NorthEast Community Bancorp, Inc./MD/

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Summary of Significant Accounting Policies

The following is a description of the Company’s business and significant accounting and reporting policies:

Nature of Business:

Northeast Community Bancorp, Inc. (the “Company”) is a Maryland corporation that was incorporated in May 2021 to be the successor to NorthEast Community Bancorp, Inc., a federally chartered corporation (the “Mid-Tier Holding Company”), upon completion of the second-step conversion of NorthEast Community Bank (the “Bank”) from the two-tier mutual holding company structure to the stock holding company structure. NorthEast Community Bancorp, MHC was the former mutual holding company for the Mid-Tier Holding Company prior to the completion of the second-step conversion. In conjunction with the second-step conversion, each of NorthEast Community Bancorp, MHC and the Mid-Tier Holding Company merged out of existence and now cease to exist.

The Bank is a New York State-chartered savings bank and the Company’s primary activity is the ownership and operation of the Bank.

The Bank is headquartered in White Plains, New York. The Bank was founded in 1934 and is a community oriented financial institution dedicated to serving the financial services needs of individuals and businesses within its market area. The Bank currently conducts business through itseleven branch offices located in the Bronx, New York, Orange, Rockland, and Sullivan Counties in New York and Essex, Middlesex and Norfolk Counties in Massachusetts andthree loan production offices located in White Plains, New York, New City, New York, and Danvers, Massachusetts.

The Bank’s principal business consists of originating primarily construction loans and, to a lesser extent, commercial and industrial loans and multifamily and mixed-use residential real estate loans and non-residential real estate loans. 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, brokered deposits, military deposits, and listing deposit services as sources of funds. The Bank’s revenues are derived primarily from interest on loans and, to a lesser extent, interest on investment securities and mortgage-backed securities. The Bank also generates revenues from other income including deposit fees and service charges.

New England Commercial Properties LLC (“NECP”), 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. NECP currently doesnot own any property.

NECB Financial Services Group, LLC (“NECB Financial”), a New York limited liability company and wholly owned subsidiary of the Bank, was formed in the third quarter of 2012 to sell life insurance and fixed rate annuities. NECB Financial is licensed in New York State. This subsidiary is currently inactive.

72 West Eckerson LLC (“72 West Eckerson”), 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 (“166 Route 59 Realty”), 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 property for 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 or lease of real property by the Bank and currently owns the property for the Bank branch located in Bloomingburg, New York.

NECB Real Estate LLC (“NECB Real Estate”), a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2024 to facilitate the purchase or lease of real property by the Bank. NECB Real Estate owned one foreclosed property located in the Bronx, New York prior to the property’s disposition in June 2025.

Principal of Consolidations:

The accompanying unaudited consolidated financial statements include the accounts of the Company, the Bank, NECP, NECB Financial, 72 West Eckerson, 166 Route 59 Realty, 3 Winterton Realty LLC, and NECB Real Estate (collectively the “Company”) and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All significant inter-company accounts and transactions have been eliminated in consolidation. The accounting and reporting policies of the Company and its subsidiaries conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. The unaudited consolidated interim financial information should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

In the opinion of the Company, all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of the operating results for the interim periods have been included. The results of operations for periods of less than a year are not necessarily indicative of results for the full year or any other period.

Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Estimates that are particularly susceptible to change in the near term are used in connection with the determination of the allowance for credit losses.

Loan Concentration Risk:

The Company’s lending activity is concentrated in construction loans secured primarily by affordable housing apartment buildings located throughout all five submarkets in the Bronx, and by construction loans secured by condominium buildings and single-family developments in Rockland, Orange, and Sullivan Counties in high demand, high absorption areas.

The Company’s lending exposures include outstanding loan balances, loans-in-process, and unfunded commitments. As of September 30, 2026 and December 31, 2025, the Company had lending exposures of$1.1 billion and $827.8 million in the Bronx, $546.1 million and $533.3 million in Orange County, $387.8 million and $364.2 million in Rockland County, and $99.3 million and $150.3 million in Sullivan County, respectively. The increase in total lending exposure reflects continued growth in construction lending activity. Compared to December 31, 2025, the Company’s lending exposure as of September 30, 2026 increased by$300.0 million, or 36.2%, in the Bronx, by $12.8 million, or 2.4%, in Orange County, and by $23.6 million, or 6.5%, in Rockland County.

At September 30, 2026, the Company had a total of $106.7 million, or 6.9%, of construction loans located in Rockland, Orange, and Sullivan Counties related to office space or other commercial-use properties within these high demand, high absorption areas.

Note 2 — Regulatory Capital

The Company and the Bank are subject to regulatory capital requirements promulgated by the federal banking agencies. The Federal Reserve establishes capital requirements, including well capitalized standards, for the consolidated bank holding company, and the FDIC has similar requirements for the Company’s subsidiary bank. However, the Federal Reserve has provided a “small bank holding company” exception to its consolidated capital requirements for holding companies, and legislation and the related issuance of regulations by the Federal Reserve Board have established the current threshold for the exception at $3.0 billion in total consolidated assets. As a result, the Company will not be subject to the consolidated holding company capital requirement until such time as its consolidated assets exceed $3.0 billion. The Bank met all capital adequacy requirements to which it was subject as of September 30, 2026 and December 31, 2025.

The following table presents information about the Bank’s capital levels at the dates presented:

Based on the most recent notification by the FDIC, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action. There have been no conditions or events that have occurred since notification that management believes have changed the Bank’s category.

Note 3 — Earnings Per Share

Basic earnings per share is calculated by dividing the net income available to common stockholders by the weighted average number of common shares outstanding during the period less any unvested restricted shares. Unallocated common shares held by the Employee Stock Ownership Plan (“ESOP”) are not included in the weighted-average number of common shares outstanding for purposes of calculating basic net income per common share until they are committed to be released. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and are determined using the treasury stock method.

The following table sets forth the computations of basic and diluted earnings per share:

Note 4 — Equity Securities

The following table is the schedule of equity securities at September 30, 2026 and December 31, 2025. Our equity securities portfolio consists of our investment in a market-rate bond mutual fund that invests in high-quality fixed income bonds, mainly government agency securities whose proceeds are designed to positively impact community development throughout the United States. The mutual fund focuses exclusively on providing affordable housing for low- and moderate-income borrowers and renters within our delineated lending areas, including those in majority minority census tracts. The high-quality fixed income bonds consist of 90% agency mortgage-backed securities and 10% state and municipal bonds. All agency mortgage-backed securities are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses.

The following is a summary of unrealized gain or loss recognized in net income on equity securities during the three and nine months ended September 30, 2026 and 2025:

Note 5 — Securities Held-to-Maturity

The following table summarizes the Company’s portfolio of securities held-to-maturity at September 30, 2026 and December 31, 2025.

Contractual final maturities of mortgage-backed securities and municipal bonds were as follows at September 30, 2026:

The maturities shown above are based upon contractual final maturity. Actual maturities will differ from contractual maturities due to scheduled monthly repayments and due to the underlying borrowers having the right to prepay their obligations.

The activity in the allowance for credit losses for debt securities held-to-maturity for the three and nine months ended September 30, 2026 and 2025 was as follows:

At September 30, 2026, eleven mortgage-backed securities had unrealized losses due to interest rate volatility. Management concluded that the unrealized losses reflected above were temporary in nature since the unrealized losses were related primarily to market interest rate volatility, and were not related to the underlying credit quality of the issuers of the securities. Additionally, the Company has the ability and intent to hold the securities for the time necessary to recover the amortized cost. At December 31, 2025, there were eleven mortgage-backed securities that had unrealized losses due to interest rate volatility.

Credit Quality Indicators

The held to maturity securities portfolio consists of agency mortgage-backed securities and municipal bonds. All agency mortgage-backed securities are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. At September 30, 2026, thenine municipal bonds in the portfolio carried no lower than A ratings from the rating agencies and had no realized losses since they were issued. At December 31, 2025, theten municipal bonds in the portfolio carried no lower than A ratings from the rating agencies and had no realized losses since they were issued. The Company regularly monitors the municipal bonds sector of the market and reviews collectability including such factors as the financial condition of the issuers as well as credit ratings in effect as of the reporting period.

Note 6 — Loans Receivable and the Allowance for Credit Losses

The composition of loans was as follows at September 30, 2026 and December 31, 2025:

Loans serviced for the benefit of others, which are not included in the amounts shown above, totaled approximately $21.5 million and $53.3 million at September 30, 2026 and December 31, 2025, respectively. The value of mortgage servicing rights was not material at September 30, 2026 and December 31, 2025.

The allowance for credit losses on loans represents management’s estimate of losses inherent in the loan portfolio as of the statement of financial condition date and is recorded as a reduction to loans. The allowance for credit losses is increased by the provision for credit losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for credit losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely.

The allowance for credit losses on loans is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the relevant available information from internal and external sources related to past events and current conditions, as well as the incorporation of reasonable and supportable forecasts. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

The activity in the allowance for credit loss by loan segment for the three and nine months ended September 30, 2026 and 2025 was as follows:

During the three months ended September 30, 2026, the provision expense recorded for construction loans was primarily attributed to increased loan balances. The reversal of the provision recorded for residential real estate loans was primarily attributed to decreased loan balances and reduced credit risks in loss given default projection. The reversal of the provision recorded for commercial and industrial loans was primarily attributed to decreased loan balances. The provision expense recorded for consumer loans was primarily attributed to a net charge off$29,000 in checking account overdrafts during the three months ended September 30, 2026.

During the three months ended September 30, 2025, the reversal of provision recorded for residential real estate loans was primarily attributed to newly originated high-quality muti-family loans coupled with decreased loss given default in the macroeconomic projection. The provision expense recorded for non-residential real estate loans and construction loans was primarily attributed to increased loan balances. The reversal of provision recorded for consumer loans was primarily attributed to a net recovery of$24,000 and decreased balance in checking account overdrafts during the three months ended September 30, 2025.

During the nine months ended September 30, 2026, the reversal of the provision recorded for residential real estate loans was primarily attributed to decreased loan balances and reduced credit risks in loss given default projection. The provision expense recorded for construction loans was primarily attributed to increased loan balances. The provision expense recorded for commercial and industrial loans was primarily attributed to a$500,000 loan charge off, offset by decreased loan balances. The provision expense recorded for consumer loans was primarily attributed to a$76,000 net charge off in checking account overdrafts during the nine months ended September 30, 2026.

During the nine months ended September 30, 2025, the reversal of provision recorded for residential real estate loans was primarily attributed to newly originated high-quality muti-family loans. The provision expense recorded for commercial and industrial loans was attributed to increased loan balances and slightly increased credit risk. The reversal

of provision recorded for non-residential real estate loans was primarily attributed to a$350,000 recovery from a loan charged off in 2021. The provision expense recorded for consumer loans was primarily attributed to a$494,000 net charge off in checking account overdrafts during the nine months ended September 30, 2025.

At September 30, 2026, the Company hadthree individually evaluated loans comprised ofone construction loan totaling $13.9 million andtwo commercial and industrial loans totaling $3.5 million. Thethree loans are secured by aseven story multi-family building with 63 apartment units andone ground floor commercial space occupied by a supermarket located in the Bronx, New York. Thethree loans are currently in foreclosure and placed on non-accrual status with no related allowance recorded at September 30, 2026. There wereno non-accrual loans at December 31, 2025. There wasno interest income recognized from non-accrual loans for the three and nine months ended September 30, 2026 and 2025.

The following tables provide information about delinquencies in our loan portfolio at the dates indicated.

Age Analysis of Past Due Loans as of September 30, 2026:

Age Analysis of Past Due Loans as of December 31, 2025:

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk. The Company uses the following definitions for risk ratings:

Pass– Loans that are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.

Special Mention– Loans which do not currently expose the Company to a sufficient degree of risk to warrant an adverse classification but have some credit deficiencies or other potential weaknesses.

Substandard – Loans which are inadequately protected by the paying capacity and net worth of the obligor or the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful– Loans which have all of the weaknesses inherent in loans classified as Substandard, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values.

The following table presents the risk category of loans at September 30, 2026 by loan segment and vintage year:

The following table presents the risk category of loans at December 31, 2025 by loan segment and vintage year:

Modifications to Borrowers Experiencing Financial Difficulty:

Occasionally, the Company modifies loans to borrowers in financial distress by providing a term extension; an other-than-insignificant payment delay; or an interest rate reduction.

In some cases, the Company provides multiple types of concessions on a loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as an interest rate reduction, may be granted.

During the nine months ended September 30, 2026, one construction loan totaling $13.9 million andtwo commercial and industrial loans totaling $3.5 million were modified to one borrower experiencing financial difficulty. There wereno loans modified to borrowers experiencing financial difficulty during the three months ended September 30, 2026 and during the year ended December 31, 2025, respectively.

The following table describes the financial effect of the modification made to the borrower experiencing financial difficulty:

The performance of the loans made to the borrower experiencing financial difficulty in which modifications were made is closely monitored to determine the effectiveness of modification efforts. At September 30, 2026, thethree loans were delinquent, placed on non-accrual status and currently in foreclosure.

Allowance for Credit Losses on Off-Balance Sheet Commitments:

The following table presents the activity in the allowance for credit losses related to off-balance sheet commitments, that is included in accounts payable and accrued expenses on the consolidated statement of financial condition, for the three and nine months ended September 30, 2026 and 2025:

During the nine months ended September 30, 2026, the provision expense recorded was primarily due to increased balances in unfunded loan commitments.

Note 7 — Borrowings

Our borrowings are primarily from the Discount Window at the Federal Reserve Bank of New York (“FRBNY”). On August 30, 2023, the FRBNY approved the Company’s eligibility to pledge loans under the Borrower-in-Custody program of the FRBNY thereby allowing the Company to borrow from the Discount Window at the FRBNY. At September 30, 2026, there wereno borrowings from the FRBNY. At December 31, 2025, borrowings from the FRBNY totaled$70.0 million, bearing an interest rate of 3.75%.

At September 30, 2026, the Company had the ability to borrow $1.0 billion from the FRBNY, and $8.0 million from Atlantic Community Bankers Bank (“ACBB”).

Note 8 — Benefits Plans

Outside Director Retirement Plan (“DRP”)

The DRP is an unfunded non-contributory defined benefit pension plan covering all non-employee directors meeting eligibility requirements as specified in the plan document. The following table sets forth information regarding the components of net pension periodic expense measured for the three and nine months ended September 30, 2026 and 2025:

Unrecognized net gain of $29,000 and $19,000 for the three months, and $79,000 and $28,000 for the nine months ended September 30, 2026 and 2025, respectively, were included in accumulated other comprehensive income along with the amortization in the table above.

Supplemental Executive Retirement Plan (“SERP”)

The SERP is a non-contributory defined benefit plan that covers certain officers of the Company. Under the SERP, each of these individuals will be entitled to receive upon retirement an annual benefit paid in monthly installments equal to 50% of the executive’s average base salary in thethree-year period preceding retirement. Each individual may also retire early and receive a reduced benefit upon the attainment of certain age andyears of service combination. Additional terms related to death while employed, death after retirement, disability before retirement and termination of employment are fully described within the plan document. The benefit payment term is the greater of 15 years or the executive’s remaining life.

At September 30, 2026 and December 31, 2025, the deferred compensation liability related to the SERP was $5.7 million and $5.3 million, respectively. Expenses of$143,000 and $146,000 for the three months, and $438,000 and $432,000 for the nine months ended September 30, 2026 and 2025, respectively, were recorded for this plan and are reflected in the Consolidated Statements of Income under Salaries and Employee Benefits.

Stock-Based Deferral Plan

In June 2021, the Company established a stock-based deferral plan for eligible key executives and members of the Board of Directors of the Company to elect to defer compensation received from the Company for their services and make deemed investments of that deferred compensation in shares of the Company’s common stock. At September 30, 2026, the Company did not have any obligations under the plan.

401(k) Plan

The Company maintains a 401(k)plan for all eligible employees. Participants are permitted to contribute from 1% to 15% or 60% of their annual compensation up to the maximum permitted under the Internal Revenue Code. The Company providedno matching contributions during the three and nine months ended September 30, 2026 and 2025.

Employee Stock Ownership Plan (“ESOP”)

In conjunction with the Mid-Tier Holding Company’s public stock offering in 2006, the Bank established an ESOP for all eligible employees (substantially all full-time employees). The ESOP borrowed$5,184,200 from the Mid-Tier Holding Company and used those funds to acquire 518,420 shares of Mid-Tier Holding Company common stock at $10.00 per share. The loan from the Mid-Tier Holding Company, which has been assumed by the Company, carries an interest rate of 8.25% and is repayable intwenty annual installments. This loan was paid off in full at December 31, 2025.

In conjunction with the Company’s second-step conversion offering, on July 12, 2021, the ESOP borrowed $7,827,260 from the Company and used those funds to acquire 782,726 shares of Company common stock at $10.00 per share. The loan from the Company carries an interest rate equal to 3.25% and is repayable infifteen annual installments through 2035.

Each year, the Bank makes discretionary contributions to the ESOP equal to the principal and interest payment required on the loans from the Company. The ESOP may further pay down the principal balance of the loans by using dividends paid, if any, on the shares of Company common stock it owns. The first ESOP loan was paid off in full at December 31, 2025. The balance remaining on the second ESOP loan was$5,529,000 at both September 30, 2026 and December 31, 2025.

Shares purchased for the ESOP with the loan proceeds serve as collateral for the loan and are held in a suspense account for future allocation among ESOP participants. As the loan principal is repaid, shares will be released from the suspense account and become eligible for allocation, subject to the allocation provisions included in the ESOP governing document.

ESOP shares initially pledged as collateral were recorded as unearned ESOP shares in the stockholders’ equity section of the Consolidated Statement of Financial Condition. Thereafter, on a monthly basis over the terms of the ESOP loans, approximately 2,894 shares for the ESOP loan made in 2006 and approximately 4,348 shares for the ESOP loan made in 2021 are committed to be released, respectively. Compensation expense is recorded in an amount equal to the shares committed to be released multiplied by the average closing price of the Company’s stock during that month. ESOP expense totaled approximately$349,000 and $478,000 for the three months, and $980,000 and $1,489,000 for the nine months ended September 30, 2026 and 2025, respectively. Dividends on unallocated shares, which totaled approximately$131,000 and $243,000 for the three months, and $365,000 and $486,000 for the nine months ended September 30, 2026 and 2025, respectively, are recorded as a reduction of the ESOP loan. Dividends on allocated shares, which totaled approximately$239,000 and $347,000 for the three months, and $669,000 and $694,000 for the nine months ended September 30, 2026 and 2025, respectively, are charged to retained earnings.

ESOP shares are summarized as follows:

Note 9 — Fair Value Disclosures

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The Company’s marketable equity securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company has to record at fair value other assets and liabilities on a non-recurring basis, such as securities held to maturity, individually evaluated loans and other real estate owned. U.S. GAAP has established a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are as follows:

The level of the asset or liability within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company’s assets that are carried at fair value on a recurring basis and the level that was used to determine their fair value at September 30, 2026 and December 31, 2025:

There wereno transfers between Level 1 and 2 during the three and nine months ended September 30, 2026 or the year ended December 31, 2025. The Company didnot have any liabilities that were carried at fair value on a recurring basis at September 30, 2026 and December 31, 2025.

The following table sets forth the Company’s assets that are carried at fair value on a non-recurring basis and the level that was used to determine their fair value, at September 30, 2026 and December 31, 2025:

The following tables present the qualitative information about non-recurring Level 3 fair value measurements of financial instruments at September 30, 2026:

The Company didnot have any collateral dependent loans at December 31, 2025. The Company didnot have any liabilities that were carried at fair value on a non-recurring basis at September 30, 2026 and December 31, 2025.

The methods and assumptions used to estimate fair value at September 30, 2026 and December 31, 2025 are as follows:

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period end-dates and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

Fair values for marketable equity securities are determined by quoted market prices on nationally recognized and foreign securities exchanges (Level 1). Fair values for equity securities and securities held to maturity are determined utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the security’s terms and conditions, among other things.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

The carrying amounts and estimated fair value of our financial instruments are as follows:

Note 10 — Revenue Recognition

The majority of the Company’s revenues come from interest income and other sources, including loans and securities that are outside the scope of ASC 606, Revenue from Contracts with Customers. The Company’s services that fall within the scope of ASC 606 are presented within noninterest income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges on deposits, electronic banking fees and charges income, and investment advisory fees.

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as referral fees basedon month end reports. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of September 30, 2026 and December 31, 2025, the Company did not have any significant contract balances.

All of the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income. The following table presents the Company’s sources of noninterest income for the three and nine months ended September 30, 2026 and 2025. Sources of revenue outside the scope of ASC 606 are noted as such:

A description of the Company’s revenue streams accounted for under ASC 606 is as follows:

Service Charges on Deposit Accounts

The Company earns fees from deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed at the point in the time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are generally earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Service charges on deposits are withdrawn from the customer’s account balance.

Electronic Banking Fee Income

The Company earns interchange fees from debit and credit card holder transactions conducted through various payment networks. Interchange fees from cardholder transactions are recognized daily, concurrently with the transaction processing services provided by an outsourced technology solution.

Note 11 — Stock Compensation Plans

At a special meeting of shareholders held on September 29, 2022, the Company’s shareholders approved the Company’s 2022 Equity Incentive Plan whereby 1,369,771 shares of the Company’s common stock were reserved from authorized but unissued shares for purposes of grants of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, performance shares and performance units to selected employees and non-employee directors of the Company. On May 21, 2026, the shareholders of the Company approved the Company’s 2026 Equity Incentive Plan whereby 204,335 shares of the Company’s common stock were reserved and available for issuance under the Plan.

The product of the number of shares granted and the grant date market price of the Company’s common stock determine the fair value of restricted stock under the Company’s Equity Incentive Plans. Management recognizes compensation expense for the fair value of restricted stock on a straight-line basis over the requisite service period for the entire award. As of September 30, 2026 and December 31, 2025, there were 204,335 and 19,335 aggregate shares available for future awards under the plans, respectively.

A summary of the Company’s restricted stock activity and related information for the three and nine months ended September 30, 2026 follows:

Compensation expense related to restricted stock was $308,000 and $301,000 for the three months, and $924,000 and $887,000 for the nine months ended September 30, 2026 and 2025, respectively. At September 30, 2026, the total compensation cost related to non-vested restricted stock awards that has not yet been recognized was$1.3 million, which cost is expected to be recognized over the nexttwo years.

A summary of the Company’s stock option activity and related information for the three and nine months ended September 30, 2026 follows:

Compensation cost related to stock options is recognized based on the fair value of the stock options at the grant date on a straight-line basis over the vesting period. Compensation expense related to stock options was$215,000 and $206,000 for the three months, and $667,000 and $577,000 for the nine months ended September 30, 2026 and 2025, respectively. At September 30, 2026, unrecognized compensation cost related to stock option awards was$1.1 million which is expected to be recognized over the nexttwo years.

Note 12 — Business Segments

While the chief decisionmakers monitor the revenue streams of the various products and services, operations are managed, and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated intoone as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated inone reportable operating segment. Substantially most of the Company’s operations occur through the Bank and involve the delivery of loan and deposit products to customers.

The Company’s chief operating decision maker is the Executive Committee that includes the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. The Executive Committee assesses performance of the Company on a consolidated basis and decides how to allocate resources based on net income that is also reported as net income on the Consolidated Statement of Income.

The Executive Committee uses net income, which is the measure of segment profit and loss, to evaluate income generated from segment assets (return on assets) and other measures, such as net interest margin, return on average assets, and return on common equity, in deciding how to reinvest profits, such as originating loans, investing in investment securities, or repurchasing shares of the Company’s common stock. Net income is used to monitor budget versus actual results. The Executive Committee also uses net income and other measures in comparing the Company to its peer banks. The comparison of the Company’s net income and other measures to its peer banks, along with the comparison of budgeted versus actual results, are used in assessing the Company’s performance and in establishing management compensation. Loans, investments, and deposits provide the revenues in the banking operations. Interest expense and payroll provide the significant expenses in the banking operations. All operations are domestic.

The following table presents the Company’s reported segment revenues, profit or loss and significant segment expenses for the three and nine months ended September 30, 2026 and 2025:

The measure of segment assets is reported as total assets on the Consolidated Statement of Condition.

The following table presents the Company’s reported segment assets as of September 30, 2026 and December 31, 2025:

Note 13 — Recent Accounting Pronouncements

In October 2023, the FASB issued ASU 2023-06,Disclosure Improvement: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which incorporates several SEC disclosure requirements into US GAAP and adds interim and annual disclosure requirements to a variety of topics in the Accounting Standards Codification, including those focusing on accounting changes, earnings per share, debt and repurchase agreements. For entities subject to the SEC disclosure requirements and those “required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer,” the US GAAP requirements will be effective when the removal of the related SEC rule is effective. Early adoption is not permitted for these entities. For all other entities, the effective date will be two years later, and early adoption is permitted. That is, financial statements issued after the effective date of each amendment are required to include on a prospective basis the related disclosure incorporated into US GAAP by this ASU. However, if the SEC does not act to remove its related requirements by September 30, 2027, any related FASB amendments will be removed from the Codification and will not be effective for any entities. This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2024, the FASB issued ASU 2024-03,Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. This ASU requires disclosure in the notes to financial statements of specified information about certain costs and expenses. Specific disclosures are required for (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas producing activities. The amendments in this Update do not change or remove current expense disclosure requirements. However, the amendments affect where this information appears in the notes to financial statements because entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments. The amendments in ASU 2024-03 apply only to public business entities and are effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2025, the FASB issued ASU 2025-01,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which revises the effective date of ASU 2024-03 (on disclosures about disaggregation of income statement expenses) “to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.” Entities within the ASU’s scope are permitted to early adopt the ASU. This Update is not expected to have a significant impact on the Company’s financial statements.

In September 2025, the FASB issued ASU 2025-06,Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software that is developed using an incremental and iterative method (e.g., agile method). The guidance removes all references to project stages in ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. The guidance specifies that the property, plant, and equipment disclosure requirements under ASC 360-10 apply to capitalized software costs accounted for under ASC 350-40, regardless of how those costs are presented in the financial statements. The guidance, which applies to all entities, is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Entities may apply the guidance using a prospective, retrospective, or modified transition approach. Early adoption is permitted. This Update is not expected to have a significant impact on the Company’s financial statements.