NorthEast Community Bancorp IncMD

Previous wording

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

Current wording

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.

Previous wording

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: (i) general economic conditions, including higher inflation, either nationally or in our market area, that are worse than expected; (ii) changes in the interest rate environment that reduce our interest margins, reduce the fair value of financial instruments or reduce the demand for our loan products; (iii) increased competitive pressures among financial services companies; (iv) changes in consumer spending, borrowing and savings habits; (v) changes in the quality and composition of our loan or investment portfolios and the adequacy of credit loss reserves; (vi) changes in real estate market values in our market area; (vii) decreased demand for loan products, deposit flows, competition, or decreased demand for financial services in our market area; (viii) major catastrophes such as earthquakes, floods or other natural or human disasters and pandemics or infectious disease outbreaks, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies; (ix) legislative or regulatory changes that adversely affect our business or changes in the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; (x) technological changes that may be more difficult or expensive than expected; (xi) success or consummation of new business initiatives may be more difficult or expensive than expected; (xii) the inability to successfully integrate acquired businesses and financial institutions into our business operations; (xiii) adverse changes in the securities markets; (xiv) the impact of failures or disruptions in or breaches of the Company’s operational or security systems, data or infrastructure, or those of third parties, including as a result of cyberattacks or campaigns; (xv) the inability of third party service providers to perform; and (xvi) changes in accounting policies and practices, as may be adopted by bank regulatory agencies or the Financial Accounting Standards Board.

Current wording

real estate market values in our market area; (vii) decreased demand for loan products, deposit flows, competition, or decreased demand for financial services in our market area; (viii) major catastrophes such as earthquakes, floods or other natural or human disasters and pandemics or infectious disease outbreaks, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies; (ix) legislative or regulatory changes that adversely affect our business or changes in the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; (x) the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts; (xi) technological changes that may be more difficult or expensive than expected; (xii) success or consummation of new business initiatives may be more difficult or expensive than expected; (xiii) the inability to successfully integrate acquired businesses and financial institutions into our business operations; (xiv) adverse changes in the securities markets; (xv) the impact of failures or disruptions in or breaches of the Company’s operational or security systems, data or infrastructure, or those of third parties, including as a result of cyberattacks or campaigns; (xvi) the inability of third party service providers to perform; and (xvii) changes in accounting policies and practices, as may be adopted by bank regulatory agencies or the Financial Accounting Standards Board.

Previous wording

Total assets increased $203.8 million, or 11.6%, to $2.0 billion at September 30, 2024, from $1.8 billion at December 31, 2023. The increase in assets was primarily due to an increase in net loans of $173.6 million and an increase in cash and cash equivalents of $29.1 million.

Current wording

Total assets decreased $76.2 million, or 3.8%, to $1.9 billion at March 31, 2025, from $2.0 billion at December 31, 2024. The decrease in assets was primarily due to decreases in net loans of $87.3 million and decreases of $1.0 million in accrued interest receivable, partially offset by increases in cash and cash equivalents of $11.2 million and increases of $1.3 million in equity securities.

Previous wording

Cash and cash equivalents increased $29.1 million, or 42.4%, to $97.8 million at September 30, 2024 from $68.7 million at December 31, 2023. The increase in cash and cash equivalents was a result of an increase in deposits of $228.0 million, partially offset by a decrease in borrowings of $57.0 million, an increase of $173.6 million in net loans, and stock repurchases of $2.4 million.

Current wording

Cash and cash equivalents increased $11.2 million, or 14.3%, to $89.5 million at March 31, 2025 from $78.3 million at December 31, 2024. The increase in cash and cash equivalents was a result of a decrease of $87.3 million in net loans and an increase of $8.9 million in stockholders’ equity, partially offset by a decrease in deposits of $84.4 million.

Previous wording

Equity securities increased $2.4 million, or 13.5%, to $20.5 million at September 30, 2024 from $18.1 million at December 31, 2023. The increase in equity securities was attributable to the purchase of $2.0 million in equity securities during the third quarter of 2024 and market appreciation of $445,000 due to market interest rate volatility during the nine months ended September 30, 2024.

Current wording

Equity securities increased $1.3 million, or 5.9%, to $23.3 million at March 31, 2025 from $22.0 million at December 31, 2024. The increase in equity securities was attributable to the purchase of $1.0 million in equity securities during the three months ended March 31, 2025 and market appreciation of $300,000 due to market interest rate volatility during the quarter ended March 31, 2025.

Previous wording

Securities held-to-maturity decreased $799,000, or 5.0%, to $15.1 million at September 30, 2024 from $15.9 million at December 31, 2023 due to $810,000 in maturities and pay-downs of various investment securities, partially offset by a decrease of $10,000 in the allowance for credit losses for held-to-maturity securities.

Current wording

Securities held-to-maturity decreased $129,000, or 0.9%, to $14.5 million at March 31, 2025 from $14.6 million at December 31, 2024 due to $129,000 in maturities and pay-downs of various investment securities.

Previous wording

Loans, net of the allowance for credit losses, increased $173.6 million, or 11.0%, to $1.8 billion at September 30, 2024 from $1.6 billion at December 31, 2023. The increase in loans, net of the allowance for credit losses, was primarily due to loan originations of $569.2 million during the nine months ended September 30, 2024, consisting primarily of $499.7 million in construction loans with respect to which approximately 34.1% of the funds were disbursed at loan closings, with the remaining funds to be disbursed over the terms of the construction loans. In addition, during the nine months ended September 30, 2024, we originated $44.7 million in commercial and industrial loans, $14.0 million in non-residential loans, $4.2 million in multi-family loans, and $600,000 in mixed-use loans.

Current wording

During the quarter ended March 31, 2025, we originated loans totaling $170.1 million consisting primarily of $110.2 million in construction loans, $49.1 million in multi-family loans, $10.1 million in commercial and industrial loans, and $730,000 in mixed-use loans. The $110.2 million in construction loans had 38.4% disbursed at loan closing, with the remaining funds to be disbursed over the terms of the construction loans.

Previous wording

The allowance for credit losses related to loans decreased to $4.8 million as of September 30, 2024 from $5.1 million as of December 31, 2023. The decrease in the allowance for credit losses related to loans was due to a credit to the provision for credit losses totaling $145,000 and charge-offs of $115,000.

Current wording

The allowance for credit losses related to loans increased to $5.1 million as of March 31, 2025, from $4.8 million as of December 31, 2024. The increase in the allowance for credit losses related to loans was due to recoveries totaling $352,000 and provision for credit losses totaling $62,000, offset by charge-offs totaling $117,000.

Previous wording

Premises and equipment decreased $507,000, or 2.0%, to $24.9 million at September 30, 2024 from $25.5 million at December 31, 2023 primarily due to the depreciation of fixed assets.

Current wording

Premises and equipment increased $84,000, or 0.3%, to $24.9 million at March 31, 2025 from $24.8 million at December 31, 2024 primarily due to the purchases of additional fixed assets.

Previous wording

Bank owned life insurance (“BOLI”) increased $486,000, or 1.9%, to $25.6 million at September 30, 2024 from $25.1 million at December 31, 2023 due to increases in the BOLI cash value.

Current wording

Bank owned life insurance (“BOLI”) increased $167,000, or 0.6%, to $25.9 million at March 31, 2025 from $25.7 million at December 31, 2024 due to increases in the BOLI cash value.

Previous wording

Accrued interest receivable increased $1.2 million, or 9.4%, to $13.5 million at September 30, 2024 from $12.3 million at December 31, 2023 due to an increase in the loan portfolio.

Current wording

Accrued interest receivable decreased $1.0 million, or 7.9%, to $12.4 million at March 31, 2025 from $13.5 million at December 31, 2024 due to a decrease in the loan portfolio.

Previous wording

Right of use assets — operating decreased $422,000, or 9.2%, to $4.1 million at September 30, 2024 from $4.6 million at December 31, 2023, primarily due to amortization.

Current wording

Right of use assets — operating decreased $145,000, or 3.6%, to $3.9 million at March 31, 2025 from $4.0 million at December 31, 2024, primarily due to amortization.

Previous wording

Advance payments by borrowers for taxes and insurance increased $442,000, or 21.9%, to $2.5 million at September 30, 2024 from $2.0 million at December 31, 2023 due primarily to accumulation of real estate tax payments by borrowers.

Current wording

Advance payments by borrowers for taxes and insurance increased $680,000, or 42.0%, to $2.3 million at March 31, 2025 from $1.6 million at December 31, 2024 due primarily to accumulation of real estate tax payments from borrowers.

Previous wording

Lease liability – operating decreased $384,000, or 8.3%, to $4.2 million at September 30, 2024 from $4.6 million at December 31, 2023, primarily due to amortization.

Current wording

Lease liability – operating decreased $136,000, or 3.3%, to $4.0 million at March 31, 2025 from $4.1 million at December 31, 2024, primarily due to amortization.

Previous wording

Accounts payable and accrued expenses increased $2.4 million, or 17.8%, to $16.0 million at September 30, 2024 from $13.6 million at December 31, 2023 due primarily to increases in dividends payable of $3.2 million and deferred compensation of $395,000, partially offset by a decrease in accrued expense of $810,000. The allowance for credit losses for off-balance sheet commitments decreased $130,000, or 12.5%, to $908,000 at September 30, 2024 from $1.0 million at December 31, 2023.

Current wording

Accounts payable and accrued expenses decreased $1.3 million, or 8.7%, to $13.3 million at March 31, 2025 from $14.5 million at December 31, 2024 due primarily to a decrease in accrued expense of $2.8 million, partially offset by increases in dividends payable and other payables of $806,000, suspense accounts for loan closings of $346,000, and deferred compensation of $167,000. The allowance for credit losses for off-balance sheet commitments increased $175,000, or 24.8%, to $879,000 at March 31, 2025 from $704,000 at December 31, 2024 due primarily to an increase of $101.4 million, or 18.0%, in off-balance sheet commitments.

Previous wording

Stockholders’ equity increased $30.3 million, or 10.8% to $309.6 million at September 30, 2024, from $279.3 million at December 31, 2023. The increase in stockholders’ equity was due to net income of $36.9 million for the nine months ended September 30, 2024, the amortization expense of $1.4 million relating to restricted stock and stock options granted under the Company’s 2022 Equity Incentive Plan, a reduction of $652,000 in unearned employee stock ownership plan shares coupled with an increase of $532,000 in earned employee stock ownership plan shares, an exercise of stock options totaling $14,000, and $10,000 in other comprehensive income, partially offset by stock repurchases totaling $2.5 million and dividends paid and declared of $6.7 million.

Current wording

March 31, 2025, an increase of $302,000 in earned employee stock ownership plan shares coupled with a reduction of $218,000 in unearned employee stock ownership plan shares, and the amortization expense of $478,000 relating to restricted stock and stock options granted under the Company’s 2022 Equity Incentive Plan, partially offset by dividends declared of $2.7 million and $13,000 in other comprehensive loss.

Previous wording

Net income for the three months ended September 30, 2024 was $12.7 million compared to net income of $11.8 million for thethree months ended September 30, 2023. The increase in net income of $843,000, or 7.1%, between periods was primarily due to an increase in net interest income, an increase in non-interest income and a reduction in the provision for loan losses, partially offset by an increase in non-interest expense and an increase in income tax expense.

Current wording

Net income for the three months ended March 31, 2025 was $10.6 million compared to net income of $11.4 million for thethree months ended March 31, 2024. The decrease in net income of $807,000, or 7.1%, between periods was primarily due to a decrease in net interest income, an increase in the provision for credit losses, and an increase in non-interest expense, partially offset by an increase in non-interest income and a decrease in income tax expense.

Previous wording

Total interest and dividend income increased $6.0 million, or 17.2%, to $41.2 million for the three months ended September 30, 2024 from $35.1 million for the three months ended September 30, 2023. The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $282.6 million, or 18.0%, to $1.9 billion for the three months ended September 30, 2024 from $1.6 billion for the three months ended September 30, 2023, partially offset by a decrease in the yield on interest earning assets by 6 basis points from 8.95% for the three months ended September 30, 2023 to 8.89% for the three months ended September 30, 2024.

Current wording

Total interest and dividend income increased $86,000, or 0.2%, to $38.2 million for the three months ended March 31, 2025 from $38.1 million for the three months ended March 31, 2024. The increase in interest and dividend income was due to an increase in the average balance of interest earning assets of $159.9 million, or 9.2%, to $1.9 billion for the three months ended March 31, 2025 from $1.7 billion for the three months ended March 31, 2024, partially offset by a decrease in the yield on interest earning assets by 72 basis points from 8.77% for the three months ended March 31, 2024 to 8.05% for the three months ended March 31, 2025.

Previous wording

Our net interest margin decreased 72 basis points, or 11.3%, to 5.68% for the three months ended September 30, 2024 compared to 6.40% for thethree months ended September 30, 2023. The decrease in the net interest margin was due to the increase in the cost of interest-bearing liabilities outpacing the increase in the yield on interest-earning assets.

Current wording

Our net interest margin decreased 64 basis points, or 11.1%, to 5.11% for the three months ended March 31, 2025 compared to 5.75% for the three months ended March 31, 2024. The decrease in the net interest margin was due to a decrease in the yield on interest-earning assets that exceeded a decrease in the cost of funds on interest-bearing liabilities.

Previous wording

The Company recorded a provision for credit loss of $105,000 for the three months ended September 30, 2024 compared to a provision for credit loss of $156,000 for the three months ended September 30, 2023. The credit loss expense of $105,000 for the three months ended September 30, 2024 was comprised of a credit loss expense for off-balance sheet commitments of $105,000 primarily attributable to an increase in the weighted average remaining maturity for the aggregate unfunded off-balance sheet commitments. The credit loss expense of $156,000 for the three months ended September 30, 2023 was comprised of credit loss for loans of $438,000, partially offset by credit loss expense reduction for off-balance sheet commitments of $278,000 and credit loss expense reduction for held-to-maturity securities of $4,000.

Current wording

The Company recorded a credit loss expense of $237,000 for the three months ended March 31, 2025 compared to a credit loss expense reduction of $165,000 for the three months ended March 31, 2024. 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.

Previous wording

The credit loss expense of $767,000 for the nine months ended September 30, 2023 was comprised of credit loss expense for loans of $1.2 million, partially offset by a credit loss expense reduction for off-balance sheet commitments of $395,000 and credit loss expense reduction for held-to-maturity investment securities of $1,000.

Current wording

The credit loss expense reduction of $165,000 for the three months ended March 31, 2024 was comprised of a credit loss expense reduction for loans of $145,000, a credit loss expense reduction for held-to-maturity investment securities of $3,000, and a credit loss expense reduction for off-balance sheet commitments of $17,000. The credit loss expense reduction for loans of $145,000 for the three months ended March 31, 2024 was primarily attributed to favorable trend in the economy.

Previous wording

With respect to the allowance for credit losses for loans, we charged-off $82,000 during the three months ended September 30, 2024 as compared to charge-offs of $71,000 during the three months ended September 30, 2023. These charge-offs during the three months ended September 30, 2024 and 2023 were against various unpaid overdrafts in our demand deposit accounts.

Current wording

With respect to the allowance for credit losses for loans, we charged-off $117,000 during the three months ended March 31, 2025 as compared to charge-offs of $21,000 during the three months ended March 31, 2024. The charge-offs during both periods were against various unpaid overdrafts in our demand deposit accounts.

Previous wording

The increase in unrealized gain (loss) on equity securities was due to an unrealized gain of $547,000 on equity securities during the three months ended September 30, 2024 compared to an unrealized loss of $430,000 on equity securities during the three months ended September 30, 2023. The unrealized gain of $547,000 on equity securities during the three months ended September 30, 2024 was due to market interest rate volatility during the quarter ended September 30, 2024.

Current wording

The increase in unrealized gain/(loss) on equity securities was due to an unrealized gain of $300,000 on equity securities during the three months ended March 31, 2025 compared to an unrealized loss of $82,000 on equity securities during the three months ended March 31, 2024. The unrealized gain of $300,000 on equity securities during the three months ended March 31, 2025 was due to market interest rate volatility during the three months ended March 31, 2025.

Previous wording

The increase of $225,000 in other loan fees and service charges was due to an increase of $210,000 in other loan fees and loan servicing fees and an increase of $15,000 in ATM/debit card/ACH fees.

Current wording

The increase of $278,000 in other loan fees and service charges was due to an increase of $245,000 in other loan fees and loan servicing fees, an increase of $31,000 in ATM/debit card/ACH fees, and an increase of $2,000 in deposit account fees. The increase in BOLI income of $10,000 was due to an increase in the yield on BOLI assets.

Previous wording

Non-interest expense increased $1.0 million, or 11.7%, to $10.0 million for the three months ended September 30, 2024 from $8.9 million for thethree months ended September 30, 2023. The increase resulted primarily from increases of $477,000 in real estate owned expense, $435,000 in salaries and employee benefits, $119,000 in occupancy expense, and $112,000 in outside data processing expense, partially offset by decreases of $53,000 in equipment expense, $39,000 in other operating expense, and $5,000 in advertising expense.

Current wording

Non-interest expense increased $938,000, or 9.7%, to $10.6 million for thethree months ended March 31, 2025 from $9.7 million for the three months ended March 31, 2024. The increase resulted primarily from increases of $582,000 in salaries and employee benefits, $221,000 in other operating expense, $98,000 in outside data processing expense, $40,000 in occupancy expense, $19,000 in real estate owned expense, and $14,000 in advertising expense, partially offset by a decrease of $36,000 in equipment expense.

Previous wording

Salaries and employee benefits increased $435,000, or 9.3%, to $5.1 million for the three months ended September 30, 2024 from $4.7 million for the three months ended September 30, 2023 primarily due to increases in employee compensation and benefits expense in order to retain key personnel.

Current wording

Salaries and employee benefits increased $582,000, or 10.9%, to $5.9 million for the three months ended March 31, 2025 from $5.4 million for the three months ended March 31, 2024 primarily due to an increase in the number of full time equivalent employees to support the growth of the Company and an increase in employee compensation and benefits expense in order to retain key personnel.

Previous wording

Other non-interest expense decreased $39,000, or 1.5%, to $2.6 million for the three months ended September 30, 2024 from $2.6 million for the three months ended September 30, 2023 due mainly to decreases of $154,000 in legal fees, $30,000 in miscellaneous other non-interest expense, $29,000 in audit and accounting fees, $22,000 in telephone expense, and $4,000 in office supplies. These decreases were offset by increases of $76,000 in regulatory fees, $74,000 in service contracts expense, $16,000 in directors’ compensation, $16,000 in directors, officers and employees expense, $9,000 in insurance expense, $9,000 in dues and subscriptions expense, and $1,000 in expenses related to the hiring of personnel.

Current wording

Other non-interest expense increased $221,000, or 8.4%, to $2.9 million for the three months ended March 31, 2025 from $2.6 million for the three months ended March 31, 2024 due mainly to increases of $157,000 in miscellaneous other non-interest expense, $106,000 in regulatory fees, $32,000 in legal expense, $8,000 in audit and accounting fees, $5,000 in expenses related to the hiring of personnel, $5,000 in office supplies, and $4,000 in insurance expense. These

Previous wording

Miscellaneous other non-interest expense decreased $30,000, or 16.4%, to $155,000 for the three months ended September 30, 2024 from $185,000 for the three months ended September 30, 2023 due to decreases of $23,000 in miscellaneous charge-offs, $13,000 in miscellaneous expenses, and $7,000 in public company expenses, partially offset by increases of $10,000 in check and correspondence bank charges and $3,000 in postage expenses.

Current wording

Miscellaneous other non-interest expense increased $157,000, or 43.9%, to $516,000 for the three months ended March 31, 2025 from $359,000 for the three months ended March 31, 2024 due to increases of $53,000 in miscellaneous expenses, $48,000 in miscellaneous charge-offs, $41,000 in public company expenses, $6,000 in postage expenses, $5,000 in check and correspondence bank charges, and $5,000 in dues and subscription expense.

Previous wording

Occupancy expense increased $119,000, or 19.3%, to $735,000 for the three months ended September 30, 2024 from $616,000 for the three months ended September 30, 2023 primarily as a result of the increased cost of operating office space. Outside data processing expense increased $112,000, or 19.7%, to $681,000 for the three months ended September 30, 2024 from $569,000 for the three months ended September 30, 2023 due to additional data processing services to support the growth of the Company.

Current wording

Outside data processing expense increased $98,000, or 15.4%, to $735,000 for the three months ended March 31, 2025 from $637,000 for the three months ended March 31, 2024 due to additional data processing services to support the growth of the Company. Occupancy expense increased $40,000, or 5.7%, to $747,000 for the three months ended March 31, 2025 from $707,000 for the three months ended March 31, 2024 primarily as a result of the impact of inflation in operating cost.

Previous wording

Equipment expense decreased $53,000, or 22.1%, to $187,000 for the three months ended September 30, 2024 from $240,000 for the three months ended September 30, 2023 due to a reduced need to purchase additional equipment.

Current wording

Equipment expense decreased $36,000, or 14.2%, to $217,000 for the three months ended March 31, 2025 from $253,000 for the three months ended March 31, 2024 due to a reduced need to purchase additional equipment.

Previous wording

Income Taxes. We recorded income tax expense of $4.9 million and $4.4 million for thethree months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024, we had approximately $203,000 in tax exempt income, compared to approximately $187,000 in tax exempt income for thethree months ended September 30, 2023. Our effective income tax rates were 27.8% and 27.3% for the three months ended September 30, 2024 and 2023, respectively.

Current wording

Income Taxes. We recorded income tax expense of $4.1 million and $4.7 million for thethree months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025, we had approximately $204,000 in tax exempt income, compared to approximately $195,000 in tax exempt income for thethree months ended March 31, 2024. Our effective income tax rates were 27.8% and 29.0% for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

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.

Current wording

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.

Previous wording

During the nine months ended September 30, 2024 and 2023, we did not collect any interest income from loans that were in non-accrual status.

Current wording

During the three months ended March 31, 2025 and 2024, we did not collect any interest income from loans that were in non-accrual status.

Previous wording

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 thenine months ended September 30, 2024 or 2023.

Current wording

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 thethree months ended March 31, 2025 or 2024.

Previous wording

The Company’s allowance for credit losses related to loans totaled $4.8 million, or 0.27% of total loans as of September 30, 2024 compared to $5.1 million, or 0.32% of total loans as of December 31, 2023. In addition, the Company’s allowance for credit losses related to off-balance sheet commitments totaled $907,000 and an allowance for credit losses related to held-to-maturity debt securities totaled $126,000 as of September 30, 2024 compared to $1.0 million and $136,000, respectively, at December 31, 2023.

Current wording

The Company’s allowance for credit losses related to loans totaled $5.1 million, or 0.30% of total loans as of March 31, 2025 compared to $4.8 million, or 0.27% of total loans as of December 31, 2024. In addition, the Company’s allowance for credit losses related to off-balance sheet commitments totaled $879,000 as of March 31, 2025 compared to $704,000 at December 31, 2024. The allowance for credit losses related to held-to-maturity debt securities totaled $126,000 as of March 31, 2025 and December 31, 2024, respectively.

Previous wording

The allowance for credit losses related to loans decreased $260,000 to $4.8 million at September 30, 2024 from $5.1 million at December 31, 2023. The decrease in the allowance for credit losses was due primarily to a credit loss expense reduction for loans of $145,000 and charge-offs of $115,000 against various unpaid overdrafts in our demand deposit accounts.

Current wording

The allowance for credit losses related to loans increased $297,000 to $5.1 million at March 31, 2025 from $4.8 million at December 31, 2024. The increase in the allowance for credit losses was due primarily to recoveries of $352,000 and a credit loss expense of $62,000, offset by charge-offs totaling $117,000.

Previous wording

The allowance for credit losses related to off-balance sheet commitments decreased $131,000 to $907,000 at September 30, 2024 from $1.1 million at December 31, 2023 due to a credit loss expense reduction of $131,000 at September 30, 2024.

Current wording

The allowance for credit losses related to off-balance sheet commitments increased $175,000 to $879,000 at March 31, 2025 from $704,000 due to a credit loss expense of $175,000 at March 31, 2025.

Previous wording

We maintain liquid assets at levels we believe are adequate to meet our liquidity needs. We established a liquidity ratio policy that identify 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, 8.0% for the On Balance Sheet Liquidity ratio, and 20.0% for the On Balance Sheet Liquidity & Borrowing Capacity ratio.

Current wording

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, 8.0% for the On Balance Sheet Liquidity ratio, and 20.0% for the On Balance Sheet Liquidity & Borrowing Capacity ratio.

Previous wording

Our Cash Liquidity ratio, On Balance Sheet Liquidity ratio, and On Balance Sheet Liquidity & Borrowing Capacity ratio averaged 6.9%, 8.9%, and 67.2%, respectively, for the nine months ended September 30, 2024 compared to 6.7%, 9.6%, and 32.7%, respectively, for theyear ended December 31, 2023. We adjust our liquidity levels to fund deposit outflows, pay real estate taxes on real estate loans, repay our borrowings, and to fund loan commitments. We also adjust liquidity as appropriate to meet asset and liability management objectives.

Current wording

8.8%, and 65.6%, respectively, for theyear ended December 31, 2024. 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.

Previous wording

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 nine months ended September 30, 2024 and 2023, our loan originations totaled $569.2 million and $653.0 million, respectively. Cash received from the maturities and pay-downs on securities totaled $805,000 and $10.7 million for thenine months ended September 30, 2024 and 2023, respectively. We purchased $2.0 million in equity securities during the nine months ended September 30, 2024 compared to no purchases during the nine months ended September 30, 2023.

Current wording

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, 2025 and 2024, our loan originations totaled $170.1 million and $180.5 million, respectively. Cash received from the maturities and pay-downs on securities totaled $128,000 for both thethree months ended March 31, 2025 and 2024, respectively. We purchased $1.0 million in equity securities during the three months ended March 31, 2025 compared to no purchases during the three months ended March 31, 2024.