacks. However, even with a strong internal control environment designed to mitigate risks, Hanover is keenly aware that risks cannot be entirely eliminated.
Biggest changeThe ultimate responsibility, among management, for effective risk management, including cybersecurity risk, resides with the Chief Executive Officer (“CEO”). The Bank’s CEO and CISO (or their equivalent) annually certify compliance to the DFS as required under DFS regulations. 44 Table of Contents Material Cybersecurity Risks, Threats, and Incidents Our cybersecurity program has been designed to mitigate risks from cyber-attacks.
Cybersecurity is a major component of the broader operational risk category given the increase in risk due to the increased reliance on technology both for operating processes and delivery channels. Hanover is committed to safeguarding the confidentiality, integrity, and availability of our information assets, including in particular customer information, and information technology environment.
Cybersecurity is a major component of the broader operational risk category given the increase in risk due to the increased reliance on technology both for operating processes and delivery channels. The Company is committed to safeguarding the confidentiality, integrity, and availability of our information assets, including in particular customer information, and information technology environment.
ITEM 1C. Cybersecurity Cybersecurity Risk Management and Strategy Hanover recognizes that risk is an intrinsic aspect of all areas of our business and activities. Effective risk management is vital to our success. A comprehensive risk management approach is fundamental to maintaining the trust of our customers and the efficacy of our financial services.
ITEM 1C. Cybersecurity Cybersecurity Risk Management and Strategy The Company recognizes that risk is an intrinsic aspect of all areas of our business and activities. Effective risk management is vital to our success. A comprehensive risk management approach is fundamental to maintaining the trust of our customers and the efficacy of our financial services.
Hanover’s Enterprise Risk Management (“ERM”) framework leverages the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) principles. This alignment is intended to bolster effective risk management practices that meet regulatory expectations.
The Company’s Enterprise Risk Management (“ERM”) framework leverages the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) principles. This alignment is intended to bolster effective risk management practices that meet regulatory expectations.
Lastly, we engage third-party audit firms to periodically assess our IT general controls and information security. ​ 41 Table of Contents We also maintain an Incident Response Plan that provides a structured framework for addressing potential or actual cybersecurity incidents. The Incident Response procedures and detections/prevention mechanisms are continuously refined to address evolving threats and alerts.
Lastly, we engage third-party audit firms to periodically assess our IT general controls and information security. We also maintain an Incident Response Plan that provides a structured framework for addressing potential or actual cybersecurity incidents. The procedures and detections/prevention mechanisms included in the Incident Response Plan are continuously refined to address evolving threats and alerts.
This Plan includes the timely notification, escalation, and reporting of cybersecurity incidents to the Bank’s Operational Risk Management Committee, Enterprise Risk Management Committee, and the Board of Directors and/or the duly designated ERM Committee of the Board of Directors.
The Incident Response Plan provides for the timely notification, escalation, and reporting of cybersecurity incidents to the Bank’s Operational Risk Management Committee, Enterprise Risk Management Committee, and the Board of Directors and/or the duly designated ERM Committee of the Board of Directors.
The SISO is an active member of the following management-level committees: Incident Response Committee, IT Steering Committee, Change Control Committee, Product Management Committee, Project Management Committee, and Operational Risk Management Committee (“ORMC”).
The Bank has an Information Security Manager (“ISM”), who is an active member of the following management-level committees: Incident Response Committee, IT Steering Committee, Change Control Committee, Product Management Committee, Project Management Committee, and Operational Risk Management Committee (“ORMC”).
The objective of our cybersecurity program is to minimize the potential and impact of cyber threats. Our comprehensive cybersecurity program is designed based upon the National Institute of Standards and Technology (“NIST”) cybersecurity framework and in accordance with applicable industry guidance inclusive of Federal Financial Institutions Examinations Council (“FFIEC”) Information Security program guidance and NYDFS guidance and requirements.
Our comprehensive cybersecurity program is designed based upon the National Institute of Standards and Technology (“NIST”) cybersecurity framework and in accordance with applicable industry guidance inclusive of Federal Financial Institutions Examinations Council (“FFIEC”) Information Security program guidance and NYDFS guidance and requirements. 43 Table of Contents Our cybersecurity governance framework includes documented policies, procedures, and controls designed to mitigate cybersecurity risk.
Moreover, we maintain a third-party risk management program designed to identify, assess, and mitigate risks, inclusive of cybersecurity risk, associated with third-party service providers and Hanover’s supply chain vendors.
We also maintain an ongoing education and training program designed to increase employee awareness and gauge risks relative to the human element. Moreover, we maintain a third-party risk management program designed to identify, assess, and mitigate risks, inclusive of cybersecurity risk, associated with third-party service providers and the Company’s supply chain vendors.
The SISO reports to the ORMC on a quarterly basis, or more frequently if needed, regarding the effectiveness and status of the cybersecurity program, material cybersecurity risks and key risk indicators, and material cybersecurity trends and developments. The SISO reports directly to the Chief Risk Officer (“CRO”), who has over 35 years of experience in enterprise risk, audit, and compliance.
The ISM reports to the ORMC on a quarterly basis, or more frequently if needed, regarding the effectiveness and status of the cybersecurity program, material cybersecurity risks and key risk indicators, and material cybersecurity trends and developments.
Our cybersecurity governance framework includes documented policies, procedures, and controls designed to mitigate cybersecurity risk. We also perform regular risk assessments of our infrastructure, network architecture, and software/systems using current threat intelligence received from a variety of sources. We employ various preventative and detective controls to block, monitor, and alert for suspicious activity.
We also perform regular risk assessments of our infrastructure, network architecture, and software/systems using current threat intelligence received from a variety of sources. We employ various preventative and detective controls to block, monitor, and alert for suspicious activity. Additionally, we engage third-party experts to perform periodic internal and external assessments, including penetration testing and vulnerability scanning.
Notwithstanding our cybersecurity program’s effectiveness, the threat posed by cyber-attacks remains substantial. Additionally, we maintain cybersecurity insurance designed to further reduce residual risk. Nevertheless, due to the continuously shifting and evolving threat landscape and global geopolitical events, a portion of cyber risk remains inherently beyond full mitigation.
Nevertheless, due to the continuously shifting and evolving threat landscape and global geopolitical events, a portion of cyber risk remains inherently beyond full mitigation.
The SISO also provides an annual Information Security report to the full Board of Directors and executive leadership team on the overall cybersecurity program, including material risks, key risk indicators, and emerging trends. The ultimate responsibility, among management, for effective risk management, including cybersecurity risk, resides with the Chief Executive Officer (“CEO”).
The vCISO reports on the overall cybersecurity program, material cybersecurity risks and key risk indicators, and material cybersecurity trends and developments. The vCISO also provides an annual Information Security report to the Company’s Board Enterprise Risk Management Committee and executive leadership team on the overall cybersecurity program, including material risks, key risk indicators, and emerging trends.
Cybersecurity Governance Our Senior Information Security Officer (“SISO”), who is supported by a team of specialized Information Security and Third-Party Risk Management Analysts, is primarily responsible for the development, oversight, and administration of our Information Security, Business Continuity, and Vendor Risk Management Programs.
The Bank has a team of Information Security and Third-Party Risk Management Analysts who are responsible for the daily execution of our Information Security, Business Continuity, and Vendor Risk Management Programs. The vCISO reports to the Company’s Board Enterprise Risk Management Committee on a quarterly basis, or more frequently if needed.
Removed
Additionally, we engage third-party experts to perform periodic internal and external assessments, including penetration testing and vulnerability scanning. We also maintain an ongoing education and training program designed to increase employee awareness and gauge risks relative to the human element.
Added
The objective of our cybersecurity program is to minimize the potential and impact of cyber threats.
Removed
The SISO has over 25 years of experience in information security, information technology, and enterprise risk management and holds certifications as both a Certified Information Systems Security Professional (“CISSP”) and Certified Information Systems Auditor (“CISA”).
Added
Cybersecurity Governance The Bank has outsourced the Information Security Officer (“ISO”) role via a virtual Chief Information Security Officer (“vCISO”) relationship. The vCISO assists management to assess, operate, and remediate information security issues and gaps. The vCISO provides security leadership and advisory services in a consultative manner that effectively leads the Bank through ongoing information security assessment and improvement activities.
Removed
The CRO maintains oversight of entity-wide risk management, inclusive of but not limited to cybersecurity risk. The SISO meets regularly with and works collectively with the Bank’s Chief Information Officer (“CIO”) and various members of the Information Technology Department as well as third-parties we may employ to assist in this area.
Added
However, even with a strong internal control environment designed to mitigate risks, we are keenly aware that risks cannot be entirely eliminated. Notwithstanding our cybersecurity program’s effectiveness, the threat posed by cyber-attacks remains substantial. Additionally, we maintain cybersecurity insurance designed to further reduce residual risk.
Removed
The CIO has over 30 years of experience in Information Technology. The SISO also reports to Hanover’s Board Enterprise Risk Management Committee on a quarterly basis, or more frequently if needed. Similar to the SISO’s management-level reporting, the SISO reports on the overall cybersecurity program, material cybersecurity risks and key risk indicators, and material cybersecurity trends and developments.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed0 unchanged
Biggest changeSet forth below is certain information about the Bank’s offices: ● Headquarters and Mineola Branch — 80 East Jericho Turnpike, Mineola, New York — this building has a branch on the first floor and Hanover’s corporate and administrative offices on the second and third floors and was opened in 2017. ● Garden City Park Branch — 2131 Jericho Turnpike, Garden City Park, New York — this one-story building houses the Bank’s original branch as well as its Residential Banking Team. ● Flushing Branch — 138-29 39th Avenue, Flushing, New York — this is a ground floor branch opened in 2019. ● Forest Hills Branch — 71-15 Austin Street, Forest Hills, New York — this is a ground floor branch opened in 2017. ● Sunset Park Branch — 5512 8th Avenue, Brooklyn, New York — this three-story building has a branch on the ground floor and administrative offices on the second and third floors. ● Bowery Branch — 109 Bowery, New York, New York — this three-story building has a branch on the ground floor and administrative offices on the second and third floors. ● Rockefeller Center Branch — 600 5th Avenue, New York, New York — this is a branch located on the 17 th floor of a 26-floor commercial building and was acquired as part of the Savoy transaction. ● Freehold Branch — 4400 Route 9, Freehold, NJ — this branch and administrative office is located on the second floor of three-story commercial office building. ● Hauppauge Branch — 410 Motor Parkway, Hauppauge, New York — this branch is located on the third floor of a commercial office building and was opened in May 2023. ​ 43 Table of Contents ​
Biggest changeSet forth below is certain information about the Bank’s offices: ● Headquarters and Mineola Branch — 80 East Jericho Turnpike, Mineola, New York — this building has a branch on the first floor and the Company’s corporate and administrative offices on the second and third floors and was opened in 2017. ● Garden City Park Branch — 2131 Jericho Turnpike, Garden City Park, New York — this one-story building houses the Bank’s original branch as well as its Residential Banking Team and was opened in 2009. ● Flushing Branch — 138-29 39th Avenue, Flushing, New York — this is a ground floor branch opened in 2019. ● Forest Hills Branch — 71-15 Austin Street, Forest Hills, New York — this is a ground floor branch opened in 2017. ● Sunset Park Branch — 5512 8th Avenue, Brooklyn, New York — this three-story building has a branch on the ground floor and administrative offices on the second and third floors and was acquired as part of the Chinatown Federal Savings Bank acquisition in 2019. ● Bowery Branch — 109 Bowery, New York, New York — this three-story building has a branch on the ground floor and administrative offices on the second and third floors and was acquired as part of the Chinatown Federal Savings Bank acquisition in 2019. ● Rockefeller Center Branch — 600 5th Avenue, New York, New York — this is a branch located on the 17 th floor of a 26-floor commercial building and was acquired as part of the Savoy acquisition in 2021. ● Freehold Branch — 4400 Route 9, Freehold, NJ — this branch and administrative office is located on the second floor of three-story commercial office building and was opened in 2022. ● Hauppauge Branch — 410 Motor Parkway, Hauppauge, New York — this branch is located on the third floor and has administrative offices on the third and fourth floor of a commercial office building and was opened in May 2023. ● Port Jefferson Branch — 1 North Country Road, Port Jefferson, New York — this is a ground floor branch opened in June 2025. ​ 45 Table of Contents ​
ITEM 2. Properties The Bank owns its administrative headquarters and its Garden City Park branch and leases seven other branch locations. Our banking offices are located in Kings, Nassau, Suffolk, New York and Queens Counties in New York and in Monmouth County in New Jersey.
ITEM 2. Properties The Bank owns its administrative headquarters and its Garden City Park branch and leases eight other branch locations. Our banking offices are located in Kings, Nassau, Suffolk, New York and Queens Counties in New York and in Monmouth County in New Jersey.
Removed
In addition, we have recently received regulatory approval to open a new branch in Port Jefferson, Suffolk County, New York, which we expect to open in early 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt December 31, 2024 and 2023, we are not party to any such legal proceeding the resolution of which we believe would have a material adverse effect on our business, financial condition or results of operations. ​ ​ ITEM 4. Mine Safety Disclosures Not applicable. ​ ​ Part II
Biggest changeITEM 3. Legal Proceedings From time to time we are party to various litigation matters incidental to the conduct of our business. At December 31, 2025, we are not party to any such legal proceeding the resolution of which we believe would have a material adverse effect on our business, financial condition or results of operations. ​ ​ ITEM 4.
Removed
ITEM 3. Legal Proceedings From time to time we are party to various litigation matters incidental to the conduct of our business.
Added
Mine Safety Disclosures Not applicable. ​ ​ Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThere were no sales of unregistered securities during the quarter ended December 31, 2024. On October 5, 2023, the Company announced that the Board of Directors approved a share repurchase program. Under the repurchase program, the Company may repurchase up to 366,050 shares of its common stock, or approximately 5% of its then outstanding shares.
Biggest changeThe following table presents the information regarding purchases of common stock during the three months ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number of ​ Maximum number ​ ​ ​ ​ ​ ​ ​ ​ shares purchased ​ of shares that may ​ ​ Total number ​ Average ​ as part of publicly ​ yet be purchased ​ ​ of shares ​ price paid ​ announced plans or ​ under the plans or Period ​ purchased ​ per share ​ programs ​ programs October 2025 ​ — ​ $ — ​ ​ — ​ 340,786 November 2025 ​ 35,511 ​ 22.22 ​ ​ 35,511 ​ 305,275 December 2025 ​ 21,200 ​ ​ 23.24 ​ ​ 21,200 ​ 284,075 ​ In October 2023, the Company announced the adoption of a new share repurchase program of up to 366,050 shares of its common stock, or approximately 5% of its then outstanding shares.
As of December 31, 2024, we had approximately 415 holders of record of our common stock, not including the number of persons or entities holding stock in nominee or the street name through various banks and brokers. We have paid a cash dividend of $0.10 per share on a quarterly basis to holders of our common stock.
As of December 31, 2025, we had approximately 378 holders of record of our common stock, not including the number of persons or entities holding stock in nominee or the street name through various banks and brokers. We have paid a cash dividend of $0.10 per share on a quarterly basis to holders of our common stock.
Removed
The timing and amount of purchases will be dictated by a number of factors. Under the share repurchase program, repurchases will be made from time to time by the Company in the open market as conditions allow, or in privately negotiated transactions.
Added
The Company (i.e., the company on an unconsolidated basis) is a separate and distinct legal entity from the Bank, and a substantial portion of the revenues the Company receives consists of dividends from the Bank. These dividends are the primary funding source for the dividends we pay on our common stock and the interest and principal payments on our debt.
Removed
The Company has not made any repurchases of its common stock under the program through the filing date of this Annual Report on Form 10-K. ​ ​ ITEM 6. [Reserved] ​ 44 Table of Contents ​
Added
Various federal and state laws and regulations limit the amount of dividends that a bank may pay to its parent company. If the Bank is unable to pay dividends to the Company, we might not be able to service our debt, pay our obligations, or pay dividends on our common stock.
Added
For further information see “Supervision and Regulation—Dividends.” There were no sales of unregistered securities during the quarter ended December 31, 2025.
Added
The repurchase program permits shares to be repurchased in the open market as conditions allow, or in privately negotiated transactions. As of December 31, 2025, 284,075 shares remained available for repurchase under the program. ​ ​ 46 Table of Contents ITEM 6. [Reserved] ​ ​

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. ​ [Reserved] 44 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations 45 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk 63 Item 8. ​ Financial Statements and Supplementary Data 64
Biggest changeItem 6. ​ [Reserved] 47 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk 65 Item 8. ​ Financial Statements and Supplementary Data 67

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(4) Net interest margin represents net interest income divided by average interest-earning assets. ​ The following table details the variances in net interest income caused by changes in interest rates and volume for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 vs. ​ ​ Fiscal Year Ended September 30, 2023 ​ ​ Increase (decrease) due to change in: ​ ​ ​ (in thousands) ​ Volume Rate Total Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 13,649 ​ $ 11,761 ​ $ 25,410 Investment securities ​ 4,981 ​ 205 ​ 5,186 Interest-earning balances and other ​ (2,946) ​ 329 ​ (2,617) Total interest income ​ 15,684 ​ 12,295 ​ ​ 27,979 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW and money market deposits ​ ​ 5,937 ​ ​ 12,873 ​ ​ 18,810 Time deposits ​ 1,888 ​ 7,968 ​ 9,856 Borrowings ​ 150 ​ 563 ​ 713 Subordinated debentures ​ — ​ — ​ — Total interest expense ​ 7,975 ​ 21,404 ​ 29,379 Net increase (decrease) in net interest income ​ $ 7,709 ​ $ (9,109) ​ $ (1,400) ​ ​ 50 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended December 31, ​ ​ 2023 vs. 2022 ​ ​ Increase (decrease) due to change in: ​ ​ ​ (in thousands) ​ Volume Rate Total Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 3,197 ​ $ 3,218 ​ $ 6,415 Investment securities ​ 652 ​ 76 ​ 728 Interest-earning balances and other ​ 1,179 ​ 261 ​ 1,440 Total interest income ​ 5,028 ​ 3,555 ​ ​ 8,583 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW and money market deposits ​ ​ 755 ​ ​ 6,028 ​ ​ 6,783 Time deposits ​ 1,081 ​ 2,603 ​ 3,684 Borrowings ​ 392 ​ 337 ​ 729 Subordinated debentures ​ (8) ​ — ​ (8) Total interest expense ​ 2,220 ​ 8,968 ​ 11,188 Net increase (decrease) in net interest income ​ $ 2,808 ​ $ (5,413) ​ $ (2,605) ​ Provision for Credit Losses The provision for credit losses was $4.9 million (including a $0.2 million provision for unfunded comments) for calendar 2024 compared to $3.4 million (including no provision for unfunded comments) for fiscal 2023.
Biggest change(4) Net interest margin represents net interest income divided by average interest-earning assets. ​ 51 Table of Contents The following table details the variances in net interest income caused by changes in interest rates and volume for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 vs. 2024 ​ ​ Increase (decrease) due to change in: ​ ​ ​ (in thousands) ​ Volume ​ Rate ​ Total Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ (1,107) ​ $ (2,175) ​ $ (3,282) Investment securities ​ (58) ​ (243) ​ (301) Interest-earning balances and other ​ 1,806 ​ (766) ​ 1,040 Total interest income ​ 641 ​ (3,184) ​ ​ (2,543) Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW and money market deposits ​ ​ 740 ​ ​ (8,957) ​ ​ (8,217) Time deposits ​ 427 ​ (891) ​ (464) Borrowings ​ (1,643) ​ 181 ​ (1,462) Subordinated debentures ​ — ​ 215 ​ 215 Total interest expense ​ (476) ​ (9,452) ​ (9,928) Net increase in net interest income ​ $ 1,117 ​ $ 6,268 ​ $ 7,385 ​ Provision for Credit Losses The provision for credit losses was $10.4 million (including a $0.3 million provision for unfunded commitments) for the year ended December 31, 2025 compared to $4.9 million (including a $0.2 million provision for unfunded commitments) for the year ended December 31, 2024.
The allowance for credit losses is a valuation allowance for management’s estimate of expected credit losses in the loan portfolio. The process to determine expected credit losses utilizes analytic tools and judgment and is reviewed on a quarterly basis.
Allowance for Credit Losses The allowance for credit losses (“ACL”) is a valuation allowance for management’s estimate of expected credit losses in the loan portfolio. The process to determine expected credit losses utilizes analytic tools and judgment and is reviewed on a quarterly basis.
In accordance with accounting requirements, we formally designate all of our hedging relationships as either fair value hedges or cash flow hedges, and document the strategy for undertaking the hedge transactions and its method of assessing ongoing effectiveness. At December 31, 2024, our derivative instruments were comprised of interest rate swaps with a total notional amount of $125.0 million.
In accordance with accounting requirements, we formally designate all of our hedging relationships as either fair value hedges or cash flow hedges, and document the strategy for undertaking the hedge transactions and its method of assessing ongoing effectiveness. At December 31, 2025, our derivative instruments were comprised of interest rate swaps with a total notional amount of $125.0 million.
No borrowings were outstanding under lines of credit with correspondent banks at December 31, 2024. Derivatives We utilize derivative instruments in the form of interest rate swaps to hedge our exposure to interest rate risk in conjunction with our overall asset/liability management process.
No borrowings were outstanding under lines of credit with correspondent banks at December 31, 2025. Derivatives We utilize derivative instruments in the form of interest rate swaps to hedge our exposure to interest rate risk in conjunction with our overall asset/liability management process.
The Bank’s capital conservation buffer was greater than 2.5% of risk-weighted assets at December 31, 2024. The Bank capital level is characterized as "well-capitalized" under the Basel III Capital Rules.
The Bank’s capital conservation buffer was greater than 2.5% of risk-weighted assets at December 31, 2025. The Bank capital level is characterized as "well-capitalized" under the Basel III Capital Rules.
Investment Securities Portfolio by Expected Maturities (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2024 ​ ​ Available-for-Sale ​ Held-to-Maturity ​ Amortized Weighted Amortized Weighted (dollars in thousands) ​ Cost ​ Average Yield ​ Cost ​ Average Yield U.S.
Investment Securities Portfolio by Expected Maturities (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2025 ​ ​ Available-for-Sale ​ Held-to-Maturity ​ ​ ​ ​ Amortized ​ ​ ​ Weighted ​ ​ ​ Amortized ​ ​ ​ Weighted (dollars in thousands) ​ Cost ​ Average Yield ​ Cost ​ Average Yield U.S.
Management believes that all of its unrealized losses on individual investment securities at December 31, 2024 and 2023 are the result of fluctuations in interest rates and do not reflect deterioration in the credit quality of these investments. Accordingly, management considers these unrealized losses to be temporary in nature.
Management believes that all of the unrealized losses on individual investment securities at December 31, 2025 and 2024 are the result of fluctuations in interest rates and do not reflect deterioration in the credit quality of these investments. Accordingly, management considers these unrealized losses to be temporary in nature.
The tables below illustrate the maturity distribution and weighted average yield and amortized cost of our investment securities as of December 31, 2024 and 2023, on a contractual maturity basis.
The tables below illustrate the maturity distribution and weighted average yield and amortized cost of our investment securities as of December 31, 2025 and 2024, on a contractual maturity basis.
Commercial letters of credit are used primarily to facilitate trade or commerce and are also issued to support public and private borrowing arrangements, bond financings and similar transactions. Collateral may be 61 Table of Contents required to support letters of credit based upon management’s evaluation of the creditworthiness of each customer.
Commercial letters of credit are used primarily to facilitate trade or commerce and are also issued to support public and private borrowing arrangements, bond financings and similar transactions. Collateral may be required to support letters of credit based upon management’s evaluation of the creditworthiness of each customer.
The results of the evaluation indicated that fair value exceeded the carrying value of the reporting unit. ​ 46 Table of Contents Annual goodwill impairment testing was performed as of November 30 and no impairment charges were incurred. Future unfavorable conditions could result in goodwill impairment.
The results of the evaluation indicated that fair value exceeded the carrying value of the reporting unit. Annual goodwill impairment testing was performed as of November 30 and no impairment charges were incurred. Future unfavorable conditions could result in goodwill impairment.
The amount of the reserve was $0.3 million at December 31, 2024 and $0.1 million at December 31, 2023. This reserve is determined based upon the outstanding volume of loan commitments at the end of each period. Any increases or reductions in this reserve are recognized in the provision for credit losses.
The amount of the reserve was $0.6 million at December 31, 2025 and $0.3 million at December 31, 2024. This reserve is determined based upon the outstanding volume of loan commitments at the end of each period. Any increases or reductions in this reserve are recognized in the provision for credit losses.
As shown below, 63% of the combined portfolio is secured by properties subject to free market rental terms, which is the dominant tenant type. Both the Market Rent and Stabilized Rent segments of our portfolio present very similar average borrower profiles.
As shown below, as of December 31, 2025, 64% of the combined portfolio is secured by properties subject to free market rental terms, which is the dominant tenant type. Both the Market Rent and Stabilized Rent segments of our portfolio present very similar average borrower profiles.
At December 31, 2024 and 2023, commitments to originate loans and commitments under unused lines of credit for which the Bank is obligated amounted to approximately $130.3 million and $143.4 million, respectively. ​ Letters of credit are conditional commitments guaranteeing payments of drafts in accordance with the terms of the letter of credit agreements.
At December 31, 2025 and 2024, commitments to originate loans and commitments under unused lines of credit for which the Bank is obligated amounted to approximately $160.9 million and $130.3 million, respectively. Letters of credit are conditional commitments guaranteeing payments of drafts in accordance with the terms of the letter of credit agreements.
The following table summarizes the amortized cost and fair value of investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, ​ Balance at September 30, ​ ​ 2024 ​ 2023 ​ 2023 (in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Investment securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
The following table summarizes the amortized cost and fair value of investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, ​ ​ 2025 ​ 2024 (in thousands) ​ ​ ​ Amortized Cost ​ ​ ​ Fair Value ​ ​ ​ Amortized Cost ​ ​ ​ Fair Value Investment securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
These accounts generally pay interest at rates established by management based on competitive market factors and management’s desire to increase or decrease certain types or maturities of deposits. Deposits continue to be our primary funding source. Total deposits at December 31, 2024 were $1.95 billion, an increase of $49.7 million from total deposits of $1.90 billion at December 31, 2023.
These accounts generally pay interest at rates established by management based on competitive market factors and management’s desire to increase or decrease certain types or maturities of deposits. Deposits continue to be our primary funding source. Total deposits at December 31, 2025 were $2.03 billion, an increase of $74.1 million from total deposits of $1.95 billion at December 31, 2024.
On a weekly basis, appropriate senior management receives a current liquidity position report and a ninety day forecasted cash flow to ensure that all short-term obligations will be met and there is sufficient liquidity available. As of December 31, 2024, we held $252.0 million of deposits that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit.
On a weekly basis, appropriate senior management receives a current liquidity position report and a ninety day forecasted cash flow to ensure that all short-term obligations will be met and there is sufficient liquidity available. 61 Table of Contents As of December 31, 2025, we held $304.8 million of deposits that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit.
Our sources of wholesale funding included brokered certificates of deposit, listing service certificates of deposit and insured cash sweep (“ICS”) reciprocal deposits in excess of 20% of total liabilities, which balances totaled approximately $85.0 million, $2.7 million and $5.5 million, or 4.4%, 0.1% and 0.3% of total deposits, respectively, at December 31, 2024.
Our sources of wholesale funding included brokered certificates of deposit, listing service certificates of deposit and insured cash sweep (“ICS”) reciprocal deposits in excess of 20% of total liabilities, which balances totaled approximately $110.0 million, $1.0 million and $0, or 5.4%, 0.0% and 0.0% of total deposits, respectively, at December 31, 2025.
At December 31, 2024, undrawn liquidity sources, which include cash and unencumbered securities and secured and unsecured funding capacity, totaled $713.1 million, or approximately 283% of uninsured deposit balances. Deposits We provide a range of deposit services, including non-interest bearing demand accounts, interest-bearing demand and savings accounts, money market accounts and time deposits.
At December 31, 2025, undrawn liquidity sources, which include cash and unencumbered securities and secured and unsecured funding capacity, totaled $776.9 million, or approximately 255% of uninsured deposit balances. Deposits We provide a range of deposit services, including non-interest bearing demand accounts, interest-bearing demand and savings accounts, money market accounts and time deposits.
At December 31, 2024, the Bank had a $247.2 million collateralized line of credit from the Federal Reserve Bank of New York’s discount window with no outstanding borrowings. At December 31, 2024, the Bank had access to approximately $92 million in unsecured lines of credit extended by correspondent banks, if needed, for short-term funding purposes.
At December 31, 2025, the Bank had a $97.3 million collateralized line of credit from the Federal Reserve Bank of New York discount window with no outstanding borrowings. At December 31, 2025, the Bank had access to approximately $92 million in unsecured lines of credit extended by correspondent banks, if needed, for short-term funding purposes.
The repurchase program permits shares to be repurchased in the open market as conditions allow, or in privately negotiated transactions, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. The Company has not made any stock repurchases under the program.
The repurchase program permits shares to be repurchased in the open market as conditions allow, or in privately negotiated transactions, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. At December 31, 2024 and 2023, letters of credit outstanding were approximately $0.8 million and $3.9 million, respectively.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. At December 31, 2025 and 2024, letters of credit outstanding were both approximately $0.8 million.
Asset liquidity is provided by short-term investments, such as fed funds sold, the marketability of securities available-for-sale and interest-bearing deposits due from the Federal Reserve Bank of New York, Federal Home Loan Bank (the “FHLB”) and correspondent banks, which totaled $246.6 million and $238.6 million at December 31, 2024 and 2023, respectively.
Asset liquidity is provided by short-term investments, such as fed funds sold, the marketability of securities available-for-sale and interest-bearing deposits due from the Federal Reserve Bank of New York, FHLB and correspondent banks, which totaled $308.5 million and $246.6 million at December 31, 2025 and 2024, respectively.
The accumulated other comprehensive loss at December 31, 2024 was 0.68% of total equity and was comprised of a $1.0 million after tax net unrealized loss on the investment portfolio and a $0.3 million after tax net unrealized loss on derivatives. We are subject to various regulatory capital requirements administered by the federal banking agencies.
The accumulated other comprehensive loss at December 31, 2025 was 0.34% of total equity and was comprised of a $0.2 million after tax net unrealized loss on the investment portfolio and a $0.5 million after tax net unrealized loss on derivatives. We are subject to various regulatory capital requirements administered by the federal banking agencies.
Business Overview We are currently a New York corporation which became the holding company for the Bank in 2016. The Bank, a community commercial bank focusing on highly personalized and efficient services and products responsive to local needs, commenced operations in 2009 and was incorporated under the laws of the State of New York.
Business Overview The Company is a Maryland corporation and is the holding company for the Bank. The Bank, a community commercial bank focusing on highly personalized and efficient services and products responsive to local needs, commenced operations in 2009 and is incorporated under the laws of the State of New York.
Commercial real estate, multi-family and construction loans totaled $1.09 billion at December 31, 2024, with an average loan balance of $1.5 million and a weighted average loan-to-value ratio of 59%. As will be discussed below, approximately 37% of the multifamily portfolio is subject to rent regulation.
Commercial real estate, multifamily and construction loans totaled $1.08 billion at December 31, 2025, with an average loan balance of $1.5 million and a weighted average loan-to-value ratio of 59%. As discussed below, approximately 36% of the multifamily portfolio is subject to rent regulation.
At December 31, 2024, $7.1 million of these borrowings were classified as short-term, while the remaining was classified as long- term. Short-term borrowings are comprised of short-term FHLB advances. Long-term funding is comprised of long-term FHLB advances and subordinated debentures. The Company will prepay FHLB advances from time to time as funding needs change.
At December 31, 2025, $40.5 million of these borrowings were classified as short-term, while the remaining was classified as long-term. Short-term borrowings are comprised of short-term FHLB advances due within 12 months. Long-term funding is comprised of long-term FHLB advances and subordinated debentures. The Company will prepay FHLB advances from time to time as funding needs change.
If, after assessing the totality of such events or circumstances, we determine it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then we would not be required to perform an impairment test.
If, after assessing the totality of such events or circumstances, we determine it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then we would not be required to perform an impairment test. ​ 48 Table of Contents The quantitative impairment analysis requires a comparison of each reporting unit’s fair value to its carrying value to identify potential impairment.
The Company used a portion of the net proceeds to pay off an existing holding company note in October 2020 and used the remainder of the net proceeds for acquisition financing and general corporate purposes, including contributing equity capital to the Bank.
As of December 31, 2025, the variable interest rate was 8.76%. The Company used a portion of the net proceeds to pay off an existing holding company note in October 2020 and used the remainder of the net proceeds for acquisition financing and general corporate purposes, including contributing equity capital to the Bank.
The increase in retained earnings was due primarily to net income of $12.3 million for the year ended December 31, 2024, which was offset by $2.9 million of dividends declared.
The increase in retained earnings was due primarily to net income of $7.5 million for the year ended December 31, 2025, which was offset by $3.0 million of dividends declared.
Capital Resources Total stockholders’ equity was $196.6 million at December 31, 2024, an increase of $11.8 million from stockholders’ equity of $184.8 million at December 31, 2023. The increase was primarily due to an increase of $9.4 million in retained earnings and a decrease of $1.1 million in accumulated other comprehensive loss.
Capital Resources Total stockholders’ equity was $200.3 million at December 31, 2025, an increase of $3.7 million from stockholders’ equity of $196.6 million at December 31, 2024. The increase was primarily due to an increase of $4.5 million in retained earnings and a decrease of $0.7 million in accumulated other comprehensive loss.
Judgment is applied in determining the weightings that are most representative of fair value. As of November 30, 2024, the Company elected to proceed to a quantitative calculation to compare the reporting unit's fair value with its carrying value.
The selection and weighting of the various fair value techniques may result in a higher or lower fair value. Judgment is applied in determining the weightings that are most representative of fair value. As of November 30, 2025, the Company elected to proceed to a quantitative calculation to compare the reporting unit's fair value with its carrying value.
The decrease in net income recorded for calendar 2024 from fiscal 2023 resulted from a decrease in net interest income, an increase in the provision for credit losses and an increase in non-interest expense, which were partially offset by an increase in non-interest income.
The decrease in net income recorded for the year ended December 31, 2025 from the year ended December 31, 2024 resulted from an increase in the provision for credit losses, a decrease in non-interest income, and an increase in non-interest expense. These were partially offset by an increase in net interest income.
A summary of the Bank’s regulatory capital amounts and ratios are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, (dollars in thousands) ​ 2024 ​ 2023 ​ 2023 Total capital $ 220,696 $ 210,071 $ 205,786 Tier 1 capital ​ 201,744 ​ 193,324 ​ 190,928 ​ Common equity tier 1 capital ​ 201,744 ​ 193,324 ​ 190,928 ​ Total capital ratio ​ 14.58 % 14.31 % 14.60 % Tier 1 capital ratio ​ 13.32 % 13.17 % 13.55 % Common equity tier 1 capital ratio ​ 13.32 % 13.17 % 13.55 % Tier 1 leverage ratio ​ 9.13 % 9.08 % 9.16 % ​ Under a policy of the Federal Reserve applicable to bank holding companies with less than $3.0 billion in consolidated assets, the Company is not subject to consolidated regulatory capital requirements. ​ On October 5, 2023, the Company announced that the Board of Directors approved a stock repurchase program.
A summary of the Bank’s regulatory capital amounts and ratios are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ (dollars in thousands) ​ 2025 ​ 2024 ​ Total capital ​ ​ ​ $ 224,239 ​ ​ ​ $ 220,696 ​ ​ ​ Tier 1 capital ​ 204,431 ​ 201,744 ​ Common equity tier 1 capital ​ 204,431 ​ 201,744 ​ Total capital ratio ​ 14.15 % 14.58 % Tier 1 capital ratio ​ 12.90 % 13.32 % Common equity tier 1 capital ratio ​ 12.90 % 13.32 % Tier 1 leverage ratio ​ 9.05 % 9.13 % ​ 64 Table of Contents Under a policy of the Federal Reserve applicable to bank holding companies with less than $3.0 billion in consolidated assets, the Company is not subject to consolidated regulatory capital requirements. ​ On October 5, 2023, the Company announced that the Board of Directors approved a share repurchase program.
Our significant accounting policies and effects of new accounting pronouncements are discussed in detail in Note 1, “Summary of Significant Accounting Policies” to the accompanying Consolidated Financial Statements contained in Item 8.
Our significant accounting policies and effects of new accounting pronouncements are discussed in detail in Note 1, “Summary of Significant Accounting Policies” to the accompanying Consolidated Financial Statements contained in Item 8. Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for credit losses and goodwill.
Analysis of Financial Condition Investment Securities Our investment securities portfolio, which is structured with minimum credit exposure, is intended to provide us with adequate liquidity, flexibility in asset/liability management, and a source of stable income.
The effective income tax rate for the year ended December 31, 2025 was 24.8% compared to 24.6% for the year ended December 31, 2024. Analysis of Financial Condition Investment Securities Our investment securities portfolio, which is structured with minimum credit exposure, is intended to provide us with adequate liquidity, flexibility in asset/liability management, and a source of stable income.
GSE commercial mortgage-backed securities ​ 2,499 ​ 2,431 ​ 2,561 ​ 2,451 ​ 2,577 ​ 2,407 Total investment securities held-to-maturity ​ 3,758 ​ 3,609 ​ 4,041 ​ 3,835 ​ 4,108 ​ 3,760 Total investment securities ​ $ 88,842 ​ $ 87,364 ​ $ 67,333 ​ $ 65,254 ​ $ 17,130 ​ $ 14,649 ​ We continually evaluate our investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which we are exposed.
GSE commercial mortgage-backed securities ​ — ​ — ​ 2,499 ​ 2,431 Total investment securities held-to-maturity ​ 1,017 ​ 976 ​ 3,758 ​ 3,609 Total investment securities ​ $ 100,849 ​ $ 100,528 ​ $ 88,842 ​ $ 87,364 ​ 53 Table of Contents We continually evaluate our investment securities portfolio in response to established asset/liability management objectives, changing market conditions that could affect profitability, and the level of interest rate risk to which we are exposed.
Under the repurchase program, the Company may repurchase up to 366,050 shares of its common stock, or approximately 5% of its then outstanding shares.
Under the repurchase program, the Company may repurchase up to 366,050 shares of its common stock, or approximately 5% of its then outstanding shares. The timing and amount of purchases will be dictated by a number of factors.
At December 31, 2024, the Bank had a total borrowing capacity of $698.0 million at the FHLB, of which $492.1 million was used to collateralize municipal deposits and $107.8 million was utilized for term advances.
At December 31, 2025, the Bank had a total borrowing capacity of $814.3 million at the FHLB, of which $704.5 million was used to collateralize municipal deposits and $100.7 million was utilized for term advances.
Allowance for Credit Losses The allowance for credit losses was $22.8 million at December 31, 2024, an increase of $3.1 million from $19.7 million at December 31, 2023.
Allowance for Credit Losses The allowance for credit losses was $18.7 million at December 31, 2025, a decrease of $4.1 million from $22.8 million at December 31, 2024.
GSE residential mortgage-backed securities ​ 1,259 ​ 1,178 ​ 1,480 ​ 1,384 ​ 1,531 ​ 1,353 U.S.
GSE residential mortgage-backed securities ​ 1,017 ​ 976 ​ 1,259 ​ 1,178 U.S.
As a New York State chartered bank, the Bank is subject to regulation by the DFS and the FDIC. As a bank holding company, we are subject to regulation and examination by the FRB.
As a New York State chartered bank, the Bank is subject to regulation by the DFS and the FDIC. As a bank holding company, the Company is subject to regulation and examination by the FRB. The Company completed its core processing system conversion to FIS Horizon in February 2025.
These evaluations may cause us to change the level of funds we deploy into investment securities, change the composition of our investment securities portfolio, and change the proportion of investments made into the available-for-sale and held-to-maturity investment categories. 52 Table of Contents Our investment securities available-for-sale portfolio included gross unrealized gains of $0.3 million and gross unrealized losses of $1.6 million at December 31, 2024, compared to gross unrealized gains of $0.1 million and gross unrealized losses of $2.0 million at December 31, 2023.
These evaluations may cause us to change the level of funds we deploy into investment securities, change the composition of our investment securities portfolio, and change the proportion of investments made into the available-for-sale and held-to-maturity investment categories.
Treasury securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ 19,995 4.37 % — — % ​ ​ 19,995 4.37 % — — % Collateralized loan obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after five years through ten years ​ 27,284 6.12 % — — % Due after ten years ​ 4,987 6.10 % — — % ​ ​ 32,271 6.12 % — — % Corporate bonds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after one year through five years ​ 1,000 8.75 % — — % Due after five years through ten years ​ 19,282 5.90 % — — % ​ ​ 20,282 6.04 % — — % Total investment securities ​ $ 85,084 5.45 % $ 3,758 2.59 % ​ ​ 53 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 ​ ​ Available-for-Sale ​ Held-to-Maturity ​ Amortized Weighted Amortized Weighted (dollars in thousands) ​ Cost ​ Average Yield ​ Cost ​ Average Yield U.S.
Treasury securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ 4,495 3.55 % — — % ​ ​ 4,495 3.55 % — — % Collateralized loan obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after five years through ten years ​ 4,993 5.45 % — — % Due after ten years ​ 27,765 5.52 % — — % ​ ​ 32,758 5.51 % — — % Corporate bonds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after one year through five years ​ 2,000 8.06 % — — % Due after five years through ten years ​ ​ 26,750 ​ 6.43 % ​ — ​ — % Due after ten years ​ 1,500 7.00 % — — % ​ ​ 30,250 6.57 % — — % Total investment securities ​ $ 99,832 5.59 % $ 1,017 2.45 % ​ ​ 54 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2024 ​ ​ Available-for-Sale ​ Held-to-Maturity ​ ​ ​ ​ Amortized ​ ​ ​ Weighted ​ ​ ​ Amortized ​ ​ ​ Weighted (dollars in thousands) ​ Cost ​ Average Yield ​ Cost ​ Average Yield U.S.
The following table presents the allocation of the allowance for credit losses by loan category for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ At September 30, ​ ​ ​ 2024 ​ ​ 2023 ​ 2023 ​ ​ ​ % of ​ ​ % of ​ ​ % of ​ ​ ​ ​ ​ Total ​ ​ ​ ​ Total ​ ​ ​ ​ Total ​ (dollars in thousands) ​ Amount ​ Loans ​ Amount ​ Loans ​ Amount ​ Loans ​ Residential real estate ​ $ 6,236 0.86 % $ 5,001 0.70 % $ 4,778 0.73 % Multi-family ​ 5,284 0.96 % 4,671 0.82 % 4,206 0.73 % Commercial real estate ​ 5,605 1.07 % 8,390 1.53 % 3,197 0.59 % Commercial and industrial ​ 5,447 3.22 % 1,419 1.31 % 2,368 2.70 % Construction ​ 180 1.34 % 122 0.93 % 104 0.80 % Consumer ​ 27 5.37 % 55 13.32 % 33 7.76 % Total allowance for credit losses ​ $ 22,779 1.15 % $ 19,658 1.00 % $ 14,686 0.78 % ​ The following table presents information related activity in the allowance for credit losses for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Fiscal ​ ​ ​ Year Ended ​ December 31, ​ Year Ended ​ ​ ​ December 31, ​ (transition period) ​ September 30, ​ (dollars in thousands) 2024 2023 2023 Beginning balance ​ $ 19,658 ​ $ 14,686 ​ $ 12,844 ​ Impact of adopting ASC 326 ​ ​ — ​ ​ 4,095 ​ ​ — ​ Provision for credit losses ​ 4,750 ​ 200 ​ 3,432 ​ Charge-Offs: ​ ​ ​ ​ Residential real estate ​ (280) ​ — ​ — ​ Multi-family ​ (765) ​ — ​ (959) ​ Commercial real estate ​ (30) ​ — ​ — ​ Commercial and industrial ​ (572) ​ — ​ (734) ​ Construction ​ — ​ — ​ — ​ Consumer ​ — ​ — ​ — ​ Total loan charge-offs ​ (1,647) ​ — ​ (1,693) ​ Recoveries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Multi-family ​ ​ — ​ ​ 567 ​ ​ — ​ Commercial and industrial ​ 18 ​ 110 ​ 103 ​ Total recoveries ​ 18 ​ ​ 677 ​ ​ 103 ​ Total net (charge-offs) recoveries ​ (1,629) ​ 677 ​ (1,590) ​ Ending balance ​ $ 22,779 ​ $ 19,658 ​ $ 14,686 ​ Allowance for credit losses to total loans held-for- investment ​ 1.15 % 1.00 % 0.78 % Net (charge-offs) recoveries to average loans held-for-investment ​ (0.08) % 0.04 % (0.09) % 58 Table of Contents Sources of Funds and Liquidity Liquidity management is defined as the ability of the Company and the Bank to meet their financial obligations on a continuous basis without material loss or disruption of normal operations.
The following table presents the allocation of the allowance for credit losses by loan category for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ ​ 2025 ​ ​ 2024 ​ ​ ​ ​ ​ ​ % of ​ ​ % of ​ ​ ​ ​ ​ Total ​ ​ ​ ​ Total ​ (dollars in thousands) ​ Amount ​ Loans ​ Amount ​ Loans ​ Residential real estate ​ $ 5,035 0.65 % $ 6,236 0.86 % Multifamily ​ 3,387 0.63 % 5,284 0.96 % Commercial real estate ​ 5,123 0.97 % 5,605 1.03 % Commercial and industrial ​ 4,912 3.37 % 5,447 3.74 % Construction ​ 215 1.94 % 180 1.34 % Consumer ​ 22 5.12 % 27 5.37 % Total allowance for credit losses ​ $ 18,694 0.93 % $ 22,779 1.15 % ​ ​ 60 Table of Contents The following table presents information related activity in the allowance for credit losses for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ (dollars in thousands) ​ 2025 ​ ​ 2024 ​ Beginning balance ​ $ 22,779 ​ $ 19,658 ​ Provision for credit losses ​ 10,070 ​ 4,750 ​ Charge-Offs: ​ ​ ​ ​ ​ Residential real estate ​ (709) ​ (280) ​ Multifamily ​ (33) ​ (765) ​ Commercial real estate ​ (1,609) ​ (30) ​ Commercial and industrial ​ (11,838) ​ (572) ​ Construction ​ — ​ — ​ Consumer ​ — ​ — ​ Total loan charge-offs ​ (14,189) ​ (1,647) ​ Recoveries: ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ 34 ​ 18 ​ Total recoveries ​ 34 ​ ​ 18 ​ Total net charge-offs ​ (14,155) ​ (1,629) ​ Ending balance ​ $ 18,694 ​ $ 22,779 ​ Allowance for credit losses to total loans held-for- investment ​ 0.93 % 1.15 % Net charge-offs to average loans held-for-investment ​ (0.71) % (0.08) % ​ Sources of Funds and Liquidity Liquidity management is defined as the ability of the Company and the Bank to meet their financial obligations on a continuous basis without material loss or disruption of normal operations.
This financial data is derived in part from, and should be read in conjunction with, our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, (in thousands) ​ 2024 ​ 2023 ​ 2023 Selected Balance Sheet Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities available-for-sale, at fair value ​ $ 83,755 ​ $ 61,419 ​ $ 10,889 Securities held-to-maturity ​ 3,758 ​ 4,041 ​ 4,108 Loans ​ 1,985,524 ​ 1,957,199 ​ 1,874,562 Total assets ​ 2,312,110 ​ 2,270,060 ​ 2,149,535 Total deposits ​ 1,954,283 ​ 1,904,595 ​ 1,735,070 Total stockholders' equity ​ 196,638 ​ 184,830 ​ 185,907 ​ ​ 47 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Fiscal ​ ​ ​ Year Ended ​ December 31, ​ Year Ended ​ ​ ​ December 31, ​ (transition period) ​ September 30, ​ (dollars in thousands) ​ 2024 ​ 2023 ​ 2023 ​ Selected Operating Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total interest income ​ $ 133,022 ​ $ 31,155 ​ $ 105,043 ​ Total interest expense ​ 79,930 ​ 18,496 ​ 50,551 ​ Net interest income ​ 53,092 ​ 12,659 ​ 54,492 ​ Provision for credit losses ​ 4,940 ​ 200 ​ 3,432 ​ Total non-interest income ​ 15,339 ​ 3,254 ​ 8,848 ​ Total non-interest expense ​ 47,112 ​ 10,670 ​ 39,721 ​ Income before income taxes ​ 16,379 ​ 5,043 ​ 20,187 ​ Income tax expense ​ 4,033 ​ 1,280 ​ 5,023 ​ Net income ​ 12,346 ​ 3,763 ​ 15,164 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Financial Data and Other Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average equity ​ 6.45 % 8.10 % 8.40 % Return on average assets ​ 0.55 % 0.69 % 0.77 % Yield on average interest earning assets ​ 6.12 % 5.91 % 5.49 % Cost of average interest bearing liabilities ​ 4.40 % 4.19 % 3.18 % Net interest rate spread ​ 1.72 % 1.72 % 2.31 % Net interest rate margin ​ 2.44 % 2.40 % 2.85 % Average equity to average assets ​ 8.57 % 8.58 % 9.13 % ​ Analysis of Results of Operations ​ Net Interest Income ​ Net interest income is the primary source of the Company’s revenue.
This financial data is derived in part from, and should be read in conjunction with, our consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (in thousands) ​ 2025 ​ 2024 Selected Balance Sheet Data: ​ ​ ​ ​ ​ ​ Securities available-for-sale, at fair value ​ $ 99,552 ​ $ 83,755 Securities held-to-maturity ​ 1,017 ​ 3,758 Loans ​ 2,000,749 ​ 1,985,524 Total assets ​ 2,383,096 ​ 2,312,110 Total deposits ​ 2,028,387 ​ 1,954,283 Total stockholders' equity ​ 200,266 ​ 196,638 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ (dollars in thousands) ​ 2025 ​ 2024 ​ Selected Operating Data: ​ ​ ​ ​ ​ ​ ​ Total interest income ​ $ 130,479 ​ $ 133,022 ​ Total interest expense ​ 70,002 ​ 79,930 ​ Net interest income ​ 60,477 ​ 53,092 ​ Provision for credit losses ​ 10,382 ​ 4,940 ​ Total non-interest income ​ 12,843 ​ 15,339 ​ Total non-interest expense ​ 52,984 ​ 47,112 ​ Income before income taxes ​ 9,954 ​ 16,379 ​ Income tax expense ​ 2,466 ​ 4,033 ​ Net income ​ 7,488 ​ 12,346 ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Financial Data and Other Data: ​ ​ ​ ​ ​ ​ ​ Return on average equity ​ 3.73 % 6.45 % Return on average assets ​ 0.33 % 0.55 % Yield on average interest earning assets ​ 5.94 % 6.12 % Cost of average interest bearing liabilities ​ 3.88 % 4.40 % Net interest rate spread ​ 2.06 % 1.72 % Net interest margin ​ 2.75 % 2.44 % Average equity to average assets ​ 8.89 % 8.57 % ​ ​ 50 Table of Contents Analysis of Results of Operations ​ Net Interest Income ​ Net interest income is the primary source of the Company’s revenue.
The Company’s commercial real estate concentration ratio continued to improve, decreasing to 385% of capital at December 31, 2024 from 432% of capital at December 31, 2023, with loans secured by office space accounting for 2.45% of the total loan portfolio and totaling $48.7 million. ​ The Bank’s investments in diversification continue to deliver results, with the volume of SBA & USDA loans originated for sale and the volume of residential loans originated for sale sustaining momentum.
The Company’s commercial real estate concentration ratio continues to improve, decreasing to 360% of capital at December 31, 2025 from 385% at December 31, 2024, with loans secured by office space accounting for 2.48% of the total loan portfolio and totaling $49.6 million at December 31, 2025.
See Note 7, “Borrowings” and Note 8, “Subordinated Debentures” to the accompanying Consolidated Financial Statements contained in Item 8 for additional details. ​ 60 Table of Contents In October 2020, the Company completed the private placement of $25.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due in 2030.
See Note 7, “Borrowings” and Note 8, “Subordinated Debentures” to the accompanying Consolidated Financial Statements contained in Item 8 for additional details. In October 2020, the Company issued $25 million of 10-year fixed-to-floating rate subordinated notes with a coupon rate of 5.00% fixed for the first five years.
GSE commercial mortgage-backed securities ​ ​ 1,520 ​ ​ 1,503 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Collateralized loan obligations ​ 32,271 ​ 32,477 ​ 50,283 ​ 50,266 ​ — ​ — Corporate bonds ​ 20,282 ​ 19,130 ​ 12,700 ​ 10,952 ​ 12,700 ​ 10,747 Total investment securities available-for- sale ​ 85,084 ​ 83,755 ​ 63,292 ​ 61,419 ​ 13,022 ​ 10,889 Investment securities held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
GSE commercial mortgage-backed securities ​ ​ 2,583 ​ ​ 2,532 ​ ​ 1,520 ​ ​ 1,503 Collateralized loan obligations ​ 32,758 ​ 32,664 ​ 32,271 ​ 32,477 Corporate bonds ​ 30,250 ​ 29,961 ​ 20,282 ​ 19,130 Total investment securities available-for- sale ​ 99,832 ​ 99,552 ​ 85,084 ​ 83,755 Investment securities held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Treasury securities ​ $ 19,995 ​ $ 20,000 ​ $ — ​ $ — ​ $ — ​ $ — U.S. GSE residential mortgage-backed securities ​ ​ 11,016 ​ ​ 10,645 ​ ​ 309 ​ ​ 201 ​ ​ 322 ​ ​ 142 U.S.
Treasury securities ​ $ 4,495 ​ $ 4,495 ​ $ 19,995 ​ $ 20,000 U.S. GSE residential mortgage-backed securities ​ ​ 18,055 ​ ​ 18,143 ​ ​ 11,016 ​ ​ 10,645 U.S. GSE residential collateralized mortgage obligations ​ ​ 11,691 ​ ​ 11,757 ​ ​ — ​ ​ — U.S.
Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the customer.
Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis.
The increase in non-interest expense was primarily attributed to additional staff for the SBA, C&I Banking and Operations teams. Set forth below are our selected consolidated financial and other data. Our business is primarily the business of our Bank.
The increase in non-interest expense was primarily related to the increase in salaries and employees benefits and the one-time core system conversion expenses. Set forth below are our selected consolidated financial and other data. Our business is primarily the business of our Bank.
The Bank offers a full range of financial services including a complete suite of consumer and commercial banking products and services, including multi-family and commercial mortgages, government guaranteed loans, residential loans, business loans and lines of credit.
The Russell Indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. The Bank offers a full range of financial services including a complete suite of consumer, commercial, and municipal banking products and services, including multifamily and commercial mortgages, government guaranteed loans, residential loans, business loans and lines of credit.
This judgment includes, but may not be limited to, the selection of appropriate discount rates, the identification of relevant market comparables and the development of cash flow projections. The selection and weighting of the various fair value techniques may result in a higher or lower fair value.
Goodwill impairment exists when a reporting unit’s carrying value of goodwill exceeds its implied fair value. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes, but may not be limited to, the selection of appropriate discount rates, the identification of relevant market comparables and the development of cash flow projections.
Together, this resulted in the higher cost of funds. 48 Table of Contents The following table presents daily average balances, interest, yield/cost, and net interest margin on a fully tax-equivalent basis for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Fiscal Year Ended September 30, ​ ​ ​ 2024 ​ 2023 ​ ​ ​ Average ​ ​ Average ​ Average ​ ​ Average ​ (dollars in thousands) Balance ​ Interest ​ Yield/Cost ​ Balance ​ Interest ​ Yield/Cost ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (1)(2) ​ $ 2,005,524 ​ $ 122,970 6.13 % $ 1,771,878 ​ $ 97,560 5.51 % Investment securities (1) ​ 98,238 ​ 5,991 6.10 % 16,007 ​ 806 5.04 % Interest-earning balances and other ​ ​ 70,238 ​ ​ 4,061 ​ 5.78 % ​ 126,740 ​ ​ 6,677 ​ 5.27 % Total interest-earning assets ​ 2,174,000 ​ 133,022 6.12 % 1,914,625 ​ 105,043 5.49 % Non interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other assets ​ 59,028 ​ ​ 62,248 ​ ​ Total assets ​ $ 2,233,028 ​ ​ $ 1,976,873 ​ ​ Liabilities and stockholders' equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW and money market deposits ​ $ 1,160,115 ​ $ 51,457 4.44 % $ 997,068 ​ $ 32,647 3.27 % Time deposits ​ 483,668 ​ 21,060 4.35 % 420,495 ​ 11,204 2.66 % Total interest-bearing deposits ​ 1,643,783 ​ 72,517 4.41 % 1,417,563 ​ 43,851 3.09 % Borrowings ​ 149,667 ​ 6,109 4.08 % 145,705 ​ 5,396 3.70 % Subordinated debentures ​ 24,660 ​ 1,304 5.29 % 24,593 ​ 1,304 5.30 % Total interest-bearing liabilities ​ 1,818,110 ​ 79,930 4.40 % 1,587,861 ​ 50,551 3.18 % Non-interest bearing deposits ​ 196,595 ​ ​ 184,051 ​ ​ Other liabilities ​ 27,000 ​ ​ 24,390 ​ ​ Total liabilities ​ ​ 2,041,705 ​ ​ ​ ​ ​ ​ ​ 1,796,302 ​ ​ ​ ​ ​ ​ Stockholders' equity ​ ​ 191,323 ​ ​ ​ ​ ​ ​ ​ 180,571 ​ ​ ​ ​ ​ ​ Total liabilities and stockholders' equity ​ $ 2,233,028 ​ ​ ​ ​ ​ ​ $ 1,976,873 ​ ​ ​ ​ ​ ​ Net interest rate spread (3) ​ ​ ​ ​ ​ ​ ​ 1.72 % ​ ​ ​ ​ ​ ​ 2.31 % Net interest income/margin (4) ​ ​ ​ ​ $ 53,092 ​ 2.44 % ​ ​ ​ $ 54,492 ​ 2.85 % (1) There is no income tax exempt interest recorded for loans or investment securities for the periods presented.
The following table presents daily average balances, interest, yield/cost, and net interest margin on a fully tax-equivalent basis for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2025 ​ 2024 ​ ​ ​ Average ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ Average ​ (dollars in thousands) ​ ​ ​ Balance ​ Interest ​ Yield/Cost ​ Balance ​ Interest ​ Yield/Cost ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (1)(2) ​ $ 1,987,356 ​ $ 119,688 6.02 % $ 2,005,524 ​ $ 122,970 6.13 % Investment securities (1) ​ 97,273 ​ 5,690 5.85 % 98,238 ​ 5,991 6.10 % Interest-earning balances and other ​ ​ 111,446 ​ ​ 5,101 ​ 4.58 % ​ 70,238 ​ ​ 4,061 ​ 5.78 % Total interest-earning assets ​ 2,196,075 ​ 130,479 5.94 % 2,174,000 ​ 133,022 6.12 % Non interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other assets ​ 62,236 ​ ​ ​ ​ 59,028 ​ ​ ​ ​ Total assets ​ $ 2,258,311 ​ ​ ​ ​ $ 2,233,028 ​ ​ ​ ​ Liabilities and stockholders' equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Savings, NOW and money market deposits ​ $ 1,177,032 ​ $ 43,240 3.67 % $ 1,160,115 ​ $ 51,457 4.44 % Time deposits ​ 493,602 ​ 20,596 4.17 % 483,668 ​ 21,060 4.35 % Total interest-bearing deposits ​ 1,670,634 ​ 63,836 3.82 % 1,643,783 ​ 72,517 4.41 % Borrowings ​ 110,483 ​ 4,647 4.21 % 149,667 ​ 6,109 4.08 % Subordinated debentures ​ 24,714 ​ 1,519 6.15 % 24,660 ​ 1,304 5.29 % Total interest-bearing liabilities ​ 1,805,831 ​ 70,002 3.88 % 1,818,110 ​ 79,930 4.40 % Non-interest bearing deposits ​ 223,564 ​ ​ ​ ​ 196,595 ​ ​ ​ ​ Other liabilities ​ 28,240 ​ ​ ​ ​ 27,000 ​ ​ ​ ​ Total liabilities ​ ​ 2,057,635 ​ ​ ​ ​ ​ ​ ​ 2,041,705 ​ ​ ​ ​ ​ ​ Stockholders' equity ​ ​ 200,676 ​ ​ ​ ​ ​ ​ ​ 191,323 ​ ​ ​ ​ ​ ​ Total liabilities and stockholders' equity ​ $ 2,258,311 ​ ​ ​ ​ ​ ​ $ 2,233,028 ​ ​ ​ ​ ​ ​ Net interest rate spread (3) ​ ​ ​ ​ ​ ​ ​ 2.06 % ​ ​ ​ ​ ​ ​ 1.72 % Net interest income/margin (4) ​ ​ ​ ​ $ 60,477 ​ 2.75 % ​ ​ ​ $ 53,092 ​ 2.44 % (1) There is no income tax exempt interest recorded for loans or investment securities for the periods presented.
Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated financial statements. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.
Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated financial statements.
The ratio of the allowance for credit losses to total portfolio loans was 1.15% at December 31, 2024, inclusive of a $3.2 million allowance on individually analyzed loans, versus 1.00% at December 31, 2023, which does not include the aforementioned allowance for individually analyzed loans. The Company experienced $1.6 million in net charge-offs both for calendar 2024 and fiscal 2023.
The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 0.93% at December 31, 2025, inclusive of a $2.1 million allowance on individually analyzed loans, versus 1.15% at December 31, 2024, inclusive of a $3.2 million allowance on individually analyzed loans.
GSE residential mortgage-backed securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after five years through ten years ​ $ — — % $ 1,044 2.31 % Due after ten years ​ 309 3.26 % 436 2.66 % ​ ​ 309 3.26 % 1,480 2.41 % U.S.
GSE residential mortgage-backed securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after five years through ten years ​ $ — — % $ 1,017 2.45 % Due after ten years ​ 18,055 4.92 % — — % ​ ​ 18,055 4.92 % 1,017 2.45 % U.S.
Insured and collateralized deposits, which include municipal deposits, accounted for approximately 87% of total deposits at December 31, 2024. Time deposits of $481.6 million are scheduled to mature within the next 12 months.
Insured and collateralized deposits, which include municipal deposits, accounted for approximately 85% of total deposits at December 31, 2025. Time deposits of $501.0 million are scheduled to mature within the next 12 months. Based on historical experience, the Company expects to be able to replace a substantial portion of those maturing deposits with comparable deposit products.
The increase in non-interest income is primarily related to the increases in the net gain on sale of loans held for sale and loan servicing and fee income which were partially offset by a decrease in other income. In September 2023, the Company settled ongoing litigation and received a settlement payment of $975 thousand which was recorded in other income.
The increase in the provision for credit losses was largely impacted by $14.2 million in net charge-offs in 2025. The decrease in non-interest income is primarily related to the decrease in the gain on sale of loans held-for-sale which was partially offset by the increases in loan servicing and fee income and service charges on deposit accounts.
Non-Interest Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Fiscal ​ ​ Year Ended ​ December 31, ​ Year Ended ​ ​ December 31, ​ (transition period) ​ September 30, (in thousands) ​ 2024 2023 2023 Loan servicing and fee income ​ $ 3,690 ​ $ 778 ​ $ 2,709 Service charges on deposit accounts ​ 469 ​ 85 ​ 275 Net gain on sale of loans held for sale ​ 10,940 ​ 2,326 ​ 4,093 Net gain on sale of investments available-for-sale ​ 31 ​ — ​ — Other income ​ 209 ​ 65 ​ 1,771 Total non-interest income ​ $ 15,339 ​ $ 3,254 ​ $ 8,848 ​ Non-interest income was $15.3 million for calendar 2024, an increase of $6.5 million from $8.8 million for fiscal 2023.
For more information, see " Asset Quality - Allowance for Credit Losses. ” Non-Interest Income ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2025 ​ ​ ​ 2024 Loan servicing and fee income ​ $ 4,270 ​ $ 3,690 Service charges on deposit accounts ​ 750 ​ 469 Net gain on sale of loans held for sale ​ 7,345 ​ 10,940 Net gain on sale of securities available-for-sale ​ 215 ​ 31 Other income ​ 263 ​ 209 Total non-interest income ​ $ 12,843 ​ $ 15,339 ​ Non-interest income was $12.8 million for the year ended December 31, 2025, a decrease of $2.5 million from $15.3 million for the year ended December 31, 2024.
Loans At December 31, 2024, our loan portfolio totaled $1.99 billion, an increase of $28.3 million from $1.96 billion at December 31, 2023. Growth was concentrated primarily in residential, SBA and C&I loans.
Loans At December 31, 2025, our loan portfolio totaled $2.00 billion, an increase of $15.2 million from $1.99 billion at December 31, 2024.
Collateral required varies, but may include accounts receivable, inventory, equipment, real estate and income-producing commercial properties.
The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the customer. Collateral required varies, but may include accounts receivable, inventory, equipment, real estate and income-producing commercial properties.
The following table sets forth the maturity of time deposits that meet or exceed the FDIC insurance limit of as of December 31, 2024: ​ ​ ​ ​ ​ ​ December 31, (in thousands) 2024 Three months or less ​ $ 39,784 Over three months through twelve months ​ 59,126 Over one year through three years ​ 7,181 Over three years ​ 259 Total ​ $ 106,350 ​ See Note 6, “Deposits” to the accompanying Consolidated Financial Statements contained in Item 8 for additional details.
The following table sets forth the maturity of these time deposits as of December 31, 2025: ​ ​ ​ ​ ​ ​ December 31, (in thousands) ​ ​ 2025 Three months or less ​ $ 43,886 Over three months through twelve months ​ 61,909 Over one year through three years ​ 2,101 Over three years ​ 266 Total ​ $ 108,162 ​ See Note 6, “Deposits” to the accompanying Consolidated Financial Statements contained in Item 8 for additional details. 62 Table of Contents Borrowings The total carrying value of our borrowings was $125.5 million at December 31, 2025, a decrease of $7.0 million from $132.5 million at December 31, 2024, due to the payoff of two FHLB advances that matured in 2025.
The Company has recorded recoveries of $18 thousand and $103 thousand for calendar 2024 and fiscal 2023, respectively.
The Company has recorded recoveries of $34 thousand and $18 thousand during the years ended December 31, 2025 and 2024, respectively.
The Company’s total interest income increased by $28.0 million, or 26.6%, as the average yield on interest-earning assets for calendar 2024 was 6.12%, an increase of 63 basis points from 5.49% for fiscal 2023.
However, total interest income decreased by $2.5 million, or 1.9%, as the average yield on interest-earning assets for the year ended December 31, 2025 was 5.94%, a decrease of 18 basis points from 6.12% for the year ended December 31, 2024.
GSE commercial mortgage-backed securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after one year through five years ​ ​ — ​ 2,561 2.68 % ​ ​ — — ​ 2,561 2.68 % Collateralized loan obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after five years through ten years ​ ​ 3,824 7.24 % — — ​ Due after ten years ​ 46,459 6.90 % — — ​ ​ ​ 50,283 6.93 % — — ​ Corporate bonds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after five years through ten years ​ 12,700 5.19 % — — ​ ​ ​ 12,700 5.19 % — — ​ Total investment securities ​ $ 63,292 6.56 % $ 4,041 2.58 % (1) There is no income tax exempt interest recorded for investment securities for the periods presented.
Treasury securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ 19,995 4.37 % — — % ​ ​ 19,995 4.37 % — — % Collateralized loan obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after five years through ten years ​ ​ 27,284 6.12 % — — % Due after ten years ​ 4,987 6.10 % — — % ​ ​ 32,271 6.12 % — — % Corporate bonds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due after one year through five years ​ ​ 1,000 ​ 8.75 % ​ — ​ — % Due after five years through ten years ​ 19,282 5.90 % — — % ​ ​ 20,282 6.04 % — — % Total investment securities ​ $ 85,084 5.45 % $ 3,758 2.59 % (1) There is no income tax exempt interest recorded for investment securities for the periods presented.
The portfolio is primarily located in the New York City boroughs of Brooklyn, the Bronx and Queens. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Multi-Family Loan Portfolio - Loans by Rent Type Rent Type # Notes Outstanding Loan Balance % of Total Multi-Family ​ Avg Loan Size ​ LTV Current DSCR ​ Avg # of Units ​ ($000's omitted) ​ ​ ​ ($000's omitted) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Market ​ 146 ​ $ 347,579 ​ 63 % ​ $ 2,381 ​ 61.6 % ​ 1.39 ​ 11 Location ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Manhattan ​ 7 ​ $ 17,840 ​ 3 % ​ $ 2,549 ​ 51.9 % ​ 1.62 ​ 15 Other NYC ​ 93 ​ $ 244,408 ​ 44 % ​ $ 2,628 ​ 61.2 % ​ 1.38 ​ 10 Outside NYC ​ 46 ​ $ 85,331 ​ 16 % ​ $ 1,855 ​ 64.8 % ​ 1.39 ​ 13 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stabilized ​ 107 ​ $ 202,937 ​ 37 % ​ $ 1,897 ​ 62.4 % ​ 1.39 ​ 12 Location ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Manhattan ​ 6 ​ $ 9,035 ​ 2 % ​ $ 1,506 ​ 44.7 % ​ 1.59 ​ 17 Other NYC ​ 89 ​ $ 174,888 ​ 32 % ​ $ 1,965 ​ 63.2 % ​ 1.38 ​ 11 Outside NYC ​ 12 ​ $ 19,014 ​ 3 % ​ $ 1,584 ​ 64.4 % ​ 1.40 ​ 16 ​ Office Property Exposure ​ The Bank’s exposure to the Office market is minor at $49 million.
The portfolio is primarily located in the New York City boroughs of Brooklyn, the Bronx and Queens. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Multifamily Loan Portfolio - Loans by Rent Type (Loan Data as of 12/31/2025) Rent Type # Notes ​ Outstanding Loan Balance ​ % of Total Multifamily ​ Avg Loan Size ​ LTV ​ Current DSCR ​ Avg # of Units ​ ​ ($000's omitted) ​ ​ ​ ($000's omitted) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Market ​ 140 ​ $ 348,202 ​ 64 % ​ $ 2,487 ​ 61.4 % ​ 1.45 ​ 11 Location ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Manhattan ​ 6 ​ $ 9,792 ​ 2 % ​ $ 1,632 ​ 50.6 % ​ 2.13 ​ 15 Other NYC ​ 94 ​ $ 261,184 ​ 48 % ​ $ 2,779 ​ 61.2 % ​ 1.42 ​ 9 Outside NYC ​ 40 ​ $ 77,226 ​ 14 % ​ $ 1,931 ​ 63.2 % ​ 1.48 ​ 14 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stabilized ​ 98 ​ $ 192,881 ​ 36 % ​ $ 1,968 ​ 61.4 % ​ 1.46 ​ 12 Location ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Manhattan ​ 7 ​ $ 10,329 ​ 2 % ​ $ 1,476 ​ 47.7 % ​ 1.71 ​ 19 Other NYC ​ 80 ​ $ 165,540 ​ 31 % ​ $ 2,069 ​ 62.2 % ​ 1.43 ​ 11 Outside NYC ​ 11 ​ $ 17,012 ​ 3 % ​ $ 1,547 ​ 62.6 % ​ 1.59 ​ 14 ​ Office Property Exposure ​ The Bank’s exposure to the Office market is not significant.
See Note 1, “Summary of Significant Accounting Policies” and Note 10, “Goodwill and Other Intangible Assets” to the accompanying Consolidated Financial Statements contained in Item 8 for further details.
See Note 1, “Summary of Significant Accounting Policies” and Note 10, “Goodwill and Other Intangible Assets” to the accompanying Consolidated Financial Statements contained in Item 8 for further details. ​ 49 Table of Contents Results of Operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 For the year ended December 31, 2025, we recognized net income of $7.5 million, or $1.00 per diluted share (including Series A preferred shares), compared to net income of $12.3 million, or $1.66 per diluted share (including Series A preferred shares) for the year ended December 31, 2024.
The increase in non-interest expense was primarily attributed to additional staff for the SBA, C&I Banking and Operations teams. Income Taxes Income tax expense was $4.0 million for calendar 2024, a decrease from $5.0 million for fiscal 2023. The decline in income tax expense reflects lower net income in calendar 2024.
Income Taxes Income tax expense was $2.5 million for the year ended December 31, 2025, a decrease from $4.0 million for the year ended December 31, 2024. The decline in income tax expense reflects lower net income in the year ended December 31, 2025.
The Bank’s exposure to Land/Construction loans is minor at $13.5 million, all at floating interest rates, and CRE-owner occupied loans have a mix of floating rates.
The Bank’s exposure to Land/Construction loans as of December 31, 2025 is not significant at $11.1 million, all at floating interest rates.
Conversely, portfolio growth is the primary focus of our C&I Banking initiative, which continues to drive deposit and loan growth at our Hauppauge Business Banking Center and will expand with the pending launch of our Port Jefferson branch. ​ 55 Table of Contents ​ Commercial Real Estate Statistics ​ A significant portion of the Bank’s commercial real estate portfolio consists of loans secured by Multi-Family and CRE-Investor owned real estate that are predominantly subject to fixed interest rates for an initial period of 5 years.
The Company will selectively explore Commercial Real Estate opportunities with an emphasis on relationship based Commercial Real Estate lending. ​ A significant portion of the Bank’s commercial real estate portfolio consists of loans secured by Multifamily and CRE-Investor owned real estate that are predominantly subject to fixed interest rates for an initial period of 5 years.
Based on historical experience, the Company expects to be able to replace a substantial portion of those maturing deposits with comparable deposit products. ​ 59 Table of Contents The following is our average deposits and weighted-average interest rates paid thereon for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Three Months Ended December 31, ​ Fiscal Year Ended September 30, ​ ​ ​ 2024 ​ 2023 (transition period) ​ 2023 ​ ​ ​ Average Average ​ ​ Average Average ​ Average Average (dollars in thousands) ​ Balance Rate ​ ​ Balance Rate ​ Balance Rate Non-interest bearing demand ​ $ 196,595 0.00 % $ 187,216 0.00 % $ 184,051 0.00 % Savings ​ 48,749 2.21 % ​ 50,191 1.79 % ​ 87,637 1.30 % NOW ​ 631,267 4.56 % ​ 539,194 4.58 % ​ 545,827 3.40 % Money market ​ 480,099 4.49 % ​ 449,677 4.50 % ​ 363,604 3.57 % Time deposits ​ 483,668 4.35 % ​ 541,475 3.83 % ​ 420,495 2.66 % Total average deposits ​ $ 1,840,378 3.94 % $ 1,767,753 3.77 % $ 1,601,614 2.74 % ​ The Company had municipal deposits of $509.3 million at December 31, 2024, which comprised 26.1% of total deposits, a decrease of $18.8 million or 3.6% from $528.1 million at December 31, 2023.
The following is our average deposits and weighted-average interest rates paid thereon for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ ​ Average ​ ​ ​ Average ​ ​ Average ​ ​ ​ Average ​ ​ ​ (dollars in thousands) ​ Balance Rate ​ ​ Balance Rate Non-interest bearing demand ​ $ 223,564 0.00 % $ 196,595 0.00 % Savings ​ 44,577 2.43 % ​ 48,749 2.21 % NOW ​ 692,339 3.65 % ​ 631,267 4.56 % Money market ​ 440,116 3.83 % ​ 480,099 4.49 % Time deposits ​ 493,602 4.17 % ​ 483,668 4.35 % Total average deposits ​ $ 1,894,198 3.37 % $ 1,840,378 3.94 % ​ The Company had municipal deposits of $700.7 million at December 31, 2025, which comprised 34.5% of total deposits, an increase of $191.4 million or 37.6% from $509.3 million at December 31, 2024.
Net interest income for calendar 2024 was $53.1 million, a decrease of 2.6% from $54.5 million for fiscal 2023. Net interest margin was 2.44% for calendar 2024, a decrease of 41 basis points from 2.85% for fiscal 2023.
Net interest income for the year ended December 31, 2025 was $60.5 million, an increase of 13.9% from $53.1 million for the year ended December 31, 2024. Net interest margin was 2.75% for the year ended December 31, 2025, an increase of 31 basis points from 2.44% for the year ended December 31, 2024.
As of December 31, 2024 and 2023, we held $106.4 million and $107.3 million, respectively, of time deposits that meet or exceed the FDIC insurance limit.
As of December 31, 2025 and 2024, we held $108.2 million and $106.4 million, respectively, of time deposits of more than $250,000.
Non-Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Fiscal ​ ​ Year Ended ​ December 31, ​ Year Ended ​ ​ December 31, ​ (transition period) ​ September 30, (in thousands) 2024 2023 2023 Salaries and employee benefits ​ $ 25,600 ​ $ 5,242 ​ $ 20,652 Occupancy and equipment ​ 7,222 ​ 1,746 ​ 6,359 Data processing ​ 2,096 ​ 530 ​ 1,951 Professional fees ​ 3,079 ​ 729 ​ 3,145 Federal deposit insurance premiums ​ ​ 1,418 ​ ​ 375 ​ ​ 1,259 Other expenses ​ 7,697 ​ 2,048 ​ 6,355 Total non-interest expense ​ $ 47,112 ​ $ 10,670 ​ $ 39,721 ​ 51 Table of Contents Non-interest expense was $47.1 million for calendar 2024, an increase of $7.4 million from $39.7 million for fiscal 2023.
The decrease in non-interest income is primarily related to a $3.6 million decrease in the net gain on sale of loans held for sale which was partially offset by a $0.6 million increase in loan servicing and fee income, a $0.3 million increase in service charges on deposit accounts and a $0.2 million increase in net gain on sale on securities available-for-sale. ​ 52 Table of Contents Non-Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Salaries and employee benefits ​ $ 27,886 ​ $ 25,600 Occupancy and equipment ​ 7,742 ​ 7,222 Data processing ​ 1,753 ​ 2,096 Professional fees ​ 3,149 ​ 3,079 Federal deposit insurance premiums ​ ​ 1,388 ​ ​ 1,418 Conversion expenses ​ ​ 3,180 ​ ​ — Other expenses ​ 7,886 ​ 7,697 Total non-interest expense ​ $ 52,984 ​ $ 47,112 ​ Non-interest expense was $53.0 million for the year ended December 31, 2025, an increase of $5.9 million from $47.1 million for the year ended December 31, 2024.
Additional branches are located in Garden City Park, Hauppauge, Forest Hills, Flushing, Sunset Park, Manhattan and Chinatown, New York and Freehold, New Jersey. The Bank has received regulatory approval to open a full-service branch in Port Jefferson, New York. Business development staff have already joined the Bank in anticipation of the opening of this location.
Additional branches are located in Garden City Park, Hauppauge, Port Jefferson, Forest Hills, Flushing, Sunset Park, Rockefeller Center and Bowery, New York and Freehold, New Jersey. It is expected that the Company will once again expand its geographic footprint with the opening of a full-service branch in a state-of-the-art facility in downtown Riverhead, New York.
The Bank expects this site to be fully operational in the first half of 2025. At December 31, 2024, on a consolidated basis we had $2.31 billion in total assets, $196.6 million in total stockholders’ equity, $1.99 billion in total loans, $1.95 billion in total deposits and 185 full-time equivalent employees.
At December 31, 2025, on a consolidated basis we had $2.38 billion in total assets, $200.3 million in total stockholders’ equity, $2.00 billion in total loans, $2.03 billion in total deposits and 194 full-time equivalent employees. ​ 47 Table of Contents Critical Accounting Policies and Estimates We prepare our consolidated financial statements in conformity with GAAP.
Commitments to extend credit are agreements to lend to customers provided there are no violations of material conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.
The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. ​ 63 Table of Contents Commitments to extend credit are agreements to lend to customers provided there are no violations of material conditions established in the contract.
This portfolio has a 2.27x weighted average DSCR, a 54% weighted average LTV and less than $400,000 of exposure in Manhattan. ​ Asset Quality Nonperforming Assets The following table presents information regarding nonperforming assets for the periods presented.
At December 31, 2025, this portfolio has a 2.30x weighted average DSCR, a 52% weighted average LTV and less than $350,000 of exposure in Manhattan. ​ Asset Quality Nonperforming Assets In the fourth quarter of 2025, the Company initiated a strategic credit cleanup and removed $9.6 million of non-performing loans (“NPLs”) from the balance sheet.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations In October 2023, the Company’s Board of Directors approved a change in the Company’s fiscal year end from September 30 to December 31.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a discussion of our financial condition and results or our operations for the years ended December 31, 2025 and 2024, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe results are within the Company’s policy limits. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2024 Interest Rates ​ Estimated ​ Estimated Change in EVE ​ Interest Rates ​ Estimated ​ Estimated Change in NII (1) ​ (basis points) EVE Amount % (basis points) NII (1) Amount % +200 ​ $ 167,512 ​ $ (33,849) (16.8) ​ +200 ​ $ 53,696 ​ $ (6,606) (11.0) ​ +100 ​ 184,567 ​ (16,794) (8.3) ​ +100 ​ 57,063 ​ (3,239) (5.4) ​ 0 ​ 201,361 ​ ​ ​ ​ 0 ​ 60,302 ​ ​ ​ ​ -100 ​ 214,522 ​ 13,161 6.5 ​ -100 ​ 63,927 ​ 3,625 6.0 ​ -200 ​ 232,123 ​ 30,762 ​ 15.3 ​ -200 ​ 67,119 ​ 6,817 11.3 ​ -300 ​ 245,099 ​ 43,738 21.7 ​ -300 ​ 69,792 ​ 9,490 15.7 ​ _________________________ (1) Assumes 12 month time horizon. ​ Certain model limitations are inherent in the methodology used in the EVE and net interest income measurements.
Biggest changeThe results are within the Company’s policy limits. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2025 Interest Rates ​ Estimated ​ Estimated Change in EVE ​ Interest Rates ​ Estimated ​ Estimated Change in NII (1) ​ (basis points) ​ ​ ​ EVE ​ ​ ​ Amount ​ ​ ​ % ​ ​ ​ (basis points) ​ ​ ​ NII (1) ​ ​ ​ Amount ​ ​ ​ % +200 ​ $ 193,031 ​ $ (26,146) (11.9) ​ +200 ​ $ 59,169 ​ $ (7,310) (11.0) ​ +100 ​ 206,077 ​ (13,100) (6.0) ​ +100 ​ 62,970 ​ (3,509) (5.3) ​ 0 ​ 219,177 ​ ​ ​ ​ 0 ​ 66,479 ​ ​ ​ ​ -100 ​ 235,358 ​ 16,181 7.4 ​ -100 ​ 70,559 ​ 4,080 6.1 ​ -200 ​ 264,742 ​ 45,565 ​ 20.8 ​ -200 ​ 74,464 ​ 7,985 12.0 ​ -300 ​ 293,270 ​ 74,093 33.8 ​ -300 ​ 78,113 ​ 11,634 17.5 ​ _________________________ (1) Assumes 12 month time horizon. ​ Certain model limitations are inherent in the methodology used in the EVE and net interest income measurements.
Given the speed with which interest rates may change, the projections noted above on the Company’s EVE and net interest income can be expected to differ from actual results. ​ ​ 63 Table of Contents
Given the speed with which interest rates may change, the projections noted above on the Company’s EVE and net interest income can be expected to differ from actual results. ​ ​ 66 Table of Contents
The Company utilizes a number of strategies to manage interest rate risk including, but not limited to: (i) balancing the types and structures of interest-earning assets and interest-bearing liabilities by diversifying mix, coupons, maturities and/or repricing characteristics, (ii) reducing the overall interest rate sensitivity of liabilities by emphasizing core and/or longer-term deposits; utilizing FHLB advances and wholesale deposits for our interest rate risk profile, and (iii) entering into interest rate swap agreements.
The Company utilizes a number of strategies to manage interest rate risk including, but not limited to: (i) balancing the types and structures of interest-earning assets and interest-bearing liabilities by diversifying mix, coupons, maturities and/or repricing characteristics, (ii) reducing the overall interest rate sensitivity of liabilities by emphasizing core and/or longer-term deposits; utilizing FHLB advances and wholesale deposits for our interest rate risk profile, and (iii) entering into interest rate swap agreements. ​ 65 Table of Contents The following presents the Company’s economic value of equity (“EVE”) and net interest income (“NII”) sensitivities at December 31, 2025 (dollars in thousands).
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The following presents the Company’s economic value of equity (“EVE”) and net interest income (“NII”) sensitivities at December 31, 2024 (dollars in thousands).

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