Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

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Statements contained in this report that are not historical facts may constitute forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended), which involve significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by the use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," "plan," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain and actual results may differ from those predicted. The Company undertakes no obligation to update these forward-looking statements in the future.

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The Company cautions readers of this report that a number of important factors could cause the Company's actual results to differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from those predicted and could affect the future prospects of the Company include, but are not limited to:

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Critical Accounting Policies

We consider accounting policies involving significant judgements and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. We consider these accounting policies to be our crucial accounting policies. The judgements and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Actual results could differ from these judgements and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of operations. There have been no changes in the critical accounting policies since the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Balance Sheet Analysis

General

Total assets decreased $38.4 million, or 1.9%, to $2.0 billion at March 31, 2026, from $2.1 billion at December 31, 2025. The decrease in assets was primarily due to decreases in net loans of $31.8 million, cash and cash equivalents of $5.0 million, and other assets of $2.0 million.

Cash and cash equivalents decreased $5.0 million, or 6.1%, to $76.1 million at March 31, 2026 from $81.2 million at December 31, 2025. The decrease in cash and cash equivalents partially funded a decrease of $50.0 million in borrowings.

Equity securities increased $879,000, or 3.3%, to $27.4 million at March 31, 2026 from $26.6 million at December 31, 2025. The increase in equity securities was attributable to the purchase of $1.0 million in equity securities during the three months ended March 31, 2026, partially offset by market depreciation of $121,000 due to market interest rate volatility during the three months ended March 31, 2026.

Securities held-to-maturity decreased $150,000, or 0.8%, to $18.2 million at March 31, 2026 from $18.3 million at December 31, 2025 due to pay-downs of various investment securities.

Loans, net of the allowance for credit losses, decreased $31.8 million, or 1.7%, to $1.8 billion at March 31, 2026 from $1.9 billion at December 31, 2025. The decrease in loans consisted of decreases of $16.1 million in construction loans, $14.3 million in multi-family loans, $610,000 in commercial and industrial loans, $494,000 in mixed-use loans, $258,000 in non-residential loans, $34,000 in one-to-four family loans, and $21,000 in consumer loans. The decrease in our construction loan portfolio was due to normal pay-downs and principal reductions as construction projects were completed and either condominium units were sold to end buyers or multi-family rental buildings were refinanced by other financial institutions.

During the three months ended March 31, 2026, we originated loans totaling $266.1 million, which includes commitments and funded loans, consisting primarily of $244.2 million in construction loans and $21.8 million in commercial and industrial loans. The $244.2 million in construction loans had $99.5 million, or 40.7%, disbursed at loan closing, with the remaining funds to be disbursed over the terms of the construction loans. The commercial and industrial loans had $18.9 million, or 86.7%, disbursed at loan closing.

The allowance for credit losses related to loans decreased to $4.6 million as of March 31, 2026, from $4.7 million as of December 31, 2025. The decrease in the allowance for credit losses related to loans was due to charge-offs totaling $27,000 and a provision for credit losses reduction of $112,000 to the allowance for credit losses related to loans due to a decrease of $31.8 million in the loan portfolio. The provision for credit losses reduction of $112,000 to the allowance for credit losses related to loans was offset by a provision for credit losses of $112,000 to the allowance for credit losses related to off-balance sheet commitments.

Premises and equipment decreased $199,000, or 0.8%, to $25.2 million at March 31, 2026 from $25.4 million at December 31, 2025 primarily due to the amortization of fixed assets. Federal Home Loan Bank stock was $410,000 and property held for investment was $1.3 million at both March 31, 2026 and December 31, 2025. Bank owned life insurance ("BOLI") increased $179,000, or 0.7%, to $26.6 million at March 31, 2026 from $26.4 million at December 31, 2025 due to increases in the BOLI cash value. Accrued interest receivable decreased $152,000, or 1.2%, to $12.1 million at March 31, 2026 from $12.2 million at December 31, 2025 due to a decrease of $31.9 million in the loan portfolio.

Right of use assets - operating decreased $179,000, or 3.8%, to $4.5 million at March 31, 2026 from $4.7 million at December 31, 2025, primarily due to depreciation of the right of use assets.

Other assets decreased $2.0 million, or 18.0%, to $9.0 million at March 31, 2026 from $11.0 million at December 31, 2025 due to decreases of $2.2 million in tax assets, partially offset by increases of $143,000 in prepaid expenses and $57,000 in suspense accounts.

Total deposits increased $9.4 million, or 0.6%, to $1.6 billion at March 31, 2026 from $1.6 billion at December 31, 2025. The increase in deposits was primarily due to increases in NOW/money market accounts of $50.0 million, or 16.5% and non-interest bearing deposits of $25.0 million, or 9.2%, partially offset by decreases in certificates of deposit of $57.1 million, or 6.3%, and savings account balances of $8.5 million, or 6.0%. The decrease of $57.1 million in certificates of deposit consisted of decreases in brokered certificates of deposit of $40.6 million, or 11.0%, non-brokered listing services certificates of deposit of $5.4 million, or 6.2%, and retail certificates of deposit of $11.2 million, or 2.5%.

The decrease in brokered certificates of deposit and non-brokered listing services certificates of deposit was due to management's strategy to reduce the cost of funds by "calling" higher rate brokered deposits on their call dates and to rely less on brokered deposits and non-brokered listing service deposits. The decrease in retail certificates of deposit was due to a shift in deposits to our retail high yield money market accounts.

Advance payments by borrowers for taxes and insurance increased $572,000, or 24.3%, to $2.9 million at March 31, 2026 from $2.4 million at December 31, 2025 due primarily to accumulation of real estate tax payments from borrowers.

Borrowings decreased $50.0 million, or 71.4%, to $20.0 million at March 31, 2026 from $70.0 million at December 31, 2025 due primarily to management's strategy to reduce the cost of funds.

Lease liability - operating decreased $163,000, or 3.4%, to $4.6 million at March 31, 2026 from $4.8 million at December 31, 2025, primarily due to the amortization of the lease liability.

Accounts payable and accrued expenses decreased $2.8 million, or 15.9%, to $14.5 million at March 31, 2026 from $17.3 million at December 31, 2025 due primarily to decreases in accrued expense of $2.9 million and accrued interest expense of $438,000, partially offset by increases in suspense account - loan closings of $217,000, deferred compensation of $158,000, and accounts payable of $40,000.

The allowance for credit losses for off-balance sheet commitments increased $112,000, or 12.7%, to $991,000 at March 31, 2026 from $879,000 at December 31, 2025 due primarily to an increase of $140.0 million, or 20.6%, in off-balance sheet commitments from December 31, 2025 to March 31, 2026.

Stockholders' equity increased $4.6 million, or 1.3% to $356.3 million at March 31, 2026, from $351.7 million at December 31, 2025. The increase in stockholders' equity was due to net income of $10.0 million for the three months ended March 31, 2026, an increase of $178,000 in earned employee stock ownership plan shares coupled with a reduction of $130,000 in unearned employee stock ownership plan shares, the amortization expense of $547,000 relating to restricted stock and stock options granted under the Company's 2022 Equity Incentive Plan, $37,000 in stock options exercised, and $8,000 in other comprehensive income. These increases were offset by stock repurchases and excise taxes of $3.6 million and dividends declared of $2.7 million.

Results of Operations for the Three Months Ended March 31, 2026 and 2025

Financial Highlights

Net income for the three months ended March 31, 2026 was $10.0 million compared to net income of $10.6 million for the three months ended March 31, 2025. The decrease in net income of $615,000, or 5.8%, between periods was primarily due to a decrease of $439,000 in non-interest income, an increase of $260,000 in non-interest expense, a decrease of $130,000 in net interest income, and an increase of $23,000 in income tax expense, partially offset by no credit loss expense for the three months ended March 31, 2026 compared to a credit loss expense of $237,000 for the three months ended March 31, 2025.

Net Interest Income

Net interest income was $24.1 million for the three months ended March 31, 2026, as compared to $24.3 million for the three months ended March 31, 2025. The decrease in net interest income of $130,000, or 0.5%, was primarily due to a decrease in interest income that exceeded a decrease in interest expense caused by a decrease in the yield on interest-earning assets that exceeded the decrease in the cost of funds for interest-bearing liabilities.

Total interest and dividend income decreased $2.2 million, or 5.9%, to $36.0 million for the three months ended March 31, 2026 from $38.2 million for the three months ended March 31, 2025. The decrease in interest and dividend income was due to a decrease in the yield on interest-earning assets of 61 basis points from 8.05% for the three months ended March 31, 2025 to 7.44% for the three months ended March 31, 2026, partially offset by an increase in the average balance of interest-earning assets of $35.2 million, or 1.9%, to $1.9 billion for the three months ended March 31, 2026 from $1.9 billion for the three months ended March 31, 2025.

Interest expense decreased $2.1 million, or 15.1%, to $11.8 million for the three months ended March 31, 2026 from $13.9 million for the three months ended March 31, 2025. The decrease in interest expense was due to a decrease in the cost of interest-bearing liabilities by 58 basis points from 4.05% for the three months ended March 31, 2025 to 3.47% for the three months ended March 31, 2026. The decrease in interest expense was also due to a decrease in the

average balance of interest-bearing liabilities of $9.9 million, or 0.7%, to $1.4 billion for the three months ended March 31, 2026 from $1.4 billion for the three months ended March 31, 2025.

Our net interest margin decreased 12 basis points, or 2.4%, to 4.99% for the three months ended March 31, 2026 compared to 5.11% for the three months ended March 31, 2025. The decrease in the net interest margin was due to a 75 basis points decrease in the Federal Funds rate from September 2025 to December 2025 that resulted in a decrease in the yield on interest-earning assets, partially offset by a smaller decrease in the cost of funds on interest-bearing liabilities.

Credit Loss Expense

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The Company recorded no credit loss expense for the three months ended March 31, 2026 compared to a credit loss expense of $237,000 for the three months ended March 31, 2025.

The credit loss expense of $237,000 for the three months ended March 31, 2025 was comprised of credit loss expense for loans of $62,000 and credit loss expense for off-balance sheet commitments of $175,000. The credit loss expense for loans of $62,000 for the three months ended March 31, 2025 was primarily due to an increase in the multi-family loan portfolio. The credit loss expense for off-balance sheet commitments of $175,000 for the three months ended March 31, 2025 was primarily due to an increase in unfunded off-balance sheet commitments.

With respect to the allowance for credit losses for loans, we charged-off $27,000 during the quarter ended March 31, 2026, as compared to charge-offs of $117,000 during the quarter ended March 31, 2025. The charge-offs during both periods were against various unpaid overdrafts in our demand deposit accounts.

We recorded no recoveries during the quarter ended March 31, 2026 compared to recoveries of $352,000 during the quarter ended March 31, 2025. The recoveries of $352,000 during the quarter ended March 31, 2025 were comprised of recoveries of $350,000 regarding a previously charged-off non-residential mortgage loan and $2,000 from a previously charged-off unpaid overdraft on a demand deposit account.

Non-Interest Income

Non-interest income for the three months ended March 31, 2026 was $796,000 compared to non-interest income of $1.2 million for the three months ended March 31, 2025. The decrease of $439,000, or 35.5%, in total non-interest income was primarily due to decreases of $421,000 in unrealized gain/(loss) on equity securities and $71,000 in other loan fees and service charges, partially offset by increases of $41,000 in miscellaneous other non-interest income and $12,000 in BOLI income.

The decrease in unrealized gain/(loss) on equity securities was due to an unrealized loss of $121,000 on equity securities during the quarter ended March 31, 2026 compared to an unrealized gain of $300,000 on equity securities during the quarter ended March 31, 2025. The unrealized loss of $121,000 and unrealized gain of $300,000 on equity securities during the quarters ended March 31, 2026 and 2025, respectively, were due to market interest rate volatility during both periods.

The decrease of $71,000 in other loan fees and service charges was due to a decrease of $143,000 in miscellaneous loan fees, partially offset by an increase of $72,000 in ATM/debit card/ACH fees. The increase of $41,000 in miscellaneous other non-interest income was due to general accrual adjustments during the quarter. The increase of $12,000 in BOLI income was due to an increase in the yield on BOLI assets.

Non-Interest Expense

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Non-interest expense increased $260,000, or 2.4%, to $10.9 million for the three months ended March 31, 2026 from $10.6 million for the three months ended March 31, 2025. The increase resulted primarily from increases of $239,000 in salaries and employee benefits, $127,000 in occupancy expense, $61,000 in outside data processing expense, and $6,000 in equipment expense, partially offset by decreases of $84,000 in other operating expense, $59,000 in advertising expense, and $30,000 in real estate owned expense.

Salaries and employee benefits increased $239,000, or 4.0%, to $6.2 million for the three months ended March 31, 2026 from $5.9 million for the three months ended March 31, 2025 primarily due to the hiring of additional personnel to support the growth of the Company and an increase in employee compensation and benefits expense in order to retain key personnel, partially offset by an increase in loan origination offset expenses.

Occupancy expense increased $128,000, or 17.1%, to $874,000 for the three months ended March 31, 2026 from $747,000 for the three months ended March 31, 2025 primarily due to repairs and maintenance at various offices, increased utilities cost, and increased snow removal cost.

Outside data processing expense increased $61,000, or 8.2%, to $796,000 for the three months ended March 31, 2026 from $735,000 for the three months ended March 31, 2025 due to additional data processing services. Equipment expense increased $6,000, or 2.6%, to $223,000 for the three months ended March 31, 2026 from $217,000 for the three months ended March 31, 2025 due to upgrades of equipment.

Other non-interest operating expense decreased $84,000, or 2.9%, to $2.8 million for the three months ended March 31, 2026 from $2.9 million for the three months ended March 31, 2025 due mainly to decreases of $105,000 in miscellaneous other non-interest expense, $24,000 in recruitment expense, $21,000 in office supplies, $16,000 in telephone expense, $12,000 in consulting fees, and $8,000 in audit and accounting expense. These decreases were partially offset by increases of $31,000 in service contracts expense, $27,000 in legal fees, $21,000 in directors, officers and employees expense, $19,000 in directors compensation, and $6,000 in insurance expense.

The decrease of $105,000 in miscellaneous other non-interest expense was mainly due to decreases of $112,000 in regulatory fees, $19,000 in miscellaneous expenses, $12,000 in dues and subscriptions, $3,000 in public company expenses, and $3,000 in postage expenses, partially offset by increases of $23,000 in miscellaneous charge-offs, $12,000 in loan related expenses, and $10,000 in check and correspondence bank charges. Regulatory fees decreased $112,000, or 13.2%, to $738,000 for the three months ended March 31, 2026 from $850,000 for the three months ended March 31, 2025 due to a reduction in the Bank's risk profile between periods.

Advertising expense decreased $59,000, or 57.7%, to $43,000 for the three months ended March 31, 2026 from $102,000 for the three months ended March 31, 2025 due to a decrease in various marketing campaigns.

Real estate owned expense decreased $30,000 to none for the three months ended March 31, 2026 from $30,000 for the three months ended March 31, 2025 due to the sale in December 2025 of the sole real estate owned located in Pittsburgh, Pennsylvania.

Income Taxes

We recorded income tax expense of $4.1 million for both three months ended March 31, 2026 and 2025, respectively. For the three months ended March 31, 2026, we had approximately $248,000 in tax exempt income, compared to approximately $204,000 in tax exempt income for the three months ended March 31, 2025. Our effective income tax rate was 29.2% for the three months ended March 31, 2026 compared to 27.8% for the three months ended March 31, 2025.

Average Balances and Yields

The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average daily balances of assets or liabilities, respectively, for the periods presented. Loan fees, including prepayment fees, are included in interest income on loans and are not material. Non-accrual loans are included in the average balances only. In addition, yields are not presented on a tax-equivalent basis. Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

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Rate/Volume Analysis

The following tables set forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns.

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Asset Quality

We had no non-performing assets at March 31, 2026 and at December 31, 2025. During the three months ended March 31, 2026 and 2025, we did not collect any interest income from loans that were in non-accrual status.

From time to time, as part of our loss mitigation strategy, we may modify loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay, or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. There were no new loan modifications to borrowers experiencing financial difficulties during the three months ended March 31, 2026 or 2025.

At March 31, 2026 and December 31, 2025, we had no loans modified to borrowers experiencing financial difficulty.

The following table sets forth an analysis of the activity in the allowance for credit losses related to loans for the periods indicated:

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The Company's allowance for credit losses related to loans totaled $4.6 million, or 0.25% of total loans as of March 31, 2026 compared to $4.7 million, or 0.25% of total loans as of December 31, 2025. In addition, the Company's allowance for credit losses related to off-balance sheet commitments totaled $991,000 as of March 31, 2026 compared to $879,000 at December 31, 2025. The allowance for credit losses related to held-to-maturity debt securities totaled $126,000 at both March 31, 2026 and December 31, 2025.

The allowance for credit losses related to loans decreased $139,000 to $4.6 million at March 31, 2026 from $4.7 million at December 31, 2025 due primarily to charge-offs totaling $27,000, and a provision for credit losses reduction of $112,000 due to a reduction in the loan portfolio.

The allowance for credit losses related to off-balance sheet commitments increased $112,000 to $991,000 at March 31, 2026 from $879,000 at December 31, 2025 due to a provision for credit losses of $112,000 due to an increase in outstanding commitments between periods.

Liquidity and Capital Resources

We maintain liquid assets at levels we believe are adequate to meet our liquidity needs. We established a liquidity ratio policy that identifies three liquidity ratios consisting of  (1) Cash/Deposits & Short Term Borrowings ("Cash Liquidity"), (2) Cash & Investments/Deposits & Short Term Borrowings ("On Balance Sheet Liquidity"), and (3) Cash & Investments & Borrowing Capacity/Deposits & Short Term Borrowings ("On Balance Sheet Liquidity & Borrowing Capacity") to assist in the management of our liquidity. We also establish targets of 2.0% for the Cash Liquidity ratio, 5.0% for the On Balance Sheet Liquidity ratio, and 20.0% for the On Balance Sheet Liquidity & Borrowing Capacity ratio.

Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 4.3%, 7.1%, and 59.6%, respectively, for the three months ended March 31, 2026 compared to 5.0%, 7.4%, and 59.9%, respectively, for the year ended December 31, 2025. We adjust our liquidity levels to fund deposit outflows, pay real estate taxes on real estate loans, repay our borrowings, and fund loan commitments. We also adjust liquidity as appropriate to meet asset and liability management objectives.

Our liquidity ratios cannot be calculated using amounts disclosed in our consolidated financial statements, as many of the calculations involve monthly, quarterly or annual averages. To calculate our liquidity ratios, the average liquidity base from the prior month is used as the denominator to calculate a daily liquidity ratio. The liquidity base consists of savings account balances, certificates of deposit balances, checking and money market balances, deposit loans and borrowings. The daily balances of these components are averaged to arrive at the liquidity base for the month, and the daily cash balances in selected general ledger accounts are used to derive our liquidity position. A daily liquidity ratio is calculated using the liquidity for the day divided by the prior month's average liquidity base. At the end of each month, a monthly liquidity position is calculated using the average liquidity position for the month divided by the prior month's average liquidity base. To calculate quarterly and annual liquidity ratios, we take the average liquidity for the three- or twelve-month period, respectively, and average it.

Given the rapid movement of deposits in today's banking environment, the Company also manages its liquidity position through a time-series approach to liquidity availability. Traditional liquidity management focuses on on-balance sheet capacity; however, converting those assets into cash may involve delays or market-driven losses. To address this, the Company emphasizes the actual accessibility of liquidity as measured by when cash becomes available in the Company's Cash Accounts rather than simply its balance sheet presence.

This time-series liquidity framework is analyzed across the following intervals: Minute 1, Day 1, Week 1, Month 1, and Year 1. This structure ensures a proactive and disciplined approach to managing liquidity risk.

Minute 1: Represents the amount of cash the Company can immediately access and disperse within one minute while remaining solvent. It is defined as the cash and cash equivalents currently on the balance sheet and typically covers daily cash needs.

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Day 1: In the event of a liquidity run, this is the amount of cash that the Company can access and disperse within one day. It includes Minute 1 liquidity plus total borrowing capacity from the Federal Home Loan Bank, Federal Reserve Bank, and other secured and unsecured sources.

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Week 1: In a prolonged liquidity event, this is the amount of cash available over one week. Week 1 liquidity includes Day 1 liquidity plus the estimated collateral value of unpledged investments that can be pledged or sold, as well as a portion (typically 10% each) of the Company's brokered and listing service deposit capacity expected to be accessible within the week.

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Month 1: Represents the total cash the Company can access and disperse over a one-month period while remaining solvent. It includes Week 1 liquidity plus the remaining brokered and listing service deposit capacity not already included in Week 1.

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Year 1: Reflects the amount of liquidity the Company can access and deploy over a one-year time period. It includes Month 1 liquidity plus the value of unpledged but pledgeable loans available on the balance sheet.

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To assess the adequacy of its liquidity, the Company compares time-series liquidity against Total Non-Contractual Deposits defined as total deposits less (1) brokered deposits outstanding, (2) other contractual funding outstanding, and (3) collateralized municipal deposits outstanding.

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As of March 31, 2026, the Company's ratios of Cash and Borrowing Capacity/Total Non-Contractual Deposits and Cash, Borrowing Capacity and Sourced Deposits Capacity/Total Non-Contractual Deposits were 73.4% and 121.2%, respectively. These figures demonstrate that the Company has sufficient liquidity resources to meet sudden and unexpected deposit outflow.

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Our primary sources of liquidity are deposits, prepayment of loans and mortgage-backed securities, maturities of investment securities, other short-term investments, earnings, and funds provided from operations. While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and rates offered by our competition. We set the interest rates on our deposits to maintain a desired level of total deposits. In addition, we invest excess funds in short-term interest-earning assets, which provide liquidity to meet lending requirements.

Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Consolidated Statements of Cash Flows included with our Consolidated Financial Statements.

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 three months ended March 31, 2026 and 2025, our loan originations totaled $266.1 million and $170.1 million, respectively. Cash received from the maturities and pay-downs on securities totaled $155,000 and $128,000 for the three months ended March 31, 2026 and 2025, respectively. We purchased $1.0 million in equity securities during the three months ended March 31, 2026 compared to purchases of $1.0 million in equity securities during the three months ended March 31, 2025.

Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements exist with the Federal Reserve Bank of New York ("FRBNY") whereby the Bank pledged eligible loans under the Borrower-in-Custody program of the FRBNY allowing the Bank to borrow from the Discount Window at the FRBNY. We had an available borrowing limit of $866.7 million and $768.8 million from the FRBNY at March 31, 2026 and December 31, 2025, respectively. We had $20.0 million in FRBNY borrowings at March 31, 2026 compared to $70.0 million in FRBNY borrowings at December 31, 2025.

As a member of the Federal Home Loan Bank of New York ("FHLB-NY"), we are required to own capital stock in the FHLB-NY and are authorized to apply for advances on the security of such stock and certain of our mortgage loans and other assets (principally securities which are obligations of, or guaranteed by, the United States), provided certain standards related to credit-worthiness have been met. In February 2026, we withdrew our pledged eligible loans from the FHLB-NY's advance program and are in the process of pledging these eligible loans with the FRB-NY to increase our borrowing capacity with the FRB-NY. Due to the withdrawal of pledged eligible loans from the FHLB-NY, we no longer have borrowing capacity at the FHLB-NY at March 31, 2026 compared to borrowing capacity at the FHLB-NY of $35.8 million at December 31, 2025. We had no FHLB-NY advances at March 31, 2026 and December 31, 2025.

In addition, we are party to a loan agreement with ACBB under which we can borrow up to $8.0 million in short-term borrowings. There were no outstanding borrowings with ACBB at March 31, 2026 and December 31, 2025.

At March 31, 2026, we had unfunded commitments on construction and multi-family mortgage loans of $429.5 million, outstanding commitments to originate loans of $297.1 million, unfunded commitments under commercial and industrial loans lines of credit of $78.9 million, and unfunded standby letters of credit of $14.2 million. At March 31, 2026, certificates of deposit scheduled to mature in less than one year totaled $796.2 million. Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case. In the event a significant portion of our deposits are not retained by us, we will have to utilize other funding sources, such as various types of sourced deposits, or Federal Reserve Bank borrowings, in order to maintain our level of assets. Alternatively, we could reduce our level of liquid assets, such as our cash and cash equivalents. In addition, the cost of such deposits may be significantly higher or lower depending on market interest rates at the time of renewal.

The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its stockholders and for the repurchase, if any, of its shares of common stock. At March 31, 2026, the Company had liquid assets of $8.8 million and $3.1 million in loan participations originated by the Bank which are held by the Company.

Off-Balance Sheet Arrangements

For the three months ended March 31, 2026, 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.

Impact of Inflation and Changing Prices

The consolidated financial statements and related notes of NorthEast Community Bancorp 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. 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.

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