ECB Bancorp, Inc. /MD/

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE1 - CONVERSION

Effective* July 27, 2022,*Everett Co-operative Bank (the "Bank") completed its conversion to a Massachusetts stock co-operative bank and became the wholly owned subsidiary of ECB Bancorp, Inc. (the “Company”). In the offering, the Company sold 8,915,247 shares of common stock at a per share price of $10.00 for gross offering proceeds of $89.2 million. Additionally, the Company contributed 260,000 shares and $600,000 in cash to the Everett Co-operative Bank Charitable Foundation (the “Foundation”).

The Bank has established a Liquidation Account in an amount equal to the net worth of the Bank as of the date of the latest consolidated balance sheet contained in the final prospectus distributed in connection with the Company’s stock conversion and stock offering. The function of the Liquidation Account is to establish a priority on liquidation of the Bank. The Liquidation Account will be maintained by the Bank for the benefit of the eligible account holders who continue to maintain deposit accounts with the Bank, following the conversion. Each eligible account holder, with respect to each deposit account, holds a related inchoate interest in a portion of the Liquidation Account balance, in relation to each deposit account balance at the eligibility record date, or to such balance as it* maybe subsequently reduced, as hereinafter provided. The initial Liquidation Account balance willnot* be increased, and is subject to downward adjustment to the extent of any downward adjustment of any subaccount balance of any eligible account holder in accordance with the regulations of the Division of Banks of the Commonwealth of Massachusetts.

In the unlikely event of a complete liquidation of the Bank (and only in such event), following all liquidation payments to creditors (including those to depositors to the extent of their deposit accounts) each eligible account holder shall be entitled to receive a liquidating distribution from the Liquidation Account, in the amount of the then-adjusted subaccount balances for his or her deposit accounts then held, before any liquidating distribution* may*be made to any holder of the Bank’s capital stock.

The Bank* may**not* declare or pay a cash dividend on its outstanding capital stock if the effect thereof would cause its regulatory capital to be reduced below the amount required to maintain the Liquidation Account and under FDIC rules and regulations.

NOTE2 – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of ECB Bancorp, Inc. have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form10-Q and Rule10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The consolidated financial statements of ECB Bancorp, Inc. (referred to herein as "the Company," “we,” “us,” or “our”) include the balances and results of operations of the Company and the Bank, its wholly-owned subsidiary, as well as First Everett Securities Corporation, a wholly-owned subsidiary of the Bank. Intercompany transactions and balances are eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the Company's financial position as of* September 30, 2026* and the results of operations and cash flows for the interim periods ended* September 30, 2026and2025*. Such adjustments were of a normal recurring nature. Interim amounts havenot been audited, and the results of operations for the interim periods herein arenot necessarily indicative of the results of operations to be expected for the fiscal year. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended* December 31, 2025* and accompanying notes thereto included in the Company’s Annual Report on Form10-K filed with the Securities and Exchange Commission.

The Company qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of2012 and has elected to defer the adoption of new or revised accounting standards until the nonpublic company effective dates. As such, the Company will adopt standards on the nonpublic company effective dates until such time that weno longer qualify as an EGC.

Certain previously reported amounts have been reclassified to conform to the current period’s presentation.

RECENT ACCOUNTING STANDARDS

In* November 2024,the Financial Accounting Standards Board ("FASB") issued ASU2024*-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220*-40): Disaggregation of Income Statement Expenses*, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. The amendments are effective for fiscal years beginning after* December 15, 2026,and for interim periods within fiscal years beginning after December 15, 2027.Early adoption is permitted. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the new guidance to determine the impact it may*have on its consolidated financial statements and related disclosures, but expects additional disclosures upon adoption.

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NOTE3 – INVESTMENTS IN SECURITIES

Available-for-Sale Securities

Investments in securities have been classified in the consolidated balance sheets according to management’s intent. The following table summarizes the amortized cost, gross unrealized gains and losses, allowance for credit losses and fair value of available-for-sale securities at the dates indicated:

The Company's available-for-sale securities are carried at fair value. For available-for-sale securities in an unrealized loss position, management willfirst evaluate whether there is intent to sell a security, or if it is more likely thannot that the Company will be required to sell a security prior to anticipated recovery of its amortized cost basis. If either of these criteria are met, the Company will record a write-down of the security's amortized cost basis to fair value through income. For those available-for-sale securities which donot meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors. In performing this assessment, management considers the creditworthiness of the issuer including whether the security is guaranteed by the U.S. federal government or other government agency, the extent to which fair value is less than amortized cost, and changes in credit rating during the period, among other factors. If this assessment indicates the existence of credit losses, an allowance for credit losses will be established, as determined by a discounted cash flow analysis. To the extent the estimated cash flows donot support the amortized cost, the deficiency is considered to be due to credit loss and is recognized in earnings. Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when a security is determined to be uncollectible, or when either of the aforementioned criteria surrounding intent or requirement to sell have been met. No allowance for credit losses was recorded for available-for-sale securities as of* September 30, 2026* and* December 31, 2025*.

The Company didnot record a provision for estimated credit losses on any available-for-sale securities for thethree andnine months ended* September 30, 2026and2025*. Excluded from the table above is accrued interest on available-for-sale securities of $351,000 and $335,000 at* September 30, 2026* and* December 31, 2025*, respectively, which is included within accrued interest receivable in the Consolidated Balance Sheets. Additionally, the Company didnot record any write-offs of accrued interest income on available-for-sale securities for thethree andnine months ended* September 30, 2026and2025*. No securities held by the Company were delinquent on contractual payments at* September 30, 2026* and* December 31, 2025*, nor were any securities placed on non-accrual status for thethree andnine months ended* September 30, 2026and2025*.

When securities are sold, the amortized cost of the specific security sold is used to compute the gain or loss on the sale. There wereno sales of securities during thethree andnine months ended* September 30, 2026and2025*.

The aggregate fair value and unrealized losses of available-for-sale securities that have been in a continuous unrealized loss position for less thantwelve months and fortwelve months or more, and haveno allowance for credit losses, are as follows as of* September 30, 2026* and* December 31, 2025*:

Management evaluates securities for expected credit losses at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

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Held-to-Maturity Securities

The following table summarizes the amortized cost, gross unrealized gains and losses, allowance for credit losses and fair value of held-to-maturity securities at the dates indicated:

The Company measures expected credit losses on held-to-maturity securities on a collective basis by major security type. Management classifies the held-to-maturity portfolio into the following major security types: Agency Mortgage-Backed Securities and Corporate Bonds.

Mortgage-backed securities are guaranteed by U.S. government sponsored agencies and have a long history ofno credit losses. As a result, management has determined these securities to have azero loss expectation. The Company's investments in corporate bonds are deemed “investment grade” and (a) the Company doesnot intend to sell these securities before recovery and (b) it is more likely thannot that the Company willnot be required to sell these securities before recovery. Therefore the Company didnot record a provision for estimated credit losses on any held-to-maturity securities during thethree andnine months ended* September 30, 2026and2025*. Excluded from the table above is accrued interest on held-to-maturity securities of $240,000 and $237,000 at* September 30, 2026* and* December 31, 2025*, respectively, which is included within accrued interest receivable in the Consolidated Balance Sheets. Additionally, the Company didnot record any write-offs of accrued interest income on held-to-maturity securities for thethree andnine months ended* September 30, 2026and2025*. No securities held by the Company were delinquent on contractual payments at* September 30, 2026* and* December 31, 2025*, nor were any securities placed on non-accrual status for thethree andnine months ended* September 30, 2026and2025*.

Held-to-Maturity and Available-for-Sale Securities

The actual maturities of certain available-for-sale or held-to-maturity securities* maydiffer from the contractual maturities because borrowers mayhave the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of available-for-sale and held-to-maturity securities as of September 30, 2026* is presented below:

The carrying value of securities pledged to secure advances from the Federal Home Loan Bank of Boston (“FHLB”) was $48.7 million and $48.5 million as of* September 30, 2026* and* December 31, 2025*, respectively.

The carrying value of securities pledged to secure advances from the Federal Reserve Bank (“FRB”) was $12.1 million and $18.7 million as of* September 30, 2026* and* December 31, 2025*, respectively.

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NOTE4 – LOANS, ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Loans

Loans that the Company has the intent and ability to hold until maturity or payoff are carried at amortized cost (net of the allowance for credit losses). Amortized cost is the principal amount outstanding, adjusted by partial charge-offs and net of deferred loan origination costs and fees. For originated loans, loan fees and certain direct origination costs are deferred and amortized into interest income over the contractual life of the loan using the level-yield method. When a loan is paid off, the unamortized portion is recognized in interest income. Interest income on loans is accrued based upon the daily principal amount outstanding except for loans on non-accrual status. As a general rule, loans more than90 days past due with respect to principal or interest, or sooner if management considers such action to be prudent, are classified as non-accrual loans. However, loans that are more than90 days past due* maybe kept on an accruing status if the loan is well secured and in the process of collection. Income accruals are suspended on all non-accrual loans in a timely manner and all previously accrued and uncollected interest is reversed against current income. A loan can be returned to accrual status when collectibility of principal and interest is reasonably assured and the loan has performed for a period of time, generallysix* months. When doubt exists as to the collectibility of a loan, any payments received are applied to reduce the amortized cost of the loan to the extent necessary to eliminate such doubt. For all loan portfolios, a charge-off occurs when the Company determines that a specific loan, or portion thereof, is uncollectible. This determination is made based on management's review of specific facts and circumstances of the individual loan, including the expected cash flows to repay the loan, the value of the collateral and the ability and willingness of any guarantors to perform.

Allowance for Credit Losses - Loans Held for Investment

The allowance for credit losses is established based upon the Company's current estimate of expected lifetime credit losses on loans measured at amortized cost. Credit losses are charged against the allowance when management's assessments confirm that the Company willnot collect the full amortized cost basis of a loan. Subsequent recoveries, if any, are credited to the allowance. Under the current expected credit loss (CECL) methodology, the Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics. The Company segments financial assets with similar risk characteristics and has elected to segment its loans based on Federal Call codes used for reporting loans to the Federal Deposit Insurance Corporation as part of the Call Report process. These segments are collectively evaluated for expected credit losses using a quantitative Discounted Cash Flow ("DCF") model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. The Company has elected to use this approach because DCF models allow for effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner and peer data is available for certain inputs such as the probability of default and the loss given default. The quantitative model utilizes a loss factor based approach to estimate expected credit losses, which are derived from internal historical and industry peer loss experience. The model estimates expected credit losses using loan level data over the estimated life of the exposure, considering the effect of prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period, beyond which is a reversion to the historical long-run average using the straight-line reversion method. Management periodically evaluates a reasonable and supportable forecast period and a reversion period to be appropriate for purposes of estimating expected credit losses. The qualitative risk factors impacting the expected risk of loss within the portfolio include the following:

Loans that donot share similar risk characteristics with any pools of assets are subject to individual evaluation and are removed from the collectively assessed pools to avoid double counting. This includes loans on non-accrual and loans that are90 days or greater past due. For the loans that will be individually evaluated, the Company will use either a discounted cash flow ("DCF") approach or a fair value of collateral approach. The latter approach will be used for loans deemed to be collateral dependent or when foreclosure is probable. Accrued interest receivable amounts are excluded from balances of loans held at amortized cost and are included within accrued interest receivable in the consolidated balance sheets. Management has electednot to measure an allowance for credit losses on these amounts as the Company employs a timely write-off policy. Consistent with the Company's policy for non-accrual loans, accrued interest receivable is typically written off when loans reach90 days past due and are placed on non-accrual status.

In the ordinary course of business, the Company enters into commitments to extend credit. Such financial instruments are recorded in the financial statements when they are funded. The credit risk associated with these commitments is evaluated in a manner similar to the allowance for credit losses on loans with an additional assumption of probability of funding. The reserve for unfunded lending commitments is included in other liabilities in the consolidated balance sheets.

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Loans consisted of the following as of the dates indicated:

The carrying value of loans pledged to secure advances from the FHLB were $1.0 billionand $920.9 million as of* September 30, 2026* and* December 31, 2025*, respectively.

The carrying value of loans pledged to secure advances from the FRB were $112.9 million and $114.7 million as of* September 30, 2026* and* December 31, 2025,*respectively.

The following tables set forth information regarding the allowance for credit losses on loans as of and for thethree andnine months ended* September 30, 2026and2025*:

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(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $4.8 million, $4.6 million and$4.6 million as of* September 30, 2026* * June 30, 2026and December 31, 2025,*respectively.

The following table sets forth information regarding the provision for credit losses for the periods indicated:

The following tables show the age analysis of past due loans as of the dates indicated:

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During thethree months ended* September 30, 2026and2025*, interest income recognized on non-accrual loans amounted to $22,000 and $36,000, respectively. During thenine months ended* September 30, 2026and2025*, interest income recognized on non-accrual loans amounted to $60,000 and $85,000, respectively. The following tables show information regarding non-accrual loans as of the dates indicated:

Credit Quality Information

The Company's loan rating system for multi-family and commercial real estate, construction, commercial loans and certain residential and home equity lines of credit is as follows:

Loans rated1 –6: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated7: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated8: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Bank will sustain some loss if the weakness isnot corrected.

Loans rated9: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated10: Loans in this category are considered uncollectible (loss) and of such little value that their continuance as loans isnot warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial loans with aggregate potential outstanding balances of $500,000 or more, and all commercial real estate loans (including multi-family and construction loans as well as residential and home equity line of credit loans to commercial borrowers) with aggregate potential outstanding balances of $2.0 million or more. For loans that arenot formally rated, the Company initially assesses credit quality based upon the borrower’s ability to pay and subsequently monitors these loans based on the borrower’s payment activity.

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The following tables detail the amortized cost balances of the Company's loan portfolios, presented by credit quality indicator and origination year as of* September 30, 2026* and* December 31, 2025*:

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(1) All loansnot formally rated were accruing as of* September 30, 2026* and* December 31, 2025*.

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At* September 30, 2026* and* December 31, 2025,*the Company hadno consumer mortgage loans secured by residential real estate property in the process of foreclosure.

For thethree andnine months ended* September 30, 2026and2025*, the Company didnot provide loan restructurings involving borrowers that are experiencing financial difficulty.

NOTE5 - STOCK-BASED COMPENSATION

On* September 7, 2023,the Company adopted the ECB Bancorp, Inc.2023 Equity Incentive Plan ("2023* Equity Plan”). The2023 Equity Plan authorizes 1,248,133 shares of common stock for equity based compensation awards including restricted stock awards, restricted stock units and stock options, including incentive stock options.

The following table summarizes the Company's stock option activities for the periods indicated:

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Restricted stock awards are measured based on grant-date fair value, which reflects the closing price of our stock on the date of grant. All of the restricted stock awards which have been granted to date vest over five years in equal portions beginning on thefirst anniversary date of the restricted stock award, except the restricted stock awards granted in2025 and2026 which vest inone year. The following table represents information regarding non-vested restricted stock award activities for the periods indicated:

The following table represents the compensation expense and income tax benefits recognized for stock options and restricted stock awards for the periods indicated:

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The following table sets forth the total compensation cost related to non-vested awardsnot yet recognized and the weighted average period (in years) over which it is expected to be recognized as of the periods indicated:

NOTE6 - FAIR VALUE MEASUREMENTS

ASC820-10, Fair Value Measurement – Overall, provides a framework for measuring fair value under U.S. GAAP. This guidance also allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.

In accordance with ASC820-10, the Company groups its financial assets and financial liabilities measured at fair value inthree levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level1 – Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level2 – Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained fromthird party pricing services for identical or comparable assets or liabilities.

Level3 – Valuations for assets and liabilities that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and arenot based on market exchange, dealer, or broker traded transactions. Level3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets and liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value for* September 30, 2026* and* December 31, 2025*.

Cash and Cash Equivalents and Interest-Earning Time Deposits

For these financial instruments, which generally have original maturities of90 days or less, their carrying amounts reported in the Consolidated Balance Sheets approximate fair value.

Available-for-Sale and Held-to-Maturity Securities

The Company’s investments in debt securities are generally classified within Level2 of the fair value hierarchy. The Company obtains fair value measurements from independent pricing services which arenot adjusted by management. The fair value measurements consider observable data that considers standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

FHLB Stock

The fair value of FHLB stock approximates the carrying amount based on the redemption provisions of the FHLB. These assets were classified as Level2.

Loans

The fair value of loans is measured on an exit price basis incorporating discounts for credit, liquidity and marketability factors. Loans were classified as Level3 since the valuation methodology utilizes significant unobservable inputs.

Loans Held for Sale

The fair value of loans held for sale, whose carrying amounts approximate fair value, was estimated using quoted market prices provided by investors. These assets were classified as Level2 given the use of observable inputs.

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Accrued Interest Receivable

For these financial instruments, which have original maturities of90 days or less, their carrying amounts reported in the Consolidated Balance Sheets approximate fair value.

Deposits

The fair value of deposits withno stated maturity, such as noninterest-bearing demand deposits, interest-bearing demand deposits, savings and money market accounts, was equal to their carrying amount. The fair value of certificates of deposits is valued using a replacement cost of funds approach, and discounted to the market rates and based on weighted remaining maturity. Deposits were classified as Level2 given the use of observable market inputs.

Accrued Interest Payable

For these financial instruments, which have original maturities of90 days or less, their carrying amounts reported in the Consolidated Balance Sheets approximate fair value.

Derivative Instruments

The fair value of interest rate swaps was determined using discounted cash flow analysis on the expected cash flows of the interest rate swaps. This analysis reflects the contractual terms of the interest rate swaps, including the period of maturity, and uses observable market-based inputs including interest rate curves. The inputs used to value the Company’s interest rate swaps fall within Level2 of the fair value hierarchy and as a result, the interest rate swaps were categorized as Level2 within the fair value hierarchy.

As of* September 30, 2026* and* December 31, 2025*, the following summarizes assets and liabilities measured at fair value on a recurring basis:

Under certain circumstances, the Company makes fair value adjustments to its assets and liabilities although they arenot measured at fair value on a recurring basis.

As of* September 30, 2026* and* December 31, 2025*, the Company hadno assets or liabilities for which a nonrecurring change in fair value had been recorded.

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ASC Topic825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that arenot measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value are discussed above. The estimated fair values and related carrying amounts of assets and liabilities for which fair value is only disclosed are shown below at the dates indicated:

NOTE7 – COMMITMENTS AND CONTINGENCIES

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there isno violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and* may*require payment of a fee. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies but usually includes income producing commercial properties or residential real estate.

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Standby letters of credit are conditional commitments issued by the Company to guarantee the performance by a customer to athird party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. As of* September 30, 2026* and* December 31, 2025*, the maximum potential amount of the Company’s obligation was $50,000, for standby letters of credit. The Company’s outstanding letters of credit generally have a term of less thanone year. If a letter of credit is drawn upon, the Company* mayseek recourse through the customer’s underlying line of credit. If the customer’s line of credit is also in default, the Company may*take possession of the collateral, if any, securing the line of credit.

Amounts of financial instruments whose contract amounts represent off-balance sheet credit risk are as follows as of* September 30, 2026* and* December 31, 2025*:

The Company accrues for credit losses related to off-balance sheet financial instruments. Expected losses on off-balance sheet loan commitments are estimated using the same risk factors used to determine the allowance for credit losses on loans, adjusted for the likelihood that funding will occur. The allowance for off-balance sheet commitments is recorded within other liabilities on the consolidated balance sheets and amounted to $1.1 million and $711,000 as of* September 30, 2026* and* December 31, 2025*, respectively.

NOTE8 – OTHER COMPREHENSIVE INCOME (LOSS)

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the shareholders' equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income.

The components of other comprehensive income (loss) and related tax effects are as follows for thethree andnine months ended* September 30, 2026and2025*:

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Accumulated other comprehensive income (loss) as of* September 30, 2026* and* December 31, 2025* consists of unrecognized benefit costs, net of tax, unrealized holding gains on securities available for sale, net of tax, and fair value of cash flow hedges, net of tax as follows:

NOTE9 – REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements.

Management believes, as of* September 30, 2026*, that the Bank meets all capital adequacy requirements to which it is subject.

As of* September 30, 2026*, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier1 risk-based, Common Equity Tier1 risk-based and Tier1 leverage ratios as set forth in the table below. There areno conditions or events since that notification that management believes have changed the Bank’s category.

The Bank’s actual capital amounts and ratios are presented in the table as of the dates indicated:

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NOTE10 - EARNINGS PER SHARE ("EPS")

Basic earnings per share is calculated by dividing the income available to common shares by the weighted-average number of common shares outstanding during the period. Diluted earnings per share have been calculated in a manner similar to that of basic earnings per share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares (such as those resulting from the exercise of stock options) were issued during the period, computed using the treasury stock method. Unallocated ESOP shares arenot deemed outstanding for earnings per share calculations.

For thethree andnine months ended* September 30, 2026* and2025, there wereno anti-dilutive shares.

NOTE11 - DERIVATIVE AND HEDGING ACTIVITIES

The Company uses derivative financial instruments to manage its interest rate risk resulting from the differences in the amount, timing, and duration of known or expected cash payments. The Company has entered into interest rate swaps to add stability to interest expense and manage exposure to interest rate movements as part of an overall risk management strategy.

An interest rate swap is an agreement wherebyone party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from asecond party. The amounts relating to the notional principal amount arenot actually exchanged. The Company has entered into interest rate swaps in which it pays fixed and receives floating interest in order to manage its interest rate risk exposure to the variability in interest cash flows on certain floating-rate FHLB Advances and brokered certificates of deposit. The interest rate swaps effectively convert the floating rate payments made on the FHLB Advances and brokered certificates of deposit to a fixed rate and consequently reduce the Company’s exposure to variability in short-term interest rates.

Derivative instruments are carried at fair value in the Company’s Consolidated Financial Statements. The accounting for changes in the fair value of a derivative instrument is dependent upon whether ornot the instrument qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship.

The Company’s interest rate swaps have been designated as and are accounted for as cash flow hedges. The changes in fair value are included in other comprehensive income and reclassified into net income in the same period or periods during which the hedged forecasted transaction affects net income.

Cash flow hedges are initially assessed for effectiveness using regression analysis. Changes in the fair value of derivatives that are designated as and that qualify as cash flow hedges are recorded in Other Comprehensive Income ("OCI") and are subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. Quarterly, a quantitative analysis is performed to monitor the ongoing effectiveness of the hedging instrument. All derivative positions were initially, and continue to be, highly effective at* September 30, 2026*.

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The following table reflects the Company's derivative position at the date indicated below for the interest rate swaps:

The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets as of the dates indicated:

For derivative instruments that are designated and qualify as cash flow hedging instruments, the effective portion of the gains or losses is reported as a component of other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company expects approximately $1.1 million to be reclassified as a decrease to interest expense from OCI related to the Company’s cash flow hedges in thetwelve months following* September 30, 2026*. This reclassification is due to anticipated payments that will be received from the counterparty on the swaps based upon the forward curve at* September 30, 2026*.

The maximum length of time over which the Company is currently hedging its exposure to the variability in future cash flows for forecasted transactions related to the payment of variable interest on existing financial instruments is 3.7 years.

The pre-tax effects of cash flow hedges on accumulated other comprehensive income and current earnings for the period indicated are as follows:

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts donot perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company’s credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterpartynot secured by variation margin plus any initial margin collateral posted. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote. As of* September 30, 2026*, the Company has pledged cash collateral to a derivative counterparty totaling $2.3 million. As of* September 30, 2026*, the Company has received cash collateral from a derivative counterparty totaling $3.5 million. The Company* mayneed to post additional collateral or may*receive additional collateral in the future in proportion to potential changes in the overall unrealized gain or loss position.

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