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What changed in NorthEast Community Bancorp, Inc./MD/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NorthEast Community Bancorp, Inc./MD/'s 2023 and 2024 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 2024 report.

+304 added−298 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-28)

Top changes in NorthEast Community Bancorp, Inc./MD/'s 2024 10-K

304 paragraphs added · 298 removed · 260 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

91 edited+18 added−5 removed193 unchanged
Biggest changeWe terminated our license in Connecticut on February 22, 2024 due to the sale of all the Bank’s assets relating to Harbor West Wealth Management Group to a third party in January 2024. 72 West Eckerson LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in April 2015 to facilitate the purchase or lease of real property by the Bank and currently owns the Bank branch locations in Spring Valley, New York and Monroe, New York. 166 Route 59 Realty LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in April 2021 to facilitate the purchase or lease of real property by the Bank and currently owns the Bank branch located in Airmont, New York. 3 Winterton Realty LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2021 to facilitate the purchase of real property by the Bank and currently owns the Bank branch located in Bloomingburg, New York.
Biggest changeThis subsidiary is currently inactive. 72 West Eckerson LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in April 2015 to facilitate the purchase or lease of real property by the Bank and currently owns the Bank branch locations in Spring Valley, New York and Monroe, New York. 166 Route 59 Realty LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in April 2021 to facilitate the purchase or lease of real property by the Bank and currently owns the Bank branch located in Airmont, New York. 3 Winterton Realty LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2021 to facilitate the purchase of real property by the Bank and currently owns the Bank branch located in Bloomingburg, New York. 19 Table of Contents Executive Officers Our executive officers are elected annually by the board of directors and serve at the board’s discretion.
Construction loans are typically for 18 to 36 month terms, pay interest only during that period, and are indexed to the prime rate plus a margin. All construction loans are underwritten on an “as is” basis and an “as completed” basis and must meet our normal loan to value ratio requirements.
Construction loans are typically for 18 to 36 month terms, pay interest only during that period, and are indexed to the prime rate plus a margin. All construction loans are underwritten on an “as is” basis and an “as completed” basis and must meet our normal loan to value ratio requirements for construction loans.
Multifamily and Mixed-Use Real Estate Loans. We offer adjustable-rate mortgage loans secured by multifamily and mixed-use real estate. These loans are comprised primarily of loans on moderate income apartment buildings located in our lending territory and include, loans on cooperative apartment buildings (in the New York area), and loans for Section 8 multifamily housing.
We offer adjustable-rate mortgage loans secured by multifamily and mixed-use real estate. These loans are comprised primarily of loans on moderate income apartment buildings located in our lending territory and include; loans on cooperative apartment buildings (in the New York area); and loans for Section 8 multifamily housing.
The lifetime interest rate cap is five percentage points over the initial interest rate of the loan (four percentage points for loans with 6 Table of Contents one-, two- and three-year terms). Loans are secured by first mortgages that generally do not exceed 75% of the property’s appraised value.
The lifetime 6 Table of Contents interest rate cap is five percentage points over the initial interest rate of the loan (four percentage points for loans with one-, two- and three-year terms). Loans are secured by first mortgages that generally do not exceed 75% of the property’s appraised value.
This strategy allows us to very effectively match the maturity of these deposits to the term of our construction loans, which make up a majority of the loans in our loan portfolio. Borrowings. We may utilize advances from the Federal Home Loan Bank of New York to supplement our supply of lendable funds and to meet deposit withdrawal requirements.
This strategy allows us to match the maturity of these deposits very effectively to the term of our construction loans, which make up a majority of the loans in our loan portfolio. Borrowings. We may utilize advances from the Federal Home Loan Bank of New York to supplement our supply of lendable funds and to meet deposit withdrawal requirements.
The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws.
Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws.
The Company will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the completion of the Company’s second-step conversion and offering, which occurred on July 12, 2021; (ii) the first fiscal year after our annual gross revenues are $1.1 billion (adjusted for inflation) or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million at the end of the second quarter of that fiscal year.
The Company will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the completion of the Company’s second-step conversion and offering, which occurred on July 12, 2021; (ii) the first fiscal year after our annual gross revenues are $1.235 billion (adjusted for inflation) or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million at the end of the second quarter of that fiscal year.
While in the past we purchased a limited number of participations from one financial institution that also serves high absorption areas in Brooklyn, New York, we currently do not have any purchased participation loan in our portfolio. We also purchased whole residential and non-residential mortgage loans from a Massachusetts financial 7 Table of Contents institution during 2021.
While in the past we purchased a limited number of participations from one financial institution that also serves high absorption areas in Brooklyn, New York, we currently do not have any purchased participation loans in our portfolio. We also purchased whole residential and non-residential mortgage loans from a Massachusetts financial 7 Table of Contents institution during 2021.
The economies of these areas were historically based on manufacturing, but, similar to many areas of the country, the underpinnings of these economies are now more service oriented, with employment spread across many economic sectors including service, finance, health-care, technology, real estate and government.
The economies of these areas were historically based on manufacturing, but, similar to many areas of the country, the underpinnings of these economies are now more technological and service oriented, with employment spread across many economic sectors including service, finance, health-care, technology, real estate and government.
In addition, if construction loans are for condominiums, as a backstop, the project will be underwritten as if they will be rental properties. We generally require the borrower to contribute 50% of the total raw land acquisition cost.
In addition, if construction loans are for condominiums, as a backstop, the project will be underwritten as if they will be rental properties. We generally require the borrower to contribute 50% to 60% of the total raw land acquisition cost.
Loan operations are also subject to state and federal laws applicable to credit transactions, such as the: ● Home Mortgage Disclosure Act of 1975, 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; ● Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; 15 Table of Contents ● Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; and ● Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such federal and state laws.
Loan operations are also subject to state and federal laws applicable to credit transactions, such as the: ● Home Mortgage Disclosure Act of 1975, 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; ● Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; ● Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; and ● Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such federal and state laws.
Generally, in homogeneous communities, units that are under construction have purchase contracts before they are complete. We will make construction loans on condominium buildings, containing between two to more than 250 units or for single family homes and single family housing developments of as many as 400 homes, in each case in high absorption and/or homogeneous areas.
Generally, in homogeneous communities, units that are under construction have purchase agreements before they are complete. We will make construction loans on condominium buildings, containing between two to more than 250 units or for single family homes and single family housing developments of as many as 400 homes, in each case in high absorption and/or homogeneous areas.
The Bank offers a variety of retail deposit products to the general public in the areas surrounding its main office and its branch offices, with interest rates that are competitive with those of similar products offered by other financial institutions operating in its market area. The Bank also utilizes borrowings as a source of funds.
The Bank offers a variety of retail deposit products to the general public in the areas surrounding its main office and its branch offices, with interest rates that are competitive with those of similar products offered by other financial institutions operating in its market area. The Bank also utilizes wholesale deposits and borrowings as a source of funds.
At December 31, 2023, our investment portfolio consisted primarily of mutual funds, residential mortgage-backed securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae with stated final maturities of 10 years or more, and municipal securities with maturities of one years or more. 8 Table of Contents Our investment portfolio is primarily viewed as a source of liquidity.
At December 31, 2024, our investment portfolio consisted primarily of mutual funds, residential mortgage-backed securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae with stated final maturities of 10 years or more, and municipal securities with maturities of one years or more. 8 Table of Contents Our investment portfolio is primarily viewed as a source of liquidity.
Emerging Growth Company Status The Company is an emerging growth company and, for so long as it continues to be an emerging growth company, the Company may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Emerging Growth Company Status The Company is an emerging growth company and, for so long as it continues to be an emerging growth company, the Company may choose to take advantage of exemptions from various reporting requirements applicable to 18 Table of Contents other public companies but not to “emerging growth companies,” including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
If we were to combine land, construction and development loans as one loan on a project, the average loan size in our construction loan portfolio was $5.4 million in committed amount, comprised of outstanding disbursed balances of $3.8 million and undisbursed loans in process of $1.5 million at December 31, 2023.
If we were to combine land, construction and development loans as one loan on a project, the average loan size in our construction loan portfolio was $5.4 million in committed amount, comprised of outstanding disbursed balances of $3.8 million and undisbursed loans in process of $1.5 million at December 31, 2024.
A bank that ceases to meet any qualifying criteria is provided with a two-quarter grace period to comply with the community bank leverage ratio requirements or the general capital regulations by the federal regulators. As of December 31, 2023, the Bank had not elected the community bank leverage ratio alternative reporting framework.
A bank that ceases to meet any qualifying criteria is provided with a two-quarter grace period to comply with the community bank leverage ratio requirements or the general capital regulations by the federal regulators. As of December 31, 2024, the Bank had not elected the community bank leverage ratio alternative reporting framework.
At December 31, 2023, the majority of our mixed-use real estate loans are secured by properties that are at least 85% residential. Loans secured by multifamily and mixed-use real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans.
At December 31, 2024, the majority of our mixed-use real estate loans are secured by properties that are at least 85% residential. Loans secured by multifamily and mixed-use real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans.
The capital conservation buffer requirement began being phased in starting on January 1, 2016 at 0.625% of risk-weighted assets and increased each year until fully implemented at 2.5% on January 1, 2019. At December 31, 2023, the Bank exceeded the fully phased in regulatory requirement for the capital conservation buffer.
The capital conservation buffer requirement began being phased in starting on January 1, 2016 at 0.625% of risk-weighted assets and increased each year until fully implemented at 2.5% on January 1, 2019. At December 31, 2024, the Bank exceeded the fully phased in regulatory requirement for the capital conservation buffer.
Upon a finding by the New York State Department of Financial Services that any director, trustee, or officer of any banking organization has violated any law, or has continued unauthorized or unsafe practices in conducting the business of the banking organization after having been notified by the Superintendent to discontinue such practices, such director, trustee, or officer may be removed from office after notice and an opportunity to be heard.
Upon a finding by the New York State Department of Financial Services that any director, trustee, or officer of any banking organization has violated any law, or has continued unauthorized or unsafe practices in conducting the business of the banking organization after having been notified by the Superintendent 10 Table of Contents to discontinue such practices, such director, trustee, or officer may be removed from office after notice and an opportunity to be heard.
In addition, the aggregate amount of 13 Table of Contents extensions of credit by a financial institution to insiders cannot exceed the institution’s unimpaired capital and surplus. Section 22(g) of the Federal Reserve Act places additional restrictions on loans to executive officers. Enforcement. The FDIC has extensive enforcement authority over insured state-chartered savings banks, including the Bank.
In addition, the aggregate amount of extensions of credit by a financial institution to insiders cannot exceed the institution’s unimpaired capital and surplus. Section 22(g) of the Federal Reserve Act places additional restrictions on loans to executive officers. Enforcement. The FDIC has extensive enforcement authority over insured state-chartered savings banks, including the Bank.
The Federal Deposit Insurance Corporation Improvement Act required each federal banking agency to revise its risk-based capital standards for insured institutions to ensure that those standards take adequate account of interest-rate risk, concentration of credit risk, and the risk of nontraditional activities, as well as to reflect the actual performance and expected risk of loss on multifamily residential loans.
The Federal Deposit Insurance Corporation Improvement Act required each federal banking agency to revise its risk-based capital standards for insured institutions to ensure that those standards take adequate account of interest-rate 11 Table of Contents risk, concentration of credit risk, and the risk of nontraditional activities, as well as to reflect the actual performance and expected risk of loss on multifamily residential loans.
The enforcement authority includes, among other things, the ability to assess civil money penalties, issue cease and desist orders and remove directors and officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations, breaches of fiduciary duty and unsafe or unsound practices. Federal Insurance of Deposit Accounts.
The enforcement authority includes, among other things, the ability to assess civil money penalties, issue cease and desist orders and remove directors and officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations, breaches of fiduciary duty and unsafe or unsound practices. 13 Table of Contents Federal Insurance of Deposit Accounts.
The NYCRA also requires the Superintendent to consider a bank’s NYCRA rating when reviewing a bank’s application to engage in certain transactions, including mergers, asset purchases and the establishment of branch offices or automated teller machines, and provides that such assessment may serve as a basis for the denial of any such application. The Bank’s latest NYCRA rating was “Outstanding”.
The NYCRA also requires the Superintendent to consider a bank’s NYCRA rating when reviewing a bank’s application to engage in certain transactions, including mergers, asset purchases and the establishment of branch offices or automated teller machines, and provides that such assessment may serve as a basis for the denial of any such application.
Interest rates on our adjustable-rate loans are adjusted to a rate that equals the applicable one-, two-, three- or five-year Federal Home Loan Bank (“FHLB”) of New York or FHLB of Boston advance rate plus a margin. The balloon loans have a maximum maturity of five years.
Interest rates on our adjustable-rate loans are adjusted to a rate that equals the applicable one-, two-, three- or five-year Federal Home Loan Bank (“FHLB”) of New York or FHLB of Boston advance 5 Table of Contents rate plus a margin. The balloon loans have a maximum maturity of five years.
The CRA does require the FDIC, in connection with its examination of a non-member bank, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution, including applications to acquire branches and other 14 Table of Contents financial institutions.
The CRA does require the FDIC, in connection with its examination of a non-member bank, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution, including applications to acquire branches and other financial institutions.
A qualifying community bank with capital meeting the specified requirements (including off balance sheet exposures of 25% or less of total assets and trading assets and liabilities of 5% or less of total assets) and electing to follow the alternative framework is considered to meet all applicable regulatory capital requirements including the risk- 11 Table of Contents based requirements.
A qualifying community bank with capital meeting the specified requirements (including off balance sheet exposures of 25% or less of total assets and trading assets and liabilities of 5% or less of total assets) and electing to follow the alternative framework is considered to meet all applicable regulatory capital requirements including the risk-based requirements.
The regulatory agencies must promulgate regulations implementing the “source of strength” policy that holding companies act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress. Dividends and Stock Repurchases.
The regulatory agencies must promulgate regulations implementing the “source of strength” policy that holding companies act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress. 17 Table of Contents Dividends and Stock Repurchases.
At December 31, 2023, the largest outstanding commercial and industrial loan was comprised of an unsecured line of credit with an outstanding balance of $10.0 million and no remaining available line of credit.
At December 31, 2024, the largest outstanding commercial and industrial loan was comprised of an unsecured line of credit with an outstanding balance of $10.0 million and no remaining available line of credit.
In 16 Table of Contents evaluating applications by holding companies to acquire savings associations, the Federal Reserve Board must consider the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on the risk to the insurance funds the convenience and needs of the community and competitive factors.
In evaluating applications by holding companies to acquire savings associations, the Federal Reserve Board must consider the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on the risk to the insurance funds the convenience and needs of the community and competitive factors.
NECB Financial Services Group, LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in the third quarter of 2012 as a complement to Harbor West Wealth Management Group to sell life insurance and fixed rate annuities. NECB Financial Services Group, LLC is licensed in New York State.
NECB Financial Services Group, LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in the third quarter of 2012 as a complement to Harbor West Wealth Management Group to sell life insurance and fixed rate annuities.
The CRA requires the FDIC to provide a written evaluation of an institution’s CRA performance utilizing a four-tiered descriptive rating system. The Bank’s latest FDIC CRA rating was “Satisfactory”. On October 24, 2023, the FDIC, the OCC and the Federal Reserve issued a final rule amending the agencies’ CRA regulations.
The CRA requires the FDIC to provide a written evaluation of an institution’s CRA performance utilizing a four-tiered descriptive rating system. The Bank’s latest FDIC CRA rating was “Outstanding.” On October 24, 2023, the FDIC, the OCC and the Federal Reserve issued a final rule amending the agencies’ CRA regulations.
Our largest mixed-use real estate loan had a balance of $4.1 million and was performing according to its terms at December 31, 2023. This loan is secured by a mixed-use building with eight apartment units and a ground floor restaurant commercial unit located in the West Village section of New York City.
Our largest mixed-use real estate loan had a balance of $4.0 million and was performing according to its terms at December 31, 2024. This loan is secured by a mixed-use building with eight apartment units and a ground floor restaurant commercial unit located in the West Village section of New York City.
Approval of the 10 Table of Contents Superintendent is required if the total of all dividends declared by the bank in a calendar year would exceed the total of its net profits for that year combined with its retained net profits for the preceding two years, less prior dividends paid.
Approval of the Superintendent is required if the total of all dividends declared by the bank in a calendar year would exceed the total of its net profits for that year combined with its retained net profits for the preceding two years, less prior dividends paid.
Under our loan-refinancing program, borrowers who are current under the terms and conditions of their contractual obligations can 5 Table of Contents apply to refinance their existing loans to the rates and terms then offered on new loans after the payment of their contractual prepayment penalties.
Under our loan-refinancing program, borrowers who are current under the terms and conditions of their contractual obligations can apply to refinance their existing loans to the rates and terms then offered on new loans after the payment of their contractual prepayment penalties.
Construction loans in Bronx County consist primarily of loans to construct affordable rental apartment buildings containing between ten and 50 or more apartments.
Construction loans in Bronx County consist primarily of loans to construct affordable rental apartment buildings containing between ten and 100 or more apartments.
As of December 31, 2023, the average loan size in our multifamily and mixed-use portfolio was approximately $1.6 million. Non-Residential Real Estate Loans . Our non-residential real estate loans are generally secured by office buildings, medical facilities, and retail shopping centers that are primarily located within our lending area.
As of December 31, 2024, the average loan size in our multifamily and mixed-use portfolio was approximately $1.7 million. Non-Residential Real Estate Loans . Our non-residential real estate loans are generally secured by office buildings, medical facilities, and retail shopping centers that are primarily located within our lending area.
We have been originating multifamily and mixed-use real estate loans in the New York State/New York Metropolitan Area for 89 years.
We have been originating multifamily and mixed-use real estate loans in the New York State/New York Metropolitan Area for 91 years.
Interest rates and payments on our commercial and industrial loans are typically indexed to the prime rate as published in the Wall Street Journal and adjusted as the prime rate changes. At December 31, 2023, the average balance of loans in our commercial and industrial loan portfolio was $639,000.
Interest rates and payments on our commercial and industrial loans are typically indexed to the prime rate as published in the Wall Street Journal and adjusted as the prime rate changes. At December 31, 2024, the average balance of loans in our commercial and industrial loan portfolio was $711,000.
Under the final rule, the agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate so that the CRA continues to be an effective tool to address inequities in access to credit and financial services.
Under the final rule, the agencies will evaluate bank performance 14 Table of Contents across the varied activities they conduct and communities in which they operate so that the CRA continues to be an effective tool to address inequities in access to credit and financial services.
Our policy requires a 4 Table of Contents guaranty of all owners of the borrower who own 20% or more of the business and we impose collateral requirements on our commercial and industrial loans.
Our policy requires a guaranty of all owners of the borrower who own 20% or more of the business and we impose collateral requirements on our commercial and industrial loans.
The Bank, as a member of the Federal Home Loan Bank of New York, is required to acquire and hold shares of capital stock in that Federal Home Loan Bank. The Bank was in compliance with requirements for the Federal Home Loan Bank of New York with an investment of $859,000 at December 31, 2023.
The Bank, as a member of the Federal Home Loan Bank of New York, is required to acquire and hold shares of capital stock in that Federal Home Loan Bank. The Bank was in compliance with requirements for the Federal Home Loan Bank of New York with an investment of $327,000 at December 31, 2024.
At December 31, 2023, these whole purchased loans totaled $2.4 million and were performing according to their terms. We occasionally sell participations interests in construction loans we have originated in high absorption areas to other community banks in order to maintain compliance with our loans-to-one borrower limits.
At December 31, 2024, these whole purchased loans totaled $2.2 million and were performing according to their terms. We occasionally sell participation interests in construction loans we have originated in high absorption areas to other community banks in order to maintain compliance with our loans-to-one borrower limits.
We have generally required that the properties securing non-residential real estate loans have debt service coverage ratios (the ratio of earnings after subtracting all operating expenses to debt service payments) of between 1.25x and 1.40x. The average non-residential loan debt-service coverage ratio is 2.20x and the average loan-to-value ratio of our non-residential loans is 38.8%.
We have generally required that the properties securing non-residential real estate loans have debt service coverage ratios (the ratio of earnings after subtracting all operating expenses to debt service payments) of between 1.25x and 1.40x. The average non-residential loan debt-service coverage ratio is 2.40x and the average loan-to-value ratio of our non-residential loans is 39.4%.
At December 31, 2023, based on the 15% limitation, the Bank’s loans-to-one-borrower limit was approximately $38.3 million. On the same date, the Bank had no borrowers with outstanding balances in excess of this amount. Loan Commitments . We issue commitments for adjustable-rate mortgage loans conditioned upon the occurrence of certain events.
At December 31, 2024, based on the 15% limitation, the Bank’s loans-to-one-borrower limit was approximately $43.6 million. On the same date, the Bank had no borrowers with outstanding balances in excess of this amount. Loan Commitments . We issue commitments for adjustable-rate mortgage loans conditioned upon the occurrence of certain events.
We have longstanding relationships with mortgage brokers in the New York market area, who are familiar with our lending practices and our underwriting standards. We also deal directly with building owners throughout our lending area. At December 31, 2023, multifamily and mixed-use real estate loans to borrowers in the New York State/New York Metropolitan Area totaled $71.3 million.
We have longstanding relationships with mortgage brokers in the New York market area, who are familiar with our lending practices and our underwriting standards. We also deal directly with building owners throughout our lending area. At December 31, 2024, multifamily and mixed-use real estate loans to borrowers in the New York State/New York Metropolitan Area totaled $70.8 million.
As of December 31, 2023, the largest outstanding multifamily real estate loan had a balance of $13.0 million and was performing according to its terms. This loan is secured by a 62-unit two building apartment complex located in Boston, Massachusetts.
As of December 31, 2024, the largest outstanding multifamily real estate loan had a balance of $12.8 million and was performing according to its terms. This loan is secured by a 62-unit two building apartment complex located in Boston, Massachusetts.
Our portion of these construction loans had an outstanding balance of $17.4 million and an undisbursed available balance of $4.4 million at December 31, 2023 and was performing in accordance with its terms at December 31, 2023. These loans are secured by the development of a 160,000 square foot class A office building located in Monsey, New York.
Our portion of these construction loans had an outstanding balance of $26.7 million and an undisbursed available balance of $594,000 at December 31, 2024 and was performing in accordance with its terms at December 31, 2024. These loans are secured by the development of a 160,000 square foot class A office building located in Monsey, New York.
The Bank maintains the following subsidiaries: New England Commercial Properties LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2007 to facilitate the purchase or lease of real property by the Bank. New England Commercial Properties, LLC currently owns one foreclosed property located in Pennsylvania.
The Bank maintains the following subsidiaries: New England Commercial Properties LLC , a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2007 to facilitate the purchase or lease of real property by the Bank.
At December 31, 2023, the largest outstanding non-residential real estate loan had an outstanding balance of $2.2 million and was performing in accordance with its terms.
At December 31, 2024, the largest outstanding non-residential real estate loan had an outstanding balance of $13.9 million and was performing in accordance with its terms.
At December 31, 2023, multifamily and mixed-use real estate loans to borrowers in the Massachusetts/Boston Metropolitan Area totaled $151.2 million. We originate a variety of adjustable-rate and balloon multifamily and mixed-use real estate loans.
At December 31, 2024, multifamily and mixed-use real estate loans to borrowers in the Massachusetts/Boston Metropolitan Area totaled $156.7 million. We originate a variety of adjustable-rate and balloon multifamily and mixed-use real estate loans.
We have also historically sold participation interests in our construction loans to the Company and we may continue to do so in the future. At December 31, 2023, the Company held $14.1 million in participation interests in construction loans originated by the Bank.
We have also historically sold participation interests in our construction loans to the Company and we may continue to do so in the future. At December 31, 2024, the Company held $15.2 million in participation interests in construction loans originated by the Bank.
An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. 12 Table of Contents An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%.
An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater.
The three commercial and industrial lines of credit had an outstanding balance of $2.9 million and undisbursed available balance of $12.1 million at December 31, 2023. The five stand-by letters of credit have not been drawn upon. All of these loans were performing in accordance with their terms at December 31, 2023.
The three commercial and industrial lines of credit had an outstanding balance of $6.2 million and undisbursed available balance of $8.8 million at December 31, 2024. The six stand-by letters of credit have not been drawn upon. All of these loans were performing in accordance with their terms at December 31, 2024.
Phase 1 environmental surveys are required for most loans and property inspections are required for all loans. At December 31, 2023, we had $21.1 million in non-residential real estate loans outstanding, or 1.3% of total loans.
Phase 1 environmental surveys are required for most loans and property inspections are required for all loans. At December 31, 2024, we had $29.4 million in non-residential real estate loans outstanding, or 1.6% of total loans.
Consumer Protection and Fair Lending Regulations. New York savings banks are subject to a variety of federal statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit.
The Bank’s latest NYCRA rating was “Outstanding.” Consumer Protection and Fair Lending Regulations. New York savings banks are subject to a variety of federal statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit.
Personnel At December 31, 2023, we had 135 full-time employees and six part-time employees, none of whom are represented by a collective bargaining unit. We believe our relationship with our employees is good. 18 Table of Contents Subsidiaries The Company’s only direct subsidiary is the Bank.
Personnel At December 31, 2024, we had 136 full-time employees and seven part-time employees, none of whom are represented by a collective bargaining unit. We believe our relationship with our employees is good. Subsidiaries The Company’s only direct subsidiary is the Bank.
An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%. As of December 31, 2023, the Bank was a “well capitalized” institution under FDIC regulations.
An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.
At December 31, 2023, if we were to combine land, construction and development loans as one loan on a project, our construction loan portfolio consisted of 322 loans totaling $1.7 billion in committed amount, comprised of outstanding disbursed balance of $1.2 billion and undisbursed loans in process of $486.3 million.
At December 31, 2024, if we were to combine land, construction and development loans as one loan on a project, our construction loan portfolio consisted of 269 loans totaling $1.9 billion in committed amount, comprised of outstanding disbursed balance of $1.4 billion and undisbursed loans in process of $398.4 million.
At December 31, 2023, if we were to count land, construction and development loans as separate loans, our construction loan portfolio consisted of 560 loans totaling $1.7 billion in committed amount, comprised of outstanding disbursed balances of $1.2 billion and undisbursed loans in process of $486.3 million.
At December 31, 2024, if we were to count land, construction and development loans as separate loans, our construction loan portfolio consisted of 485 loans totaling $1.9 billion in committed amount, comprised of outstanding disbursed balances of $1.4 billion and undisbursed loans in process of $398.4 million.
Our largest committed construction loan project at December 31, 2023 was comprised of four loans with a total commitment of $43.6 million of which 50.0% of the commitment has been sold to another financial institution thereby reducing our committed portion to $21.8 million.
Our largest committed construction loan project at December 31, 2024 was comprised of five loans with a total commitment of $49.2 million of which 50.0% of the commitment of four of the five loans has been sold to another financial institution thereby reducing our committed portion to $27.4 million.
We no longer offer the overdraft protection for checking accounts linked to statement savings accounts. We also consider any checking accounts with overdrawn balances as a consumer loan even though the customer typically deposits sufficient funds the next business day to cover the overdrawn balance.
We also consider any checking accounts with overdrawn balances as a consumer loan even though the customer typically deposits sufficient funds the next business day to cover the overdrawn balance.
The Federal Reserve Bank of New York (“FRBNY”) approved on August 30, 2023 the Bank’s eligibility to pledge loans under the Borrower-in-Custody program of the FRBNY thereby allowing the Bank to borrow from the Discount Window at the FRBNY. As of December 31, 2023, we had $50.0 million in FRBNY borrowings and an available borrowing limit of $865.1 million.
At December 31, 2024, we had no Federal Home Loan Bank advances outstanding and an available borrowing limit of $18.2 million. The Federal Reserve Bank of New York (“FRBNY”) approved on August 30, 2023 the Bank’s eligibility to pledge loans under the Borrower-in-Custody program of the FRBNY thereby allowing the Bank to borrow from the Discount Window at the FRBNY.
At December 31, 2023, the construction loan portfolio was comprised primarily of 556 New York construction loans with $1.7 billion in committed amount, comprising of outstanding disbursed balances of $1.2 billion and undisbursed loans in process of $480.3 million.
At December 31, 2024, the construction loan portfolio was comprised primarily of 483 New York construction loans with $1.9 billion in committed amount, comprising of outstanding disbursed balances of $1.4 billion and undisbursed loans in process of $398.3 million.
At December 31, 2023, our non-residential real estate loan portfolio was comprised mainly of $15.7 million of loans secured by properties in the New York State/New York Metropolitan Area, $3.9 million of loans secured by properties in the Massachusetts/Boston Metropolitan Area, and $1.5 million of loans secured by properties in Connecticut and New Jersey.
At December 31, 2024, our non-residential real estate loan portfolio was comprised of $25.3 million of loans secured by properties in the New York State/New York Metropolitan Area, $3.1 million of loans secured by properties in the Massachusetts/Boston Metropolitan Area, and $993,000 of loans secured by properties in New Jersey.
We offer personal loans, loans secured by savings accounts or certificates of deposit (share loans), and overdraft protection for checking accounts which is linked to statement savings accounts and has the ability to transfer funds from the statement savings account to the checking account when needed to cover overdrafts.
Consumer Loans. We offer personal loans and overdraft protection for checking accounts which is linked to statement savings accounts and has the ability to transfer funds from the statement savings account to the checking account when needed to cover overdrafts. We no longer offer the overdraft protection for checking accounts linked to statement savings accounts.
At December 31, 2023, our largest outstanding credit relationship with one borrower totaled $47.1 million, comprising of four construction loans with $31.2 million in committed amount, three commercial and industrial lines of credit with $15.0 million in committed amount, and five stand-by letters of credit with $855,000 in committed amount.
At December 31, 2024, our largest outstanding credit relationship with one borrower totaled $51.6 million, comprising of four construction loans with $33.1 million in committed amount, three commercial and industrial lines of credit with $15.0 million in committed amount, and six stand-by letters of credit with $3.5 million in committed amount.
Our largest outstanding construction loan at December 31, 2023 had a committed amount of $28.0 million, an outstanding balance of $27.0 million, and an undisbursed available balance of $959,000.
Our largest outstanding construction loan at December 31, 2024 had a committed amount of $27.2 million, an outstanding balance of $26.9 million, and an undisbursed available balance of $373,000.
Most buildings are granted real estate tax abatements under New York City’s former 421- A program or an equivalent program due to the affordable nature of the apartments in the buildings. 3 Table of Contents Our average construction loans range from $5.0 million to $10.0 million on buildings and complexes ranging from 20 to 40 units.
Most buildings in the Bronx are granted real estate tax abatements under New York City’s former 421-A tax abatement program or the new 485-x tax abatement program approved on April 27, 2024 by New York State to replace the expired 421-A tax abatement program. 3 Table of Contents Our average construction loans range from $5.0 million to $10.0 million on buildings and complexes ranging from 20 to 40 units.
The average multifamily loan debt-service coverage is 2.91x and the average loan-to-value ratio of our multifamily real estate loans is 31.2%. The average mixed-use real estate loan debt-service coverage is 2.95x and the average loan-to-value ratio of our mixed-use real estate loans is 38.6%.
The average multifamily loan debt-service coverage is 2.58x and the average loan-to-value ratio of our multifamily real estate loans is 37.5%. The average mixed-use real estate loan debt-service coverage is 2.98x and the average loan-to-value ratio of our mixed-use real estate loans is 37.5%.
At December 31, 2023, our portfolio of consumer loans was $1.2 million, or 0.08% of total loans, comprised primarily of checking accounts with overdrawn balances of $1.2 million and lines for overdraft protection with balances of $10,000.
At December 31, 2024, our portfolio of consumer loans was $1.6 million, or 0.09% of total loans, comprised primarily of checking accounts with overdrawn balances of $1.6 million and one line for overdraft protection with a balance of $1,000.
This loan was performing in accordance with its terms at December 31, 2023 and is secured by the development of a multi-family building located in the Bronx, New York that will include 111 apartment units with a first floor community space.
This loan was performing in accordance with its terms at December 31, 2024 and is secured by the development of a 110 apartment unit multi-family building located in the Bronx, New York.
At December 31, 2023, $1.4 billion, or 88.1%, of our portfolio was secured by loans in the New York State/New York Metropolitan Area, $159.2 million, or 10.0%, of our portfolio was secured by loans in the Massachusetts/Boston Metropolitan Area and $28.3 million, or 1.9%, of our portfolio was secured by loans in Connecticut and New Jersey. Construction Loans.
At December 31, 2024, $1.6 billion, or 89.2%, of our portfolio was secured by loans in the New York State/New York Metropolitan Area, $163.1 million, or 9.0%, of our portfolio was secured by loans in the Massachusetts/Boston Metropolitan Area and $32.7 million, or 1.8%, of our portfolio was secured by loans in Connecticut and New Jersey. Construction Loans.
Of the $47.1 million in committed amount, $11.2 million of the commitment in construction loans has been sold to two other financial institutions thereby reducing our committed portion to $35.9 million. Our portion of these construction loans had an outstanding balance of $17.5 million and undisbursed loans in process of $2.5 million at December 31, 2023.
Of the $51.6 million in committed amount, $11.2 million of the commitment in construction loans has been sold to two other financial institutions thereby reducing our committed portion to $40.4 million. Our portion of these construction loans had an outstanding balance of $18.8 million and undisbursed loans in process of $480,000 at December 31, 2024.
At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on the payment of dividends, and restrictions on the acceptance of brokered deposits.
As of December 31, 2024, the Bank was a “well capitalized” institution under FDIC regulations. 12 Table of Contents At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on the payment of dividends, and restrictions on the acceptance of brokered deposits.
Hom joined the Company and the Bank in 2007, serving as Chief Financial Officer since 2013. Prior to joining the Company and the Bank, Mr. Hom served for 23 years as a bank examiner and financial analyst for a Federal banking regulatory agency and six years as the chief executive officer of a New Jersey community bank. Age 69. ​
Hom served for 23 years as a bank examiner and financial analyst for a Federal banking regulatory agency and six years as the chief executive officer of a New Jersey community bank. Age 70. ​
Pursuant to our lending policy, we generally limit the aggregate of all loans and lines of credit (including unused commitments) to any one borrower to no more than 10% of our Tier 1 Capital.
We also provide commercial and industrial loans to real estate developers in the New York 4 Table of Contents Metropolitan Area. Pursuant to our lending policy, we generally limit the aggregate of all loans and lines of credit (including unused commitments) to any one borrower to no more than 10% of our Tier 1 Capital.
The Company’s common stock is registered with the Securities and Exchange Commission and, as a result, the Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934. Sarbanes-Oxley Act of 2002.
Any company that acquires control would then be subject to regulation as a savings and loan holding company. Federal Securities Laws. The Company’s common stock is registered with the Securities and Exchange Commission and, as a result, the Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.
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. Other Regulations. Interest and other charges collected or contracted for by the Bank are subject to state usury laws and federal laws concerning interest rates.
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.
In addition, we are party to a loan agreement with Atlantic Community Bankers Bank under which we can borrow up to $8.0 million in short-term borrowings.
As of December 31, 2024, we had no FRBNY borrowings and an available borrowing limit of $834.7 million. In addition, we are party to a loan agreement with Atlantic Community Bankers Bank under which we can borrow up to $8.0 million in short-term borrowings.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA breakdown in our internal control systems, improper operation of our systems or improper employee actions could result in material financial loss to us, the imposition of regulatory action, and damage to our reputation. 23 Table of Contents Risks Related to Our Growth Strategy The building of market share through our branch office strategy, and our ability to achieve profitability on new branch offices, may increase our expenses and negatively affect our earnings.
Biggest changeA breakdown in our internal control systems, improper operation of our systems or improper employee actions could result in material financial loss to us, the imposition of regulatory action, and damage to our reputation.
The Bank is subject to extensive regulation, supervision and examination by the FDIC and the New York State Department of Financial Services. In addition, the Company is subject to extensive regulation, supervision and examination by the Federal Reserve Board and the New York State Department of Financial Services.
The Bank is subject to extensive regulation, supervision and examination by the FDIC and the New York State Department of Financial Services. In addition, the Company is subject to extensive regulation, supervision and examination by the Federal Reserve Board.
The 26 Table of Contents ability to keep pace with technological change is important, and the failure to do so, due to cost, proficiency or otherwise, could have a material adverse impact on our business and therefore on our financial condition and results of operations. Acts of terrorism and other external events could impact our business.
The ability to keep pace with technological change is important, and the failure to do so, due to cost, proficiency or otherwise, could have a material adverse impact on our business and therefore on our financial condition and results of operations. 27 Table of Contents Acts of terrorism and other external events could impact our business.
Although the CRE Guidance did not establish 20 Table of Contents specific lending limits, it provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months.
Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months.
While we believe that our long-standing presence in our market areas in New York and Massachusetts, and our personal service philosophy enhance our ability to compete favorably in attracting and retaining individual and business customers, price competition for loans may result in originating fewer loans, or earning 22 Table of Contents less on our loans and price competition for deposits may result in a reduction of our deposit base of paying more on deposits.
While we believe that our long-standing presence in our market areas in New York and Massachusetts, and our personal service philosophy enhance our ability to compete favorably in attracting and retaining individual and business customers, price competition for loans may result in originating fewer loans, or earning less on our loans and price competition for deposits may result in a reduction of our deposit base of paying more on deposits.
Additionally, in May 2023, First Republic Bank experienced similar circumstances which resulted in the institution 24 Table of Contents being placed in FDIC receivership. In the aftermath of these events, there has been substantial market disruption and concerns that diminished depositor confidence could spread across the banking industry, leading to deposit outflows that could destabilize other institutions.
Additionally, in May 2023, First Republic Bank experienced similar circumstances which resulted in the institution being placed in FDIC receivership. In the aftermath of these events, there has been substantial market disruption and concerns that diminished depositor confidence could spread across the banking industry, leading to deposit outflows that could destabilize other institutions.
Any increase in our allowance for credit losses or credit charge-offs 21 Table of Contents resulting from these regulatory reviews may have a material adverse effect on our results of operations and financial condition. The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in our primary market area.
Any increase in our allowance for credit losses or credit charge-offs resulting from these regulatory reviews may have a material adverse effect on our results of operations and financial condition. The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in our primary market area.
Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to, among other things, the environment, health and safety, labor conditions and human rights.
Consideration should also be given to the other information in this Annual Report on Form 10-K, as well as in the documents incorporated by reference into this Form 10-K. 19 Table of Contents Risks Related to Our Lending Activities Our emphasis on construction lending involves risks that could adversely affect our financial condition and results of operations.
Consideration should also be given to the other information in this Annual Report on Form 10-K, as well as in the documents incorporated by reference into this Form 10-K. Risks Related to Our Lending Activities Our emphasis on construction lending involves risks that could adversely affect our financial condition and results of operations.
To strengthen public confidence in the banking system, the FDIC took action to protect funds held in uninsured deposit accounts at Silicon Valley Bank and Signature Bank following the placement of those institutions into receivership. However, the FDIC has not committed to protecting uninsured deposits in other institutions that experience outsized withdrawal demands.
To strengthen public confidence in the banking system, the FDIC took action to protect funds held in uninsured deposit accounts at Silicon Valley Bank and Signature Bank following the placement of those institutions into receivership. However, the FDIC has not committed to protecting uninsured deposits in other 25 Table of Contents institutions that experience outsized withdrawal demands.
Paying higher deposit rates to maintain or replace these types of deposits could adversely affect our net interest margin and operating results. We face a risk of non-compliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
Paying higher deposit rates to maintain or replace these types of deposits could adversely affect our net interest margin and operating results. 23 Table of Contents We face a risk of non-compliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
Commercial and industrial loans generally expose a lender to a greater risk of loss than one- to four-family residential loans. Repayment of commercial and industrial loans generally is dependent, in large part, on sufficient income from the business to cover operating expenses and debt service.
Commercial and industrial loans generally expose a lender to a greater risk of loss than one- to four-family 21 Table of Contents residential loans. Repayment of commercial and industrial loans generally is dependent, in large part, on sufficient income from the business to cover operating expenses and debt service.
Adverse conditions in the local economy such as unemployment, recession, a catastrophic event or other factors beyond our control could impact the ability of our borrowers to repay their loans, which could impact our net interest income.
Adverse conditions in the local economy such as unemployment, recession, a 22 Table of Contents catastrophic event or other factors beyond our control could impact the ability of our borrowers to repay their loans, which could impact our net interest income.
Construction loans represented 478% of the Bank’s total risk-based capital at December 31, 2023, and our multifamily, mixed-use and nonresidential real estate loan portfolio represented 98% of the Bank’s total risk-based capital on that same date. In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”).
Construction loans represented 485% of the Bank’s total risk-based capital at December 31, 2024, and our multifamily, mixed-use and nonresidential real estate loan portfolio represented 90% of the Bank’s total risk-based capital on that same date. In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”).
See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Management of Credit Risk.” Our portfolio of commercial and industrial loans may expose us to increased lending risks. At December 31, 2023, $111.1 million, or 7.0%, of our loan portfolio consisted of commercial and industrial loans.
See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Management of Credit Risk.” Our portfolio of commercial and industrial loans may expose us to increased lending risks. At December 31, 2024, $118.7 million, or 6.6%, of our loan portfolio consisted of commercial and industrial loans.
A key component of our business strategy is to rely on our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas.
A key component of our business strategy is to rely on our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas. As such, we strive to conduct our business in an honorable manner that enhances our reputation.
For construction loans we originate, we require our borrowers to fund an interest reserve account in advance. Our portfolio of multifamily residential, mixed-use and non-residential real estate lending could expose us to increased lending risks. At December 31, 2023, $249.7 million, or 15.8%, of our loan portfolio consisted of multifamily, mixed-use and non-residential real estate loans.
For construction loans we originate, we require our borrowers to fund an interest reserve account in advance. 20 Table of Contents Our portfolio of multifamily residential, mixed-use and non-residential real estate lending could expose us to increased lending risks. At December 31, 2024, $262.6 million, or 14.5%, of our loan portfolio consisted of multifamily, mixed-use and non-residential real estate loans.
Our construction loan portfolio has increased to $1.2 billion, net of loans-in-process of $486.3 million, or 76.9% of total loans, at December 31, 2023 from $251.0 million, net of loans-in-process of $145.8 million, or 39.8% of total loans, at December 31, 2016.
Our construction loan portfolio has increased to $1.4 billion, net of loans-in-process of $398.4 million, or 78.6% of total loans, at December 31, 2024 from $251.0 million, net of loans-in-process of $145.8 million, or 39.8% of total loans, at December 31, 2016.
As such, we strive to conduct our business in an honorable manner that enhances our 25 Table of Contents reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and communities.
This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and communities.
The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations.
Our business is dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party service providers. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations.
At December 31, 2023, we had uninsured deposits totaling $344.8 million and $102.7 million in available liquidity, including $68.7 million in cash, as well as $865.1 million in borrowing capacity at the FRBNY which was sufficient to cover our uninsured deposits.
At December 31, 2024, we had uninsured deposits totaling $346.9 million and $115.0 million in available liquidity, including $78.3 million in cash, as well as $834.7 million in borrowing capacity at the FRBNY which was sufficient to cover our uninsured deposits as of December 31, 2024.
At December 31, 2023, brokered deposits, military deposits and deposits obtained through listing services totaled $361.4 million, or 25.8% of total deposits, of which brokered deposits represents $311.2 million or 22.2% of total deposits. Generally, these deposits may not be as stable as other types of deposits.
At December 31, 2024, brokered deposits, military deposits and deposits obtained through listing services totaled $489.3 million, or 29.3% of total deposits, of which brokered deposits represents $436.0 million or 26.1% of total deposits. Generally, these deposits may not be as stable as other types of deposits.
If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers or otherwise, our business and operating results may be materially adversely affected.
If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers or otherwise, our business and operating results may be materially adversely affected. 26 Table of Contents We are dependent on our information technology and telecommunications systems and third-party service providers; systems failures, interruptions and cybersecurity breaches could have a material adverse effect on us.
At December 31, 2023, $1.1 billion, or 92.4% of our construction loan portfolio and 76.7% of our loan portfolio, represented loans made in high absorption areas of these four counties of New York. This may make us vulnerable to a downturn in the local economy and real estate markets and to a decrease in new construction in these counties.
At December 31, 2024, $1.3 billion of our construction loan portfolio, or 92.3% of our construction loan portfolio and 72.7% of our total loan portfolio, represented loans made in the high absorption areas of these four counties of New York.
Risks Related to Our Business and Industry Generally Changes in interest rates may hurt our profits and asset values and our strategies for managing interest rate risk may not be effective. We are subject to significant interest rate risk as a financial institution. Our interest-bearing liabilities reprice or mature more quickly than our interest-earning assets.
We are subject to significant interest rate risk as a financial institution. Our interest-bearing liabilities reprice or mature more quickly than our interest-earning assets.
Removed
To further bolster the banking system, the Federal Reserve Board created a new Bank Term Funding Program to provide an additional source of liquidity.
Added
In addition, at December 31, 2024, $159.8 million, or 60.9% of our multifamily, mixed use and non-residential real estate loan portfolio and 8.8% of our total loan portfolio, represented loans made in the Boston Metropolitan Area.
Removed
We are dependent on our information technology and telecommunications systems and third-party service providers; systems failures, interruptions and cybersecurity breaches could have a material adverse effect on us. Our business is dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party service providers.
Added
Furthermore, at December 31, 2024, $96.1 million, or 36.6% of our multifamily, mixed-use and non-residential real estate loan portfolio and 5.3% of our total loan portfolio, represented loans made in the New York Metropolitan Area.
Added
This might make us vulnerable to a downturn in the local economy and real estate markets and to a decrease in new construction in these counties.
Added
Risks Related to Our Growth Strategy The building of market share through our branch office strategy, and our ability to achieve profitability on new branch offices, may increase our expenses and negatively affect our earnings.
Added
Risks Related to Our Payment of Dividends Our dividend policy may change without notice and any payment of dividends in the future is subject to the discretion of our Board of Directors. The holders of our common stock will receive cash dividends if and when declared by our Board of Directors out of legally available funds.
Added
The Company has historically paid a quarterly cash dividend to stockholders. During the 24 Table of Contents year ended December 31, 2024, the Company increased the quarterly cash dividends to $0.10 per share on March 21, 2024 and $0.15 per share on September 19, 2024 from $0.06 per share prior to 2024.
Added
Although we have a history of paying cash dividends, we have no obligation to continue paying dividends.
Added
Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements and alternative uses for capital, financial condition, future prospects, regulatory restrictions, and other factors that our board of directors may deem relevant.
Added
Our principal business operations are conducted through our subsidiary, the Bank, and the ability of the Bank to pay dividends to us will continue to be subject to, and limited by, certain legal and regulatory restrictions.
Added
Further, any lenders making loans to us may impose financial covenants that may be more restrictive with respect to dividend payments than the regulatory requirements. Risks Related to Our Business and Industry Generally Changes in interest rates may hurt our profits and asset values and our strategies for managing interest rate risk may not be effective.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeITEM 1C. CYBERSECURITY Our information security program is managed by a dedicated Chief Information Officer, whose team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes.
Biggest changeITEM 1C. CYBERSECURITY Our information security program is managed by a dedicated Chief Information Officer, whose team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes. The Chief Information Officer provides periodic reports to our Board of Directors, as well as our Chief Executive Officer and other members of our senior management as appropriate.
These reports include updates on the Company’s cyber risks and threats, the status of projects to strengthen our information security systems, assessments of the information security program, and the emerging threat landscape. Our program is regularly evaluated by internal and external experts with the results of those reviews reported to senior management and the Board.
These reports include updates on the Company’s cyber risks and threats, the status of projects to strengthen our information security systems, assessments of the information security program, and the emerging threat landscape. Our program is regularly evaluated by internal and external experts with 28 Table of Contents the results of those reviews reported to senior management and the Board.
Removed
The Chief 27 Table of Contents Information Officer provides periodic reports to our Board of Directors, as well as our Chief Executive Officer and other members of our senior management as appropriate.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt December 31, 2023, we leased five of our offices, and the total net book value of our land, buildings, furniture, fixtures and equipment was $25.5 million. ​
Biggest changeAt December 31, 2024, we leased five of our offices, and the total net book value of our land, buildings, furniture, fixtures and equipment was $24.8 million. ​
PROPERTIES At December 31, 2023, we conducted business through our administrative headquarters located in White Plains, New York and through our eleven branch offices located in Bronx, New York, Rockland, Orange, and Sullivan Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts and three loan production offices located in White Plains and New City, New York and Danvers, Massachusetts.
PROPERTIES At December 31, 2024, we conducted business through our administrative headquarters located in White Plains, New York and through our eleven branch offices located in Bronx, New York, Rockland, Orange, and Sullivan Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts and three loan production offices located in White Plains and New City, New York and Danvers, Massachusetts.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, the Company and the Bank are involved in routine legal proceedings in the ordinary course of business. At December 31, 2023, such routine legal proceedings, in the aggregate, are believed by management to be immaterial to our financial condition, results of operations and cash flows. ​
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, the Company and the Bank are involved in routine legal proceedings in the ordinary course of business. At December 31, 2024, such routine legal proceedings, in the aggregate, are believed by management to be immaterial to our financial condition, results of operations and cash flows. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn May 30, 2023, following the completion of the Company’s first stock repurchase program, the Company announced that its Board of Directors had authorized a second stock repurchase program to acquire up to an additional 1,509,218 shares, or 10%, of the Company’s currently issued and outstanding common stock. ​ ​ 29 Table of Contents The following table provides information on repurchases by the Company of its common stock under the Company’s stock repurchase program during the three months ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Maximum Number of ​ ​ ​ ​ ​ ​ ​ Purchased as Part of Shares that May Yet Be ​ Total Number of ​ Average Price Paid Publicly Announced Purchased Under the Period ​ Shares Purchased ​ ​ Per Share ​ Plans or Programs ​ Plans or Programs October 1 - 31, 2023 ​ 200,655 $ 14.87 200,655 697,998 November 1 - 30, 2023 ​ 124,700 ​ ​ 16.07 ​ 124,700 ​ 573,298 December 1 - 31, 2023 ​ - ​ ​ - ​ - ​ 573,298 Total ​ 325,355 ​ ​ ​ ​ 325,355 ​ ​ ​ ​ ​
Biggest changeThe following table provides information on repurchases by the Company of its common stock under the Company’s stock repurchase program during the quarter ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Maximum Number of ​ ​ ​ ​ ​ ​ ​ Purchased as Part of Shares that May Yet Be ​ Total Number of ​ Average Price Paid Publicly Announced Purchased Under the Period ​ Shares Purchased ​ ​ Per Share ​ Plans or Programs ​ Plans or Programs October 1 - 31, 2024 ​ - $ - - 418,044 November 1 - 30, 2024 ​ - ​ ​ - ​ - ​ 418,044 December 1 - 31, 2024 ​ - ​ ​ - ​ - ​ 418,044 Total ​ - ​ ​ ​ ​ - ​ ​ ​ ​ ​
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information regarding outstanding options and shares outstanding under the Company’s previously disclosed 2022 Equity Incentive Plan at December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (a) ​ ​ (b) ​ (c) ​ ​ ​ ​ ​ ​ ​ Numbers of Securities ​ ​ ​ ​ ​ ​ ​ Remaining Available ​ ​ ​ ​ ​ ​ ​ for Future Issuance ​ ​ Numbers of Securities to ​ ​ Weighted-Average ​ Under Equity ​ ​ be Issued Upon Exercise ​ ​ Exercise Price of ​ Compensation Plans ​ of Outstanding Options, ​ Outstanding Options, (Excluding Securities Period ​ Warrants and Rights ​ ​ Warrants and Rights ​ Reflected in Column (a)) Equity compensation plan approved by security holders ​ 880,097 $ 13.67 98,311 Equity compensation plan not approved by security holders ​ - ​ ​ - ​ - Total ​ 880,097 ​ ​ ​ ​ 98,311 ​ Share Repurchases On July 27, 2022, the Company announced that its Board of Directors had authorized a stock repurchase program to acquire up to 1,637,794 shares, or 10%, of the Company's currently issued and outstanding common stock commencing on August 1, 2022.
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information regarding outstanding options and shares outstanding under the Company’s previously disclosed 2022 Equity Incentive Plan at December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (a) ​ ​ (b) ​ (c) ​ ​ ​ ​ ​ ​ ​ Numbers of Securities ​ ​ ​ ​ ​ ​ ​ Remaining Available ​ ​ ​ ​ ​ ​ ​ for Future Issuance ​ ​ Numbers of Securities to ​ ​ Weighted-Average ​ Under Equity ​ ​ be Issued Upon Exercise ​ ​ Exercise Price of ​ Compensation Plans ​ of Outstanding Options, ​ Outstanding Options, (Excluding Securities Period ​ Warrants and Rights ​ ​ Warrants and Rights ​ Reflected in Column (a)) Equity compensation plan approved by security holders ​ 842,896 $ 13.72 98,311 Equity compensation plan not approved by security holders ​ - ​ ​ - ​ - Total ​ 842,896 ​ ​ ​ ​ 98,311 ​ Issuer Purchases of Equity Securities On July 27, 2022, the Company announced that its Board of Directors had authorized a stock repurchase program to acquire up to 1,637,794 shares, or 10%, of the Company's currently issued and outstanding common stock commencing on August 1, 2022.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The common stock of the Company is traded on the Nasdaq Capital Market under the ticker symbol “NECB.” Holders The number of shareholders of record of the Company at March 28, 2024 was 317.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The common stock of the Company is traded on the Nasdaq Capital Market under the ticker symbol “NECB.” Holders The number of shareholders of record of the Company at March 11, 2025 was 301.
As previously disclosed, the Company’s Board of Directors also declared a one-time special cash dividend of $0.18 per share, which was paid on May 31, 2022, to shareholders of record at the close of business on May 16, 2022.
As previously disclosed, the Company’s Board of Directors also declared a one-time special cash dividend of $0.15 per share, which was paid on November 6, 2024, to shareholders of record at the close of business on October 6, 2024 and $0.18 per share, which was paid on May 31, 2022, to shareholders of record at the close of business on May 16, 2022.
Dividends The Company has historically paid a quarterly cash dividend to stockholders. During the year ended December 31, 2023 and 2022, the Company paid regular quarterly cash dividends of $0.06 per share.
Dividends The Company has historically paid a quarterly cash dividend to stockholders. During the year ended December 31, 2024, the Company increased the quarterly cash dividends to $0.10 per share on March 21, 2024 and $0.15 per share on September 19, 2024 from $0.06 per share prior to 2024.
The stock repurchase program was the Company’s first repurchase program since completing its second-step conversion and related stock offering in July 2021.
The stock repurchase program was the Company’s first repurchase program since completing its second-step conversion and related stock offering in July 2021. 30 Table of Contents On May 30, 2023, following the completion of the Company’s first stock repurchase program, the Company announced that its Board of Directors had authorized a second stock repurchase program to acquire up to an additional 1,509,218 shares, or 10%, of the Company’s currently issued and outstanding common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest changeAs a result, our banking regulators could require us to increase our allowance for credit losses - loans. ​ The following table sets forth the breakdown of the allowance for credit losses by loan category at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2023 ​ ​ 2022 ​ ​ ​ ​ % of Allowance % of Loans in ​ ​ ​ % of Allowance % of Loans in ​ ​ ​ ​ ​ Amount to Total ​ Category to Total ​ ​ ​ ​ ​ Amount to Total ​ Category to Total ​ ​ Amount ​ Allowance ​ Loans ​ ​ Amount ​ Allowance ​ Loans ​ ​ (Dollars in thousands) ​ Residential real estate loans: ​ ​ ​ ​ ​ One- to four-family ​ $ 44 0.86 % 0.33 % ​ $ 11 0.20 % 0.45 % Multifamily ​ 2,186 42.92 12.54 ​ 479 8.75 10.14 ​ Mixed-use ​ 203 3.99 1.87 ​ 38 0.69 1.80 ​ Non-residential real estate loans ​ 126 2.47 1.33 ​ 131 2.39 2.08 ​ Construction loans ​ 1,914 37.58 76.85 ​ 3,835 70.06 76.45 ​ Commercial and industrial ​ 472 9.27 7.00 ​ 955 17.45 9.04 ​ Consumer loans ​ 148 2.91 0.08 ​ 18 0.33 0.04 ​ Total general allowance ​ $ 5,093 100.00 % 100.00 % ​ $ 5,467 99.87 % 100.00 % Unallocated ​ — - — ​ 7 0.13 — Total allowance for credit losses ​ $ 5,093 100.00 % 100.00 % ​ $ 5,474 100.00 % 100.00 % ​ 48 Table of Contents The following table sets forth an analysis of the activity in the allowance for credit losses related to loans for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended December 31, ​ ​ ​ 2023 2022 ​ ​ (Dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans net of deferred fees ​ $ 1,586,897 ​ $ 1,217,693 ​ Average loans outstanding ​ 1,401,492 ​ 1,054,577 ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance at beginning of period ​ $ 5,474 ​ $ 5,242 ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of adopting ASC 326 ​ ​ (1,584) ​ ​ — ​ Net charge-offs: ​ ​ ​ Residential real estate loans: ​ ​ ​ One- to four-family ​ — ​ — ​ Multifamily ​ — ​ — ​ Mixed-use ​ — ​ (103) ​ Total residential real estate loans ​ — ​ (103) ​ Non-residential real estate loans ​ — ​ (53) ​ Construction loans ​ 159 ​ 328 ​ Commercial and industrial loans ​ — ​ — ​ Consumer loans ​ 154 ​ 35 ​ Total net charge-offs ​ 313 ​ 207 ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for credit losses ​ 1,516 ​ 439 ​ Allowance at end of period ​ $ 5,093 ​ $ 5,474 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loan outstanding: ​ ​ ​ Residential real estate loans: ​ ​ ​ One- to four-family ​ 5,240 ​ 6,213 ​ Multifamily ​ 141,836 ​ 83,907 ​ Mixed-use ​ 28,034 ​ 24,333 ​ Total residential real estate loans ​ 175,110 ​ 114,453 ​ Non-residential real estate loans ​ 23,196 ​ 33,531 ​ Construction loans ​ 1,088,219 ​ 795,340 ​ Commercial and industrial loans ​ 113,908 ​ 110,452 ​ Consumer loans ​ 1,059 ​ 501 ​ Total ​ 1,401,492 ​ 1,054,277 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net charge-offs as a percentage of average loans outstanding ​ ​ ​ Residential real estate loans: ​ ​ ​ One- to four-family ​ — % — % Multifamily ​ — ​ — ​ Mixed-use ​ — ​ (0.42) ​ Total residential real estate loans ​ — ​ (0.09) ​ Non-residential real estate loans ​ — ​ (0.16) ​ Construction loans ​ 0.01 ​ 0 ​ Commercial and industrial loans ​ — ​ — ​ Consumer loans ​ 14.54 ​ 6.99 ​ Total net charge-offs ​ 0.02 % 0.02 % ​ ​ ​ ​ ​ ​ ​ ​ Credit Quality Ratios: ​ ​ ​ ​ ​ ​ ​ As a percentage of year-end loans, net of unearned income: ​ ​ ​ ​ ​ ​ ​ Allowance for credit loss ​ 0.32 % 0.45 % Nonaccrual loans ​ ​ 0.28 % ​ — % Nonperforming loans ​ ​ 0.28 % ​ — % Allowance for credit losses to nonaccrual loans ​ 116.15 % — % Allowance for credit losses to nonperforming loans ​ 116.15 % — % ​ 49 Table of Contents The allowance for credit losses related to loans decreased by $381,000 to $5.1 million at December 31, 2023 from $5.5 million at December 31, 2022.
Biggest changeAs a result, our banking regulators could require us to increase our allowance for credit losses - loans. ​ The following table sets forth the breakdown of the allowance for credit losses by loan category at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2024 ​ ​ 2023 ​ ​ ​ ​ % of Allowance % of Loans in ​ ​ ​ % of Allowance % of Loans in ​ ​ ​ ​ ​ Amount to Total ​ Category to Total ​ ​ ​ ​ ​ Amount to Total ​ Category to Total ​ ​ Amount ​ Allowance ​ Loans ​ ​ Amount ​ Allowance ​ Loans ​ ​ (Dollars in thousands) ​ Residential real estate loans ​ $ 1,900 39.34 % 13.06 % ​ $ 2,433 47.77 % 14.74 % Non-residential real estate loans ​ 308 6.38 1.62 ​ 126 2.47 1.33 ​ Construction loans ​ 1,937 40.10 78.68 ​ 1,914 37.58 76.85 ​ Commercial and industrial ​ 520 10.77 6.55 ​ 472 9.27 7.00 ​ Consumer loans ​ 165 3.42 0.09 ​ 148 2.91 0.08 ​ Total allowance for credit losses ​ $ 4,830 100.00 % 100.00 % ​ $ 5,093 100.00 % 100.00 % ​ 48 Table of Contents The following table sets forth an analysis of the activity in the allowance for credit losses related to loans for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended December 31, ​ ​ ​ 2024 2023 ​ ​ (Dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans net of deferred (fees) costs ​ $ 1,812,598 ​ $ 1,586,897 ​ Average loans outstanding ​ 1,701,079 ​ 1,401,492 ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance at beginning of period ​ $ 5,093 ​ $ 5,474 ​ ​ ​ ​ ​ ​ ​ ​ ​ Impact of adopting ASC 326 ​ ​ — ​ ​ (1,584) ​ Net charge-offs: ​ ​ ​ Residential real estate loans: ​ ​ ​ One- to four-family ​ — ​ — ​ Multifamily ​ — ​ — ​ Mixed-use ​ — ​ — ​ Total residential real estate loans ​ — ​ — ​ Non-residential real estate loans ​ — ​ — ​ Construction loans ​ — ​ 159 ​ Commercial and industrial loans ​ 1,000 ​ — ​ Consumer loans ​ 347 ​ 154 ​ Total net charge-offs ​ 1,347 ​ 313 ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for credit losses ​ 1,084 ​ 1,516 ​ Allowance at end of period ​ $ 4,830 ​ $ 5,093 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loan outstanding: ​ ​ ​ Residential real estate loans: ​ ​ ​ One- to four-family ​ 4,213 ​ 5,240 ​ Multifamily ​ 198,372 ​ 141,836 ​ Mixed-use ​ 27,965 ​ 28,034 ​ Total residential real estate loans ​ 230,550 ​ 175,110 ​ Non-residential real estate loans ​ 26,152 ​ 23,196 ​ Construction loans ​ 1,327,180 ​ 1,088,219 ​ Commercial and industrial loans ​ 115,807 ​ 113,908 ​ Consumer loans ​ 1,390 ​ 1,059 ​ Total ​ 1,701,079 ​ 1,401,492 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net charge-offs as a percentage of average loans outstanding ​ ​ ​ Residential real estate loans: ​ ​ ​ One- to four-family ​ — % — % Multifamily ​ — ​ — ​ Mixed-use ​ — ​ — ​ Total residential real estate loans ​ — ​ — ​ Non-residential real estate loans ​ — ​ — ​ Construction loans ​ — ​ 0.01 ​ Commercial and industrial loans ​ 0.86 ​ — ​ Consumer loans ​ 24.96 ​ 14.54 ​ Total net charge-offs ​ 0.08 % 0.02 % ​ ​ ​ ​ ​ ​ ​ ​ Credit Quality Ratios: ​ ​ ​ ​ ​ ​ ​ As a percentage of year-end loans, net of deferred fees: ​ ​ ​ ​ ​ ​ ​ Allowance for credit loss ​ 0.27 % 0.32 % Nonaccrual loans ​ ​ — % ​ 0.28 % Nonperforming loans ​ ​ — % ​ 0.28 % Allowance for credit losses to nonaccrual loans ​ NA % 116.15 % Allowance for credit losses to nonperforming loans ​ NA % 116.15 % ​ 49 Table of Contents The allowance for credit losses related to loans decreased by $263,000 to $4.8 million at December 31, 2024 from $5.1 million at December 31, 2023.
The increase in interest expense was also due to increases in the average balances on our certificates of deposits, our savings and club deposits, and our borrowed money, offset by a decrease in the average balances on our interest-bearing demand deposits.
The increase in interest expense was also due to increases in the average balances on our certificates of deposits, our interest-bearing demand deposits, and our borrowed money, offset by a decrease in the average balance of our savings and club deposits.
The simulation uses projected repricing of assets and liabilities at December 31, 2023. The income simulation analysis presented represents a one-year impact of the interest scenario assuming a static balance sheet. Various assumptions are made regarding the prepayment speed and optionality of loans, investment securities and deposits, which are based on analysis and market information.
The simulation uses projected repricing of assets and liabilities at December 31, 2024. The income simulation analysis presented represents a one-year impact of the interest scenario assuming a static balance sheet. Various assumptions are made regarding the prepayment speed and optionality of loans, investment securities and deposits, which are based on analysis and market information.
Management regularly monitors the condition of borrowers and assesses both internal and external factors in determining whether any relationships have deteriorated, considering factors such as historical loss experience, trends in delinquency and non-performing loans, changes in risk composition and underwriting standards, and regional and national economic conditions and trends. 46 Table of Contents ​ Our loan officers, loan servicing staff, and internal loan review personnel identify and manage potential problem loans within our mortgage, construction, and commercial and industrial loan portfolio.
Management regularly monitors the condition of borrowers and assesses both internal and external factors in determining whether any relationships have deteriorated, considering factors such as historical loss experience, trends in delinquency and non-performing loans, changes in risk composition and underwriting standards, and regional and national economic conditions and trends. ​ Our loan officers, loan servicing staff, and internal loan review personnel identify and manage potential problem loans within our mortgage, construction, and commercial and industrial loan portfolio.
The results at December 31, 2023 indicate the level of risk within the parameters of our model. Our management believes that the December 31, 2023 results indicate a profile that reflects interest rate risk exposures in both rising and declining rate environments for both net interest income and economic value. Model Simulation Analysis.
The results at December 31, 2024 indicate the level of risk within the parameters of our model. Our management believes that the December 31, 2024 results indicate a profile that reflects interest rate risk exposures in both rising and declining rate environments for both net interest income and economic value. Model Simulation Analysis.
Off-Balance Sheet Arrangements For the year ended December 31, 2023, we did not engage in any off-balance sheet transactions reasonably likely to have a material adverse effect on our financial condition, results of operations or cash-flows.
Off-Balance Sheet Arrangements For the year ended December 31, 2024, we did not engage in any off-balance sheet transactions reasonably likely to have a material adverse effect on our financial condition, results of operations or cash-flows.
Delinquent Loans The following table provides information about delinquencies in our loan portfolio at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2023 ​ 2022 ​ ​ Days Past Due ​ Days Past Due ​ ​ 30 – 59 60 – 89 90 or more 30 – 59 60 – 89 90 or more ​ ​ (In thousands) Residential real estate loans: ​ ​ ​ ​ ​ ​ ​ Multi-family ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 946 ​ $ — Consumer loan: ​ ​ 1 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction loan: ​ 2,319 ​ — ​ 4,385 ​ — ​ — ​ — Total ​ $ 2,320 ​ $ — ​ $ 4,385 ​ $ — ​ $ 946 ​ $ — ​ Analysis and Determination of the Allowance for Credit Losses - Loans ​ The allowance for credit losses (“ACL”) is a valuation account that reflects management's evaluation of expected future losses in the loan portfolio.
Delinquent Loans The following table provides information about delinquencies in our loan portfolio at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2024 ​ 2023 ​ ​ Days Past Due ​ Days Past Due ​ ​ 30 – 59 60 – 89 90 or more 30 – 59 60 – 89 90 or more ​ ​ (In thousands) Residential real estate loans: ​ ​ ​ ​ ​ ​ ​ Multi-family ​ $ 931 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — Consumer loan: ​ ​ — ​ ​ — ​ ​ — ​ ​ 1 ​ ​ — ​ ​ — Construction loan: ​ — ​ — ​ — ​ 2,319 ​ — ​ 4,385 Total ​ $ 931 ​ $ — ​ $ — ​ $ 2,320 ​ $ — ​ $ 4,385 ​ Analysis and Determination of the Allowance for Credit Losses - Loans ​ The allowance for credit losses (“ACL”) is a valuation account that reflects management's evaluation of expected future losses in the loan portfolio.
No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to 38 Table of Contents interest income or interest expense.
No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.
Additionally, we reserve for certain inherent, but undetected, losses that are probable within the loan portfolio. This is due to several factors, such as, but not limited to, inherent delays in obtaining information regarding a customer’s financial condition or changes in their unique business conditions and the interpretation of economic trends.
Additionally, we reserve for certain inherent, but undetected, losses that are probable within the loan portfolio. This is due to several factors, such as, but not limited to, inherent delays in obtaining 47 Table of Contents information regarding a customer’s financial condition or changes in their unique business conditions and the interpretation of economic trends.
As part of its risk management process, the Bank conducts stress testing on its commercial real estate portfolio, performs a global cash flow analysis for loans associated with multiple properties and/or guarantors and also operates a loan review program for all real estate loans (including construction loans) with terms more than 12 months.
As part of its risk management process, the Bank conducts stress testing on its commercial real estate portfolio, performs a global cash flow analysis for loans associated with multiple properties and/or guarantors and also operates a 44 Table of Contents loan review program for all real estate loans (including construction loans) with terms more than 12 months.
However, during the interest rate environment in 2023, we have strategically allowed these metrics to fall below the minimum thresholds at times to provide for the effective management of extension risk and other interest rate risks.
However, during the interest rate environment in 2024, we have strategically allowed these metrics to fall below the minimum thresholds at times to provide for the effective management of extension risk and other interest rate risks.
Our principal focus, therefore, is on the adequacy of the total allowance for credit losses. 47 Table of Contents ​ Although we believe we have established and maintained the ACL on loans at appropriate levels, changes in reserves may be necessary if actual economic and other conditions differ substantially from the forecast used in estimating the ACL.
Our principal focus, therefore, is on the adequacy of the total allowance for credit losses. ​ Although we believe we have established and maintained the ACL on loans at appropriate levels, changes in reserves may be necessary if actual economic and other conditions differ substantially from the forecast used in estimating the ACL.
These two perspectives give rise to income simulation and economic value simulation, each of which presents a unique picture of our risk of any movement in interest rates. Income simulation identifies the timing and magnitude of changes in income resulting from changes in prevailing interest rates over a short-term time horizon (usually one or two years).
These two perspectives give rise to income simulation and economic value simulation, each of which presents a unique picture of our risk of any movement in interest rates. Income simulation identifies the timing and magnitude of changes in income resulting from changes in prevailing interest rates over a short-term time horizon (usually one or 50 Table of Contents two years).
Impact of Inflation and Changing Prices The consolidated financial statements and related notes of the Company have been prepared in accordance with GAAP, which generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation.
Impact of Inflation and Changing Prices The consolidated financial statements and related notes of the Company have been prepared in accordance with GAAP, which generally requires the measurement of financial position and operating results in terms of historical 53 Table of Contents dollars without consideration for changes in the relative purchasing power of money over time due to inflation.
An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the 44 Table of Contents collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the institution will sustain “some loss” if the deficiencies are not corrected.
An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the institution will sustain “some loss” if the deficiencies are not corrected.
By doing so, we have been able to attract and retain food service and other businesses as customers of the Bank and at the same time increase the amount of our non-interest bearing business accounts. Expanding our franchise through de novo branching or branch acquisitions.
By doing so, we have been able to attract and retain supermarkets and other businesses as customers of the Bank and at the same time increase the amount of our non-interest bearing business accounts. Expanding our franchise through de novo branching or branch acquisitions.
Our senior management team also 30 Table of Contents spends substantial time conducting construction site visits and visiting regularly with community leaders and borrowers in our high absorption communities, which enables us to understand the needs of our communities and to stay informed as to matters affecting those communities.
Our senior management team also spends substantial time conducting construction site visits and visiting regularly with community leaders and borrowers in our high absorption communities, which enables us to understand the needs of our communities and to stay informed as to matters affecting those communities.
The following table sets forth certain information at December 31, 2023 regarding the dollar amount of loan principal repayments becoming due during the periods indicated. The tables do not include any estimate of prepayments which significantly shorten the average life of all loans and may cause our actual repayment experience 36 Table of Contents to differ from that shown below.
The following table sets forth certain information at December 31, 2024 regarding the dollar amount of loan principal repayments becoming due during the periods indicated. The tables do not include any estimate of prepayments which significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below.
The primary impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets 53 Table of Contents and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation. ​
The primary impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation. ​
We attribute this credit quality to a conservative credit culture and an effective credit risk management environment. We have an experienced team of credit professionals, well-defined and implemented credit policies and procedures, what we believe to be conservative loan underwriting criteria, and active credit monitoring policies and procedures.
We attribute this credit quality to a 31 Table of Contents conservative credit culture and an effective credit risk management environment. We have an experienced team of credit professionals, well-defined and implemented credit policies and procedures, what we believe to be conservative loan underwriting criteria, and active credit monitoring policies and procedures.
Recent Accounting Pronouncements For a discussion of the impact of recent accounting pronouncements, see note 24 in the notes to the consolidated financial statements of the Company included in this report.
Recent Accounting Pronouncements For a discussion of the impact of recent accounting pronouncements, see note 23 in the notes to the consolidated financial statements of the Company included in this report.
Strong asset quality is a key to the long-term financial success of any financial institution. We have been successful in maintaining strong asset quality in recent years. Our ratio of non-performing assets to total assets was 0.33%, 0.10%, and 0.16% at December 31, 2023, 2022 and 2021, respectively.
Strong asset quality is a key to the long-term financial success of any financial institution. We have been successful in maintaining strong asset quality in recent years. Our ratio of non-performing assets to total assets was 0.25%, 0.33%, and 0.10%, at December 31, 2024, 2023 and 2022, respectively.
The ACL is maintained at a level that management considers adequate to provide for estimated losses and impairment based upon an evaluation of known and inherent risk in the loan portfolio.
The ACL is maintained at a level that management considers adequate to provide for estimated losses and impairment based upon an 46 Table of Contents evaluation of known and inherent risk in the loan portfolio.
For most segments the Company calculates estimated credit losses using a probability of 32 Table of Contents default and loss given default methodology, the results of which are applied to each individual loan within the segment.
For most segments, the Company calculates estimated credit losses using a probability of default and loss given default methodology, the results of which are applied to each individual loan within the segment.
The following table sets forth the stated maturities and weighted average yields of investment securities at December 31, 2023. Weighted average yields on tax-exempt securities are presented on a tax equivalent basis using a combined federal and state marginal rate of 28.5%.
The following table sets forth the stated maturities and weighted average yields of investment securities at December 31, 2024. Weighted average yields on tax-exempt securities are presented on a tax equivalent basis using a combined federal and state marginal rate of 28.4%.
As the communities we serve continue to grow and expand into new areas, we believe there will be branch expansion opportunities within our market area and in the newly developing communities expanding outward from existing high absorption, homogeneous communities where our branches are currently located.
As the communities we serve continue to grow and expand into new areas, we believe there will be branch expansion opportunities within our market area and in the newly developing communities expanding outward from existing high absorption, homogeneous communities where our branches are currently located. We intend to continue to explore opportunities as they arise to expand our branch network.
We have already made significant investments in our infrastructure, technology and employee base to support the growth in our construction portfolio and the increased compliance responsibilities due to such growth, including experienced Bank Secrecy Act professionals.
Expanding our employee base, infrastructure and technology, as necessary, to support future growth. We have already made significant investments in our infrastructure, technology and employee base to support the growth in our construction portfolio and the increased compliance responsibilities due to such growth, including experienced Bank Secrecy Act professionals.
One-year net interest income would decrease by approximately 8.07% to 24.50% in a declining interest rate environment over the same period. Economic value at risk would be positively impacted by a rise in interest rates and negatively impacted by a decline in interest rates. We have established an interest rate floor of zero percent for measuring interest rate risk.
One-year net interest income would decrease by approximately 8.93% to 28.08% in a declining interest rate environment over the same period. Economic value at risk would be positively impacted by a rise in interest rates and negatively impacted by a decline in interest rates. We have established an interest rate floor of zero percent for measuring interest rate risk.
Allowance for Credit Losses – Held-to-Maturity Debt Securities The allowance for credit losses related to held-to-maturity debt securities is a valuation reserve established and maintained by charges against income and is deducted from the amortized cost basis of held-to-maturity debt securities to present the net amount expected to be collected on the held-to-maturity debt securities.
Allowance for Credit Losses - Loans The allowance for credit losses related to loans is a valuation reserve established and maintained by charges against income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.
The increase in market interest rates in 2023 also caused an increase in our interest expense. As a result, the increase in interest expense for the year ended December 31, 2023 was due to an increase in the cost of funds on our deposits and our borrowed money.
The increase in market interest rates in 2023 that continued until September 2024 also caused an increase in our interest expense. As a result, the increase in interest expense for the year ended December 31, 2024 was due to an increase in the cost of funds on our deposits and borrowed money.
Net income for the year ended December 31, 2023 was greater than the year ended December 31, 2022 primarily due to an increase in net interest income and an increase in non-interest income, partially offset by an increase in provision for credit losses expense, an increase in non-interest expenses, and an increase in income tax expense.
Net income for the year ended December 31, 2024 was greater than the year ended December 31, 2023 primarily due to an increase in net interest income and provision for credit losses reduction, partially offset by a decrease in non-interest income, an increase in non-interest expenses, and an increase in income tax expense.
The increase in the provision for credit losses related to loans was due to increases in the construction, multi-family mortgage, mixed-use mortgage, and commercial and industrial loan portfolio, partially offset by a decrease in the non-residential mortgage loan portfolio. We had no recoveries in 2023 compared to recoveries totaling $241,000 in 2022.
The increase in the provision for credit losses related to loans was due to increases in the construction, multi-family mortgage, non-residential mortgage, and commercial and industrial loan portfolio, partially offset by a decrease in the mixed-use mortgage loan portfolio. We had no recoveries in 2024 and 2023.
Our primary investing activities are the origination of construction loans, commercial and industrial loans, multifamily loans, and to a lesser extent, mixed-use real estate loans and other loans. For the years ended December 31, 2023 and 2022, our loan originations totaled $815.8 million and $700.1 million, respectively.
Our primary investing activities are the origination of construction loans, commercial and industrial loans, multifamily loans, and to a lesser extent, mixed-use real estate loans and other loans. For the years ended December 31, 2024 and 2023, our loan originations totaled $656.0 million and $815.8 million, respectively.
The charge-offs of $313,000 during the year ended December 31, 2023 were comprised of a charge-off of $159,000 related to three performing construction loans on the same project whereby we 41 Table of Contents sold the loans to a third-party at a loss of $159,000, as well as charge-offs of $154,000 against various unpaid overdrafts in our demand deposit accounts.
The charge-offs of $313,000 during the year ended December 31, 2023 were comprised of a charge-off of $159,000 related to three performing construction loans on the same project whereby we sold the loans to a third-party at a loss of $159,000. The remaining charge-offs of $154,000 for the 2023 period were against various unpaid overdrafts in our demand deposit accounts.
In addition, we have a borrowing agreement with Atlantic Community Bankers Bank (“ACBB”) to provide short-term borrowings of $8.0 million at December 31, 2023 and 2022. There were no outstanding borrowings with ACBB at December 31, 2023 and 2022.
We had no FRBNY borrowings at December 31, 2024 compared to $50.0 million in FRBNY borrowings at December 31, 2023 In addition, we have a borrowing agreement with Atlantic Community Bankers Bank (“ACBB”) to provide short-term borrowings of $8.0 million at December 31, 2024 and 2023. There were no outstanding borrowings with ACBB at December 31, 2024 and 2023.
The following table sets forth information with respect to our non-performing assets at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ 2023 ​ 2022 ​ ​ (Dollars in thousands) Total non-accrual loans ​ $ 4,385 ​ ​ $ — ​ Total accruing loans past due 90 days or more ​ ​ — ​ ​ — ​ Total non-performing loans ​ ​ 4,385 ​ ​ — ​ Real estate owned ​ ​ 1,456 ​ ​ 1,456 ​ Total non-performing assets ​ $ 5,841 ​ ​ $ 1,456 ​ Total non-performing loans to total loans ​ 0.37 % ​ — % Total non-performing assets to total assets ​ 0.33 % ​ 0.10 % ​ During the year ended December 31, 2023, non-performing assets increased by $4.4 million, or 301.2%, to $5.8 million from $1.5 million as of December 31, 2022.
The following table sets forth information with respect to our non-performing assets at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ 2024 ​ 2023 ​ ​ (Dollars in thousands) Total non-accrual loans ​ $ — ​ ​ $ 4,385 ​ Total accruing loans past due 90 days or more ​ ​ — ​ ​ — ​ Total non-performing loans ​ ​ — ​ ​ 4,385 ​ Real estate owned ​ ​ 5,120 ​ ​ 1,456 ​ Total non-performing assets ​ $ 5,120 ​ ​ $ 5,841 ​ Total non-performing loans to total loans ​ — % ​ 0.37 % Total non-performing assets to total assets ​ 0.25 % ​ 0.33 % ​ During the year ended December 31, 2024, non-performing assets decreased by $721,000, or 12.3%, to $5.1 million as of December 31, 2024 from $5.8 million as of December 31, 2023.
The unrealized gain of $294,000 on equity securities during 2023 was due to market interest rate volatility during the year ended December 31, 2023. The increase of $409,000 in BOLI income was primarily due to two death claims totaling $1.8 million on BOLI policies that resulted in additional BOLI income of $404,000 during the year ended December 31, 2023.
The unrealized loss of $109,000 on equity securities during the 2024 period was due to market interest rate volatility during the year ended December 31, 2024. The decrease in BOLI income was primarily due to two death claims totaling $1.8 million on BOLI policies that resulted in additional BOLI income of $404,000 in the year ended December 31, 2023.
Total deposits increased by $278.1 million at December 31, 2023 due to 52 Table of Contents increases in certificates of deposits and NOW/money market deposits, offset by decreases in savings account deposits, and non-interest bearing demand deposits. Liquidity management is both a daily and long-term function of business management.
Total deposits increased by $270.3 million at December 31, 2024 due to increases in certificates of deposits and NOW/money market deposits, offset by decreases in savings account deposits, and non-interest bearing demand deposits. Liquidity management is both a daily and long-term function of business management.
The increase in our loan portfolio was partially offset by decreases of $4.2 million in non-residential loans, and $215,000 in residential loans, coupled with normal pay-downs and principal reductions. The allowance for credit losses related to loans decreased to $5.1 million as of December 31, 2023 from $5.5 million as of December 31, 2022.
The increase in our loan portfolio was partially offset by decreases of $3.1 million in mixed-use loans and $1.8 million in residential loans, coupled with normal pay-downs and principal reductions. The allowance for credit losses related to loans decreased to $4.8 million as of December 31, 2024, from $5.1 million as of December 31, 2023.
At December 31, 2023, $1.2 billion, or 76.9%, of our total loan portfolio, net of loans in process, consisted of construction loans primarily located in high demand and high absorption areas in the New York Metropolitan Area.
At December 31, 2024, $1.4 billion, or 78.6%, of our total loan portfolio, net of loans in process, consisted of construction loans primarily located in high demand and high absorption areas in the New York Metropolitan Area.
The increase in loans, net of the allowance for credit losses, was primarily due to loan originations of $815.8 million during the year ended December 31, 2023, consisting primarily of $703.4 million in construction loans with respect to which approximately 38.4% of the funds were disbursed at loan closings, with the remaining funds to be disbursed over the terms of the construction loans.
The increase in loans, net of the allowance for credit losses, was primarily due to loan originations of $656.0 million during the year ended December 31, 2024, consisting primarily of $573.8 million in construction loans with respect to which approximately 36.3% of the funds were disbursed at loan closings, with the remaining funds to be disbursed over the terms of the construction loans.
Outside data processing expense increased by $324,000, or 17.2%, to $2.2 million in 2023 from $1.9 million in 2022 due to an increase in transactions and additional services required in 2023 to support the Company’s expansion.
Outside data processing expense increased by $394,000, or 17.8%, to $2.6 million in 2024 from $2.2 million in 2023 due to an increase in transactions and additional services required in 2024 to support the Company’s expansion.
The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $316.2 million, or 26.3%, to $1.5 billion for the year ended December 31, 2023 from $1.2 billion for the year ended December 31, 2022 and an increase in the yield on interest earning assets by 273 basis points from 6.00% for the year ended December 31, 2022 to 8.73% for the year ended December 31, 2023.
The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $312.3 million, or 20.6%, to $1.8 billion for the year ended December 31, 2024 from $1.5 billion for the year ended December 31, 2023 and an increase in the yield on interest earning assets by two basis points from 8.73% for the year ended December 31, 2023 to 8.75% for the year ended December 31, 2024.
Deferred loan fees totaled $176,000 and $372,000 for the years ended December 31, 2023 and 2022, respectively.
Deferred loan fees totaled $49,000 and deferred loan costs totaled $176,000 for the years ended December 31, 2024 and 2023, respectively.
We charged-off $313,000 during the year ended December 31, 2023 as compared to charge-offs of $449,000 during the year ended December 31, 2022.
We charged-off $1.3 million during the year ended December 31, 2024 as compared to charge-offs of $313,000 during the year ended December 31, 2023.
Our credit risk management strategy also emphasizes diversification at the borrower level as well as regular credit examinations, continuous site visits by executive management and management reviews of large credit exposures and credits that might experience deterioration of credit quality.
Our lending practices include conservative exposure limits and underwriting, extensive documentation and collection standards. Our credit risk management strategy also emphasizes diversification at the borrower level as well as regular credit examinations, continuous site visits by executive management and management reviews of large credit exposures and credits that might experience deterioration of credit quality.
We recorded no recoveries from previously charged-off loans during the year ended December 31, 2023 compared to recoveries of $242,000 during the year ended December 31, 2022, which was comprised of $146,000 from a previously charged-off loan secured by a multi-family property, $53,000 from a previously charged-off loan secured by a non-residential property, and $43,000 regarding a previously charged-off loan secured by a mixed-use property. ​ Based on a review of our loan portfolio, held-to-maturity investment securities, and off-balance sheet commitments at December 31, 2023, management believes that the allowance is maintained at a level that represents its best estimate of expected future losses in the loan portfolio, held-to-maturity investment securities, and off-balance sheet commitments that were both probable and reasonably estimable. ​ Management uses available information to establish the appropriate level of the allowance for credit losses.
We recorded no recoveries from previously charged-off loans during the year ended December 31, 2024 and 2023. ​ Based on a review of our loan portfolio, held-to-maturity investment securities, and off-balance sheet commitments at December 31, 2024, management believes that the allowance is maintained at a level that represents its best estimate of expected future losses in the loan portfolio, held-to-maturity investment securities, and off-balance sheet commitments that were both probable and reasonably estimable. ​ Management uses available information to establish the appropriate level of the allowance for credit losses.
Loans evaluated collectively totaled $1.6 billion at December 31, 2023 compared to $1.2 billion at December 31, 2022. Loans evaluated individually totaled $4.4 million at December 31, 2023 compared to $855,000 at December 31, 2022.
Loans evaluated collectively totaled $1.8 billion at December 31, 2024 compared to $1.6 billion at December 31, 2023. Loans evaluated individually totaled $241,000 at December 31, 2024 compared to $4.4 million at December 31, 2023.
We have no deposits that are uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance. ​ The following table sets forth the portion of the Bank’s certificates of deposit, by remaining time until maturity, that are in excess of the FDIC insurance limit as of December 31, 2023: ​ ​ ​ ​ ​ ​ At ​ ​ December 31, 2023 ​ ​ (In thousands) Maturity Period: ​ Three months or less ​ $ 70,969 Over three through six months ​ 23,029 Over six through twelve months ​ 58,365 Over twelve months ​ 25,749 Total ​ $ 178,112 ​ ​ ​ Average Balance Sheets The following tables set forth average balance sheets, average yields and costs, and certain other information for the years indicated.
We have no deposits that are uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance. ​ The following table sets forth the portion of the Bank’s certificates of deposit, by remaining time until maturity, that are in excess of the FDIC insurance limit as of December 31, 2024: ​ ​ ​ ​ ​ At ​ ​ December 31, 2024 ​ ​ (In thousands) Maturity Period: ​ Three months or less ​ $ 54,390 Over three through six months ​ 111,482 Over six through twelve months ​ 6,045 Over twelve months ​ 15,260 Total ​ $ 187,177 ​ ​ 38 Table of Contents Average Balance Sheets The following tables set forth average balance sheets, average yields and costs, and certain other information for the years indicated.
We had an available borrowing limit of $29.7 million and $31.5 million from the Federal Home Loan Bank of New York as of December 31, 2023 and 2022, respectively. Federal Home Loan Bank advances were $14.0 million and $21.0 million at December 31, 2023 and 2022, respectively.
We had an available borrowing limit of $18.2 million and $29.7 million from the Federal Home Loan Bank of New York as of December 31, 2024 and 2023, respectively. We had no Federal Home Loan Bank advances at December 31, 2024 compared to $14.0 million in Federal Home Loan Bank advances at December 31, 2023.
Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 6.7%, 9.6%, and 32.7%, respectively, for the year ended December 31, 2023 compared to 11.2%, 15.5%, and 19.0%, respectively, for the year ended December 31, 2022.
Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 6.7%, 8.8%, and 65.6%, respectively, for the year ended December 31, 2024 compared to 6.7%, 9.6%, and 32.7%, respectively, for the year ended December 31, 2023.
The increase resulted primarily from increases of $3.3 million in salaries and employee benefits, $1.4 million in other operating expense, $324,000 in outside data processing expense, $222,000 in advertising expense, $167,000 in occupancy expense, and $138,000 in loss on the disposition of the Bank’s assets relating to the Harbor West Wealth Management Group, partially offset by decreases of $530,000 in real estate owned expense, $451,000 in goodwill impairment charges, and $52,000 in equipment expense.
The increase resulted primarily from increases of $2.1 million in salaries and employee benefits, $879,000 in other operating expense, $638,000 in real estate owned expense, $394,000 in outside data processing expense, and $233,000 in occupancy expense, partially offset by decreases of $165,000 in equipment expense, $138,000 in loss on the disposition of the Bank’s assets relating to the Harbor West Wealth Management Group, and $103,000 in advertising expense.
Cash received from the sales, calls, maturities and pay-downs on securities totaled $11.2 million and $1.5 million for the years ended December 31, 2023 and 2022, respectively. We purchased $806,000 and $10.0 million in securities for the years ended December 31, 2023 and 2022, respectively.
Cash received from the sales, calls, maturities and pay-downs on securities totaled $1.2 million and $11.2 million for the years ended December 31, 2024 and 2023, respectively.
We subsequently sold these two loans to a third party in January 2023 at a loss of $86,000. 45 Table of Contents The following table summarizes classified and criticized assets of all portfolio types at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ 2023 2022 ​ ​ (In thousands) Classified loans: ​ ​ ​ Substandard ​ $ 4,385 ​ $ 855 Doubtful ​ — ​ — Loss ​ — ​ — Total classified loans ​ 4,385 ​ 855 Special mention ​ 915 ​ 946 Total criticized loans ​ $ 5,300 ​ $ 1,801 ​ On the basis of management’s review of our assets, we had two loans totaling $4.4 million classified as substandard at December 31, 2023 compared to two loans totaling $855,000 classified as substandard at December 31, 2022.
The following table summarizes classified and criticized assets of all portfolio types at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ 2024 2023 ​ ​ (In thousands) Classified loans: ​ ​ ​ Substandard ​ $ 241 ​ $ 4,385 Doubtful ​ — ​ — Loss ​ — ​ — Total classified loans ​ 241 ​ 4,385 Special mention ​ — ​ 915 Total criticized loans ​ $ 241 ​ $ 5,300 ​ On the basis of management’s review of our assets, we had one loan with a balance of $241,000 classified as substandard at December 31, 2024 compared to two loans totaling $4.4 million classified as substandard at December 31, 2023.
The Company has chosen to segment its portfolio consistent with the manner in which it manages credit risk. Such segments include residential real estate, non-residential real estate, construction, commercial and industrial business, and consumer.
Expected recoveries do not exceed the aggregate of amounts previously charged off or expected to be charged off. The Company has chosen to segment its portfolio consistent with the manner in which it manages credit risk. Such segments include residential real estate, non-residential real estate, construction, commercial and industrial business, and consumer.
The increase in interest expense was due to an increase in the cost of interest bearing liabilities by 232 basis points from 1.26% for the year ended December 31, 2022 to 3.58% for the year ended December 31, 2023, and an increase in average interest bearing liabilities of $341.2 million, or 52.9%, to $986.3 million for the year ended December 31, 2023 from $645.1 million for the year ended December 31, 2022.
The increase in interest expense was due to an increase in the cost of interest bearing liabilities by 77 basis points from 3.58% for the year ended December 31, 2023 to 4.35% for the year ended December 31, 2024, and an increase in average interest bearing liabilities of $328.9 million, or 33.3%, to $1.3 billion for the year ended December 31, 2024 from $986.3 million for the year ended December 31, 2023.
Total deposits increased by $278.1 million, or 24.8%, to $1.4 billion at December 31, 2023 from $1.1 billion at December 31, 2022. The increase in deposits was due to the Bank offering competitive interest rates to attract deposits.
Total deposits increased $270.3 million, or 19.3%, to $1.7 billion at December 31, 2024 from $1.4 billion at December 31, 2023. The increase in deposits was primarily due to the Bank offering competitive interest rates to attract deposits.
A provision for credit losses of $972,000 was recorded for the year ended December 31, 2023 as compared to $439,000 for the year ended December 31, 2022.
A credit loss expense of $740,000 was recorded for the year ended December 31, 2024 as compared to a credit loss expense of $972,000 for the year ended December 31, 2023.
If the risk characteristics of a loan change, such that they are no longer similar to other loans in the pool, the Company will evaluate the loan with a different pool of loans that share similar risk characteristics. If the loan does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis.
The allowance for credit losses related to loans is measured on a collective (pool) basis when similar risk characteristics exist. If the risk characteristics of a loan change, such that they are no longer similar to other loans in the pool, the Company will evaluate the loan with a different pool of loans that share similar risk characteristics.
Total interest and dividend income increased by $60.5 million, or 84.0%, to $132.5 million for the year ended December 31, 2023 from $72.0 million for the year ended December 31, 2022.
Total interest and dividend income increased $27.5 million, or 20.8%, to $160.0 million for the year ended December 31, 2024 from $132.5 million for the year ended December 31, 2023.
The increase in the cost of interest bearing liabilities was also partially due to a shift to interest bearing certificates of deposits and savings accounts from interest bearing demand deposits as the average balances of interest bearing certificates of deposits increased by $329.1 million, or 115.1%, from $286.0 million for the year ended December 31, 2022 to $615.1 million for the year ended December 31, 2023 and the average balances of savings accounts increased by $19.9 million, or 8.7%, from $228.8 million for the year ended December 31, 2022 to $248.7 million for the year ended December 31, 2023.
The increase in the cost of interest bearing liabilities was also partially due to a shift to interest bearing certificates of deposits and interest bearing demand deposits from savings accounts as the average balances of interest bearing certificates of deposits increased by $302.5 million, or 49.2%, from $615.1 million for the year ended December 31, 2023 to $917.7 million for the year ended December 31, 2024 and the average balances of interest bearing demand deposits increased by $116.6 million, or 124.8%, from $93.4 million for the year ended December 31, 2023 to $210.0 million for the year ended December 31, 2024.
Depending on a bank’s asset/liability structure, adverse movements in interest rates could be either rising or falling interest rates. For example, a bank with predominantly long-term fixed-rate assets and short-term liabilities could have an adverse earnings exposure to a rising rate environment. Conversely, a short-term or variable-rate asset base funded by longer-term liabilities could be negatively affected by falling rates.
For example, a bank with predominantly long-term fixed-rate assets and short-term liabilities could have an adverse earnings exposure to a rising rate environment. Conversely, a short-term or variable-rate asset base funded by longer-term liabilities could be negatively affected by falling rates. This is referred to as re-pricing or maturity mismatch risk.
At December 31, 2023, the Company had liquid assets of $4.3 million and $14.1 million in loan participations originated by the Bank which are held by the Company.
At December 31, 2024, the Company had liquid assets of $5.8 million and $15.2 million in loan participations originated by the Bank which are held by the Company.
The Federal Reserve Bank of New York (“FRBNY”) approved on August 30, 2023 the Bank’s eligibility to pledge loans under the Borrower-in-Custody program of the FRBNY thereby allowing the Bank to borrow from the Discount Window at the FRBNY. As of December 31, 2023, we had $50.0 million in FRBNY borrowings and an available borrowing limit of $865.1 million.
The Federal Reserve Bank of New York (“FRBNY”) approved on August 30, 2023 the Bank’s eligibility to pledge loans under the Borrower-in-Custody program of the FRBNY thereby allowing the Bank to borrow from the Discount Window at the FRBNY.
In addition, we had the same one loan classified as special mention at December 31, 2023 and December 31, 2022, with balances of $915,000 and $946,000, respectively. There were no assets classified as doubtful or loss at December 31, 2023 or 2022.
In addition, we had no loans classified as special mention at December 31, 2024 compared to one loan with a balance of $915,000 classified as special mention at December 31, 2023. There were no assets classified as doubtful or loss at December 31, 2024 or 2023.
Salaries and employee benefits increased by $3.3 million, or 21.2%, to $18.8 million in 2023 from $15.5 million in 2022 primarily due to the hiring of additional personnel to support the growth of the Company, the amortization of expenses related to the 2022 Equity Incentive Plan awards of restricted stocks and options, and a decrease in loan origination expenses related to loan origination fees due to a decrease in loan originations.
Salaries and employee benefits increased by $2.1 million, or 11.2%, to $20.9 million in 2024 from $18.8 million in 2023 primarily due to the hiring of additional personnel to support the growth of the Company, an increase in personnel compensation in order to remain competitive in recruiting and retaining personnel, an increase in the ESOP compensation cost due to an increase in the value of the Company’s stock, an increase in the amortization of expenses related to the 2022 Equity Incentive Plan awards of restricted stocks and options, and a decrease in loan origination expenses related to loan origination fees due to a decrease in loan originations.
Non-Interest Expense The following table sets forth an analysis of non-interest expense for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ ​ (Dollars in thousands) Salaries and employee benefits ​ $ 18,839 ​ $ 15,549 Occupancy expense ​ 2,595 ​ 2,428 Equipment ​ 1,055 ​ 1,107 Outside data processing ​ 2,210 ​ 1,886 Advertising ​ 521 ​ 299 Impairment loss on goodwill ​ — ​ 451 Loss on disposition of business ​ ​ 138 ​ ​ — Real estate owned expense ​ 93 ​ 623 Other ​ 9,770 ​ 8,347 Total ​ $ 35,221 ​ $ 30,690 ​ Non-interest expense increased by $4.5 million, or 14.8%, to $35.2 million for the year ended December 31, 2023 from $30.7 million for the year ended December 31, 2022.
Non-Interest Expense The following table sets forth an analysis of non-interest expense for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ 2023 ​ ​ (Dollars in thousands) Salaries and employee benefits ​ $ 20,942 ​ $ 18,839 Occupancy expense ​ 2,828 ​ 2,595 Equipment ​ 890 ​ 1,055 Outside data processing ​ 2,604 ​ 2,210 Advertising ​ 418 ​ 521 Loss on disposition of business ​ ​ — ​ ​ 138 Real estate owned expense ​ 731 ​ 93 Other ​ 10,649 ​ 9,770 Total ​ $ 39,062 ​ $ 35,221 ​ Non-interest expense increased $3.8 million, or 10.9%, to $39.1 million for the year ended December 31, 2024 from $35.2 million for the year ended December 31, 2023.
Interest expense increased by $27.2 million, or 334.3%, to $35.3 million for the year ended December 31, 2023 from $8.1 million for the year ended December 31, 2022.
Interest expense increased $21.9 million, or 62.1%, to $57.2 million for the year ended December 31, 2024 from $35.3 million for the year ended December 31, 2023.
Advance payments by borrowers for taxes and insurance decreased by $349,000, or 14.7%, to $2.0 million at December 31, 2023 from $2.4 million at December 31, 2022 due primarily to remittance of real estate tax payments for our borrowers.
Advance payments by borrowers for taxes and insurance decreased $402,000, or 19.9%, to $1.6 million at December 31, 2024 from $2.0 million at December 31, 2023 due primarily to real estate tax payments for borrowers.
In addition, as of December 31, 2023, the aggregate amount of all our uninsured certificates of deposit was $178.1 million.
In addition, as of December 31, 2024, the aggregate amount of all our uninsured certificates of 37 Table of Contents deposit was $187.2 million.
At December 31, 2023, we had unfunded commitments on construction loans of $489.7 million, outstanding commitments to originate loans of $125.9 million, unfunded commitments under lines of credit of $103.0 million, and unfunded standby letters of credit of $9.5 million. At December 31, 2023, certificates of deposit scheduled to mature in less than one year totaled $596.1 million.
At December 31, 2024, we had unfunded commitments on construction loans of $399.6 million, unfunded commitments under lines of credit of $86.2 million, outstanding commitments to originate loans of $61.2 million, and unfunded standby letters of credit of $14.9 million. At December 31, 2024, certificates of deposit scheduled to mature in less than one year totaled $918.4 million.
This resulted in a shift in deposits whereby certificates of deposit increased by $378.8 million, or 98.7% and NOW/money market accounts increased by $56.7 million, or 64.3%, partially offset by decreases in savings account balances of $81.2 million, or 29.7%, and non-interest bearing demand deposits of $76.1 million, or 20.2%.
This resulted in a shift in deposits whereby certificates of deposit increased $239.7 million, or 31.5%, and NOW/money market accounts increased $98.0 million, or 67.4%, partially offset by decreases in savings account balances of $54.3 million, or 28.2%, and non-interest bearing demand deposits of $14.7 million, or 4.9%.
Net interest margin increased by 109 basis points, or 20.5%, for the year ended December 31, 2023 to 6.41% compared to 5.32% for the year ended December 31, 2022.
Net interest margin decreased by 79 basis points, or 12.3%, for the year ended December 31, 2024 to 5.62% compared to 6.41% for the year ended December 31, 2023.
It can identify the quantity of interest rate risk as a function of 50 Table of Contents the changes in the economic values of assets and liabilities, and the corresponding change in the economic value of equity of the Bank.
Economic value simulation reflects the interest rate sensitivity of assets and liabilities in a more comprehensive fashion, reflecting all future time periods. It can identify the quantity of interest rate risk as a function of the changes in the economic values of assets and liabilities, and the corresponding change in the economic value of equity of the Bank.
The following table sets forth the deposits as a percentage of total deposits for the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2023 ​ 2022 ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ Outstanding ​ ​ ​ ​ Average ​ Outstanding ​ ​ ​ ​ Average ​ Balance Percent Rate Balance Percent Rate ​ ​ (Dollars in thousands) Demand deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest bearing ​ $ 322,185 ​ ​ 25.18% — ​ $ 355,118 ​ ​ 36.31% — ​ NOW and money market ​ 93,426 ​ ​ 7.30% 3.07% ​ 108,077 ​ ​ 11.05% 0.95% ​ Total ​ ​ 415,611 ​ ​ 32.48% ​ 1.00% ​ ​ 463,195 ​ ​ 47.36% ​ 0.18% ​ Savings accounts ​ 248,755 ​ ​ 19.44% 2.71% ​ 228,811 ​ ​ 23.40% 2.68% ​ Certificates of deposit ​ 615,124 ​ ​ 48.08% 4.62% ​ 285,991 ​ ​ 29.24% 2.52% ​ Total ​ $ 1,279,490 ​ ​ 100.00% 3.20% ​ $ 977,997 ​ ​ 100.00% 1.59% ​ ​ As of December 31, 2023 and 2022, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was $344.8 million and $672.8 million, respectively.
The following table sets forth the deposits as a percentage of total deposits for the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2024 ​ 2023 ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ Outstanding ​ ​ ​ ​ Average ​ Outstanding ​ ​ ​ ​ Average ​ Balance Percent Rate Balance Percent Rate ​ ​ (Dollars in thousands) Demand deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest bearing ​ $ 277,957 ​ ​ 17.82% — ​ $ 322,185 ​ ​ 25.18% — ​ NOW and money market ​ 209,993 ​ ​ 13.46% 3.41% ​ 93,426 ​ ​ 7.30% 3.07% ​ Total ​ ​ 487,950 ​ ​ 31.28% ​ 1.56% ​ ​ 415,611 ​ ​ 32.48% ​ 1.00% ​ Savings accounts ​ 154,430 ​ ​ 9.90% 2.16% ​ 248,755 ​ ​ 19.44% 2.71% ​ Certificates of deposit ​ 917,665 ​ ​ 58.82% 4.71% ​ 615,124 ​ ​ 48.08% 4.62% ​ Total ​ $ 1,560,045 ​ ​ 100.00% 3.50% ​ $ 1,279,490 ​ ​ 100.00% 3.20% ​ ​ As of December 31, 2024 and 2023, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was $346.9 million and $344.8 million, respectively.
Loans, net of the allowance for credit losses, increased by $369.6 million, or 30.5%, to $1.6 billion at December 31, 2023 from $1.2 billion at December 31, 2022.
Loans, net of the allowance for credit losses, increased $226.0 million, or 14.3%, to $1.8 billion at December 31, 2024 from $1.6 billion at December 31, 2023.
The difference between the two results reflects the relatively long terms of a portion of our assets which is captured by the economic value at risk but has less impact on the one year net interest income sensitivity. 51 Table of Contents Overall, our December 31, 2023 results indicate that we are adequately positioned with an acceptable net interest income and economic value at risk and that all interest rate risk results continue to be within our policy guidelines.
The 51 Table of Contents difference between the two results reflects the relatively long terms of a portion of our assets which is captured by the economic value at risk but has less impact on the one year net interest income sensitivity.
The increase in stockholders’ equity was due to net income of $46.3 million for the year ended December 31, 2023, $1.7 million in the amortization of restricted stock and stock options granted under the Company’s 2022 Equity Incentive Plan, a reduction of $869,000 in unearned employee stock ownership plan shares coupled with an increase of $445,000 in earned employee stock ownership plan shares, and $161,000 in other 35 Table of Contents comprehensive income, partially offset by stock repurchases totaling $28.7 million, dividends paid and declared of $3.3 million, and a one-time adjustment to retained earnings of $99,000 due to the adoption of CECL.
The increase in stockholders’ equity was due to net income of $47.1 million for the year ended December 31, 2024, the amortization expense of $2.0 million relating to restricted stock and stock options granted under the Company’s 2022 Equity Incentive Plan, an increase of $1.3 million in earned employee stock ownership plan shares coupled with a reduction of $475,000 in unearned employee stock ownership plan shares, and an exercise of stock options totaling $14,000, partially offset by dividends paid and declared of $8.7 million, stock repurchases and stock repurchase excise taxes totaling $2.5 million, awarding restricted stock totaling $725,000. and $93,000 in other comprehensive income.
Risk Management Overview Managing risk is an essential part of successfully managing a financial institution. Our most prominent risk exposures are credit risk, interest rate risk and market risk. Credit risk is the risk of not collecting the interest and/or the principal balance of a loan or investment when it is due.
Our most prominent risk exposures are credit risk, interest rate risk and market risk. Credit risk is the risk of not collecting the interest and/or the principal balance of a loan or investment when it is due. Interest rate risk is the potential reduction of interest income as a result of changes in interest rates.
Cash and cash equivalents decreased by $26.6 million, or 27.9%, to $68.7 million at December 31, 2023 from $95.3 million at December 31, 2022.
Cash and cash equivalents increased $9.6 million, or 14.0%, to $78.3 million at December 31, 2024 from $68.7 million at December 31, 2023.

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