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10-Q

ECB Bancorp, Inc. /MD/ (ECBK)

10-Q 2025-08-08 For: 2025-06-30
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Added on April 08, 2026
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________________ to ______________________

Commission File Number: 001-41456

ECB Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland 88-1502079
( State or other jurisdiction of<br> <br>incorporation or organization) (I.R.S. Employer<br> Identification No.)
419 Broadway<br> <br>Everett, Massachusetts 02149
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (617) 387-1110

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Ticker Symbol Name of each exchange on which registered
Common Stock, $0.01 par value ECBK The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.

Yes ☒   No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act:

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐   No ☒

As of August 7, 2025, 8,851,046 shares of the Registrant’s common stock, par value $0.01 per share, were issued and outstanding.

ECB Bancorp, Inc.

Form 10-Q

Index

Page
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 1
Consolidated Statements of Income for the Three and Six Months Ended June 30, 2025 and 2024 2
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2025 and 2024 3
Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 5
Notes to Consolidated Financial Statements 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24
Item 3. Quantitative and Qualitative Disclosures about Market Risk 34
Item 4. Controls and Procedures 34
Part II. Other Information
Item 1. Legal Proceedings 35
Item 1A. Risk Factors 35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
Item 3. Defaults upon Senior Securities 35
Item 4. Mine Safety Disclosures 35
Item 5. Other Information 35
Item 6. Exhibits 36
Signature Page 37

Part I. – Financial Information

Item 1. Financial Statements

ECB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets

(unaudited)

(Dollars in thousands)

December 31, 2024
ASSETS
Cash and due from banks 6,329 $ 5,828
Short-term investments 92,333 151,789
Total cash and cash equivalents 98,662 157,617
Interest-bearing time deposits — 100
Investments in available-for-sale securities, at fair value 20,038 6,564
Investments in held-to-maturity securities, at amortized cost (fair values of 62,547 at June 30, 2025 and 67,505 at December 31, 2024) 66,845 73,215
Loans held-for-sale 1,504 —
Loans, net of allowance for credit losses of 9,886 at June 30, 2025 and 8,884 at December 31, 2024 1,281,741 1,136,449
Federal Home Loan Bank stock, at cost 11,302 10,000
Premises and equipment, net 3,430 3,512
Accrued interest receivable 4,775 4,015
Deferred tax asset, net 5,511 4,914
Bank-owned life insurance 15,178 14,945
Other assets 6,028 6,822
Total assets 1,515,014 $ 1,418,153
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing 87,862 $ 84,958
Interest-bearing 979,576 913,575
Total deposits 1,067,438 998,533
Federal Home Loan Bank advances 264,815 234,000
Other liabilities 14,484 17,352
Total liabilities 1,346,737 1,249,885
Shareholders' Equity:
Preferred Stock, par value 0.01; Authorized: 1,000,000 shares; Issued and outstanding: 0 shares — —
Common Stock, par value 0.01; Authorized: 30,000,000 shares; Issued and outstanding: 8,946,958 shares and 9,095,833 shares at June 30, 2025 and December 31, 2024, respectively 89 91
Additional paid-in capital 84,755 86,189
Retained earnings 90,582 87,845
Accumulated other comprehensive (loss) income (1,092 ) 382
Unallocated common shares held by the Employee Stock Ownership Plan (6,057 ) (6,239 )
Total shareholders' equity 168,277 168,268
Total liabilities and shareholders' equity 1,515,014 $ 1,418,153

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1

ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Income

(unaudited)

(Dollars in thousands, except share data)

Three months ended Six months ended
June 30, June 30,
2025 2024 2025 2024
Interest and dividend income:
Interest and fees on loans $ 16,862 $ 14,174 $ 32,005 $ 27,619
Interest and dividends on securities 994 779 1,847 1,543
Interest on short term investments 1,244 1,433 2,869 2,917
Interest on interest-bearing deposits 1 — 2 —
Total interest and dividend income 19,101 16,386 36,723 32,079
Interest expense:
Interest on deposits 9,122 8,159 17,981 15,684
Interest on Federal Home Loan Bank advances 2,319 2,214 4,434 4,482
Total interest expense 11,441 10,373 22,415 20,166
Net interest and dividend income 7,660 6,013 14,308 11,913
Provision for credit losses 1,120 292 1,110 438
Net interest and dividend income after provision for credit losses 6,540 5,721 13,198 11,475
Noninterest income:
Customer service fees 154 143 294 284
Income from bank-owned life insurance 118 117 233 234
Net gain on sales of loans 43 19 43 54
Other income 40 10 56 22
Total noninterest income 355 289 626 594
Noninterest expense:
Salaries and employee benefits 3,013 3,130 6,273 6,441
Director compensation 173 209 389 416
Occupancy and equipment 261 263 542 538
Data processing 315 285 625 596
Computer software and licensing 104 100 214 209
Advertising and promotions 189 106 321 237
Professional fees 264 231 574 591
Federal Deposit Insurance Corporation deposit insurance 216 194 401 372
Other expense 445 429 849 775
Total noninterest expense 4,980 4,947 10,188 10,175
Income before income tax expense 1,915 1,063 3,636 1,894
Income tax expense 475 272 899 482
Net income $ 1,440 $ 791 $ 2,737 $ 1,412
Share data:
Weighted average shares outstanding, basic 8,155,667 8,265,579 8,183,072 8,282,677
Weighted average shares outstanding, diluted 8,369,819 8,342,516 8,357,375 8,358,818
Earnings per share, basic $ 0.18 $ 0.10 $ 0.33 $ 0.17
Earnings per share, diluted $ 0.17 $ 0.09 $ 0.33 $ 0.17

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income

(unaudited)

(Dollars in thousands)

Three months ended Six months ended
June 30, June 30,
2025 2024 2025 2024
Net income $ 1,440 $ 791 $ 2,737 $ 1,412
Other comprehensive (loss) income, net of tax:
Net change in fair value of securities available-for-sale (36 ) — 17 (3 )
Net change in fair value of cash flow hedges (671 ) (26 ) (1,491 ) 430
Other comprehensive (loss) income, net of tax (707 ) (26 ) (1,474 ) 427
Comprehensive income $ 733 $ 765 $ 1,263 $ 1,839

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

ECB Bancorp, Inc. and Subsidiary

Statements of Changes in Shareholders' Equity

(unaudited)

(in thousands except share data)

Three months ended
Shares of **** **** Accumulated Unallocated ****
Common **** Additional Other Common ****
Stock Common Paid in Retained Comprehensive Stock Held ****
Outstanding Stock Capital Earnings Income (Loss) by ESOP Total
Balance at March 31, 2024 9,243,578 $ 92 $ 87,155 $ 84,475 $ 582 $ (6,515 ) $ 165,789
Net income — — — 791 — — 791
Other comprehensive loss, net of tax — — — — (26 ) — (26 )
ESOP shares committed to be released (9,125 shares) — — 22 — — 91 113
Shares repurchased under share repurchase plan (43,359 ) — (528 ) — — — (528 )
Stock-based compensation — — 325 — — — 325
Balance at June 30, 2024 9,200,219 $ 92 $ 86,974 $ 85,266 $ 556 $ (6,424 ) $ 166,464
Balance at March 31, 2025 9,049,790 $ 90 $ 85,879 $ 89,142 $ (385 ) $ (6,148 ) $ 168,578
Net income — — — 1,440 — — 1,440
Other comprehensive loss, net of tax — — — — (707 ) — (707 )
ESOP shares committed to be released (9,151 shares) — — 52 — — 91 143
Shares repurchased under share repurchase plan (93,501 ) (1 ) (1,457 ) — — — (1,458 )
Restricted stock awards forfeited (9,331 ) — (35 ) (35 )
Stock-based compensation — — 316 — — — 316
Balance at June 30, 2025 8,946,958 $ 89 $ 84,755 $ 90,582 $ (1,092 ) $ (6,057 ) $ 168,277
Six months ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Shares of **** **** Accumulated Unallocated ****
Common **** Additional Other Common ****
Stock Common Paid in Retained Comprehensive Stock Held ****
Outstanding Stock Capital Earnings Income (Loss) by ESOP Total
Balance at December 31, 2023 9,291,810 $ 93 $ 87,431 $ 83,854 $ 129 $ (6,606 ) $ 164,901
Net income — — — 1,412 — — 1,412
Other comprehensive income, net of tax — — — — 427 — 427
ESOP shares committed to be released (18,250 shares) — — 50 — — 182 232
Shares repurchased under share repurchase plan (91,591 ) (1 ) (1,156 ) — — — (1,157 )
Stock-based compensation — — 649 — — — 649
Balance at June 30, 2024 9,200,219 $ 92 $ 86,974 $ 85,266 $ 556 $ (6,424 ) $ 166,464
Balance at December 31, 2024 9,095,833 $ 91 $ 86,189 $ 87,845 $ 382 $ (6,239 ) $ 168,268
Net income — — — 2,737 — — 2,737
Other comprehensive loss, net of tax — — — — (1,474 ) — (1,474 )
ESOP shares committed to be released (18,200 shares) — — 93 — — 182 275
Shares repurchased under share repurchase plan (139,544 ) (2 ) (2,129 ) — — — (2,131 )
Restricted stock awards forfeited (9,331 ) — (35 ) — — — (35 )
Stock-based compensation — — 637 — — — 637
Balance at June 30, 2025 8,946,958 $ 89 $ 84,755 $ 90,582 $ (1,092 ) $ (6,057 ) $ 168,277

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

Six months ended
June 30,
2025 2024
Cash flows from operating activities:
Net income $ 2,737 $ 1,412
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of premiums and discounts on securities, net (109 ) (3 )
Provision for credit losses 1,110 438
Change in deferred loan costs/fees 195 179
Gain on sales of loans, net (43 ) (54 )
Proceeds from sales of loans 3,914 3,586
Loans originated for sale, net (5,375 ) (4,156 )
Depreciation and amortization expense 150 151
Increase in accrued interest receivable (760 ) (445 )
Decrease (increase) in accrued interest payable 368 (160 )
Increase in bank-owned life insurance (233 ) (234 )
Deferred income tax benefit (18 ) (5 )
ESOP expense 275 232
Stock-based compensation expense 637 649
Restricted stock awards forfeited (35 ) —
Decrease (increase) in other assets 240 (90 )
Decrease in other liabilities (1,789 ) (543 )
Net cash provided by operating activities 1,264 957
Cash flows from investing activities:
Purchases of held-to-maturity securities (17,992 ) (8,874 )
Proceeds from paydowns and maturities of held-to-maturity securities 24,396 5,398
Purchases of available-for-sale securities (16,319 ) —
Proceeds from paydowns and maturities of available-for-sale securities 2,941 5,000
Proceeds from maturities of interest-bearing time deposits 100 —
Investment in low-income housing tax credit fund (2,992 ) —
Purchase of Federal Home Loan Bank Stock (2,761 ) (536 )
Redemption of Federal Home Loan Bank Stock 1,459 828
Loan originations and principal collections, net (143,766 ) (58,088 )
Purchase of loans (2,806 ) (5,625 )
Capital expenditures (68 ) (60 )
Net cash used in investing activities (157,808 ) (61,957 )
Cash flows from financing activities:
Net change in demand deposits, interest-bearing checking, savings and money market accounts 18,104 (1,527 )
Net increase in time deposits 50,801 66,090
Proceeds from long-term Federal Home Loan Bank advances 25,815 10,000
Repayments of long-term Federal Home Loan Bank advances (25,000 ) (45,000 )
Net change in short-term Federal Home Loan Bank advances 30,000 25,000
Payments for shares repurchased under share repurchase plan (2,131 ) (1,157 )
Net cash provided by financing activities 97,589 53,406
Net decrease in cash and cash equivalents (58,955 ) (7,594 )
Cash and cash equivalents at beginning of year 157,617 119,036
Cash and cash equivalents at end of period $ 98,662 $ 111,442
Supplemental disclosures:
Interest paid $ 22,783 $ 20,006
Income taxes paid 1,000 727

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

ECB Bancorp, Inc. and Subsidiary

Form 10-Q

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 1 - 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 may be subsequently reduced, as hereinafter provided. The initial Liquidation Account balance will not 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.

NOTE 2 – 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 Form 10-Q and Rule 10-01 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  June 30, 2025 and the results of operations and cash flows for the interim periods ended June 30, 2025 and 2024. Such adjustments were of a normal recurring nature. Interim amounts have not been audited, and the results of operations for the interim periods herein are not 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, 2024 and accompanying notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The Company qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012 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 we no longer qualify as an EGC.

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

RECENT ACCOUNTING STANDARDS

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. These amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation. ASU 2023-09 also requires entities to provide additional information for reconciling items that meet a quantitative threshold. As an emerging growth company, the amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2025 with early adoption permitted. ASU 2023-09 is not expected to have a significant impact on the company's consolidated financial statements.

In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): 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.

NOTE 3 – INVESTMENTS IN SECURITIES

Held-to-Maturity Securities

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

Gross Gross Allowance
Amortized Unrealized Unrealized for Credit Fair
Held-to-maturity: Cost Gains Losses Losses Value
(in thousands)
June 30, 2025
Debt securities issued by U.S. government-sponsored enterprises $ 5,589 $ — $ (34 ) $ — $ 5,555
Mortgage-backed securities 41,859 43 (4,092 ) — 37,810
Corporate bonds 16,400 140 (360 ) — 16,180
U.S. Treasury securities 2,997 5 — — 3,002
Total held-to-maturity securities $ 66,845 $ 188 $ (4,486 ) $ — $ 62,547
December 31, 2024
Debt securities issued by U.S. government-sponsored enterprises $ 5,588 $ — $ (138 ) $ — $ 5,450
Mortgage-backed securities 44,261 20 (5,334 ) — 38,947
Corporate bonds 17,899 192 (471 ) — 17,620
U.S. Treasury securities 5,467 21 — — 5,488
Total held-to-maturity securities $ 73,215 $ 233 $ (5,943 ) $ — $ 67,505

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: U.S. Government Sponsored Enterprises, U.S. Treasury, Agency Mortgage-Backed Securities, and Corporate Bonds.

Debt securities issued by U.S. government-sponsored enterprises, U.S. Treasury securities and mortgage-backed securities are guaranteed by the U.S. federal government or other government sponsored agencies and have a long history of no credit losses. As a result, management has determined these securities to have a zero loss expectation and therefore the Company did not record a provision for estimated credit losses on any held to maturity securities during the three and six months ended June 30, 2025 and 2024. The Company's investments in corporate bonds are deemed “investment grade” and (a) the Company does not intend to sell these securities before recovery and (b) it is more likely than not that the Company will not be required to sell these securities before recovery. Excluded from the table above is accrued interest on held to maturity securities of $283,000 and $378,000 at  June 30, 2025 and December 31, 2024, respectively, which is included within accrued interest receivable in the Consolidated Balance Sheets. Additionally, the Company did not record any write-offs of accrued interest income on held to maturity securities for the three and six months ended June 30, 2025 and 2024. No securities held by the Company were delinquent on contractual payments at  June 30, 2025 and December 31, 2024, nor were any securities placed on non-accrual status for the three and six months ended June 30, 2025 and 2024.

Available-for-Sale Securities

The following table summarizes the amortized cost, allowance for credit losses, and fair value of securities and their corresponding amounts of unrealized gains and losses of available-for-sale securities at the dates indicated:

Gross Gross Allowance
Amortized Unrealized Unrealized for Credit Fair
Available-for-sale Cost Gains Losses Losses Value
(in thousands)
June 30, 2025
Mortgage-backed securities $ 6,548 $ 39 $ (10 ) $ — $ 6,577
Collateralized mortgage obligation 2,992 — (25 ) — 2,967
Corporate bonds 10,529 10 (45 ) — 10,494
Total available-for-sale securities $ 20,069 $ 49 $ (80 ) $ — $ 20,038
December 31, 2024
Mortgage-backed securities $ 4,164 $ — $ (38 ) $ — $ 4,126
Collateralized mortgage obligation 1,452 — (14 ) — 1,438
Corporate bonds 1,000 — — — 1,000
Total available-for-sale securities $ 6,616 $ — $ (52 ) $ — $ 6,564

The Company's available-for-sale securities are carried at fair value. For available-for-sale securities in an unrealized loss position, management will first evaluate whether there is intent to sell a security, or if it is more likely than not 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 do not 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 do not 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  June 30, 2025 and December 31, 2024.

The Company did not record a provision for estimated credit losses on any available-for-sale securities for the three and six months ended June 30, 2025 and 2024. Excluded from the table above is accrued interest on available-for-sale securities of $227,000 and $16,000 at  June 30, 2025 and December 31, 2024, respectively, which is included within accrued interest receivable in the Consolidated Balance Sheets. Additionally, the Company did not record any write-offs of accrued interest income on available-for-sale securities for the three and six months ended June 30, 2025 and 2024. No securities held by the Company were delinquent on contractual payments at  June 30, 2025 and December 31, 2024, nor were any securities placed on non-accrual status for the three and six months ended June 30, 2025 and 2024.

When securities are sold, the amortized cost of the specific security sold is used to compute the gain or loss on the sale. There were no sales of securities during the three and six months ended June 30, 2025 and 2024.

The aggregate fair value and unrealized losses of available-for-sale securities that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more, and have no allowance for credit losses, are as follows as of  June 30, 2025 and December 31, 2024:

Less than 12 Months 12 Months or Longer Total
# of Fair Unrealized Fair Unrealized Fair Unrealized
Holdings Value Losses Value Losses Value Losses
**** (Dollars in thousands) ****
June 30, 2025
Available-for-Sale:
Mortgage-backed securities 1 $ 1,365 $ (10 ) $ — $ — $ 1,365 $ (10 )
Collateralized mortgage obligation 2 2,967 (25 ) — — 2,967 (25 )
Corporate bonds 2 5,482 (45 ) — — 5,482 (45 )
Total 5 $ 9,814 $ (80 ) $ — $ — $ 9,814 $ (80 )
December 31, 2024
Available-for-Sale:
Mortgage-backed securities 2 $ 4,126 $ (38 ) $ — $ — $ 4,126 $ (38 )
Collateralized mortgage obligation 1 1,438 (14 ) — — 1,438 (14 )
Total 3 $ 5,564 $ (52 ) $ — $ — $ 5,564 $ (52 )

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

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

The actual maturities of certain available-for-sale or held-to-maturity securities may differ from the contractual maturities because borrowers may have 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  June 30, 2025 is presented below:

Available-for-sale Held-to-maturity
Fair Amortized Fair
Value Cost Value
(in thousands)
Within 1 year $ — $ 14,317 $ 14,246
After 1 year through 5 years 9,515 14,407 14,331
After 5 years through 10 years 6,495 5,736 5,454
After 10 years 4,028 32,385 28,516
Total $ 20,038 $ 66,845 $ 62,547

The carrying value of securities pledged to secure advances from the Federal Home Loan Bank of Boston (“FHLBB”) was $54.8 million and $55.5 million as of  June 30, 2025 and December 31, 2024, respectively.

The carrying value of securities pledged to secure advances from the Federal Reserve Bank (“FRB”) was $18.2 million and $16.0 million as of  June 30, 2025 and December 31, 2024, respectively.

NOTE 4 – 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 nonaccrual status. As a general rule, loans more than 90 days past due with respect to principal or interest, or sooner if management considers such action to be prudent, are classified as nonaccrual loans. However, loans that are more than 90 days past due may be kept on an accruing status if the loan is well secured and in the process of collection. Income accruals are suspended on all nonaccrual 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, generally six 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 will not 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:

● Lending policies and procedures
● Economic and business conditions
--- ---
● Nature and volume of loans
--- ---
● Changes in management
--- ---
● Changes in credit quality
--- ---
● Changes in loan review system
--- ---
● Changes to underlying collateral values
--- ---
● Concentrations of credit risk
--- ---
● Other external factors
--- ---

Loans that do not 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 are 90 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 elected not 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 nonaccrual loans, accrued interest receivable is typically written off when loans reach 90 days past due and are placed on nonaccrual 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.

Loans consisted of the following as of the dates indicated:

At June 30, At December 31,
2025 2024
Amount Percent Amount Percent
(Dollars in thousands)
Real estate loans:
One-to-four family residential $ 448,473 34.6 % $ 422,841 36.9 %
Multi-family 385,845 29.9 % 343,970 30.0 %
Commercial 309,990 24.0 % 228,991 20.0 %
Home equity lines of credit and loans 47,586 3.7 % 45,154 4.0 %
Construction 87,211 6.8 % 90,894 7.9 %
Other loans:
Commercial 12,330 0.9 % 13,844 1.2 %
Consumer 889 0.1 % 141 0.0 %
Total loans, gross 1,292,324 100.0 % 1,145,835 100.0 %
Less:
Net deferred loan fees (697 ) (502 )
Allowance for credit losses (9,886 ) (8,884 )
Total loans, net $ 1,281,741 $ 1,136,449

The carrying value of loans pledged to secure advances from the FHLBB were $746.3 million and $744.6 million as of  June 30, 2025 and December 31, 2024, respectively.

The following tables set forth information regarding the allowance for credit losses on loans as of and for the three and six months ended June 30, 2025 and 2024:

For the three months ended June 30, 2025
(in thousands)
Beginning **** Provision Ending
Balance Charge-offs Recoveries (benefit) Balance^(1)^
Real estate loans:
One-to-four family residential $ 2,698 $ — $ — $ 135 $ 2,833
Multi-family 2,632 — — 134 2,766
Commercial 2,532 — — 586 3,118
Home equity lines of credit and loans 119 — — 15 134
Construction 708 — — 208 916
Other loans:
Commercial 118 — — (5 ) 113
Consumer 1 (2 ) 1 6 6
Total $ 8,808 $ (2 ) $ 1 $ 1,079 $ 9,886
For the six months ended June 30, 2025
--- --- --- --- --- --- --- --- --- --- --- --- ---
(in thousands)
Beginning **** (Benefit) Ending
Balance Charge-offs Recoveries provision Balance^(1)^
Real estate loans:
One-to-four family residential $ 2,928 $ — $ — $ (95 ) $ 2,833
Multi-family 2,422 — — 344 2,766
Commercial 2,260 — — 858 3,118
Home equity lines of credit and loans 118 — — 16 134
Construction 1,036 — — (120 ) 916
Other loans:
Commercial 119 (81 ) — 75 113
Consumer 1 (3 ) 1 7 6
Total $ 8,884 $ (84 ) $ 1 $ 1,085 $ 9,886
For the three months ended June 30, 2024
--- --- --- --- --- --- --- --- --- --- --- --- ---
(in thousands)
Beginning **** Provision Ending
Balance Charge-offs Recoveries (benefit) Balance^(1)^
Real estate loans:
One-to-four family residential $ 3,511 $ — $ — $ 93 $ 3,604
Multi-family 1,283 — — 21 1,304
Commercial 1,672 — — 68 1,740
Home equity lines of credit and loans 319 — — 44 363
Construction 1,681 — — 133 1,814
Other loans:
Commercial 203 — — (4 ) 199
Consumer 1 (3 ) — 3 1
Total $ 8,670 $ (3 ) $ — $ 358 $ 9,025
For the six months ended June 30, 2024
--- --- --- --- --- --- --- --- --- --- --- ---
(in thousands)
Beginning **** Ending
Balance Charge-offs Recoveries Provision Balance^(1)^
Real estate loans:
One-to-four family residential $ 3,555 $ — $ — $ 49 $ 3,604
Multi-family 1,190 — — 114 1,304
Commercial 1,636 — — 104 1,740
Home equity lines of credit and loans 321 — — 42 363
Construction 1,757 — — 57 1,814
Other loans:
Commercial 131 — — 68 199
Consumer 1 (3 ) — 3 1
Total $ 8,591 $ (3 ) $ — $ 437 $ 9,025

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $4.1 million and $3.6 million as of  June 30, 2025 and June 30, 2024.

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

90 days or
90 Days Total Total Total more past due Loans on
30–59 Days 60–89 Days or More Past Due Current Loans and accruing Non-accrual
(in thousands)
As of June 30, 2025
Real estate loans:
One-to-four family residential $ 57 $ 490 $ 106 $ 653 $ 447,820 $ 448,473 $ — $ 982
Multi-family 1,313 — — 1,313 384,532 385,845 — —
Commercial — — — — 309,990 309,990 — —
Home equity lines of credit and loans 80 — 12 92 47,494 47,586 — 304
Construction — — — — 87,211 87,211 — —
Other loans:
Commercial — — — — 12,330 12,330 — —
Consumer — — — — 889 889 — —
$ 1,450 $ 490 $ 118 $ 2,058 $ 1,290,266 $ 1,292,324 $ — $ 1,286
**** **** **** **** **** **** **** **** **** **** **** **** 90 days or **** ****
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
**** **** **** **** 90 Days Total Total Total more past due Loans on
30–59 Days 60–89 Days or More Past Due Current Loans and accruing Non-accrual
(in thousands) **** ****
As of December 31, 2024
Real estate loans:
One-to-four family residential $ 1,260 $ — $ 1,077 $ 2,337 $ 420,504 $ 422,841 $ — $ 1,872
Multi-family — — — — 343,970 343,970 — —
Commercial — — — — 228,991 228,991 — —
Home equity lines of credit and loans 405 — 85 490 44,664 45,154 — 85
Construction — — — — 90,894 90,894 — —
Other loans:
Commercial — — — — 13,844 13,844 — —
Consumer — — — — 141 141 — —
$ 1,665 $ — $ 1,162 $ 2,827 $ 1,143,008 $ 1,145,835 $ — $ 1,957

During the three months ended June 30, 2025 and 2024, interest income recognized on nonaccrual loans amounted to $10,000 and $17,000, respectively. During the six months ended June 30, 2025 and 2024, interest income recognized on nonaccrual loans amounted to $49,000 and $35,000, respectively. The following tables show information regarding nonaccrual loans as of the dates indicated:

Six Months Ended
As of June 30, 2025 June 30, 2025
With an Without an
Allowance for Allowance for Interest Income
Credit Losses Credit Losses Total Recognized
(in thousands)
Real estate loans:
One-to-four family residential $ — $ 982 $ 982 $ 32
Home equity lines of credit and loans — 304 304 17
Total nonaccrual loans $ — $ 1,286 $ 1,286 $ 49
**** **** **** **** **** **** Year Ended
--- --- --- --- --- --- --- --- ---
As of December 31, 2024 December 31, 2024
With an Without an **** **** **** ****
Allowance for Allowance for **** **** Interest Income
Credit Losses Credit Losses Total Recognized
(in thousands)
Real estate loans:
One-to-four family residential $ — $ 1,872 $ 1,872 $ 53
Home equity lines of credit and loans — 85 85 1
Total nonaccrual loans $ — $ 1,957 $ 1,957 $ 54

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 rated 1 – 6: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 7: 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 rated 8: 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 is not corrected.

Loans rated 9: 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 rated 10: Loans in this category are considered uncollectible (loss) and of such little value that their continuance as loans is not 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 are not 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.

The following tables detail the amortized cost balances of the Company's loan portfolios, presented by credit quality indicator and origination year as of  June 30, 2025 and December 31, 2024:

Revolving Revolving
Loans Loans
Amortized Converted
Term Loans Amortized Cost Basis by Origination Year Cost Basis to Term Total
2025 2024 2023 2022 2021 Prior
(in thousands)
As of June 30, 2025
One-to-four family residential
Pass $ 17,297 $ 8,865 $ 14,006 $ 33,592 $ 14,440 $ 15,095 $ — $ — $ 103,295
Special Mention — — 522 — 365 518 — — 1,405
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ 22,427 27,097 46,181 81,025 66,996 100,047 — — 343,773
Total $ 39,724 $ 35,962 $ 60,709 $ 114,617 $ 81,801 $ 115,660 $ — $ — $ 448,473
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Multi-family
Pass $ 51,895 $ 21,409 $ 52,357 $ 204,438 $ 28,267 $ 17,083 $ 10,396 $ — $ 385,845
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ — — — — — — — — —
Total $ 51,895 $ 21,409 $ 52,357 $ 204,438 $ 28,267 $ 17,083 $ 10,396 $ — $ 385,845
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial real estate
Pass $ 68,926 $ 28,561 $ 38,690 $ 98,260 $ 24,521 $ 44,621 $ 6,411 $ — $ 309,990
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ — — — — — — — — —
Total $ 68,926 $ 28,561 $ 38,690 $ 98,260 $ 24,521 $ 44,621 $ 6,411 $ — $ 309,990
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Home equity lines of credit and loans
Pass $ — $ 197 $ 320 $ — $ — $ — $ 6,582 $ — $ 7,099
Special Mention — — — — — 5 337 12 354
Substandard — — — — — — 99 — 99
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ 89 173 367 26 4 63 38,669 643 40,034
Total $ 89 $ 370 $ 687 $ 26 $ 4 $ 68 $ 45,687 $ 655 $ 47,586
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Construction
Pass $ 15,131 $ 42,451 $ 12,781 $ 10,038 $ 337 $ 2,988 $ — $ — $ 83,726
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ 1,991 951 543 — — — — — 3,485
Total $ 17,122 $ 43,402 $ 13,324 $ 10,038 $ 337 $ 2,988 $ — $ — $ 87,211
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial
Pass $ — $ 4,501 $ 4,392 $ 2,314 $ 288 $ 167 $ 668 $ — $ 12,330
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ — — — — — — — — —
Total $ — $ 4,501 $ 4,392 $ 2,314 $ 288 $ 167 $ 668 $ — $ 12,330
Current-period gross charge-offs $ — $ — $ — $ — $ — $ 16 $ 65 $ — $ 81
Consumer
Pass $ — $ — $ — $ — $ — $ — $ — $ — $ —
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ 765 7 12 24 35 4 42 — 889
Total $ 765 $ 7 $ 12 $ 24 $ 35 $ 4 $ 42 $ — $ 889
Current-period gross charge-offs $ 3 $ — $ — $ — $ — $ — $ — $ — $ 3
**** **** **** **** **** **** **** **** **** **** **** **** Revolving Revolving **** ****
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
**** **** **** **** **** **** **** **** **** **** **** **** Loans Loans **** ****
**** **** **** **** **** **** **** **** **** **** **** **** Amortized Converted **** ****
Term Loans Amortized Cost Basis by Origination Year Cost Basis to Term Total
2024 2023 2022 2021 2020 Prior **** **** **** **** **** ****
(in thousands)
As of December 31, 2024
One-to-four family residential
Pass $ 8,351 $ 12,065 $ 34,466 $ 15,123 $ 3,979 $ 11,766 $ — $ — $ 85,750
Special Mention — — — — 636 771 — — 1,407
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ 30,905 46,491 84,245 68,818 48,728 56,497 — — 335,684
Total $ 39,256 $ 58,556 $ 118,711 $ 83,941 $ 53,343 $ 69,034 $ — $ — $ 422,841
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Multi-family
Pass $ 24,006 $ 55,612 $ 201,562 $ 35,315 $ 8,611 $ 8,792 $ 10,072 $ — $ 343,970
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ — — — — — — — — —
Total $ 24,006 $ 55,612 $ 201,562 $ 35,315 $ 8,611 $ 8,792 $ 10,072 $ — $ 343,970
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial real estate
Pass $ 28,614 $ 40,935 $ 82,054 $ 25,215 $ 15,447 $ 32,071 $ 4,655 $ — $ 228,991
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ — — — — — — — — —
Total $ 28,614 $ 40,935 $ 82,054 $ 25,215 $ 15,447 $ 32,071 $ 4,655 $ — $ 228,991
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Home equity lines of credit and loans
Pass $ 199 $ 323 $ — $ — $ — $ — $ 8,083 $ — $ 8,605
Special Mention — — — — — 10 322 — 332
Substandard — — — — — — 99 — 99
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ 176 382 27 7 — 71 34,618 837 36,118
Total $ 375 $ 705 $ 27 $ 7 $ — $ 81 $ 43,122 $ 837 $ 45,154
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Construction
Pass $ 30,986 $ 19,398 $ 32,483 $ 2,493 $ — $ 2,988 $ — $ — $ 88,348
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ 1,116 1,430 — — — — — — 2,546
Total $ 32,102 $ 20,828 $ 32,483 $ 2,493 $ — $ 2,988 $ — $ — $ 90,894
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial
Pass $ 4,501 $ 4,410 $ 2,597 $ 340 $ — $ 195 $ 1,801 $ — $ 13,844
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ — — — — — — — — —
Total $ 4,501 $ 4,410 $ 2,597 $ 340 $ — $ 195 $ 1,801 $ — $ 13,844
Current-period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Consumer
Pass $ — $ — $ — $ — $ — $ — $ — $ — $ —
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Loans not formally rated ^(1)^ 7 16 29 39 — 6 44 — 141
Total $ 7 $ 16 $ 29 $ 39 $ — $ 6 $ 44 $ — $ 141
Current-period gross charge-offs $ 4 $ — $ — $ — $ — $ — $ — $ — $ 4

(1) All loans not formally rated were accruing as of June 30, 2025 . Non-accrual loans that were not formally rated amounted to $526,000 as of  December 31, 2024.

At June 30, 2025, the Company had no consumer mortgage loans secured by residential real estate property in the process of foreclosure. At December 31, 2024, the Company had one consumer mortgage loan secured by residential real estate property in the process of foreclosure for $335,000.

For the three and six months ended June 30, 2025 and 2024, the Company did not provide loan restructurings involving borrowers that are experiencing financial difficulty.

NOTE 5 - STOCK-BASED COMPENSATION

On September 7, 2023, the Company adopted the ECB Bancorp, Inc. 2023 Equity Incentive Plan ("2023 Equity Plan”). The 2023 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:

Three months ended June 30, 2025 Six months ended June 30, 2025
Outstanding and exercisable Non-vested Outstanding and exercisable Non-vested
Weighted-Average **** Weighted-Average Weighted-Average **** Weighted-Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price Shares Exercise Price
Balance at beginning of period 146,962 $ 10.45 611,175 $ 10.50 146,962 $ 10.45 611,175 $ 10.50
Granted — — — — — — — —
Vested — — — — — — — —
Exercised — — — — — — — —
Forfeited or expired — — (23,328 ) 11.80 — — (23,328 ) 11.80
Balance at end of period 146,962 $ 10.45 587,847 $ 10.45 146,962 $ 10.45 587,847 $ 10.45
Three months ended June 30, 2024 Six months ended June 30, 2024
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Outstanding and exercisable Non-vested Outstanding and exercisable Non-vested
**** **** Weighted-Average **** **** Weighted-Average **** **** Weighted-Average **** **** Weighted-Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price Shares Exercise Price
Balance at beginning of period — $ — 763,969 $ 10.50 — $ — 763,969 $ 10.50
Granted — — — — — — — —
Vested — — — — — — — —
Exercised — — — — — — — —
Forfeited or expired — — — — — — — —
Balance at end of period — $ — 763,969 $ 10.50 — $ — 763,969 $ 10.50

The 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 the first anniversary date of the restricted stock award. The following table represents information regarding non-vested restricted stock award activities for the periods indicated:

Three Months Ended Six Months Ended
June 30, 2025 June 30, 2025
**** Weighted-Average **** Weighted-Average
**** Grant Date **** Grant Date
**** Fair Value **** Fair Value
Number of Shares Per Share Number of Shares Per Share
Balance at beginning of period 245,766 $ 10.51 245,766 $ 10.51
Granted — — — —
Vested — — — —
Forfeited (9,331 ) 11.80 (9,331 ) 11.80
Balance at end of period 236,435 $ 10.46 236,435 $ 10.46
Three Months Ended Six Months Ended
--- --- --- --- --- --- --- --- ---
June 30, 2024 June 30, 2024
**** **** Weighted-Average **** **** Weighted-Average
**** **** Grant Date **** **** Grant Date
**** **** Fair Value **** **** Fair Value
Number of Shares Per Share Number of Shares Per Share
Balance at beginning of period 305,957 $ 10.50 305,957 $ 10.50
Granted — — — —
Vested — — — —
Forfeited — — — —
Balance at end of period 305,957 $ 10.50 305,957 $ 10.50

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

Three months ended Three months ended Six months ended Six months ended
June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024
(in thousands) (in thousands)
Stock-based compensation expense
Stock options $ 142 $ 165 $ 304 $ 329
Restricted stock awards 139 160 298 320
Total stock-based compensation expense $ 281 $ 325 $ 602 $ 649
Related tax benefits recognized in earnings $ 58 $ 71 $ 128 $ 140

The following table sets forth the total compensation cost related to non-vested awards not yet recognized and the weighted average period (in years) over which it is expected to be recognized as of the periods indicated:

June 30, 2025 December 31, 2024
Weighted average Weighted average
Amount period Amount period
(Dollars in thousands)
Stock options $ 2,086 3.31 $ 2,501 3.80
Restricted stock awards 2,041 3.31 2,449 3.80
Total $ 4,127 $ 4,950

NOTE 6 - FAIR VALUE MEASUREMENTS

ASC 820-10, 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 ASC 820-10, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – 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.

Level 2 – Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities.

Level 3 – Valuations for assets and liabilities that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker traded transactions. Level 3 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  June 30, 2025 and December 31, 2024.

Cash and Cash Equivalents

For these financial instruments, which have original maturities of 90 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 Level 2 of the fair value hierarchy. The Company obtains fair value measurements from independent pricing services which are not 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 Level 2.

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 Level 3 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 Level 2 given the use of observable inputs.

Bank-Owned Life Insurance

The fair value of bank-owned life insurance was based upon quotations received from bank-owned life insurance dealers. These assets were classified as Level 2 given the use of observable inputs.

Accrued Interest Receivable

For these financial instruments, which have original maturities of 90 days or less, their carrying amounts reported in the Consolidated Balance Sheets approximate fair value.

Deposits

The fair value of deposits with no 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 Level 2 given the use of observable market inputs.

Accrued Interest Payable

For these financial instruments, which have original maturities of 90 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 Level 2 of the fair value hierarchy and as a result, the interest rate swaps were categorized as Level 2 within the fair value hierarchy.

As of  June 30, 2025 and December 31, 2024, the following summarizes assets and liabilities measured at fair value on a recurring basis:

Fair Value Measurements at Reporting Date Using
Quoted Prices Significant
in Active Other Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs
Total Level 1 Level 2 Level 3
(in thousands)
June 30, 2025
Assets:
Available-for-sale securities
Mortgage-backed securities $ 6,577 $ — $ 6,577 $ —
Collateralized mortgage obligation 2,967 — 2,967 —
Corporate bonds 10,494 — 10,494 —
Derivative instruments 3 — 3 —
Total assets measured at fair value on a recurring basis $ 20,041 $ — $ 20,041 $ —
Liabilities:
Derivative instruments $ 1,693 $ — $ 1,693 $ —
Total liabilities measured at fair value on a recurring basis $ 1,693 $ — $ 1,693 $ —
December 31, 2024
Assets:
Available-for-sale securities
Mortgage-backed securities $ 4,126 $ — $ 4,126 $ —
Collateralized mortgage obligation 1,438 — 1,438 —
Corporate bonds 1,000 — 1,000 —
Derivative instruments 557 — 557 —
Total assets measured at fair value on a recurring basis $ 7,121 $ — $ 7,121 $ —
Liabilities:
Derivative instruments $ 173 $ — $ 173 $ —
Total liabilities measured at fair value on a recurring basis $ 173 $ — $ 173 $ —

Under certain circumstances, the Company makes fair value adjustments to its assets and liabilities although they are not measured at fair value on a recurring basis.

As of  June 30, 2025 and December 31, 2024, the Bank had no assets or liabilities for which a nonrecurring change in fair value had been recorded.

ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not 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:

June 30, 2025
Carrying Fair
Amount Value Level 1 Level 2 Level 3
(in thousands)
Financial assets:
Cash and cash equivalents $ 98,662 $ 98,662 $ 98,662 $ — $ —
Held-to-maturity securities 66,845 62,547 — 62,547 —
Federal Home Loan Bank stock 11,302 11,302 — 11,302 —
Loans, net 1,281,741 1,234,293 — — 1,234,293
Loans held for sale 1,504 1,504 — 1,504 —
Accrued interest receivable 4,775 4,775 $ 4,775 — —
Bank-owned life insurance 15,178 15,178 — 15,178 —
Financial liabilities:
Deposits, other than certificates of deposit $ 411,122 $ 411,122 $ — $ 411,122 $ —
Certificates of deposit 656,316 656,799 — 656,799 —
Federal Home Loan Bank advances 264,815 265,893 — 265,893 —
Accrued interest payable 1,839 1,839 1,839 — —
December 31, 2024
--- --- --- --- --- --- --- --- --- --- ---
Carrying Fair **** **** **** **** **** ****
Amount Value Level 1 Level 2 Level 3
**** **** (in thousands) **** ****
Financial assets:
Cash and cash equivalents $ 157,617 $ 157,617 $ 157,617 $ — $ —
Interest-bearing time deposits 100 100 — 100 —
Held-to-maturity securities 73,215 67,505 — 67,505 —
Federal Home Loan Bank stock 10,000 10,000 — 10,000 —
Loans, net 1,136,449 1,079,916 — — 1,079,916
Accrued interest receivable 4,015 4,015 4,015 — —
Bank-owned life insurance 14,945 14,945 — 14,945 —
Financial liabilities:
Deposits, other than certificates of deposit $ 393,018 $ 393,018 $ — $ 393,018 $ —
Certificates of deposit 605,515 606,387 — 606,387 —
Federal Home Loan Bank advances 234,000 232,027 — 232,027 —
Accrued interest payable 2,207 2,207 2,207 — —

NOTE 7 – 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 is no 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.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance by a customer to a third 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  June 30, 2025 and December 31, 2024, 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 than one year. If a letter of credit is drawn upon, the Company may seek 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  June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024
(in thousands)
Commitments to originate loans $ 18,479 $ 21,542
Unadvanced funds on lines of credit 87,292 80,156
Unadvanced funds on construction loans 60,135 54,636
Letters of credit 50 50
$ 165,956 $ 156,384

The Company accrues for credit losses related on 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 $659,000 and $634,000 as of  June 30, 2025 and December 31, 2024, respectively. For the three and six months ended June 30, 2025, the provision recorded for off-balance sheet commitment was $41,000 and $25,000, respectively. For the three months ended June 30, 2024, a benefit of $67,000 was recorded to reflect a reduction in allowance for off-balance sheet commitments. For the six months ended June 30, 2024, provision expense of $1,000 was recorded for off-balance sheet commitments.

NOTE 8 – 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 the three and six months ended June 30, 2025 and 2024:

Three months ended Six months ended
June 30, June 30,
2025 2024 2025 2024
(in thousands) (in thousands)
Available-for-sale securities:
Change in fair value of available-for-sale securities $ (52 ) $ — $ 21 $ (3 )
Reclassification adjustment for realized gains in net income — — — —
Total (52 ) — 21 (3 )
Income tax benefit (expense) 16 — (4 ) —
Net-of-tax amount (36 ) — 17 (3 )
Cash flow hedges:
Change in fair value of cash flow hedges $ (788 ) $ 192 $ (1,833 ) $ 976
Reclassification adjustment for cash flow hedge gains into net income (145 ) (227 ) (241 ) (378 )
Total (933 ) (35 ) (2,074 ) 598
Income expense benefit (expense) 262 9 583 (168 )
Net-of-tax amount (671 ) (26 ) (1,491 ) 430
Other comprehensive (loss) income, net of tax $ (707 ) $ (26 ) $ (1,474 ) $ 427

Accumulated other comprehensive (loss) income as of  June 30, 2025 and  December 31, 2024 consists of unrecognized benefit costs, net of taxes, unrealized holding gains (losses) on securities available for sale, net of tax, and fair value of cash flow hedges, net of tax as follows:

As of June 30, 2025 As of December 31, 2024
(in thousands)
Net unrealized holding loss on securities available-for-sale, net of tax $ (23 ) $ (40 )
Unrecognized SERP gain, net of tax 70 70
Unrecognized DFCP gain, net of tax 75 75
Fair value of cash flow hedges, net of tax (1,214 ) 277
Accumulated other comprehensive (loss) income $ (1,092 ) $ 382

NOTE 9 – 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 June 30, 2025, that the Bank meets all capital adequacy requirements to which it is subject.

As of June 30, 2025, 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, Tier 1 risk-based, Common Equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no 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:

**** Minimum For Capital Minimum To Be Well
**** Adequacy Purposes Capitalized Under
**** Plus Capital Prompt Corrective
Actual Conservation Buffer Action Provisions
Amount Ratio Amount Ratio Amount Ratio
**** (dollars in thousands) ****
As of June 30, 2025
Total Capital (to Risk Weighted Assets) $ 159,308 14.67 % $ 113,987 10.50 % $ 108,559 10.00 %
Tier 1 Capital (to Risk Weighted Assets) 148,763 13.70 % 92,275 8.50 % 86,847 8.00 %
Common Equity Tier 1 Capital (to Risk Weighted Assets) 148,763 13.70 % 75,991 7.00 % 70,563 6.50 %
Tier 1 Capital (to Average Assets) 148,763 10.03 % 59,325 4.00 % 74,157 5.00 %
As of December 31, 2024
Total Capital (to Risk Weighted Assets) $ 154,753 16.58 % $ 98,010 10.50 % $ 93,343 10.00 %
Tier 1 Capital (to Risk Weighted Assets) 145,235 15.56 % 79,342 8.50 % 74,674 8.00 %
Common Equity Tier 1 Capital (to Risk Weighted Assets) 145,235 15.56 % 65,340 7.00 % 60,673 6.50 %
Tier 1 Capital (to Average Assets) 145,235 10.47 % 55,479 4.00 % 69,349 5.00 %

NOTE 10 - 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 are not deemed outstanding for earnings per share calculations.

Three months ended Six months ended
June 30, June 30,
2025 2024 2025 2024
(Dollars in thousands, except per share data) (Dollars in thousands, except per share data)
Net income allocated to common stock $ 1,440 $ 791 $ 2,737 $ 1,412
Weighted-average common shares outstanding used to calculate basic earnings per common share 8,155,667 8,265,579 8,183,072 8,282,677
Add: Dilutive effect of restricted stock awards 103,830 76,937 95,056 76,141
Add: Dilutive effect of stock options 110,322 — 79,247 —
Weighted-average common shares outstanding used to calculate diluted earnings per common share 8,369,819 8,342,516 8,357,375 8,358,818
Earnings per common share
Basic $ 0.18 $ 0.10 $ 0.33 $ 0.17
Diluted $ 0.17 $ 0.09 $ 0.33 $ 0.17

For the three and six months ended June 30, 2025, there were no anti-dilutive shares. For the three and six months ended June 30, 2024, the shares that were anti-dilutive, and therefore excluded from the calculation of diluted earnings per share, included options to purchase 763,969 shares of common stock.

NOTE 11 - 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 whereby one 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 a second party. The amounts relating to the notional principal amount are not 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 or not 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 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 June 30, 2025.

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

As of June 30, 2025 As of December 31, 2024
(Dollars in thousands)
Notional amount $ 120,000 $ 60,000
Weighted-average pay rate 3.79 % 3.80 %
Weighted-average receive rate 4.29 % 4.49 %
Weighted-average maturity in years 3.74 3.74

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:

Asset Derivatives Liability Derivatives
Balance Sheet Balance Sheet ****
Location Fair Value Location Fair Value
June 30, 2025 (in thousands)
Derivatives designated as hedging instruments
Interest rate swaps Other assets $ 3 Other liabilities $ (1,693 )
Total $ 3 $ (1,693 )
December 31, 2024
Derivatives designated as hedging instruments
Interest rate swaps Other assets $ 557 Other liabilities $ (173 )
Total $ 557 $ (173 )

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 $30,000 to be reclassified as a decrease to interest expense from OCI related to the Company’s cash flow hedges in the twelve months following June 30, 2025. This reclassification is due to anticipated payments that will be received on the swaps based upon the forward curve at June 30, 2025.

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 5.0 years.

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

Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024
(in thousands)
Interest rate swaps
Amount of (loss) gain recognized in OCI on derivatives $ (933 ) $ (35 ) $ (2,074 ) $ 598
Gain reclassified from OCI into interest expense $ 145 $ 227 $ 241 $ 378

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not 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 counterparty not 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 June 30, 2025, the Company has pledged cash collateral to a derivative counterparty totaling $3.5 million. The Company may need 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.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Management’s discussion and analysis of the financial condition at June 30, 2025 compared to December 31, 2024 and results of operations for the three and six months ended June 30, 2025 and 2024 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing on Part I, Item 1 of this quarterly report on Form 10-Q.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

● statements of our goals, intentions and expectations;
● statements regarding our business plans, prospects, growth and operating strategies;
--- ---
● statements regarding the quality of our loan portfolio; and
--- ---
● estimates of our risks and future costs and benefits.
--- ---

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

● changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;
● our ability to access cost-effective funding;
--- ---
● fluctuations in real estate values and both residential and commercial real estate market conditions;
--- ---
● demand for loans and deposits in our market area;
--- ---
● our ability to implement and change our business strategies;
--- ---
● competition among depository and other financial institutions;
--- ---
● inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments, or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;
--- ---
● adverse changes in the securities or secondary mortgage markets;
--- ---
● changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;
--- ---
● changes in the quality or composition of our loan or investment portfolios;
--- ---
● technological changes that may be more difficult or expensive than expected;
--- ---
● the inability of third-party providers to perform as expected;
--- ---
● a failure or breach of our operational or security systems or infrastructure, including cyberattacks;
--- ---
● our ability to manage market risk, credit risk and operational risk;
--- ---
● our ability to enter new markets successfully and capitalize on growth opportunities;
--- ---

24

● changes in consumer spending, borrowing and savings habits;
● changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;
--- ---
● the risk of adverse changes in business conditions due to geo-political tensions;
--- ---
● our ability to attract and retain key employees; and
--- ---
● changes in the financial condition, results of operations or future prospects of issuers of securities that we own.
--- ---

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Critical Accounting Policies

There are no material changes to the critical accounting policies disclosed in ECB Bancorp, Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 26, 2025.

Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with generally accepted accounting principles used in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

Allowance for Credit Losses

The Company estimates the allowance for credit losses in accordance with the CECL methodology for loans measured at amortized cost. The allowance for credit losses is established based upon the Company's current estimate of expected lifetime credit losses. Arriving at an appropriate amount of allowance for credit losses involves a high degree of judgment.

The Company estimates credit losses on a collective basis for loans sharing similar risk characteristics using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. Management's judgment is required for the selection and application of these factors which are derived from historical loss experience as well as assumptions surrounding expected future losses and economic forecasts.

Loans that no longer share similar risk characteristics with any pools of assets are subject to individual assessment and are removed from the collectively assessed pools to avoid double counting. For the loans that are individually assessed, the Company uses either a discounted cash flow (“DCF”) approach or a fair value of collateral approach. The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable. Changes in these judgments and assumptions could be due to a number of circumstances which may have a direct impact on the provision for credit losses and may result in changes to the amount of allowance. The allowance for credit losses is increased by the provision for credit losses and by recoveries of loans previously charged off. Credit losses are charged against the allowance when management's assessments confirm that the Company will not collect the full amortized cost basis of a loan.

Income Taxes

We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments may require us to make projections of future taxable income and/or to carryback to taxable income in prior years. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.

25

Securities Valuation

We classify our investments in debt securities as either held-to-maturity or available-for-sale. Securities classified as held-to maturity are recorded at amortized cost. Available-for-sale securities are carried at fair value. We obtain our fair values from one or more third-party services. This service’s fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations and cash flows.

For any debt security with a fair value less than its amortized cost basis, we will determine whether we have the intent to sell the debt security or whether it is more likely than not we will be required to sell the debt security before the recovery of its amortized cost basis. If either condition is met, the Company will recognize a full impairment charge to earnings. For all other debt securities that do not meet either condition and that have expected credit losses, the credit loss will be recognized in earnings. Any non-credit related loss impairment related to all other factors will be recorded in other comprehensive income (loss). Management also assesses the nature of the unrealized losses taking into consideration factors such as changes in risk-free interest rates, general credit spread widening, market supply and demand, creditworthiness of the issuer, and quality of the underlying collateral.

Comparison of Financial Condition at June 30, 2025 and December 31, 2024

Total Assets. Total assets were $1.52 billion at June 30, 2025, as compared to $1.42 billion at December 31, 2024, or an increase of $96.9 million, or 6.8%.

Cash and Cash Equivalents. Cash and cash equivalents decreased $59.0 million, or 37.4%, to $98.7 million at June 30, 2025 from $157.6 million at December 31, 2024. The decrease in cash and cash equivalents was driven by growth in both loans and investments that in aggregate, was greater than our growth in deposits and borrowings.

Investment Securities Available for Sale. Investments in securities available for sale were $20.0 million at June 30, 2025, as compared to $6.6 million at December 31, 2024, or an increase of $13.5 million, or 205.3%. This increase was due to purchases of new securities.

Investment Securities Held to Maturity. Investments in securities held to maturity were $66.8 million at June 30, 2025, as compared to $73.2 million at December 31, 2024, or a $6.4 million, or 8.7%, decrease. This decrease was due to maturities of securities.

Loans. Total gross loans were $1.29 billion at June 30, 2025, as compared to $1.15 billion at December 31, 2024, or an increase of $146.5 million, or 12.8%.

● Commercial real estate loans increased $81.0 million, or 35.4%, to $310.0 million at June 30, 2025 from $229.0 million at December 31, 2024.
● Multi-family real estate loans increased $41.9 million, or 12.2%, to $385.8 million at June 30, 2025 from $344.0 million at December 31, 2024.
--- ---
● Residential real estate loans increased $25.6 million, or 6.1%, to $448.5 million at June 30, 2025, from $422.8 million at December 31, 2024.
--- ---
● Home equity lines of credit increased $2.4 million, or 5.4%, to $47.6 million at June 30, 2025, from $45.2 million at December 31, 2024.
--- ---
● Commercial loans decreased $1.5 million, or 10.9%, to $12.3 million at June 30, 2025 from $13.8 million at December 31, 2024.
--- ---
● Construction loans decreased $3.7 million, or 4.1%, to $87.2 million at June 30, 2025 from $90.9 million at December 31, 2024.
--- ---

Federal Home Loan Bank stock. The Federal Home Loan Bank (FHLB) is a cooperative bank that provides services to its member banking institutions. The primary reason for our membership in the FHLB is to gain access to a reliable source of wholesale funding and as a tool to manage interest rate risk. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. We purchase and/or are subject to redemption of FHLB stock proportional to the volume of funding received and view the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return. We held an investment in FHLB stock of $11.3 million and $10.0 million at June 30, 2025 and December 31, 2024, respectively. Accordingly, the increase in the FHLB stock is due to increased borrowings.

Bank-owned Life Insurance. We invest in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is nontaxable. Bank-owned life insurance increased $233,000, or 1.6%, to $15.2 million at June 30, 2025 from $14.9 million at December 31, 2024. The increase was due to an increase of $233,000 in the cash surrender value of our bank-owned life insurance portfolio during the six months ended June 30, 2025.

26

Deposits. Total deposits were $1.07 billion at June 30, 2025, as compared to $998.5 million at December 31, 2024, or an increase of $68.9 million, or 6.9%.

● Certificates of deposit increased $50.8 million, or 8.4%, to $656.3 million at June 30, 2025 from $605.5 million at December 31, 2024.
● Money market deposit accounts increased $30.9 million, or 16.7%, to $215.5 million at June 30, 2025 from $184.6 million at December 31, 2024.
--- ---
● Demand deposit accounts increased $2.9 million, or 3.4%, to $87.9 million at June 30, 2025 from $85.0 million at December 31, 2024.
--- ---
● Interest bearing checking accounts decreased $3.7 million, or 18.0%, to $16.9 million at June 30, 2025 from $20.5 million at December 31, 2024.
--- ---
● Savings accounts decreased $12.0 million, or 11.7%, to $90.9 million at June 30, 2025 from $102.9 million at December 31, 2024.
--- ---

Core deposits (defined as all deposits other than certificates of deposit) increased $18.1 million, or 4.6%, to $411.1 million at June 30, 2025 from $393.0 million at December 31, 2024.

Federal Home Loan Bank Advances. FHLB advances increased $30.8 million, or 13.2%, to $264.8 million at June 30, 2025 from $234.0 million at December 31, 2024. The increase in FHLB advances was used to fund loan growth.

Shareholders' Equity. Total shareholders' equity increased $9,000, or 0.01%, to $168.3 million as of June 30, 2025 from $168.3 million as of December 31, 2024. This increase is primarily the result of earnings of $2.7 million and $877,000 related to stock-based compensation and ESOP shares committed to being released. Substantially offsetting these increases were $1.5 million of other comprehensive losses and $2.1 million related to shares repurchased under our share repurchase plan. Our book value per share increased by $0.31 to $18.81 at June 30, 2025 from $18.50 at December 31, 2024.

Comparison of Operating Results for the Three Months Ended June 30, 2025 and June 30, 2024

Net Income. We recorded net income of $1.4 million for the three months ended June 30, 2025, compared to net income of $791,000 for the three months ended June 30, 2024, or an increase of $649,000, or 82.0% in net income.

Interest and Dividend Income. Interest and dividend income increased $2.7 million, or 16.6%, to $19.1 million for the three months ended June 30, 2025 from $16.4 million for the three months ended June 30, 2024. This increase was due to a $2.7 million increase in interest and fees on loans and a $215,000 increase in interest and dividends on investment securities. The increase in interest and fees on loans was driven by an increase of $147.3 million in the average balance of the loan portfolio to $1.24 billion for the three months ended June 30, 2025 from $1.10 billion for the three months ended June 30, 2024, as well as an increase in the average yield of 23 basis points to 5.43% during the three months ended June 30, 2025 from 5.20% during the three months ended June 30, 2024. The yield for the three months ended June 30, 2025 benefited from new loans with higher rates. The increase in interest and dividend income on investment securities was driven by an increase in the yield on securities of 84 basis points to 3.70% during the three months ended June 30, 2025 from 2.86% during the three months ended June 30, 2024 as well as an increase of $8.5 million in the average balance of the investment portfolio to $88.0 million for the three months ended June 30, 2025 from $79.6 million for the three months ended June 30, 2024. The decrease in interest income on short term investments was driven by a decrease in the yield on short term investments of 106 basis points to 4.42% during the three months ended June 30, 2025 from 5.48% during the three months ended June 30, 2024, partially offset by an increase of $7.6 million in the average balance of short term investments to $112.8 million for the three months ended June 30, 2025 from $105.2 million for the three months ended June 30, 2024.

Average interest-earning assets increased $163.4 million to $1.45 billion for the three months ended June 30, 2025 from $1.28 billion for the three months ended June 30, 2024. The yield on interest-earning assets increased 18 basis points to 5.25% for the three months ended June 30, 2025 from 5.07% for the three months ended June 30, 2024.

Interest Expense. Total interest expense increased $1.1 million, or 10.3%, to $11.4 million for the three months ended June 30, 2025 from $10.4 million for the three months ended June 30, 2024. Interest expense on deposit accounts increased $963,000, or 11.8%, to $9.1 million for the three months ended June 30, 2025 from $8.2 million for the three months ended June 30, 2024, primarily due to an increase in the average balance of interest-bearing deposits of $140.5 million, or 16.7%, to $979.2 million for the three months ended June 30, 2025 from $838.7 million for the three months ended June 30, 2024, partially offset by a decrease in the cost of interest bearing deposits of 17 basis points to 3.74% for the three months ended June 30, 2025 from 3.91% for the three months ended June 30, 2024. Interest expense on FHLB advances increased $105,000, or 4.7%, to $2.3 million for the three months ended June 30, 2025 from $2.2 million for the three months ended June 30, 2024, primarily due to an increase in the average balance of FHLB advances of $13.0 million, or 5.8%, to $236.1 million for the three months ended June 30, 2025 from $223.1 million for the three months ended June 30, 2024, partially offset by a decrease in the cost of FHLB advances of 5 basis points to 3.94% for the three months ended June 30, 2025 from 3.99% for the three months ended June 30, 2024.

Net Interest and Dividend Income. Net interest and dividend income increased $1.6 million, or 27.4%, to $7.7 million for the three months ended June 30, 2025 from $6.0 million for the three months ended June 30, 2024, primarily due to a $163.4 million increase in the average balance of interest-earning assets during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 as well as an increase in the net interest margin of 26 basis points to 2.08% for three months ended June 30, 2025 from 1.82% for the three months ended June 30, 2024.

Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses was $1.1 million for the three months ended June 30, 2025, as compared to $292,000 for the three months ended June 30, 2024. The increase in the provision for credit losses was driven by greater loan growth during the three months ended June 30, 2025 than in the three months ended June 30, 2024.

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Noninterest Income. Noninterest income was $355,000 for the three months ended June 30, 2025, as compared to $289,000 for the three months ended June 30, 2024, or an increase of $66,000, or 22.8%. The table below sets forth our noninterest income for three months ended June 30, 2025 and 2024:

Three Months Ended ****
June 30, Change
2025 2024 Amount Percent
(Dollars in thousands)
Customer service fees $ 154 $ 143 $ 11 7.7 %
Income from bank-owned life insurance 118 117 1 0.9
Net gain on sales of loans 43 19 24 126.3
Other income 40 10 30 300.0
Total noninterest income $ 355 $ 289 $ 66 22.8 %

Noninterest Expense. Noninterest expense was $5.0 million for the three months ended June 30, 2025 as compared to $4.9 million for the three months ended June 30, 2024, or an increase of $33,000, or 0.7%. During the second quarter of 2025, the Company recognized $236,000 in Employee Retention Tax Credits (ERTC) in the form of refunds of certain federal employment taxes that are authorized and established under the CARES Act. The amount was recorded as a reduction to salaries and employee benefits expenses. The table below sets forth our noninterest expense for the three months ended June 30, 2025 and 2024:

Three Months Ended **** ****
June 30, Change
2025 2024 Amount Percent
(Dollars in thousands)
Salaries and employee benefits $ 3,013 $ 3,130 $ (117 ) (3.7 )%
Director compensation 173 209 (36 ) (17.2 )
Occupancy and equipment 261 263 (2 ) (0.8 )
Data processing 315 285 30 10.5
Computer software and licensing fees 104 100 4 4.0
Advertising and promotions 189 106 83 78.3
Professional fees 264 231 33 14.3
FDIC deposit insurance 216 194 22 11.3
Other expense 445 429 16 3.7
Total noninterest expense $ 4,980 $ 4,947 $ 33 0.7 %

Income Tax Expense. Income tax expense increased $203,000, or 74.6%, to $475,000 for the three months ended June 30, 2025 from $272,000 for the three months ended June 30, 2024. The effective tax rate was 24.8% and 25.6% for the three months ended June 30, 2025 and 2024, respectively.

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Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. Average balances are daily average balances. Non-accrual loans are included in average balances only. Average yields include the effect of deferred costs and fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

For the Three Months Ended June 30,
2025 2024
Average **** Average ****
Outstanding Yield/ Outstanding Yield/
Balance Interest Rate^(5)^ Balance Interest Rate^(5)^
(Dollars in thousands)
Interest-earning assets: **** ****
Total loans $ 1,244,406 $ 16,862 5.43 % $ 1,097,086 $ 14,174 5.20 %
Securities ^(1)^ 88,039 812 3.70 79,557 565 2.86
Short term investments 112,816 1,244 4.42 105,207 1,433 5.48
Interest-bearing time deposits 38 1 5.37 — — 0.00
Total interest-earning assets 1,445,299 18,919 5.25 % 1,281,850 16,172 5.07 %
Non-interest-earning assets 38,221 34,523
Total assets $ 1,483,520 $ 1,316,373
Interest-bearing liabilities: **** ****
Checking accounts 19,850 5 0.10 % 18,907 4 0.09 %
Savings accounts 92,469 480 2.08 115,619 833 2.90
Money market accounts 208,777 1,759 3.38 153,181 1,391 3.65
Certificates of deposit 658,102 6,878 4.19 551,018 5,931 4.33
Total interest-bearing deposits 979,198 9,122 3.74 838,725 8,159 3.91
Federal Home Loan Bank advances 236,076 2,319 3.94 223,121 2,214 3.99
Total interest-bearing liabilities 1,215,274 11,441 3.78 % 1,061,846 10,373 3.93 %
Non-interest-bearing demand deposits 85,317 75,510
Non-interest-bearing liabilities 13,516 11,875
Total liabilities 1,314,107 1,149,231
Shareholders' Equity 169,413 167,142
Total liabilities and shareholders' equity $ 1,483,520 $ 1,316,373
Net interest income $ 7,478 $ 5,799
Net interest rate spread ^(2)^ 1.47 % 1.14 %
Net interest-earning assets ^(3)^ $ 230,025 $ 220,004
Net interest margin ^(4)^ 2.08 % 1.82 %
Average interest-earning assets to interest-bearing liabilities 118.93 % 120.72 %

(1) Excludes interest and dividends on cost method investments of $182,000 and $214,000 for the three months ended June 30, 2025 and 2024, respectively.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

(5) Annualized

29

Rate/Volume Analysis. The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior period volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.

Three Months Ended June 30, 2025 vs. 2024
Increase (Decrease) Due to Total Increase
Volume Rate (Decrease)
(In thousands)
Interest-earning assets: **** **** ****
Loans $ 2,002 $ 686 $ 2,688
Securities 66 181 247
Short term investments 100 (289 ) (189 )
Interest-bearing time deposits 1 — 1
Total interest-earning assets $ 2,169 $ 578 $ 2,747
Interest-bearing liabilities: **** **** ****
Checking accounts $ — $ 1 $ 1
Savings accounts (147 ) (206 ) (353 )
Money market accounts 478 (110 ) 368
Certificates of deposit 1,138 (191 ) 947
Total interest-bearing deposits 1,469 (506 ) 963
Federal Home Loan Bank advances 133 (28 ) 105
Total interest-bearing liabilities $ 1,602 $ (534 ) $ 1,068
Change in net interest income $ 567 $ 1,112 $ 1,679

Comparison of Operating Results for the Six Months Ended June 30, 2025 and June 30, 2024

Net Income. We recorded net income of $2.7 million for the six months ended June 30, 2025, compared to net income of $1.4 million for the six months ended June 30, 2024, an increase of $1.3 million, or 93.8% in net income.

Interest and Dividend Income. Interest and dividend income increased $4.6 million, or 14.5%, to $36.7 million for the six months ended June 30, 2025 from $32.1 million for the six months ended June 30, 2024. This increase was driven by a $4.4 million increase in interest and fees on loans and a $304,000 increase in interest and dividends on investment securities. The increase in interest and fees on loans was driven by an increase of $123.9 million in the average balance of the loan portfolio to $1.20 billion for the six months ended June 30, 2025 from $1.08 billion for the six months ended June 30, 2024, as well as an increase in the average yield of 22 basis points to 5.37% during the six months ended June 30, 2025 from 5.15% during the six months ended June 30, 2024. The yield for the six months ended June 30, 2025 benefited from new loans with higher rates. The increase in interest and dividend income on investment securities was driven by an increase in the yield on securities of 73 basis points to 3.54% during the six months ended June 30, 2025 from 2.81% during the six months ended June 30, 2024.

Average interest-earning assets increased $151.7 million to $1.42 billion for the six months ended June 30, 2025 from $1.26 billion for the six months ended June 30, 2024. The yield on interest-earning assets increased 15 basis points to 5.18% for the six months ended June 30, 2025 from 5.03% for the six months ended June 30, 2024.

Interest Expense. Total interest expense increased $2.2 million, or 11.2%, to $22.4 million for the six months ended June 30, 2025 from $20.2 million for the six months ended June 30, 2024. Interest expense on deposit accounts increased $2.3 million, or 14.6%, to $18.0 million for the six months ended June 30, 2025 from $15.7 million for the six months ended June 30, 2024, primarily due to an increase in the average balance of interest-bearing deposits of $142.6 million, or 17.4%, to $961.9 million for the six months ended June 30, 2025 from $819.3 million for the six months ended June 30, 2024, partially offset by a decrease in the cost of interest bearing deposits of 8 basis points to 3.77% for the six months ended June 30, 2025 from 3.85% for the six months ended June 30, 2024. Interest expense on FHLB advances decreased $48,000, or 1.1%, to $4.4 million for the six months ended June 30, 2025 from $4.5 million for the six months ended June 30, 2024, due to a decrease in the cost of FHLB advances of 5 basis points to 3.95% for the six months ended June 30, 2025 from 4.00% for the six months ended June 30, 2024, partially offset by an increase the average balance of FHLB advances of $1.5 million, or 0.7%, to $226.6 million for the six months ended June 30, 2025 from $225.2 million for the six months ended June 30, 2024.

Net Interest and Dividend Income. Net interest and dividend income increased $2.4 million, or 20.1%, to $14.3 million for the six months ended June 30, 2025 from $11.9 million for the six months ended June 30, 2024, primarily due to a $151.7 million increase in the average balance of interest-earning assets during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 as well as an increase in the net interest margin of 16 basis points to 1.99% for six months ended June 30, 2025 from 1.83% for the six months ended June 30, 2024.

Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses was $1.1 million for the six months ended June 30, 2025, as compared to $438,000 for the six months ended June 30, 2024. The increase in the provision for credit losses was driven by greater loan growth in the six months ended June 30, 2025 than in the six months ended June 30, 2024.

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Noninterest Income. Noninterest income was $626,000 for the six months ended June 30, 2025, as compared to $594,000 for the six months ended June 30, 2024, or an increase of $32,000, or 5.4%. The table below sets forth our noninterest income for six months ended June 30, 2025 and 2024:

Six Months Ended **** ****
June 30, Change
2025 2024 Amount Percent
(Dollars in thousands)
Customer service fees $ 294 $ 284 $ 10 3.5 %
Income from bank-owned life insurance 233 234 (1 ) (0.4 )
Net gain on sales of loans 43 54 (11 ) (20.4 )
Other income 56 22 34 154.5
Total noninterest income $ 626 $ 594 $ 32 5.4 %

Noninterest Expense. Noninterest expense was $10.2 million for the six months ended June 30, 2025 and June 30, 2024. During the six months ended June 30, 2025, the Company recognized $236,000 in Employee Retention Tax Credits (ERTC) in the form of refunds of certain federal employment taxes that are authorized and established under the CARES Act. The amount was recorded as a reduction to salaries and employee benefits expenses. The table below sets forth our noninterest expense for the six months ended June 30, 2025 and 2024:

Six Months Ended **** ****
June 30, Change
2025 2024 Amount Percent
(Dollars in thousands)
Salaries and employee benefits $ 6,273 $ 6,441 $ (168 ) (2.6 )%
Director compensation 389 416 (27 ) (6.5 )
Occupancy and equipment 542 538 4 0.7
Data processing 625 596 29 4.9
Computer software and licensing fees 214 209 5 2.4
Advertising and promotions 321 237 84 35.4
Professional fees 574 591 (17 ) (2.9 )
FDIC deposit insurance 401 372 29 7.8
Other expense 849 775 74 9.5
Total noninterest expense $ 10,188 $ 10,175 $ 13 0.1 %

Income Tax Expense. Income tax expense increased $417,000, or 86.5%, to $899,000 for the six months ended June 30, 2025 from $482,000 for the six months ended June 30, 2024. The effective tax rate was 24.7% and 25.4% for the six months ended June 30, 2025 and 2024, respectively.

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Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. Average balances are daily average balances. Non-accrual loans are included in average balances only. Average yields include the effect of deferred costs and fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

For the Six Months Ended June 30,
2025 2024
Average **** Average ****
Outstanding Yield/ Outstanding Yield/
Balance Interest Rate^(5)^ Balance Interest Rate^(5)^
(Dollars in thousands)
Interest-earning assets: **** ****
Total loans $ 1,201,409 $ 32,005 5.37 % $ 1,077,497 $ 27,619 5.15 %
Securities ^(1)^ 84,502 1,484 3.54 80,112 1,121 2.81
Short term investments 130,441 2,869 4.44 107,089 2,917 5.48
Interest-bearing time deposits 69 2 5.31 — — 0.00
Total interest-earning assets 1,416,421 36,360 5.18 % 1,264,698 31,657 5.03 %
Non-interest-earning assets 38,159 34,309
Total assets $ 1,454,580 $ 1,299,007
Interest-bearing liabilities: **** ****
Checking accounts 18,663 8 0.09 % 19,208 7 0.07 %
Savings accounts 95,684 993 2.09 117,867 1,661 2.83
Money market accounts 199,111 3,323 3.37 148,487 2,647 3.58
Certificates of deposit 648,443 13,657 4.25 533,744 11,369 4.28
Total interest-bearing deposits 961,901 17,981 3.77 819,306 15,684 3.85
Federal Home Loan Bank advances 226,646 4,434 3.95 225,154 4,482 4.00
Total interest-bearing liabilities 1,188,547 22,415 3.80 % 1,044,460 20,166 3.88 %
Non-interest-bearing demand deposits 82,564 76,007
Non-interest-bearing liabilities 14,126 12,037
Total liabilities 1,285,237 1,132,504
Shareholders' Equity 169,343 166,503
Total liabilities and shareholders' equity $ 1,454,580 $ 1,299,007
Net interest income $ 13,945 $ 11,491
Net interest rate spread ^(2)^ 1.37 % 1.15 %
Net interest-earning assets ^(3)^ $ 227,874 $ 220,238
Net interest margin ^(4)^ 1.99 % 1.83 %
Average interest-earning assets to interest-bearing liabilities 119.17 % 121.09 %

(1) Excludes interest and dividends on cost method investments of $363,000 and $422,000 for the six months ended June 30, 2025 and 2024, respectively.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average total interest-earning assets.

(5) Annualized

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Rate/Volume Analysis. The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior period volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.

Six Months Ended June 30, 2025 vs. 2024
Increase (Decrease) Due to Total Increase
Volume Rate (Decrease)
(In thousands)
Interest-earning assets: **** **** ****
Loans $ 3,209 $ 1,177 $ 4,386
Securities 63 300 363
Short term investments 566 (614 ) (48 )
Interest-bearing time deposits 2 — 2
Total interest-earning assets $ 3,840 $ 863 $ 4,703
Interest-bearing liabilities: **** **** ****
Checking accounts $ — $ 1 $ 1
Savings accounts (280 ) (388 ) (668 )
Money market accounts 847 (171 ) 676
Certificates of deposit 2,386 (98 ) 2,288
Total interest-bearing deposits 2,953 (656 ) 2,297
Federal Home Loan Bank advances 26 (74 ) (48 )
Total interest-bearing liabilities $ 2,979 $ (730 ) $ 2,249
Change in net interest income $ 861 $ 1,593 $ 2,454

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We are also able to borrow from the Federal Home Loan Bank of Boston, the Federal Reserve Bank and the Atlantic Community Bankers Bank. At June 30, 2025, we had outstanding advances of $264.8 million from the Federal Home Loan Bank. At June 30, 2025, we had unused borrowing capacity of $316.7 million with the Federal Home Loan Bank, $16.8 million with the Federal Reserve Bank and $15.0 million with the Atlantic Community Bankers Bank.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities.

At June 30, 2025, we had $18.5 million in loan commitments outstanding. In addition to commitments to originate loans, we had $87.3 million in unused lines of credit to borrowers and $60.1 million in unadvanced construction loans.

Non brokered certificates of deposit due within one year of June 30, 2025 totaled $415.6 million, or 38.9%, of total deposits. If these deposits do not remain with us, we may be required to seek other sources of funds, including brokered deposits and FHLB advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before June 30, 2026, or on our savings and money market accounts.

33

We believe, however, based on historical experience and current market interest rates that we will retain upon maturity a large portion of our certificates of deposit with maturities of one year or less as of June 30, 2025.

Our primary investing activity is originating loans. During the six months ended June 30, 2025 and the year ended December 31, 2024, we originated $179.7 million and $160.4 million of loans, respectively.

Financing activities consist primarily of activity in deposit accounts and FHLB advances. We experienced net increases in deposits of $68.9 million and $130.3 million for the six months ended June 30, 2025 and the year ended December 31, 2024, respectively. At June 30, 2025 and December 31, 2024, the level of brokered time deposits was $123.9 million and $125.6 million, respectively. Deposit flows are affected primarily by the overall level of interest rates and the interest rates and products offered by us and our competitors. At June 30, 2025 and December 31, 2024, the level of FHLB advances was $264.8 million and $234.0 million, respectively.

For additional information, see the consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 included as part of the consolidated financial statements appearing elsewhere in this Form 10-Q.

We are committed to maintaining a strong liquidity position. We continuously monitor our liquidity position and adjustments are made to the balance between sources and uses of funds as deemed appropriate by management. Liquidity risk management is an important element in our asset/liability management process. We regularly model liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed problematic by management. These scenarios are incorporated into our contingency funding planning process, which provides the basis for the identification of our liquidity needs. We anticipate that we will have sufficient funds to meet our current funding commitments. In addition, based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

At June 30, 2025, Everett Co-operative Bank exceeded all of its regulatory capital requirements, and was categorized as well-capitalized at that date. Management is not aware of any conditions or events since the most recent notification of well-capitalized status that would change our category. See Note 9 of the notes to consolidated financial statements.

Impact of Inflation and Changing Prices

The consolidated financial statements and related data presented in this Form 10-Q have been prepared in accordance with U.S. GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable, as the Registrant is a smaller reporting company.

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2025. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Registrant’s disclosure controls and procedures were effective.

During the quarter ended June 30, 2025, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II – Other Information

Item 1. Legal Proceedings

The Company is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Bank’s or the Company’s financial condition or results of operations.

Item 1A. Risk Factors

Not applicable, as the Registrant is a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of unregistered securities during the period covered by this Report.

On August 10, 2023, the Company announced the commencement of a stock repurchase program to acquire up to 458,762 shares, or 5% of the Company’s then outstanding common stock. On April 11, 2025, the Company completed the stock repurchase plan. On May 8, 2025, the Company announced an additional stock repurchase plan that authorizes the Company to repurchase up to 451,092 shares, or approximately 5%, of the Company's then outstanding common stock. Repurchases will be made from time to time depending on market conditions and other factors, and will be conducted through open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. There is no guarantee as to the exact number of shares to be repurchased by the Company. The following table sets forth the information regarding the Company's common stock repurchase activities during the three months ended June 30, 2025:

Total Number of Maximum Number
Shares Purchased of Shares That May
Total Number of Average Price as Part of Publicly Yet Be Purchased
Shares Purchased Paid Per Share Announced Programs Under the Programs
From April 1, 2025 to April 30, 2025 22,109 $ 15.07 22,109 —
From May 1, 2025 to May 31, 2025 14,397 $ 16.27 14,397 436,695
From June 1, 2025 to June 30, 2025 56,995 $ 15.60 56,995 379,700
Total 93,501 $ 15.57 93,501

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended June 30, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as that term is used in SEC regulations.

35

Item 6. Exhibits

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ECB BANCORP, INC.
Date: August 8, 2025 /s/Richard J. O'Neil, Jr.
Richard J. O’Neil, Jr.
President and Chief Executive Officer
Date: August 8, 2025 /s/Brandon N. Lavertu
Brandon N. Lavertu
Executive Vice President and Chief Financial Officer

37

ex_817568.htm

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Richard J. O’Neil, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ECB Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
--- ---
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
--- ---
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
--- ---
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
--- ---
Date: August 8, 2025 /s/Richard J. O'Neil, Jr.
--- ---
Richard J. O’Neil, Jr.
President and Chief Executive Officer

ex_817569.htm

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Brandon N. Lavertu, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ECB Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
--- ---
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
--- ---
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
--- ---
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
--- ---
Date: August 8, 2025 /s/Brandon N. Lavertu
--- ---
Brandon N. Lavertu
Executive Vice President and Chief Financial Officer

ex_817570.htm

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Richard J. O’Neil, Jr., President and Chief Executive Officer of ECB Bancorp, Inc., (the “Company”) and Brandon N. Lavertu, Executive Vice President and Chief Financial Officer of the Company, each certify in their capacity as an officer of the Company that they have reviewed the quarterly report on Form 10-Q for the quarter ended June 30, 2025 (the “Report”) and that to the best of their knowledge:

1. the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
--- ---
Date: August 8, 2025 /s/Richard J. O'Neil, Jr.
--- ---
Richard J. O’Neil, Jr.
President and Chief Executive Officer
Date: August 8, 2025 /s/Brandon N. Lavertu
Brandon N. Lavertu
Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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