UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
|
For the quarterly period ended
OR
For the transition period from __________________ to __________________
Commission File No.
(Exact Name of Registrant as Specified in Its Charter)
| ||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
☒ 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).
☒ 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 ☐ | |
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 Exchange Act).
YES
There were
METROPOLITAN BANK HOLDING CORP.
Form 10-Q
Table of Contents
2
GLOSSARY OF COMMON TERMS AND ACRONYMS
ACL | Allowance for credit losses | FHLB | Federal Home Loan Bank |
AFS | Available-for-sale | FHLBNY | Federal Home Loan Bank of New York |
ALCO | Asset Liability Committee | FRB | Federal Reserve Bank |
AOCI | Accumulated other comprehensive income | FRBNY | Federal Reserve Bank of New York |
ASC | Accounting Standards Codification | FX | Foreign exchange |
ASU | Accounting Standards Update | GAAP | U.S. Generally accepted accounting principles |
Bank | Metropolitan Commercial Bank | GPG | Global Payments Group |
BHC Act | Bank Holding Company Act of 1956, as amended | HTM | Held-to-maturity |
BSA | Bank Secrecy Act | IRR | Interest rate risk |
C&I | Commercial and industrial | ISO | Incentive stock option |
CARES Act | Coronavirus Aid, Relief, and Economic Security Act | JOBS Act | The Jumpstart Our Business Startups Act |
CECL | Current Expected Credit Loss | LIBOR | London Inter-Bank Offered Rate |
CFPB | Consumer Financial Protection Bureau | LTV | Loan-to-value |
Company | Metropolitan Bank Holding Corp. | MBS | Mortgage-backed securities |
Coronavirus | COVID-19 | N/A | Not Applicable |
CRA | Community Reinvestment Act | NYSDFS | New York State Department of Financial Services |
CRE | Commercial real estate | OCC | Office of the Comptroller of the Currency |
CRE Guidance | Commercial Real Estate Lending, Sound Risk Management Practices | PRSU | Performance restricted share units |
DIF | Deposit Insurance Fund | ROU | Right of use |
EB-5 Program | EB-5 Immigrant Investor Program | SEC | U.S. Securities and Exchange Commission |
EVE | Economic value of equity | SOFR | Secured Overnight Financing Rate |
FASB | Financial Accounting Standards Board | TDR | Troubled debt restructuring |
FDIC | Federal Deposit Insurance Corporation | USD | U.S. dollar |
3
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “consider,” “should,” “plan,” “estimate,” “predict,” “continue,” “probable,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Metropolitan Bank Holding Corp. (the “Company”) and its wholly-owned subsidiary Metropolitan Commercial Bank (the “Bank”), share repurchases under the Company’s share repurchase program, dividend payments and the Company’s strategies, plans, objectives, expectations and intentions, and other statements contained in this Quarterly Report on Form 10-Q that are not historical facts. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that are difficult to predict and are generally beyond our control and that may cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Factors that may cause actual results to differ from those results expressed or implied include those factors listed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on February 20, 2026 and in this Quarterly Report on Form 10-Q. In addition, these factors include but are not limited to:
| ● | a failure to successfully manage our credit risk, nonperforming loan resolutions and the sufficiency of our allowance for credit losses; |
| ● | changes in loan demand and declines in real estate values in the Company’s market area, which may adversely affect our loan production; |
| ● | borrower and depositor concentrations (e.g., by geographic area and by industry); |
| ● | the interest rate policies of the Federal Reserve and other regulatory bodies; |
| ● | general economic conditions, including unemployment rates, and potential recessionary and inflationary indicators, either nationally or locally, including the related effects on our borrowers and other clients, such as adverse changes to credit quality, and on our financial condition and results of operations; |
| ● | an unanticipated loss of key personnel or existing clients, or an inability to attract key employees; |
| ● | system failures or cybersecurity breaches of our information technology infrastructure and/or confidential information or those of the Company’s third-party service providers; |
| ● | failure to maintain current technologies or technological changes and enhancements that may be more difficult or expensive to implement than anticipated, and failure to successfully implement future information technology enhancements; |
| ● | emerging issues related to the development and use of artificial intelligence that could give rise to legal or regulatory action, damage our reputation or otherwise materially harm our business or clients; |
| ● | the timely and efficient development of new products and services offered by the Company, as well as risks (including reputational and litigation) attendant thereto, and the perceived overall value and acceptance of these products and services by clients; |
| ● | the successful implementation or consummation of new business initiatives, which may be more difficult or expensive than anticipated; |
| ● | an unexpected adverse financial, regulatory, legal or bankruptcy event experienced by our financial service clients; |
| ● | unexpected increases in our expenses; |
| ● | changes in liquidity, including funding sources, deposit flows and the size and composition of our deposit portfolio, and the percentage of uninsured deposits in the portfolio; |
4
| ● | an unexpected deterioration in the performance of our loan or securities portfolios and our inability to absorb the amount of actual losses inherent in the portfolio; |
| ● | difficulties associated with achieving or predicting expected future financial results; |
| ● | growth that differed from expectations and our ability to manage our growth; |
| ● | increases in competitive pressures among financial institutions or from non-financial institutions which may result in unanticipated changes in our loan or deposit rates; |
| ● | unexpected adverse impacts related to future acquisitions or divestitures; |
| ● | impacts related to or resulting from regional and community bank failures and stresses to regional banks, or conditions in the securities markets or the banking industry being less favorable than currently anticipated; |
| ● | changes in accounting principles, policies or guidelines may cause the Company’s financial condition or results of operation to be reported or perceived differently; |
| ● | legislative, tax or regulatory changes or actions, including changes and the potential for changes to regulatory policy and the promulgation of new laws and regulations following the inauguration of a new presidential administration, may adversely affect the Company’s business; |
| ● | unanticipated increases in FDIC insurance premiums or future assessments; |
| ● | the costs, including the possible incurrence of fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party, and which may adversely affect our results; |
| ● | the current or the potential impact on the Company’s operations, financial condition, and clients resulting from natural or man-made disasters, climate change, wars, military conflict, acts of terrorism, other geopolitical events, cyberattacks, and global pandemics, or localized epidemics; and |
| ● | unanticipated changes or developments in the industries and sectors in which we have made material investments in, as well as the impact of such changes or developments on our ability to provide banking services to those industries and sectors. |
The Company’s ability to predict results or the actual effects of its plans or strategies is inherently uncertain. As such, forward-looking statements can be affected by inaccurate assumptions made, or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect conditions only as of the date of this filing. Forward-looking statements speak only as of the date of this document. The Company undertakes no obligation (and expressly disclaims any obligation) to publicly release the results of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements, except as may be required by law.
5
METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
(in thousands, except share data)
June 30, | December 31, | |||||
| 2026 | | 2025 | |||
Assets | ||||||
Cash and due from banks | $ | | $ | | ||
Overnight deposits | | | ||||
Total cash and cash equivalents | | | ||||
Investment securities available-for-sale, at fair value | | | ||||
Investment securities held-to-maturity (estimated fair value of $ | | | ||||
Equity investment securities, at fair value | | | ||||
Total securities | | | ||||
Other investments | | | ||||
Loans, net of deferred fees and costs | | | ||||
Allowance for credit losses | ( | ( | ||||
Net loans | | | ||||
Other assets | | | ||||
Total assets | $ | | $ | | ||
Liabilities and Stockholders’ Equity | ||||||
Deposits | ||||||
Noninterest-bearing demand deposits | $ | | $ | | ||
Interest-bearing deposits | | | ||||
Total deposits | | | ||||
Trust preferred securities | | | ||||
Secured and other borrowings | | | ||||
Other liabilities | | | ||||
Total liabilities | | | ||||
Common stock, $ | | | ||||
Additional paid in capital | | | ||||
Retained earnings | | | ||||
Accumulated other comprehensive income (loss), net of tax | ( | ( | ||||
Treasury stock, at cost, | ( | ( | ||||
Total stockholders’ equity | | | ||||
Total liabilities and stockholders’ equity | $ | | $ | | ||
See accompanying notes to unaudited consolidated financial statements
6
METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | |||||
Interest and dividend income | ||||||||||||
Loans, including fees | $ | | $ | | $ | | $ | | ||||
Securities | | | | | ||||||||
Overnight deposits | | | | | ||||||||
Other interest and dividends | | | | | ||||||||
Total interest income | | | | | ||||||||
Interest expense | ||||||||||||
Deposits | | | | | ||||||||
Borrowed funds | — | | — | | ||||||||
Trust preferred securities | | | | | ||||||||
Total interest expense | | | | | ||||||||
Net interest income | | | | | ||||||||
Provision for credit losses | | | | | ||||||||
Net interest income after provision for credit losses | | | | | ||||||||
Non-interest income | ||||||||||||
| | | | |||||||||
Other income | | | | | ||||||||
Total non-interest income | | | | | ||||||||
Non-interest expense | ||||||||||||
Compensation and benefits | | | | | ||||||||
Bank premises and equipment | | | | | ||||||||
Professional fees | | | | | ||||||||
Technology costs | | | | | ||||||||
Deposit related program fees | | | | | ||||||||
FDIC assessments | | | | | ||||||||
Other expenses | | | | | ||||||||
Total non-interest expense | | | | | ||||||||
Net income before income tax expense | | | | | ||||||||
Income tax expense | | | | | ||||||||
Net income | $ | | $ | | $ | | $ | | ||||
Earnings per common share | ||||||||||||
Basic earnings | $ | | $ | | $ | | $ | | ||||
Diluted earnings | $ | | $ | | $ | | $ | | ||||
See accompanying notes to unaudited consolidated financial statements
7
METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(in thousands)
Three months ended | Six months ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | |||||
Net income | $ | | $ | | $ | | $ | | ||||
Other comprehensive income (loss), net of tax | ||||||||||||
Securities available-for-sale: | ||||||||||||
Unrealized gain (loss) arising during the period, net | ( | | ( | | ||||||||
Cash flow hedges: | ||||||||||||
Unrealized gain (loss) arising during the period, net | | ( | | ( | ||||||||
Reclassification adjustment for (gains) losses included in net income, net | — | — | | ( | ||||||||
Total | | ( | | ( | ||||||||
Total other comprehensive income (loss), net | | | | | ||||||||
Comprehensive income (loss), net | $ | | $ | | $ | | $ | | ||||
See accompanying notes to unaudited consolidated financial statements
8
METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)
Common | Additional | Retained | AOCI (Loss), | Treasury | ||||||||||||||||
| Stock | Paid-in Capital | Earnings | Net | Stock | Total | ||||||||||||||
Shares | Amount | |||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Balance at April 1, 2026 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Equity-based compensation awards and related tax effect | | — | ( | | — | | ( | |||||||||||||
Employee and non-employee stock-based compensation | — | — | | — | — | — | | |||||||||||||
Net income | — | — | — | | — | — | | |||||||||||||
Other comprehensive income (loss) | — | — | — | — | | — | | |||||||||||||
Cash dividends declared on common stock ($ | — | — | — | ( | — | — | ( | |||||||||||||
Balance at June 30, 2026 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Balance at April 1, 2025 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Equity-based compensation awards and related tax effect | | — | ( | — | — | — | ( | |||||||||||||
Employee and non-employee stock-based compensation | — | — | | — | — | — | | |||||||||||||
Treasury stock purchased | ( | — | — | — | — | ( | ( | |||||||||||||
Net income | — | — | — | | — | — | | |||||||||||||
Other comprehensive income (loss) | — | — | — | — | | — | | |||||||||||||
Balance at June 30, 2025 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Six Months Ended | ||||||||||||||||||||
Balance at January 1, 2026 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Issuance of common stock | | | | — | — | — | | |||||||||||||
Equity-based compensation awards and related tax effect | | — | ( | ( | — | | ( | |||||||||||||
Employee and non-employee stock-based compensation | — | — | | — | — | — | | |||||||||||||
Treasury stock purchased | ( | — | — | — | — | ( | ( | |||||||||||||
Net income | — | — | — | | — | — | | |||||||||||||
Other comprehensive income (loss) | — | — | — | — | | — | | |||||||||||||
Cash dividends declared on common stock ($ | — | — | — | ( | — | — | ( | |||||||||||||
Balance at June 30, 2026 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Balance at January 1, 2025 | | $ | | $ | | $ | | $ | ( | $ | — | $ | | |||||||
Equity-based compensation awards and related tax effect | | | ( | — | — | — | ( | |||||||||||||
Employee and non-employee stock-based compensation | — | — | | — | — | — | | |||||||||||||
Treasury stock purchased | ( | — | — | — | — | ( | ( | |||||||||||||
Net income | — | — | — | | — | — | | |||||||||||||
Other comprehensive income (loss) | — | — | — | — | | — | | |||||||||||||
Balance at June 30, 2025 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
See accompanying notes to unaudited consolidated financial statements
9
METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
Six months ended June 30, | |||||||
| 2026 | | 2025 | | |||
Cash flows from operating activities | |||||||
Net income | $ | | $ | | |||
Adjustments to reconcile net income to net cash: | |||||||
Net depreciation, amortization, and accretion | ( | ( | |||||
Provision for credit losses | | | |||||
Stock-based compensation | | | |||||
Other, net | ( | ( | |||||
Net change in: | |||||||
Other assets | ( | ( | |||||
Other liabilities | | ( | |||||
Net cash provided by (used in) operating activities | | | |||||
Cash flows from investing activities | |||||||
Loan originations and payments, net | ( | ( | |||||
Proceeds from the sale of loans | | — | |||||
Redemptions of FRB and FHLB Stock | | | |||||
Purchases of FRB and FHLB Stock | ( | ( | |||||
Purchase of securities available-for-sale | ( | ( | |||||
Purchase of securities held-to-maturity | ( | — | |||||
Proceeds from paydowns and maturities of securities available-for-sale | | | |||||
Proceeds from paydowns and maturities of securities held-to-maturity | | | |||||
Purchase of premises and equipment | ( | ( | |||||
Net cash provided by (used in) investing activities | ( | ( | |||||
Cash flows from financing activities | |||||||
Proceeds from issuance of common stock, net | | — | |||||
Proceeds from (repayments of) federal funds purchased, net | — | ( | |||||
Proceeds from (repayments of) FHLB advances, net | — | ( | |||||
Redemption of common stock for tax withholdings for restricted stock vesting | ( | ( | |||||
Proceeds from (repayments of) secured borrowings, net | | | |||||
Net increase (decrease) in deposits | | | |||||
Purchase of treasury stock | ( | ( | |||||
Cash dividend paid | ( | — | |||||
Net cash provided by (used in) financing activities | | | |||||
| |||||||
Increase (decrease) in cash and cash equivalents | ( | ( | |||||
Cash and cash equivalents at the beginning of the period | | | |||||
Cash and cash equivalents at the end of the period | $ | | $ | | |||
Supplemental information | |||||||
Cash paid for: | |||||||
Interest | $ | | $ | | |||
Income Taxes | $ | | $ | | |||
See accompanying notes to unaudited consolidated financial statements
10
NOTE 1 — ORGANIZATION
Metropolitan Bank Holding Corp. (the “Company”), a New York corporation, is a bank holding company headquartered in New York, New York and registered under the BHC Act. Through its wholly owned bank subsidiary, Metropolitan Commercial Bank (the “Bank”), a New York state-chartered commercial bank, the Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals primarily in the New York metropolitan area. See the “GLOSSARY OF COMMON TERMS AND ACRONYMS” for the definition of certain terms and acronyms used throughout this Form 10-Q.
The Company’s primary lending products are CRE loans (including multi-family loans) and C&I loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flows from the operations of businesses.
The Company’s primary deposit products are checking, savings, and term deposit accounts, all of which are insured by the FDIC up to the maximum amounts allowed by law. In addition to traditional commercial banking products, the Company offers: corporate cash management and retail banking services; customized financial solutions for government entities, municipalities, public institutions and charter schools; specialized services to facilitate secure and efficient real estate transactions and tax-deferred exchanges for title and escrow and Section 1031 exchanges; and EB-5 Program escrow accounts of foreign investor funds for USCIS approved job-creating projects.
As a bank holding company, the Company is subject to the supervision of the Board of Governors of the Federal Reserve System. The Company is required to file with the FRB reports and other information regarding its business operations and the business operations of its subsidiaries. As a state-chartered bank that is a member of the FRB, the Bank is subject to FDIC regulations as well as supervision, periodic examination and regulation by the NYDFS as its primary state regulator and by the FRB as its primary federal regulator.
NOTE 2 — BASIS OF PRESENTATION
The accounting and reporting policies of the Company conform with GAAP and predominant practices within the U.S. banking industry. The Unaudited Consolidated Financial Statements (“unaudited financial statements”) include the accounts of the Company and the Bank. All intercompany balances and transactions have been eliminated. The unaudited financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q, Article 10 of Regulation S-X and predominant practices within the U.S. banking industry. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The unaudited financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.
In preparing the interim unaudited financial statements in conformity with GAAP, management has made estimates and assumptions based on available information. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods, and actual results could differ from those estimated. Information available which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, inflation and its related effects and changes in the financial condition of borrowers.
Some items in the prior year financial statements may have been reclassified to conform to the current presentation. Reclassification had no effect on prior year net income or stockholders’ equity.
The results of operations for the three and six months ended June 30, 2026 and 2025 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or for any other period.
11
The unaudited financial statements presented in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC.
Allowance for Credit Losses
The ACL for loans is measured on the loan’s amortized cost basis, excluding interest receivable, and is initially recognized upon origination or purchase of the loans and subsequently remeasured on a recurring basis. The ACL is recognized as a contra-asset, and credit loss expense is recorded as a provision for credit losses in the consolidated statements of operations. Loan losses are charged-off against the ACL when management believes the loan is uncollectible. Subsequent recoveries, if any, are credited to the ACL. The Company does not recognize an ACL on accrued interest receivable, consistent with its policy to reverse interest income when interest is 90 days or more past due.
The Company also records an ACL on unfunded loan commitments, which is based on the same assumptions as funded loans and also considers the probability of funding. The ACL is recognized as a liability, and credit loss expense is recorded as a provision for unfunded loan commitments within the provision for credit losses in the consolidated statements of operations. Upon funding of the loan, any related ACL previously recorded on the unfunded amount is reversed and an ACL is subsequently recognized on the outstanding loan.
To calculate the ACL for loans and loan commitments collectively evaluated, the Company uses models developed by a third party. The lifetime loss rate models calculate the expected losses over the life of the loan based on exposure at default loan attributes and reasonable, supportable economic forecasts. The exposure at default considers the current unpaid balance, prepayment assumptions, and expected utilization assumptions.
Key assumptions used in the models include portfolio segmentation, prepayments, risk rating, a peer scalar, and the expected utilization of unfunded commitments among others. The portfolios are segmented by loan level attributes such as loan type, loan size, date of origination, and delinquency status to create homogenous loan pools. Pool level metrics are calculated, and loss rates are subsequently applied to the pools as the loans have similar characteristics. Prepayment assumptions, if applicable, are embedded within the models and are based on the same data used for model development and incorporate adjustments for reasonable and supportable forecasts. The models employ mean reversion techniques to predict credit losses for loans that are expected to mature beyond the forecast period.
To account for economic uncertainty, the Company uses multiple economic scenarios provided by the model vendor in determining the ACL. The forecasts include various projections based on variables such as, Gross Domestic Product, interest rates, property price indices, and employment measures, among others. The forecasts are probability-weighted based on available information at the time the calculation is conducted. Scenario weightings and model parameters are reviewed for each calculation and are subject to change.
The CRE and C&I lifetime loss rate models were developed using the historical loss experience of all banks in the model’s developmental dataset. Banks in the model’s developmental dataset may have different loss experiences due to geography and portfolio as well as operational and underwriting procedures that vary from those of the Company, and therefore, the Company calibrates expected losses using a peer scalar function provided by the model vendor. The peer scalar was calculated by examining the loss rates of peer banks that have similar asset bases and that operate in similar markets as the Company and comparing these peer group loss rates to the model results.
The Company also considers qualitative adjustments to expected credit loss estimates for information not already captured in the quantitative loss estimation models. Qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Qualitative loss factors are based on the Company’s judgment of market, industry or business specific data, changes in loan composition, performance trends, regulatory changes, uncertainty of macroeconomic forecasts, and other asset specific risk characteristics.
When loans do not share risk characteristics with other financial assets they are evaluated individually. Management applies its normal loan review procedures in making these judgments. Individually evaluated loans consist of nonaccrual loans and loans that have been modified due to financial difficulty. In determining the ACL, the Company generally applies
12
a discounted cash flow method for instruments that are individually assessed. For collateral dependent financial assets where the borrower is experiencing financial difficulty, the ACL is measured based on the difference between the fair value of the collateral (less selling costs if applicable) and the amortized cost basis of the asset as of the measurement date. Fair value is generally calculated based on the value of the underlying collateral less an appraisal discount.
The measurement of all expected credit losses for financial assets held at amortized cost is based on historical experience, current conditions, and reasonable and supportable forecasts. The Company continuously monitors current conditions and events and will evaluate potential changes that will enhance the estimation process. During the quarter ended March 31, 2026, the peer group selection process, macroeconomic forecast weightings, and the qualitative factor process were adjusted to reflect current conditions and events. The Company accounted for these revisions prospectively as a change in accounting estimate beginning March 31, 2026, and no prior period amounts were adjusted. The effect of this change in accounting estimate for the three months ended March 31, 2026, was a net decrease in the provision for credit losses of $
NOTE 3 — SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” ASU 2024-03 requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU No. 2024-03 does not change the expense captions an entity presents on the face of the income statement. Subsequently issued ASU No. 2025-01 amended the effective date of ASU No. 2024-03 to require all public business entities to adopt the new guidance for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The guidance may be applied on a prospective or retrospective basis. The Company is currently evaluating the impact of ASU No. 2024- 03 on its consolidated financial statements.
ASU No. 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" clarifies the accounting for costs related to internal-use software. The new guidance clarifies the threshold entities apply to begin capitalizing costs and removes all references to project stages in ASC Subtopic 350-40. ASU No. 2025-06 is effective for the Company beginning in 2028. The new guidance may be applied using a prospective, retrospective or modified transition approach with early adoption permitted. The Company is currently evaluating the impact of ASU 2025-06 on its consolidated financial statements
In November 2025, the FASB issued ASU 2025-08, “Financial instruments – Credit Losses (Topic 326): Purchased Loans,” which amends the guidance in ASC 326 on the accounting for certain purchased loans. Under the ASU, entities must account for acquired loans (excluding credit cards) that meet certain criteria at acquisition (“purchased seasoned loans”) by recognizing them at their purchase price plus an allowance for expected credit losses (the “gross-up approach”). ASU 2025-08 also introduces an accounting policy election related to the subsequent measurement of expected credit losses for entities that use a method other than a discounted cash flow analysis to estimate credit losses on purchased seasoned loans. If this accounting policy is elected, entities can use the amortized cost basis of the asset to subsequently measure their credit loss allowance. ASU 2025-08 is effective for interim and annual reporting periods beginning after December 15, 2026. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact of ASU 2025-08 on its consolidated financial statements.
In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements,” which addresses five hedge accounting issues by providing additional guidance that is expected to enable entities to achieve and maintain hedge accounting for highly effective economic hedges and more closely aligning hedge accounting with risk management activities. This ASU is effective for annual reporting periods beginning after Dec. 15, 2026, with early adoption permitted. Guidance is to be applied on a prospective basis, however certain changes to existing cash flow hedges are permitted as of adoption. The Company is currently evaluating the impact of ASU 2025-09 on its consolidated financial statements.
13
NOTE 4 — INVESTMENT SECURITIES
The following tables summarize the amortized cost and fair value of AFS and HTM debt securities and equity investments and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses (in thousands):
Gross | Gross | |||||||||||
Unrealized/ | Unrealized/ | |||||||||||
Amortized | Unrecognized | Unrecognized | ||||||||||
At June 30, 2026 | | Cost | | Gains | | Losses | | Fair Value | ||||
Available-for-Sale Securities: | ||||||||||||
U.S. Government agency securities | $ | | $ | — | $ | ( | $ | | ||||
U.S. State and Municipal securities | | — | ( | | ||||||||
Residential MBS | | | ( | | ||||||||
Commercial MBS | | — | ( | | ||||||||
Asset-backed securities | | — | ( | | ||||||||
Total securities available-for-sale | $ | | $ | | $ | ( | $ | | ||||
Held-to-Maturity Securities: | ||||||||||||
U.S. State and Municipal securities | $ | | $ | — | $ | ( | $ | | ||||
Residential MBS | | | ( | | ||||||||
Commercial MBS | | — | ( | | ||||||||
Total securities held-to-maturity | $ | | $ | | $ | ( | $ | | ||||
Equity Investments: | ||||||||||||
CRA Mutual Fund | $ | | $ | — | $ | ( | $ | | ||||
Total equity investment securities | $ | | $ | — | $ | ( | $ | | ||||
Gross | Gross | |||||||||||
Unrealized/ | Unrealized/ | |||||||||||
Amortized | Unrecognized | Unrecognized | ||||||||||
At December 31, 2025 | | Cost | | Gains | | Losses | | Fair Value | ||||
Available-for-Sale Securities: | ||||||||||||
U.S. Government agency securities | $ | | $ | — | $ | ( | $ | | ||||
U.S. State and Municipal securities | | — | ( | | ||||||||
Residential MBS | | | ( | | ||||||||
Commercial MBS | | | ( | | ||||||||
Asset-backed securities | | — | ( | | ||||||||
Total securities available-for-sale | $ | | $ | | $ | ( | $ | | ||||
Held-to-Maturity Securities: | ||||||||||||
U.S. State and Municipal securities | $ | | $ | — | $ | ( | $ | | ||||
Residential MBS | | — | ( | | ||||||||
Commercial MBS | | — | ( | | ||||||||
Total securities held-to-maturity | $ | | $ | — | $ | ( | $ | | ||||
Equity Investments: | ||||||||||||
CRA Mutual Fund | $ | | $ | — | $ | ( | $ | | ||||
Total equity investment securities | $ | | $ | — | $ | ( | $ | | ||||
There were
14
The tables below summarize, by contractual maturity, the amortized cost and fair value of debt securities. The tables do not include the effect of principal repayments or scheduled principal amortization. Equity securities, primarily investments in mutual funds, have been excluded from the table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):
Held-to-Maturity | Available-for-Sale | |||||||||||
At June 30, 2026 | | Amortized Cost | | Fair Value | | Amortized Cost | | Fair Value | ||||
Due within 1 year | $ | — | $ | — | $ | — | $ | — | ||||
After 1 year through 5 years | — | — | | | ||||||||
After 5 years through 10 years | — | — | | | ||||||||
After 10 years | | | | | ||||||||
Mortgage-backed and Asset-backed Securities | | | | | ||||||||
Total Securities | $ | | $ | | $ | | $ | | ||||
Held-to-Maturity | Available-for-Sale | |||||||||||
At December 31, 2025 | | Amortized Cost | | Fair Value | | Amortized Cost | | Fair Value | ||||
Due within 1 year | $ | — | $ | — | $ | | $ | | ||||
After 1 year through 5 years | — | — | | | ||||||||
After 5 years through 10 years | — | — | | | ||||||||
After 10 years | | | | | ||||||||
Mortgage-backed and Asset-backed Securities | | | | | ||||||||
Total Securities | $ | | $ | | $ | | $ | | ||||
At June 30, 2026, there were $
At June 30, 2026 and December 31, 2025, there were
The following tables present debt securities with unrealized/unrecognized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||
Unrealized/ | Unrealized/ | Unrealized/ | ||||||||||||||||
Estimated | Unrecognized | Estimated | Unrecognized | Estimated | Unrecognized | |||||||||||||
At June 30, 2026 | | Fair Value | | Losses | | Fair Value | | Losses | | Fair Value | | Losses | ||||||
Available-for-Sale Securities: | ||||||||||||||||||
U.S. Government agency securities | $ | — | $ | — | $ | | $ | ( | $ | | $ | ( | ||||||
U.S. State and Municipal securities | — | — | | ( | | ( | ||||||||||||
Residential MBS | | ( | | ( | | ( | ||||||||||||
Commercial MBS | | ( | | ( | | ( | ||||||||||||
Asset-backed securities | — | — | | ( | | ( | ||||||||||||
Total securities available-for-sale | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
Held-to-Maturity Securities: | ||||||||||||||||||
U.S. State and Municipal securities | $ | — | $ | — | $ | | $ | ( | $ | | $ | ( | ||||||
Residential MBS | | ( | | ( | | ( | ||||||||||||
Commercial MBS | — | — | | ( | | ( | ||||||||||||
Total securities held-to-maturity | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
15
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||
Unrealized/ | Unrealized/ | Unrealized/ | ||||||||||||||||
Estimated | Unrecognized | Estimated | Unrecognized | Estimated | Unrecognized | |||||||||||||
At December 31, 2025 | | Fair Value | | Losses | | Fair Value | | Losses | | Fair Value | | Losses | ||||||
Available-for-Sale Securities: | ||||||||||||||||||
U.S. Government agency securities | $ | — | $ | — | $ | | $ | ( | $ | | $ | ( | ||||||
U.S. State and Municipal securities | — | — | | ( | | ( | ||||||||||||
Residential MBS | — | — | | ( | | ( | ||||||||||||
Commercial MBS | | ( | | ( | | ( | ||||||||||||
Asset-backed securities | — | — | | ( | | ( | ||||||||||||
Total securities available-for-sale | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
Held-to-Maturity Securities: | ||||||||||||||||||
U.S. State and Municipal securities | $ | — | $ | — | $ | | $ | ( | $ | | $ | ( | ||||||
Residential MBS | — | — | | ( | | ( | ||||||||||||
Commercial MBS | — | — | | ( | | ( | ||||||||||||
Total securities held-to-maturity | $ | — | $ | — | $ | | $ | ( | $ | | $ | ( | ||||||
Except for U.S. State and Municipal securities, the Company has a zero loss expectation for its HTM securities portfolio, and therefore has
AFS securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. The unrealized losses on AFS securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend, nor would it be required, to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result,
NOTE 5 — LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans, net of deferred costs and fees, consist of the following (in thousands):
At | At | |||||
June 30, | December 31, | |||||
| 2026 | 2025 | ||||
Real estate | ||||||
Commercial | $ | | $ | | ||
Construction | | | ||||
Multi-family | | | ||||
One-to four-family | | | ||||
Total real estate loans | | | ||||
Commercial and industrial | | | ||||
Consumer | | | ||||
Total loans | | | ||||
Deferred fees, net of origination costs | ( | ( | ||||
Loans, net of deferred fees and costs | | | ||||
Allowance for credit losses | ( | ( | ||||
Net loans | $ | | $ | | ||
At June 30, 2026, $
16
The following tables present the activity in the ACL for funded loans by segment. The portfolio segments represent the categories that the Company uses to determine its ACL (in thousands):
Multi- | One-to four- | ||||||||||||||||||||
Three months ended June 30, 2026 | | CRE | | C&I | | Construction | | family | | family | | Consumer | | Total | |||||||
Allowance for credit losses: | |||||||||||||||||||||
Beginning balance | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Provision/(credit) for credit losses | | | | | ( | ( | | ||||||||||||||
Loans charged-off | ( | ( | — | ( | — | — | ( | ||||||||||||||
Recoveries | | — | — | — | — | | | ||||||||||||||
Total ending allowance balance | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Multi- | One-to four- | ||||||||||||||||||||
Three months ended June 30, 2025 | | CRE | | C&I | | Construction | | family | | family | | Consumer | | Total | |||||||
Allowance for credit losses: | |||||||||||||||||||||
Beginning balance | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Provision/(credit) for credit losses | | | ( | | ( | | | ||||||||||||||
Loans charged-off | — | — | — | — | — | ( | ( | ||||||||||||||
Recoveries | — | | — | — | — | | | ||||||||||||||
Total ending allowance balance | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Multi- | One-to four- | ||||||||||||||||||||
Six months ended June 30, 2026 | | CRE | | C&I | | Construction | | family | | family | | Consumer | | Total | |||||||
Allowance for credit losses: | |||||||||||||||||||||
Beginning balance | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Provision/(credit) for credit losses | ( | | ( | ( | | ( | | ||||||||||||||
Loans charged-off | ( | ( | — | ( | — | ( | ( | ||||||||||||||
Recoveries | | | — | — | — | — | | ||||||||||||||
Total ending allowance balance | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Multi- | One-to four- | ||||||||||||||||||||
Six months ended June 30, 2025 | | CRE | | C&I | | Construction | | family | | family | | Consumer | | Total | |||||||
Allowance for credit losses: | |||||||||||||||||||||
Beginning balance | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Provision/(credit) for credit losses | | | | | | | | ||||||||||||||
Loans charged-off | — | — | — | — | — | ( | ( | ||||||||||||||
Recoveries | — | | — | — | — | | | ||||||||||||||
Total ending allowance balance | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Net charge-offs for the three and six months ended June 30, 2026 were $
The following tables present the activity in the ACL for unfunded loan commitments (in thousands):
Three months ended June 30, | | Six months ended June 30, | |||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | ||||||
17
Balance at the beginning of period | $ | | $ | | $ | | $ | | |||||
Provision/(credit) for credit losses | ( | | ( | | |||||||||
Total ending allowance balance | $ | | $ | | $ | | $ | |
The following tables present the recorded investment in non-accrual loans and loans past due 90 days and greater and still accruing, by class of loans (in thousands):
Loans Past Due | |||||||||
Non-accrual | 90 Days and | ||||||||
Total | Without an | Greater and | |||||||
At June 30, 2026 | | Non-accrual | ACL | Still Accruing | |||||
Commercial real estate | $ | | $ | | $ | — | |||
Commercial & industrial | | | — | ||||||
Multi-family | | | — | ||||||
One-to-four family | | | — | ||||||
Consumer | — | — | — | ||||||
Total | $ | | $ | | $ | — | |||
Loans Past Due | |||||||||
Non-accrual | 90 Days and | ||||||||
Total | Without an | Greater and | |||||||
At December 31, 2025 | Non-accrual | ACL | Still Accruing | ||||||
Commercial real estate | $ | | $ | | $ | — | |||
Commercial & industrial | | | — | ||||||
Multi-family | | | — | ||||||
One-to-four family | | | — | ||||||
Consumer | — | — | | ||||||
Total | $ | | $ | | $ | | |||
Interest income on non-accrual loans recognized on a cash basis for the three and six months ended June 30, 2026 and 2025 was immaterial.
The following tables present the aging of the recorded investment in past due loans by class of loans (in thousands):
Non-accrual or | Total Past | |||||||||||||||||
30-59 | 60-89 | 90 Days and | Due or | Current | ||||||||||||||
At June 30, 2026 | | Days | | Days | | Greater | | Non-accrual | | Loans | | Total | ||||||
Commercial real estate | $ | | $ | — | $ | | $ | | $ | | $ | | ||||||
Commercial & industrial | — | | | | | | ||||||||||||
Construction | — | — | — | — | | | ||||||||||||
Multi-family | | — | | | | | ||||||||||||
One-to four-family | | — | | | | | ||||||||||||
Consumer | — | — | — | — | | | ||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
18
Non-accrual or | Total Past | |||||||||||||||||
30-59 | 60-89 | 90 Days and | Due or | Current | ||||||||||||||
At December 31, 2025 | | Days | | Days | | Greater | | Non-accrual | | Loans | | Total | ||||||
Commercial real estate | $ | — | $ | — | $ | | $ | | $ | | $ | | ||||||
Commercial & industrial | — | | | | | | ||||||||||||
Construction | — | — | — | — | | | ||||||||||||
Multi-family | | — | | | | | ||||||||||||
One-to four-family | | — | | | | | ||||||||||||
Consumer | | — | | | | | ||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Credit Quality Indicators
The Company aggregates loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Except for one-to four-family loans and consumer loans, the Company analyzes loans individually by classifying the loans as to credit risk ratings at least annually. For one-to four-family loans and consumer loans, the Company evaluates credit quality based on the aging status of the loan. An analysis is performed on a quarterly basis for loans classified as special mention, substandard or doubtful. The Company uses the following definitions for risk ratings. Loans not meeting these definitions are considered to be pass-rated loans.
Special Mention - Loans classified as special mention have a potential weakness that deserves management’s attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.
Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values highly questionable and improbable.
19
The following table presents loan balances by credit quality indicator and year of origination at June 30, 2026 and charge-offs for the six months ended June 30, 2026 (in thousands):
2021 | ||||||||||||||||||||||||
| 2026 | | 2025 | | 2024 | | 2023 | | 2022 | | & Prior | | Revolving | | Total | |||||||||
CRE | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Special Mention | | | | — | — | — | — | | ||||||||||||||||
Substandard | | | — | — | | | — | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Construction | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | — | $ | — | $ | — | $ | | $ | | ||||||||
Total | $ | | $ | | $ | | $ | — | $ | — | $ | — | $ | | $ | | ||||||||
Multi-family | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Special Mention | — | | — | — | — | | — | | ||||||||||||||||
Substandard | — | | | — | — | | — | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
One-to four-family | ||||||||||||||||||||||||
Current | $ | — | $ | — | $ | — | $ | | $ | | $ | | $ | — | $ | | ||||||||
Past Due | — | — | — | — | — | | — | | ||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | | $ | | $ | | $ | — | $ | | ||||||||
C&I | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Special Mention | | | | — | — | — | — | | ||||||||||||||||
Substandard | — | — | — | | | — | | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Consumer | ||||||||||||||||||||||||
Current | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||
Total | ||||||||||||||||||||||||
Pass/Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Special Mention | | | | — | — | | — | | ||||||||||||||||
Substandard/Past due | | | | | | | | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Charge-offs | ||||||||||||||||||||||||
CRE | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||
C&I | — | — | | — | | | — | | ||||||||||||||||
Multi-family | — | — | — | — | | | — | | ||||||||||||||||
Consumer | — | — | — | — | — | | — | | ||||||||||||||||
Total | $ | — | $ | — | $ | | $ | — | $ | | $ | | $ | — | $ | | ||||||||
20
The following table presents loan balances by credit quality indicator and year of origination at December 31, 2025 and charge-offs for the year ended December 31, 2025 (in thousands):
2020 | ||||||||||||||||||||||||
| 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | & Prior | | Revolving | | Total | |||||||||
CRE | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Special Mention | | | — | — | | — | — | | ||||||||||||||||
Substandard | | — | — | | | — | — | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Construction | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | — | $ | — | $ | — | $ | | $ | | ||||||||
Total | $ | | $ | | $ | | $ | — | $ | — | $ | — | $ | | $ | | ||||||||
Multi-family | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Special Mention | | — | — | — | — | — | — | | ||||||||||||||||
Substandard | | | — | — | — | — | — | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
One-to four-family | ||||||||||||||||||||||||
Current | $ | — | $ | — | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||||
Substandard | — | — | — | — | — | | — | | ||||||||||||||||
Total | $ | — | $ | — | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||||
C&I | ||||||||||||||||||||||||
Pass | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Substandard | | — | | | — | — | | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Consumer | ||||||||||||||||||||||||
Current | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||
Past due | — | — | — | — | — | | — | | ||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||
Total | ||||||||||||||||||||||||
Pass/Current | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Special Mention | | | — | — | | — | — | | ||||||||||||||||
Substandard/Past due | | | | | | | | | ||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Charge-offs | ||||||||||||||||||||||||
Multi-family | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | — | $ | | ||||||||
Consumer | — | — | — | — | — | | — | | ||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | | $ | | $ | — | $ | | ||||||||
21
A loan is considered collateral dependent when the borrower is experiencing financial difficulties and repayment is expected to be substantially provided by the operation or sale of the collateral. The following table presents collateral dependent loans by portfolio segment as of June 30, 2026 and December 31, 2025. These loans are classified as substandard as of June 30, 2026 and December 31, 2025:
June 30, | December 31, | |||||
| 2026 | 2025 | ||||
Collateral dependent loans: | ||||||
Commercial real estate | $ | | $ | | ||
Multi-family | | | ||||
One-to four-family | | | ||||
Total | $ | | $ | | ||
The following tables show the amortized cost basis of modified loans to borrowers experiencing financial difficulty during the periods indicated (in thousands):
Combination | Combination | ||||||||||||||
Term | Term Extension | Modifications | |||||||||||||
Extension and | Payment Deferral and | as a % of | |||||||||||||
Three months ended June 30, 2026 | Extension | Interest Rate | Debt Forgiveness | Total | Loan Class | ||||||||||
Commercial real estate | $ | — | $ | | $ | — | $ | | |||||||
Multi-family | $ | — | $ | — | $ | | $ | | |||||||
Total | $ | — | $ | | $ | | $ | | |||||||
Combination | Combination | ||||||||||||||
Term | Term Extension | Modifications | |||||||||||||
Extension and | Payment Deferral and | as a % of | |||||||||||||
Six months ended June 30, 2026 | Extension | Interest Rate | Debt Forgiveness | Total | Loan Class | ||||||||||
Commercial real estate | $ | — | $ | | $ | — | $ | | |||||||
Multi-family | $ | — | $ | — | $ | | $ | | |||||||
Total | $ | — | $ | | $ | | $ | | |||||||
Combination | Combination | ||||||||||||||
Term | Term Extension | Modifications | |||||||||||||
Extension and | Payment Deferral and | as a % of | |||||||||||||
Three months ended June 30, 2025 | Extension | Interest Rate | Debt Forgiveness | Total | Loan Class | ||||||||||
Commercial real estate | $ | — | $ | — | $ | — | $ | — | |||||||
Total | $ | — | $ | — | $ | — | $ | — | |||||||
Combination | Combination | ||||||||||||||
Term | Term Extension | Modifications | |||||||||||||
Extension and | Payment Deferral and | as a % of | |||||||||||||
Six months ended June 30, 2025 | Extension | Interest Rate | Debt Forgiveness | Total | Loan Class | ||||||||||
Multi-family | $ | | $ | — | $ | — | $ | | |||||||
Total | $ | | $ | — | $ | — | $ | | |||||||
22
The following tables describe the types of modifications made to borrowers experiencing financial difficulty (dollars in thousands):
| Types of Modifications | |||||||||
Weighted | ||||||||||
Combination | Combination | Average | ||||||||
Term | Term Extension | Interest | ||||||||
Term | Extension and | Payment Deferral | Rate | |||||||
Extension | Interest Rate | and Debt Forgiveness | Reduction | |||||||
Three months ended June 30, 2026 | ||||||||||
Commercial real estate | — | — | ||||||||
Multi-family | — | — |
| |||||||
| Types of Modifications | |||||||||
Weighted | ||||||||||
Combination | Combination | Average | ||||||||
Term | Term Extension | Interest | ||||||||
Term | Extension and | Payment Deferral | Rate | |||||||
Extension | Interest Rate | and Debt Forgiveness | Reduction | |||||||
Six months ended June 30, 2026 | ||||||||||
Commercial real estate | — | — | ||||||||
Multi-family | — | — |
| |||||||
| Types of Modifications | |||||||||
Weighted | ||||||||||
Combination | Combination | Average | ||||||||
Term | Term Extension | Interest | ||||||||
Term | Extension and | Payment Deferral | Rate | |||||||
Extension | Interest Rate | and Debt Forgiveness | Reduction | |||||||
Three months ended June 30, 2025 | ||||||||||
Multi-family | — | — | — | |||||||
| Types of Modifications | |||||||||
Weighted | ||||||||||
Combination | Combination | Average | ||||||||
Term | Term Extension | Interest | ||||||||
Term | Extension and | Payment Deferral | Rate | |||||||
Extension | Interest Rate | and Debt Forgiveness | Reduction | |||||||
Six months ended June 30, 2025 | ||||||||||
Multi-family | — | — | ||||||||
There were $
23
NOTE 6 — BORROWINGS
Borrowings consisted of the following (in thousands):
Interest Expense | Interest Expense | ||||||||||||||||||
At | At | Three months ended | | Six months ended | |||||||||||||||
June 30, | December 31, | | June 30, | June 30, | |||||||||||||||
| 2026 | | 2025 | 2026 | | 2025 | 2026 | | 2025 | | |||||||||
Federal funds purchased and securities sold under agreements to repurchase | $ | — | $ | — | $ | — | $ | | $ | — | $ | | |||||||
Federal Home Loan Bank of New York advances | $ | — | $ | — | $ | — | $ | | $ | — | $ | | |||||||
Secured and other borrowings: | |||||||||||||||||||
Secured borrowings | $ | | $ | | N.M. | N.M. | N.M | N.M | |||||||||||
N.M. – not meaningful
Federal funds purchased are generally overnight transactions and FHLBNY advances are short-term transactions. At June 30, 2026, the Company had
Secured borrowings are loan participation agreements with counterparties where the transfer of the participation interest did not qualify for sale treatment under GAAP.
At June 30, 2026, the Company had cash on deposit with the FRBNY and available secured wholesale funding borrowing capacity of $
NOTE 7 — STOCKHOLDERS’ EQUITY
The Board of Directors has authorized an aggregate of $
The Company may repurchase shares of common stock from time to time on the open market or by other means in accordance with applicable securities laws and other restrictions, including, in part, under a Rule 10b5-1 plan. The number of shares to be repurchased and the timing of additional repurchases, if any, will depend on several factors, including market conditions, prevailing share price, corporate and regulatory requirements, and other considerations. The share repurchase plan has no expiration date, may be discontinued or suspended at any time and does not obligate the Company to acquire any amount of its common stock. The Company records common stock that it repurchases as treasury stock at cost. Treasury stock is reissued at average cost.
During the first quarter of 2026, the Company completed a follow-on public equity offering of approximately
24
NOTE 8 — EARNINGS PER SHARE
The Company uses the two-class method in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings.
Three months ended June 30, | Six months ended June 30, | ||||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | ||||||
Basic | |||||||||||||
Net income available to common stockholders | $ | | $ | | $ | | $ | | |||||
Weighted average common shares outstanding | | | | | |||||||||
Basic earnings per common share | $ | $ | | $ | | $ | | ||||||
Diluted | |||||||||||||
Net income allocated to common stockholders | $ | | $ | | $ | | $ | | |||||
Weighted average common shares outstanding for basic earnings per common share | | | | | |||||||||
Add: Dilutive effects of assumed vesting of performance based restricted stock units | | | | | |||||||||
Add: Dilutive effects of assumed vesting of restricted stock units | | | | | |||||||||
Average shares and diluted potential common shares | | | | | |||||||||
Diluted earnings per common share | $ | | $ | | $ | | $ | | |||||
For the three and six months ended June 30, 2026, and 2025, respectively, all granted PRSUs and restricted stock units were considered in computing diluted earnings per common share.
NOTE 9 — STOCK COMPENSATION PLAN
Equity Incentive Plan
At June 30, 2026, the Company maintained a stock compensation plan, the Amended and Restated 2022 Equity Incentive Plan, as amended (the “2022 EIP”).
The 2022 EIP was approved on May 31, 2022 by the stockholders of the Company and an amendment and restatement of the 2022 EIP was approved by the stockholders of the Company on May 29, 2024 to increase the number of shares of common stock that may be issued under the plan by
Restricted Stock Awards and Restricted Stock Units
The Company grants restricted stock awards and restricted stock units under the 2022 EIP to certain key personnel. Each restricted stock grant vests based on the vesting schedule outlined in the respective grant agreement. Unvested restricted stock units are subject to forfeiture if the holder is not employed by the Company on the applicable vesting date.
25
In the first quarter of 2026 and 2025,
In January 2026,
The following table summarizes the changes in the Company’s restricted stock grants:
Six months ended | |||||
June 30, 2026 | |||||
Weighted | |||||
Average | |||||
Number | Grant Date | ||||
of | Fair Value | ||||
| Shares | | per Share | ||
Outstanding, beginning of period | | $ | | ||
Granted | | | |||
Forfeited | ( | | |||
Vested | ( | | |||
Outstanding at end of period | | $ | | ||
Performance-Based Stock Units
During the second quarter of 2022, the Company established a long-term incentive award program under the 2022 EIP. Under the program,
26
NOTE 10 — FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entity’s own judgments about the assumptions that market participants would use in pricing an asset or liability.
Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis
Assets measured on a recurring basis are limited to the Company’s AFS securities portfolio, equity investments, and derivative contracts. The AFS portfolio is carried at estimated fair value with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss in shareholders’ equity. Equity investments are carried at estimated fair value with changes in fair value reported on the statements of operations. Outstanding derivative contracts designated as cash flow hedges are carried at estimated fair value with changes in fair value reported as accumulated other comprehensive income or loss in shareholders’ equity. Outstanding derivatives not designated as hedges are carried at estimated fair value with changes in fair value reported as non-interest income. The fair values for substantially all of these assets are obtained monthly from an independent nationally recognized pricing service. On a quarterly basis, the Company assesses the reasonableness of the fair values obtained for the AFS portfolio by reference to a second independent nationally recognized pricing service. Based on the nature of these securities, the Company’s independent pricing service provides prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available for the majority of securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for the Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. On an annual basis, the Company obtains the models, inputs and assumptions utilized by its pricing service and reviews them for reasonableness. Other than derivative contracts, the Company did not have any liabilities that were measured at fair value at June 30, 2026 and December 31, 2025.
From time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as certain loans where the carrying value is based on the fair value of the underlying collateral estimated using Level 3 inputs consisting of individual third-party appraisals that may be adjusted based on certain criteria.
27
Assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized below (in thousands):
Fair Value Measurement using: | ||||||||||||
Quoted Prices | ||||||||||||
in Active | Significant | |||||||||||
Markets | Other | Significant | ||||||||||
Carrying | For Identical | Observable | Unobservable | |||||||||
| Amount | | Assets (Level 1) | | Inputs (Level 2) | | Inputs (Level 3) | |||||
At June 30, 2026 | ||||||||||||
Recurring Fair Value Measurements: | ||||||||||||
Assets | ||||||||||||
U.S. Government agency securities | $ | | $ | — | $ | | $ | — | ||||
U.S. State and Municipal securities | | — | | — | ||||||||
Residential mortgage securities | | — | | — | ||||||||
Commercial mortgage securities | | — | | — | ||||||||
Asset-backed securities | | — | | — | ||||||||
CRA Mutual Fund | | | — | — | ||||||||
Derivative assets | | — | | — | ||||||||
Liabilities | ||||||||||||
Derivative liabilities | | — | | — | ||||||||
Non-Recurring Fair Value Measurements: | ||||||||||||
Assets | ||||||||||||
Collateral dependent loans | | — | — | | ||||||||
Fair Value Measurement using: | ||||||||||||
Quoted Prices | ||||||||||||
in Active | Significant | |||||||||||
Markets | Other | Significant | ||||||||||
Carrying | For Identical | Observable | Unobservable | |||||||||
| Amount | | Assets (Level 1) | | Inputs (Level 2) | | Inputs (Level 3) | |||||
At December 31, 2025 | ||||||||||||
Recurring Fair Value Measurements: | ||||||||||||
Assets | ||||||||||||
U.S. Government agency securities | $ | | $ | — | $ | | $ | — | ||||
U.S. State and Municipal securities | | — | | — | ||||||||
Residential mortgage securities | | — | | — | ||||||||
Commercial mortgage securities | | — | | — | ||||||||
Asset-backed securities | | — | | — | ||||||||
CRA Mutual Fund | | | — | — | ||||||||
Derivative assets | | — | | — | ||||||||
Liabilities | ||||||||||||
Derivative liabilities | | — | | — | ||||||||
Non-Recurring Fair Value Measurements: | ||||||||||||
Assets | ||||||||||||
Collateral dependent loans | | — | — | | ||||||||
There were
At June 30, 2026, a collateral dependent CRE loan with a total amortized cost of $
28
Company used Level 3 inputs to estimate the fair value including discounts to the appraisal for costs to sell, and other adjustments, ranging from -
At December 31, 2025, collateral dependent multi-family loans with a total amortized cost of $
Assets and Liabilities Not Measured at Fair Value
The Company has engaged independent pricing service providers to provide the fair values of its financial assets and liabilities not measured at fair value. These providers follow FASB’s exit pricing guidelines, as required by ASC 820, Fair Value Measurement, when calculating the fair market value. Cash and cash equivalents include cash and due from banks and overnight deposits. The estimated fair values of cash and cash equivalents are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities. For securities and the disability fund, if quoted market prices are not available for a specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads. The estimated fair value of loans are measured using an exit price notion. Ownership in equity securities of the FRB and FHLB is generally restricted and there is no established liquid market for their resale. The fair values of deposit liabilities with no stated maturity (i.e., money market and savings deposits, and non-interest-bearing demand deposits) are equal to the carrying amounts payable on demand. Time deposits are valued using a replacement cost of funds approach. Trust preferred securities are valued using a replacement cost of funds approach. For all other assets and liabilities it is assumed that the carrying value equals their current fair value.
Carrying amounts and estimated fair values of financial instruments not carried at fair value were as follows (in thousands):
Fair Value Measurement Using: | |||||||||||||||
Quoted Prices | |||||||||||||||
in Active | Significant | ||||||||||||||
Markets | Other | Significant | |||||||||||||
Carrying | For Identical | Observable | Unobservable | Total Fair | |||||||||||
At June 30, 2026 | | Amount | | Assets (Level 1) | | Inputs (Level 2) | | Inputs (Level 3) | | Value | |||||
Financial Assets: | |||||||||||||||
Cash and due from banks | $ | | $ | | $ | — | $ | — | $ | | |||||
Overnight deposits | | | — | — | | ||||||||||
Securities held-to-maturity | | — | | — | | ||||||||||
Loans, net | | — | — | | | ||||||||||
Other investments | |||||||||||||||
FRB Stock | | N/A | N/A | N/A | N/A | ||||||||||
FHLB Stock | | N/A | N/A | N/A | N/A | ||||||||||
Disability Fund | | — | | — | | ||||||||||
Time deposits at banks | | | — | — | | ||||||||||
Accrued interest receivable | | — | | | | ||||||||||
Financial Liabilities: | |||||||||||||||
Non-interest-bearing demand deposits | $ | | $ | | $ | — | $ | — | $ | | |||||
Money market and savings deposits | | | — | — | | ||||||||||
Time deposits | | — | | — | | ||||||||||
Trust preferred securities | | — | — | | | ||||||||||
Accrued interest payable | | | | | | ||||||||||
Secured and other borrowings | | — | | — | | ||||||||||
29
Fair Value Measurement Using: | |||||||||||||||
Quoted Prices | |||||||||||||||
in Active | Significant | ||||||||||||||
Markets | Other | Significant | |||||||||||||
Carrying | For Identical | Observable | Unobservable | Total Fair | |||||||||||
At December 31, 2025 | | Amount | | Assets (Level 1) | | Inputs (Level 2) | | Inputs (Level 3) | | Value | |||||
Financial Assets: | |||||||||||||||
Cash and due from banks | $ | | $ | | $ | — | $ | — | $ | | |||||
Overnight deposits | | | — | — | | ||||||||||
Securities held-to-maturity | | — | | — | | ||||||||||
Loans, net | | — | — | | | ||||||||||
Other investments | |||||||||||||||
FRB Stock | | N/A | N/A | N/A | N/A | ||||||||||
FHLB Stock | | N/A | N/A | N/A | N/A | ||||||||||
Disability Fund | | — | | — | | ||||||||||
Time deposits at banks | | | — | — | | ||||||||||
Accrued interest receivable | | — | | | | ||||||||||
Financial Liabilities: | |||||||||||||||
Non-interest-bearing demand deposits | $ | | $ | | $ | — | $ | — | $ | | |||||
Money market and savings deposits | | | — | — | | ||||||||||
Time deposits | | — | | — | | ||||||||||
Trust preferred securities | | — | — | | | ||||||||||
Accrued interest payable | | | | | | ||||||||||
Secured and other borrowings | | — | | — | | ||||||||||
NOTE 11 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables present the tax effects allocated to each component of Other Comprehensive Income (Loss) (in thousands):
Three months ended | |||||||||||||||||||
June 30, 2026 | | June 30, 2025 | |||||||||||||||||
Before | Tax | After | Before | Tax | After | | |||||||||||||
Tax | Effect | Tax | Tax | Effect | Tax | ||||||||||||||
Unrealized gain (loss) arising on AFS securities | |||||||||||||||||||
Unrealized gain (loss) arising during the period | $ | ( | $ | | $ | ( | $ | | $ | ( | $ | | |||||||
Unrealized gain (loss) arising on cash flow hedges | |||||||||||||||||||
Unrealized gain (loss) arising during the period | | ( | | ( | | ( | |||||||||||||
Total other comprehensive income (loss) | $ | | $ | ( | $ | | $ | | $ | ( | $ | | |||||||
Six months ended | ||||||||||||||||||
June 30, 2026 | | June 30, 2025 | ||||||||||||||||
Before | Tax | After | Before | Tax | After | |||||||||||||
Tax | Effect | Tax | Tax | Effect | Tax | |||||||||||||
Unrealized gain (loss) arising on AFS securities | ||||||||||||||||||
Unrealized gain (loss) arising during the period | $ | ( | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
Unrealized gain (loss) arising on cash flow hedges | ||||||||||||||||||
Unrealized gain (loss) arising during the period | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
Reclassification adjustment for gain included in net income | | ( | | ( | | ( | ||||||||||||
Net Change | | ( | | ( | | ( | ||||||||||||
Total other comprehensive income (loss) | $ | | $ | ( | $ | | $ | | $ | ( | $ | | ||||||
30
The following tables present the after-tax changes in the balances of each component of Accumulated Other Comprehensive Income (Loss) at the dates indicated (in thousands):
Total | |||||||||
Accumulated | |||||||||
Other | |||||||||
AFS | Cash Flow | Comprehensive | |||||||
Securities | Hedge | Income (Loss) | |||||||
Balance at April 1, 2026 | $ | ( | $ | | $ | ( | |||
Other comprehensive income (loss), net of tax | ( | | | ||||||
Balance at June 30, 2026 | $ | ( | $ | | $ | ( | |||
Balance at April 1, 2025 | $ | ( | $ | ( | $ | ( | |||
Other comprehensive income (loss), net of tax | | ( | | ||||||
Balance at June 30, 2025 | $ | ( | $ | ( | $ | ( | |||
Total | |||||||||
Accumulated | |||||||||
Other | |||||||||
AFS | Cash Flow | Comprehensive | |||||||
Securities | Hedge | Income (Loss) | |||||||
Balance at January 1, 2026 | $ | ( | $ | ( | $ | ( | |||
Unrealized gain (loss) arising during the period, net of tax | ( | | | ||||||
Reclassification adjustment for (gain) loss included in net income, net of tax | — | | | ||||||
Other comprehensive income (loss), net of tax | ( | | | ||||||
Balance at June 30, 2026 | $ | ( | $ | | $ | ( | |||
Balance at January 1, 2025 | $ | ( | $ | | $ | ( | |||
Unrealized gain (loss) arising during the period, net of tax | | ( | | ||||||
Reclassification adjustment for gain included in net income, net of tax | — | ( | ( | ||||||
Other comprehensive income (loss), net of tax | | ( | | ||||||
Balance at June 30, 2025 | $ | ( | $ | ( | $ | ( | |||
The following table shows the amounts reclassified out of AOCI for the realized gain on cash flow hedges (in thousands):
Affected line item in | ||||||||||||||||
Three months ended | Six months ended | the Consolidated Statements | ||||||||||||||
June 30, | June 30, | of Operations | ||||||||||||||
2026 | 2025 | 2026 | 2025 | | ||||||||||||
Realized gain (loss) on derivative cash flow hedges | $ | — | $ | — | | $ | ( | $ | | Deposit related program fees and Interest expense | ||||||
Income tax (expense) benefit | — | — | | ( | Income tax expense | |||||||||||
Total reclassifications, net of income tax | $ | — | $ | — | $ | ( | $ | | ||||||||
31
NOTE 12 — COMMITMENTS AND CONTINGENCIES
Financial instruments with off-balance-sheet risk
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 clients. These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. The Company’s exposure to credit loss in the event of non-performance by the counterparty to the financial instrument for commitments to extend credit is represented by the contractual 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.
The following off-balance-sheet financial instruments, whose contract amounts represent credit risk, are outstanding (in thousands):
At June 30, 2026 | At December 31, 2025 | |||||||||||
Fixed | Variable | Fixed | Variable | |||||||||
| Rate | | Rate | | Rate | | Rate | |||||
Unused loan commitments | $ | | $ | | $ | | $ | | ||||
Standby and commercial letters of credit | | | | | ||||||||
$ | | $ | | $ | | $ | | |||||
A commitment to extend credit is a legally binding agreement to lend to a client as long as there is no violation of any condition established in the contract. These commitments do not necessarily represent future cash requirements and generally expire within
The Company’s stand-by letters of credit amounted to $
Legal and Regulatory Proceedings
In the ordinary course of business, the Company is subject to various pending and threatened legal actions. With respect to the litigation brought by Michael Wyse, as Plan Administrator for the Voyager Wind-Down Debtor, the Company’s motion to dismiss, filed in February 2025, was granted as to all counts on August 4, 2025. The Plaintiff has since filed its appeal with the U.S. Court of Appeals for the Second Circuit and oral arguments on that appeal were heard in March 2026. In addition to this matter, the Company is subject to various other pending and threatened legal actions relating to the conduct of its business activities, as well as inquiries and investigations from regulators. In addition to the foregoing, during the second quarter of 2026 the Company recorded a $
32
NOTE 13 — REVENUE FROM CONTRACTS WITH CUSTOMERS
All of the Company’s revenue from contracts with customers that are in the scope of ASC 606, Revenue from Contracts with Customers, are recognized in non-interest income.
Three months ended June 30, | Six months ended June 30, | ||||||||||||
| 2026 | | 2025 | 2026 | | 2025 | |||||||
Service charges on deposit accounts | $ | | $ | | $ | | $ | | |||||
Other service charges and fees |
| |
| |
| |
| | |||||
Total | $ | | $ | | $ | | $ | | |||||
A description of the Company’s revenue streams accounted for under the accounting guidance is as follows:
Service charges on deposit accounts
The Company offers business and personal retail products and services, which include, but are not limited to, online banking, mobile banking, Automated Clearing House (“ACH”) transactions, and remote deposit capture. A standard deposit contract exists between the Company and all deposit customers. The Company earns fees from its deposit customers for transaction-based services (such as ATM use fees, stop payment charges, statement rendering, and ACH fees), account maintenance, and overdraft services. Transaction-based fees are recognized at the time the transaction is executed as that is the point in time the Company fulfills the client’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the client’s account balance.
Other service charges
The primary component of other service charges relates to letter of credit fees and FX conversion fees. The Company outsources FX conversion for foreign currency transactions to correspondent banks. The Company earns a portion of an FX conversion fee that the client charges to process an FX conversion transaction. Revenue is recognized at the end of the month once the client has remitted the transaction information to the Company.
33
NOTE 14 — DERIVATIVES
On occasion, the Company enters into derivative contracts as a part of its asset liability management strategy to help manage its interest rate risk position. At June 30, 2026, these derivatives had a notional amount of $
In addition, the Company periodically enters into certain commercial loan interest rate swap agreements to provide commercial loan clients the ability to convert loans from variable to fixed interest rates. Under these agreements, the Company enters into a variable-rate loan agreement with a client in addition to a swap agreement. This swap agreement effectively converts the client’s variable rate loan into a fixed rate loan. The Company then enters into a corresponding swap agreement with a third party to offset its exposure on the variable and fixed components of the client agreement. As the interest rate swap agreements with the clients and third parties are not designated as hedges, the instruments are marked to market in earnings. At June 30, 2026, these interest rate swaps have a notional amount of $
The following tables reflect the derivatives recorded on the balance sheet (in thousands):
Fair Value | |||||||||
Notional | Other | Other | |||||||
Amount | Assets | Liabilities | |||||||
At June 30, 2026 | |||||||||
Derivatives designated as hedges: | |||||||||
Interest rate swaps related to client deposits and borrowings | $ | | $ | | $ | — | |||
Derivatives not designated as hedges: | |||||||||
Interest rate swaps | $ | | $ | | $ | | |||
At December 31, 2025 | |||||||||
Derivatives designated as hedges: | |||||||||
Interest rate swaps related to client deposits and borrowings | $ | | $ | — | $ | | |||
Derivatives not designated as hedges: | |||||||||
Interest rate swaps | $ | | $ | | $ | | |||
34
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company Background
The Company is a bank holding company headquartered in New York, New York and registered under the BHC Act. Through its wholly owned bank subsidiary, Metropolitan Commercial Bank, a New York state-chartered commercial bank, the Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and individuals primarily in the New York metropolitan area. See the “GLOSSARY OF COMMON TERMS AND ACRONYMS” for the definition of certain terms and acronyms used throughout this Form 10-Q.
The Company’s primary lending products are CRE, including multi-family loans, and C&I loans. Substantially all loans are secured by specific items of collateral including business and consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flows from operations of commercial enterprises. The Company has developed various deposit gathering strategies, which generate the funding necessary to operate without a large branch network. In addition to traditional commercial banking products, the Company offers: corporate cash management and retail banking services; tailored financial solutions for government entities, municipalities, and public institutions; specialized services to facilitate secure and efficient real estate transactions and tax-deferred exchanges for title and escrow and Section 1031 exchanges; and EB-5 Program escrow accounts of foreign investor funds for USCIS approved job-creating projects. The Company’s primary deposit products are checking, savings, and term deposit accounts, all of which are insured by the FDIC up to the maximum amounts allowed by law. These activities, together with eight strategically located banking centers, generate a stable source of deposits to support the growth of our diverse loan portfolio and other assets.
The Company is focused on organically growing its position in the New York metropolitan area. Growth in other markets across the country is generally dependent on the business activities of our New York-based customers. Through an experienced team of commercial relationship managers and its integrated, client-centric approach, the Company has grown market share by deepening existing client relationships and continually expanding its client base through referrals and the ability to offer alternatives to traditional retail banking products. The Company has converted many of its commercial lending clients into full retail relationship banking clients. Given the size of the market in which the Company operates and its differentiated approach to client service, there is significant opportunity to further grow its loans and deposits. By combining high-tech service with the relationship-based focus of a community bank with an extensive suite of financial products and services, the Company is well-positioned to continue to capitalize on the significant growth opportunities available in the New York metropolitan area and elsewhere.
Recent Events
On June 6, 2026, William Reinhardt retired from the Board of Directors and the board of directors of the Bank.
On June 19, 2026, the Board of Directors of the Company approved a new share repurchase program pursuant to which the Company is authorized to repurchase up to $50.0 million of its outstanding common stock, par value $0.01 per share (the “Share Repurchase Program”). Repurchases under the Share Repurchase Program may be conducted from time to time on the open market or by other means in accordance with applicable securities laws and other restrictions, including, in part, under a Rule 10b5-1 plan, which allows stock repurchases when the Company might otherwise be precluded from doing so. The number of shares to be repurchased and the timing of repurchases, if any, will depend on several factors, including market conditions, prevailing share price, corporate and regulatory requirements, and other considerations.
The Share Repurchase Program represents a newly authorized program that replaces and supersedes the previously disclosed program that was authorized by the Company’s Board of Directors on July 17, 2025.
The Company intends to fund the Share Repurchase Program with available cash. The Share Repurchase Program has no expiration date, may be discontinued or suspended at any time and does not obligate the Company to acquire any amount of its common stock. The Company records the purchase of treasury stock at cost.
35
Critical Accounting Policies
Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Management believes the Company’s most critical accounting policy, which involves the most complex or subjective decisions or assessments, is the allowance for credit losses.
Allowance for Credit Losses
The ACL has been determined in accordance with GAAP. The Company is responsible for the timely and periodic determination of the amount of the ACL. Management believes that the ACL for loans and loan commitments is adequate to cover expected credit losses over the life of the loan portfolio. Although management evaluates available information to determine the adequacy of the ACL, the level of allowance is an estimate which is subject to significant judgment and short-term change. Because of uncertainties associated with local and national economic forecasts, the operating and regulatory environment, collateral values and future cash flows from the loan portfolio, it is possible that a material change could occur in the ACL. The evaluation of the adequacy of loan collateral is often based upon estimates and appraisals. Because of uncertain economic conditions, the valuations determined from such estimates and appraisals may change. Accordingly, the Company may ultimately incur losses that vary from management’s current estimates. Adjustments to the ACL will be reported in the period in which such adjustments become apparent and can be reasonably estimated. All loan losses are charged-off to the ACL when the loss actually occurs or when the collectability of principal is deemed to be unlikely. Recoveries are credited to the allowance at the time of recovery. Various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL. As a result of such examinations, the Company may need to recognize additions to the ACL based on the regulators’ observations.
In estimating the ACL, the Company relies on models and economic forecasts developed by external parties as the primary driver of the ACL. These external models and forecasts are based on nationwide data sets. Economic forecasts can change significantly over an economic cycle and have a significant level of uncertainty associated with them. The performance of these models is dependent on the variables used in the models being reasonable predictors for the loan portfolio’s performance. However, these variables may not capture all sources of risk within the portfolio. As a result, the Company reviews the results and makes qualitative adjustments to capture potential limitations of the external models as necessary. Such qualitative factors may include adjustments to better capture the imprecision associated with the economic forecasts, and the ability of the models to capture emerging risks within the portfolio that may not be represented in the data. These adjustments are evaluated through the Company’s review process and revised on a quarterly basis to account for changes in forecasts, facts and circumstances.
The measurement of all expected credit losses for financial assets held at amortized cost is based on historical experience, current conditions, and reasonable and supportable forecasts. The Company continuously monitors current conditions and events and will evaluate potential changes that will enhance the estimation process. During the quarter ended March 31, 2026, the peer group selection process, macroeconomic forecast weightings, and the qualitative factor process were adjusted to reflect current conditions and events. The Company accounted for these revisions prospectively as a change in accounting estimate beginning March 31, 2026, and no prior period amounts were adjusted. The effect of this change in accounting estimate for the three months ended March 31, 2026, was a net decrease in the provision for credit losses of $6.4 million, which is $4.6 million, net of tax, or $0.43 per basic earnings per share and $0.42 per dilutive earnings per share.
One of the more significant judgments involved in estimating the Company’s ACL relates to the macroeconomic forecasts used to estimate credit losses and the relative weightings applied to them. To illustrate the impact of changes in these forecasts to the Company’s ACL, the Company performed a hypothetical sensitivity analysis that decreased the weight on the baseline scenario by 33% and equally allocated the difference to increase the weighting on the more optimistic and adverse scenarios. All else equal, the impact of this hypothetical forecast would result in a net increase of approximately $2.5 million, or 4.0%, in the Company’s total ACL for loans and loan commitments as of June 30, 2026. This hypothetical analysis is intended to illustrate the impact of adverse changes in the macroeconomic forecasts at a point in time and is not intended to reflect the full nature and extent of potential future change in the ACL. It is difficult to estimate how potential
36
changes in any one of the quantitative inputs or qualitative factors might affect the overall ACL and the Company’s current assessments may not reflect the potential future impact of changes to those inputs or factors.
Discussion of Financial Condition
The Company had total assets of $8.9 billion at June 30, 2026, an increase of $603.0 million, or 7.3%, from December 31, 2025. Total cash and cash equivalents were $239.3 million at June 30, 2026, as compared to $393.6 million at December 31, 2025.
Investments
Total securities were $1.1 billion at June 30, 2026, an increase of $147.3 million or 15.7%, from December 31, 2025. The increase was primarily due to the purchase of $230.7 million of AFS and HTM securities, partially offset by the $76.7 million paydown and maturities of AFS and HTM securities.
Loans
Total loans, net of deferred fees and unamortized costs, were $7.3 billion at June 30, 2026, an increase of $518.7 million, or 7.6%, from December 31, 2025. The increase in total loans from December 31, 2025 was due primarily to an increase of $563.4 million in CRE loans (including owner-occupied). At June 30, 2026, 73.2% of the CRE and C&I loan portfolio was concentrated in the New York metropolitan area, mainly New York City, and Florida.
37
As of June 30, 2026, total loans consisted primarily of CRE loans (including multi-family mortgage loans) and C&I loans. The Company’s commercial loan portfolio includes loans to the following industries (dollars in thousands)
At June 30, 2026 | ||||||
% of Total | ||||||
Balance | Loans | |||||
CRE (1) |
| |
| | ||
Skilled Nursing Facilities |
| $ | 3,073,450 |
| 41.8 | % |
Office | 462,601 | 5.6 | ||||
Hospitality | 425,080 | 6.3 | ||||
Multi-family | 414,332 | 4.7 | ||||
Retail | 375,036 | 5.8 | ||||
Mixed Use | 346,318 | 5.1 | ||||
Construction | 244,244 | 3.2 | ||||
Land | 237,681 | 2.2 | ||||
Warehouse/Industrial | 159,439 | 3.3 | ||||
Other | 685,299 | 9.4 | ||||
Total CRE | $ | 6,423,480 | 87.4 | % | ||
C&I | ||||||
Skilled Nursing Facilities | $ | 209,845 | 2.9 | % | ||
Finance & Insurance | 182,863 | 2.5 | ||||
Services | 107,956 | 1.4 | ||||
Individuals |
| 101,291 | 1.2 | |||
Healthcare | 85,391 | 1.5 | ||||
Other | 72,623 | 0.8 | ||||
Wholesale | 60,205 | 0.2 | ||||
Manufacturing | 11,262 | 1.0 | ||||
Total C&I | $ | 831,436 | 11.5 | % | ||
(1)CRE, not including one-to four-family loans
The largest concentration in the loan portfolio is to the healthcare industry, which amounted to $3.4 billion, or 45.9% of total loans, at June 30, 2026, including $3.3 billion in loans to skilled nursing facilities.
38
Asset Quality
As the Company continues to work diligently toward the resolution of the credits that make up its nonperforming loan portfolio, non-performing loans decreased to $67.0 million at June 30, 2026 compared to $86.9 million at December 31, 2025. The decrease primarily reflects the charge-offs for two out-of-market CRE loan relationships, and two C&I loans, partially offset by the addition of one C&I loan in a non-core private equity portfolio segment that only contains one other loan. The loan portfolio remains fundamentally sound, with pass-rated loans representing approximately 97% of total loans. The table below sets forth key asset quality ratios (dollars in thousands):
At or for the | At or for the | ||||||||
six months ended | year ended | ||||||||
June 30, | | December 31, | |||||||
2026 | | 2025 | |||||||
Asset Quality Ratios |
| ||||||||
Non-performing loans | $ | 66,970 | $ | 86,884 | |||||
Non-performing loans to total loans |
| 0.91 | % | 1.28 | % | ||||
Allowance for credit losses to total loans |
| 0.85 | % | 1.43 | % | ||||
Non-performing loans to total assets |
| 0.76 | % | 1.05 | % | ||||
Allowance for credit losses to non-performing loans | 92.6 | % | 111.7 | % | |||||
Ratio of net charge-offs (recoveries) to average loans outstanding in aggregate | 1.35 | % | 0.06 | % | |||||
Allowance for Credit Losses – Loans and Loan Commitments
The ACL for loans was $62.0 million at June 30, 2026, as compared to $97.1 million at December 31, 2025. The $35.1 million decrease in the ACL primarily reflects the charge-offs related to the two aforementioned out-of-market CRE loan relationships that were previously provisioned for, and adjustments made to the Bank’s allowance for credit loss estimation process in the first quarter of 2026, partially offset by loan growth. The measurement of the ACL is based on historical experience, current conditions, and reasonable and supportable forecasts. Management believes that the ACL for loans and loan commitments is adequate to cover expected credit losses over the life of the loan portfolio. See “— Critical Accounting Policies” above for more information on the Bank’s allowance for credit losses.
Deposits
Total deposits were $7.7 billion at June 30, 2026, an increase of $354.3 million, or 4.8%, from December 31, 2025. The increase in total deposits from December 31, 2025 was broadly distributed across the Bank’s various deposit verticals. Non-interest-bearing demand deposits were 20.6% of total deposits at June 30, 2026, compared to 20.1% at December 31, 2025.
The table below summarizes the Company’s deposit composition by segment for the periods indicated (dollars in thousands):
| At June 30, 2026 | | At December 31, 2025 | | Dollar | | Percentage | |||||
Non-interest-bearing demand deposits | $ | 1,591,126 | $ | 1,479,420 | $ | 111,706 | 7.6 | % | ||||
Money market | 5,977,600 | 5,698,748 | 278,852 | 4.9 | ||||||||
Savings accounts | 9,418 | 8,886 | 532 | 6.0 | ||||||||
Time deposits | 153,338 | 190,124 | (36,786) | (19.3) | ||||||||
Total | $ | 7,731,482 | $ | 7,377,178 | $ | 354,304 | 4.8 | % | ||||
39
At June 30, 2026, the aggregate estimated amount of FDIC uninsured deposits was $2.1 billion, and the aggregate estimated amount of uninsured time deposits was $44.5 million. The following table presents the scheduled maturities of time deposits greater than $250,000 (in thousands):
At June 30, 2026 | |||
Three months or less | $ | 23,272 | |
Over three months through six months |
| 12,421 | |
Over six months through one-year |
| 8,153 | |
Over one-year |
| 685 | |
Total | $ | 44,531 | |
Borrowings
To support the balance sheet, the Company may at times utilize FHLB advances or other funding sources. At June 30, 2026, and December 31, 2025, the Company had no outstanding Federal funds purchased or FHLBNY advances.
Accumulated Other Comprehensive Income
Accumulated other comprehensive loss, net of tax, was $39.0 million at June 30, 2026, a decrease of $0.7 million from December 31, 2025. The decrease from December 31, 2025 was primarily due to unrealized gains on cash flow hedges, as a result of changes in prevailing market interest rates, partially offset by unrealized losses on AFS securities.
Results of Operations
Net Income
Net income was $19.2 million for the second quarter of 2026, an increase of $456,000 as compared to $18.8 million for the second quarter of 2025. This increase was due primarily to a $16.8 million increase in net interest income, and a $1.7 million decrease in FDIC assessments, partially offset by a $6.9 million increase in the provision for credit losses, $5.1 million increase in compensation and benefits, and a $1.8 million one-time accrual for an adverse judgment in a legal matter.
Net income was $50.6 million for the six months ended June 30, 2026, an increase of $15.5 million as compared to $35.1 million for the six months ended June 30, 2025. This increase was due primarily to a $35.8 million increase in net interest income and a $2.8 million decrease in FDIC assessments, partially offset by a $7.5 million increase in compensation and benefits related to the increase in the number of employees, a $3.5 million increase in deposit related program fees, a $3.0 million increase in technology costs, and a $1.8 million one-time accrual for an adverse judgment in a legal matter.
Net Interest Income and Net Interest Margin
Net interest income is the difference between interest earned on assets and interest incurred on liabilities. The following table presents an analysis of net interest income by each major category of interest-earning assets and interest-bearing liabilities. The table presents the average yield on interest-earning assets and the average cost of interest-bearing liabilities. Yields and costs were derived by dividing income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. Average balances were derived from daily balances over the periods indicated. Interest income includes fees that management considers to be adjustments to yields. Yields on tax-exempt obligations were not computed on a tax-equivalent basis. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred loan origination fees and costs, and purchase discounts and premiums that are amortized or accreted to interest income.
Net interest margin for the second quarter of 2026 was 4.08% compared to 3.83% for the second quarter of 2025. The 25 basis point increase reflects the decline in short-term interest rates.
40
Three Months Ended | ||||||||||||||||||
June 30, 2026 | June 30, 2025 | |||||||||||||||||
Average | Yield / | Average | Yield / | |||||||||||||||
(dollars in thousands) | Balance | Interest | Rate (1) | Balance | Interest | Rate (1) | ||||||||||||
Assets: | ||||||||||||||||||
Interest-earning assets: | |
| |
| |
| |
| |
| ||||||||
Loans (2) | $ | 7,023,237 | $ | 125,642 |
| 7.18 | % | $ | 6,486,667 | $ | 118,774 |
| 7.34 | % | ||||
Available-for-sale securities |
| 727,655 |
| 5,984 |
| 3.30 |
| 607,363 |
| 3,884 |
| 2.57 | ||||||
Held-to-maturity securities |
| 363,589 |
| 1,866 |
| 2.06 |
| 394,374 |
| 1,849 |
| 1.88 | ||||||
Equity investments | 5,918 | 45 | 3.04 | 5,556 | 42 | 3.02 | ||||||||||||
Overnight deposits |
| 750,213 |
| 7,010 |
| 3.75 |
| 184,054 |
| 2,078 |
| 4.53 | ||||||
Other interest-earning assets |
| 25,331 |
| 391 |
| 6.19 |
| 27,682 |
| 416 |
| 6.03 | ||||||
Total interest-earning assets |
| 8,895,943 |
| 140,938 |
| 6.35 |
| 7,705,696 |
| 127,043 |
| 6.61 | ||||||
Non-interest-earning assets |
| 155,960 |
| |
| |
| 138,469 |
| |
| | ||||||
Allowance for credit losses |
| (80,257) |
| |
| |
| (68,966) |
| |
| | ||||||
Total assets | $ | 8,971,646 |
| |
| | $ | 7,775,199 |
| |
| | ||||||
Liabilities and Stockholders' Equity: |
| |
| |
| |
| |
| |
| | ||||||
Interest-bearing liabilities: |
| |
| |
| |
| |
| |
| | ||||||
Money market and savings accounts | $ | 6,110,436 | 48,800 |
| 3.20 | $ | 5,125,850 | 48,454 |
| 3.79 | ||||||||
Certificates of deposit |
| 152,062 |
| 1,394 |
| 3.68 |
| 133,495 |
| 1,369 |
| 4.11 | ||||||
Total interest-bearing deposits |
| 6,262,498 |
| 50,194 |
| 3.21 |
| 5,259,345 |
| 49,823 |
| 3.80 | ||||||
Borrowed funds |
| 20,620 |
| 296 |
| 5.76 |
| 298,843 |
| 3,573 |
| 4.79 | ||||||
Total interest-bearing liabilities |
| 6,283,118 |
| 50,490 |
| 3.22 |
| 5,558,188 |
| 53,396 |
| 3.85 | ||||||
Non-interest-bearing liabilities: |
| |
| |
| |
|
| |
| | |||||||
Non-interest-bearing deposits |
| 1,583,067 |
| |
| |
| 1,358,029 |
| |
| | ||||||
Other non-interest-bearing liabilities |
| 140,438 |
| |
| |
| 135,008 |
| |
| | ||||||
Total liabilities |
| 8,006,623 |
| |
| |
| 7,051,225 |
| |
| | ||||||
Stockholders' equity |
| 965,023 |
| |
| |
| 723,974 |
| |
| | ||||||
Total liabilities and equity | $ | 8,971,646 |
| |
| | $ | 7,775,199 |
| |
| | ||||||
Net interest income |
| | $ | 90,448 |
| |
| | $ | 73,647 |
| | ||||||
Net interest rate spread (3) |
| |
| |
| 3.13 | % |
| |
| |
| 2.76 | % | ||||
Net interest margin (4) |
| |
| |
| 4.08 | % |
| |
| |
| 3.83 | % | ||||
Total cost of deposits (5) | 2.57 | % | 3.02 | % | ||||||||||||||
Total cost of funds (6) | 2.57 | % | 3.10 | % | ||||||||||||||
(1) | Annualized. |
(2) | Amount includes deferred loan fees and non-performing loans. |
(3) | Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets. |
(4) | Determined by dividing annualized net interest income by total average interest-earning assets. |
(5) | Determined by dividing annualized interest expense on deposits by total average interest-bearing and non-interest bearing deposits. |
(6) | Determined by dividing annualized interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits. |
41
Six Months Ended | |||||||||||||||||||
June 30, 2026 | June 30, 2025 |
| |||||||||||||||||
Average | Yield / | Average | Yield / |
| |||||||||||||||
(dollars in thousands) | Balance | Interest | Rate (1) | Balance | Interest | Rate (1) |
| ||||||||||||
Assets: | |||||||||||||||||||
Interest-earning assets: |
| |
| |
| |
| |
| |
| | |||||||
Loans (2) | $ | 6,975,376 | $ | 248,236 |
| 7.18 | % | $ | 6,345,274 | $ | 229,639 |
| 7.30 | % | |||||
Available-for-sale securities |
| 690,000 |
| 10,967 |
| 3.21 |
| 592,357 |
| 7,299 |
| 2.48 | |||||||
Held-to-maturity securities |
| 358,292 |
| 3,529 |
| 1.99 |
| 405,787 |
| 3,792 |
| 1.88 | |||||||
Equity investments - non-trading | 5,896 | 89 | 3.04 | 5,536 | 81 | 2.96 | |||||||||||||
Overnight deposits |
| 664,766 |
| 12,339 |
| 3.74 |
| 169,287 |
| 4,003 |
| 4.77 | |||||||
Other interest-earning assets |
| 23,025 |
| 710 |
| 6.22 |
| 29,291 |
| 999 |
| 6.88 | |||||||
Total interest-earning assets |
| 8,717,355 |
| 275,870 |
| 6.38 |
| 7,547,532 |
| 245,813 |
| 6.57 | |||||||
Non-interest-earning assets |
| 138,963 |
| |
| |
| 132,675 |
| |
| | |||||||
Allowance for credit losses |
| (88,974) |
| |
| |
| (66,787) |
| |
| | |||||||
Total assets | $ | 8,767,344 |
| |
| | $ | 7,613,420 |
| |
| | |||||||
Liabilities and Stockholders' Equity: |
| |
| |
| |
| |
| |
| | |||||||
Interest-bearing liabilities: |
| |
| |
| |
| |
| |
| | |||||||
Money market and savings accounts | $ | 6,036,129 | 95,798 |
| 3.20 | $ | 4,937,693 | 94,298 |
| 3.85 | |||||||||
Certificates of deposit |
| 168,254 |
| 3,126 |
| 3.75 |
| 130,002 |
| 2,703 |
| 4.19 | |||||||
Total interest-bearing deposits |
| 6,204,383 |
| 98,924 |
| 3.22 |
| 5,067,695 |
| 97,001 |
| 3.86 | |||||||
Borrowed funds |
| 21,624 |
| 589 |
| 5.49 |
| 345,982 |
| 8,213 |
| 4.79 | |||||||
Total interest-bearing liabilities |
| 6,226,007 |
| 99,513 |
| 3.22 |
| 5,413,677 |
| 105,214 |
| 3.92 | |||||||
Non-interest-bearing liabilities: |
| |
| |
| |
| |
| |
| | |||||||
Non-interest-bearing deposits |
| 1,521,475 |
| |
| |
| 1,338,964 |
| |
| | |||||||
Other non-interest-bearing liabilities |
| 122,933 |
| |
| |
| 130,644 |
| |
| | |||||||
Total liabilities |
| 7,870,415 |
| |
| |
| 6,883,285 |
| |
| | |||||||
Stockholders' equity |
| 896,929 |
| |
| |
| 730,135 |
| |
| | |||||||
Total liabilities and equity | $ | 8,767,344 |
| |
| | $ | 7,613,420 |
| |
| | |||||||
Net interest income |
| | $ | 176,357 |
| |
| | $ | 140,599 |
| | |||||||
Net interest rate spread (3) |
| |
| |
| 3.16 | % |
| |
| |
| 2.65 | % | |||||
Net interest margin (4) |
| |
| |
| 4.08 | % |
| |
| |
| 3.76 | % | |||||
Total cost of deposits (5) |
| |
| |
| 2.58 | % |
| |
| |
| 3.05 | % | |||||
Total cost of funds (6) |
| |
| |
| 2.59 | % | |
| |
| 3.14 | % | ||||||
(1) | Annualized. |
(2) | Amount includes deferred loan fees and non-performing loans. |
(3) | Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets. |
(4) | Determined by dividing annualized net interest income by total average interest-earning assets. |
(5) | Determined by dividing annualized interest expense on deposits by total average interest-bearing and non-interest bearing deposits. |
(6) | Determined by dividing annualized interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits. |
42
The following table presents the effects of changing rates and volumes on net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). 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 (in thousands).
Three Months Ended June 30, | ||||||||||
2026 over 2025 | ||||||||||
Increase (Decrease) | Total | |||||||||
Due to | Increase | |||||||||
| Volume | | Rate | | (Decrease) | | ||||
Interest-earning assets: |
| |
| |
| |
| |||
Loans | $ | 9,648 | $ | (2,781) | $ | 6,867 | ||||
Available-for-sale securities |
| 859 |
| 1,241 |
| 2,100 | ||||
Held-to-maturity securities |
| (150) |
| 167 |
| 17 | ||||
Equity investments | 3 | — | 3 | |||||||
Overnight deposits | 5,348 | (416) | 4,932 | |||||||
Other interest-earning assets |
| (36) |
| 11 |
| (25) | ||||
Total interest-earning assets | $ | 15,672 | $ | (1,778) | $ | 13,894 | ||||
Interest-bearing liabilities: |
| |
| |
| | ||||
Money market and savings accounts | $ | 8,508 | $ | (8,161) | $ | 347 | ||||
Certificates of deposit |
| 179 |
| (154) |
| 25 | ||||
Total deposits |
| 8,687 |
| (8,315) |
| 372 | ||||
Borrowed funds |
| (3,878) |
| 601 |
| (3,277) | ||||
Total interest-bearing liabilities |
| 4,809 |
| (7,714) |
| (2,905) | ||||
Change in net interest income | $ | 10,863 | $ | 5,936 | $ | 16,799 | ||||
Six Months Ended June 30, | ||||||||||
2026 over 2025 | ||||||||||
Increase (Decrease) | Total | |||||||||
Due to | Increase | |||||||||
| Volume | | Rate | | (Decrease) | | ||||
Interest-earning assets: |
| |
| |
| |
| |||
Loans | $ | 22,531 | $ | (3,934) | $ | 18,597 | ||||
Available-for-sale securities |
| 1,323 |
| 2,345 |
| 3,668 | ||||
Held-to-maturity securities |
| (466) |
| 203 |
| (263) | ||||
Equity investments | 6 | 2 | 8 | |||||||
Overnight deposits | 9,371 | (1,035) | 8,336 | |||||||
Other interest-earning assets |
| (200) |
| (89) |
| (289) | ||||
Total interest-earning assets | $ | 32,565 | $ | (2,508) | $ | 30,057 | ||||
Interest-bearing liabilities: |
|
|
| |||||||
Money market and savings accounts | $ | 18,942 | $ | (17,442) | $ | 1,500 | ||||
Certificates of deposit |
| 732 |
| (309) |
| 423 | ||||
Total deposits |
| 19,674 |
| (17,751) |
| 1,923 | ||||
Borrowed funds |
| (8,680) |
| 1,056 |
| (7,624) | ||||
Total interest-bearing liabilities |
| 10,994 |
| (16,695) |
| (5,701) | ||||
Change in net interest income | $ | 21,571 | $ | 14,187 | $ | 35,758 | ||||
Interest Income
Interest income increased $13.9 million to $140.9 million for the second quarter of 2026 compared to $127.0 million for the second quarter of 2025, primarily due to the $536.6 million increase in the average balance of loans, the $566.2 million increase in the average balance of overnight deposits, and the $89.5 million increase in the average balance of securities.
43
Interest income increased $30.1 million to $275.9 million for the six months ended June 30, 2026 as compared to $245.8 million for the six months ended June 30, 2025, primarily due to the $630.1 million increase in the average balance of loans and the $495.5 million increase in the average balance of overnight deposits.
Interest Expense
Interest expense decreased $2.9 million to $50.5 million for the second quarter of 2026 as compared to $53.4 million for the second quarter of 2025 due primarily to the 53 basis point decrease in the total cost of funds that reflects the reduction in short-term interest rates.
Interest expense decreased $5.7 million to $99.5 million for the six months ended June 30, 2026 as compared to $105.2 million for the six months ended June 30, 2025, due primarily to a 55 basis point decrease in the total cost of funds reflecting the reduction in short-term interest rates and the $324.4 million decrease in the average balance of borrowed funds.
Provision for Credit Losses – Loans and Loan Commitments
The provision for credit losses for the three months ended June 30, 2026 was $13.3 million, as compared to $6.4 million for the three months ended June 30, 2025. The increase in the provision for credit losses was driven primarily by a single C&I loan in a non-core portfolio segment.
The provision for credit losses for the six months ended June 30, 2026 was $11.0 million, as compared to $10.9 million for the six months ended June 30, 2025. The provision reflects $19.3 million of credit losses related to the aforementioned single C&I loan in a non-core portfolio segment as well as one C&I and two CRE loans that were provisioned and subsequently charged-off in the first quarter of 2026. The provision for the six months ended June 30, 2026 also reflects a decrease of $6.4 million due to the adjustments made to the Bank’s allowance for credit loss estimation process. See “—Critical Accounting Policies” above for more information on the adjustments made to the Bank’s allowance for credit loss estimation process.
Non-Interest Income
Non-interest income decreased $61,000 to $2.6 million for the second quarter of 2026, as compared to $2.6 million for the second quarter of 2025, driven primarily by a decrease in loan production fees, partially offset by an increase in service charges on deposit accounts.
Non-interest income decreased $1.1 million to $5.1 million for the six months ended June 30, 2026, as compared to $6.2 million for the six months ended June 30, 2025 driven primarily by a $1.2 million decrease in loan production fees.
Non-Interest Expense
Non-interest expense increased $8.7 million to $51.8 million for the second quarter of 2026, compared to the second quarter of 2025 due primarily to a $5.1 million increase in compensation and benefits, a $1.8 million one-time accrual for an adverse judgment in a legal matter, and $1.1 million increase in technology costs, partially offset by a $1.7 million decrease in the FDIC assessment.
Non-interest expense increased $12.4 million to $98.2 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, due primarily to an increase of $7.5 million in compensation and benefits due to the increase in the number of employees, a $3.5 million increase in deposit program related fees, a $3.0 million increase in technology costs, and a $1.8 million one-time legal accrual for an adverse judgment in legal matter, partially offset by a decrease of $2.8 million in FDIC assessment.
44
Income Tax Expense
The estimated effective tax rate for the second quarter of 2026 was 31.1% as compared to 29.9% for the second quarter of 2025. The effective tax rate for the six months ended June 30, 2026 was 29.9% compared to 30.0% for the six months ended June 30, 2025.
Off-Balance Sheet Arrangements
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, which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. Exposure to credit loss is represented by the contractual amount of the instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.
At June 30, 2026, the Company had $586.3 million in unused loan commitments and $34.6 million in standby and commercial letters of credit. At December 31, 2025, the Company had $600.0 million in unused commitments and $26.4 million in standby and commercial letters of credit.
Liquidity and Capital Resources
Liquidity
Liquidity is the ability to economically meet current and future financial obligations. The Company’s primary sources of funds consist of deposit inflows, loan repayments and maturities, securities cash flows and borrowings. While maturities and scheduled amortization of loans, securities, and borrowings are predictable sources of funds, deposit flows, mortgage prepayments and securities cash flows may be greatly influenced by the general level of interest rates and changes thereto, economic conditions and competition.
The Company regularly reviews the need to adjust investments in liquid assets based upon its assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, and (4) the objectives of its asset/liability program. Excess liquidity is generally invested in interest earning deposits and short- and intermediate-term securities.
The Company’s most liquid assets are cash and cash equivalents. The levels of these assets are dependent on the Company’s operating, financing, lending and investing activities during any given period. At June 30, 2026 and December 31, 2025, cash and cash equivalents totaled $239.3 million and $393.6 million, respectively. Securities, which provide an additional source of liquidity, totaled $1.1 billion at June 30, 2026 and $941.2 million at December 31, 2025. At June 30, 2026, there were $960.4 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $127.0 million were encumbered. At December 31, 2025, there were $807.5 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $118.2 million were encumbered.
The Company’s primary investing activities are the origination and, to a lesser extent, purchase of loans and securities. For the three and six months ended June 30, 2026, the Company’s loan production was $718.9 million and $1.1 billion as compared to $492.0 million and $901.8 million, respectively, for the three and six months ended June 30, 2025.
During the three and six months ended June 30, 2026, the Company purchased $44.5 million and $153.5 million of AFS securities. During the three and six months ended June 30, 2025, the Company purchased $20.9 million and $85.1 million of AFS securities.
Financing activities consisted primarily of activity in deposit accounts and borrowings. The Company gathers deposits from businesses and individuals through client referrals and other relationships and through its retail presence. The Company has established deposit concentration thresholds to avoid the possibility of dependence on any single depositor
45
base for funds. Total deposits were $7.7 billion at June 30, 2026, an increase of $354.3 million, or 4.8%, from December 31, 2025.
At June 30, 2026, interest-bearing deposits were comprised of $6.0 billion of money market accounts and $153.3 million of time deposits. Time deposits due within one year of June 30, 2026 totaled $150.0 million, or 1.9%, of total deposits. At June 30, 2026, the aggregate estimated amount of FDIC uninsured deposits was $2.1 billion. At December 31, 2025, interest-bearing deposits were comprised of $5.7 billion of money market accounts and $190.1 million of time deposits. Time deposits due within one year of December 31, 2025 totaled $186.3 million or 2.5% of total deposits. Non-interest-bearing deposits were 20.6% of total deposits at June 30, 2026, as compared to 20.1% at December 31, 2025. At December 31, 2025, the aggregate estimated amount of FDIC uninsured deposits was $2.0 billion.
The Company has no material commitments or demands that are likely to affect its liquidity other than as set forth below. In the event loan demand were to increase faster than expected, or any other unforeseen demand or commitment were to occur, the Company could access its borrowing capacity with the FHLB or obtain additional funds through alternative funding sources, including the brokered deposit market. At June 30, 2026 and December 31, 2025, the Company had cash on deposit with the FRBNY and available secured wholesale funding borrowing capacity of $3.1 billion and $3.3 billion, respectively.
Capital Resources
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. At June 30, 2026 and December 31, 2025, the Bank met all applicable regulatory capital requirements to be considered “well capitalized” under regulatory guidelines. The Company and the Bank manage their capital to comply with their internal planning targets and regulatory capital standards administered by federal banking agencies. The Company and the Bank review capital levels on a monthly basis. Below is a table of the Company’s and Bank’s capital ratios for the periods indicated:
Minimum | Minimum Ratio | Minimum | ||||||||||||||
At | At | Ratio to be | Required for | Capital | ||||||||||||
June 30, | December 31, | “Well | Capital Adequacy | Conservation | ||||||||||||
| 2026 | 2025 | Capitalized” | | Purposes | | Buffer(1) | | ||||||||
The Company | ||||||||||||||||
Tier 1 leverage ratio | 11.3 | % | 9.5 | % | N/A | 4.0 | % | — | % | |||||||
Common equity tier 1 | 12.9 | % | 10.7 | % | N/A | 4.5 | % | 2.5 | % | |||||||
Tier 1 risk-based capital ratio | 13.2 | % | 11.0 | % | N/A | 6.0 | % | 2.5 | % | |||||||
Total risk-based capital ratio | 14.0 | % | 12.3 | % | N/A | 8.0 | % | 2.5 | % | |||||||
The Bank | ||||||||||||||||
Tier 1 leverage ratio | 11.1 | % | 9.1 | % | 5.00 | % | 4.0 | % | — | % | ||||||
Common equity tier 1 | 12.9 | % | 10.5 | % | 6.50 | % | 4.5 | % | 2.5 | % | ||||||
Tier 1 risk-based capital ratio | 12.9 | % | 10.5 | % | 8.00 | % | 6.0 | % | 2.5 | % | ||||||
Total risk-based capital ratio | 13.7 | % | 11.7 | % | 10.00 | % | 8.0 | % | 2.5 | % |
(1) As of June 30, 2026, the capital conservation buffer for the Company and the Bank was 6.01% and 5.73%, respectively, which exceeded the minimum requirement of 2.5% required to be held by banking institutions.
At June 30, 2026 and December 31, 2025, total non-owner-occupied CRE loans were 304.1% and 376.5% of risk-based capital, respectively. The decrease in the CRE loan concentration ratio is primarily due to the increase in the Bank’s total capital as a result of the completion of the Company’s follow-on public equity offering of common stock in the first quarter of 2026.
46
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
General
The principal objective of the Company’s asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of IRR while maximizing net income and preserving adequate levels of liquidity and capital. The Board of Directors bears the ultimate oversight responsibility for the Company’s asset and liability management function. The Company’s ALCO is responsible for assisting the Board of Directors with this oversight. The ALCO has further assigned responsibility for the day-to-day management of IRR to the CFO, or their designee. The ALCO meets regularly to review, among other things, the sensitivity of earnings and the market value of assets and liabilities to market interest rate changes and local and national market conditions and market interest rates. That group also reviews liquidity, capital, deposit mix, loan mix and investment positions. Based upon the nature of its operations, the Company is not subject to FX or commodity price risk.
Interest Rate Risk
As a financial institution, the Company’s primary market risk exposure is IRR. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most assets and liabilities, and the fair value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. IRR is the potential for economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values. The objective is to measure the effect on net interest income and to adjust, as deemed appropriate, the balance sheet to manage the inherent risk while at the same time maximizing income.
The Company manages its exposure to interest rates primarily by prudently structuring its balance sheet in the ordinary course of business. The Company generally originates fixed and floating rate loans with maturities of less than five years. The IRR on these loans is offset to some degree by the mix and structure of the deposit portfolio. On occasion, the Company enters into derivative contracts as a part of its asset liability management strategy to help manage its IRR position.
Net Interest Income At-Risk
The Company analyzes its net interest income sensitivity to changes in interest rates through a simulation model, which estimates what net interest income would be for a one-year period based on current interest rates, and then calculates what the net interest income would be for the same period under different interest rate assumptions.
The following table shows the estimated impact on net interest income for the one-year period beginning June 30, 2026 resulting from potential changes in interest rates, expressed in basis points. These estimates require certain assumptions to be made, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain. As a result, no simulation model can precisely predict the impact of changes in interest rates on net interest income.
47
Although the net interest income table below provides an indication of the Company’s IRR exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on net interest income and may differ from actual results. The following table indicates the sensitivity of projected annualized net interest income to the interest rate movements described above (dollars in thousands):
At June 30, 2026 | ||||||
Change in | Net | Year 1 | ||||
Interest | Interest | Change | ||||
Rates | Income Year 1 | from | ||||
(basis points) | | Forecast | | Level | ||
+300 | 376,535 | (0.81) | % | |||
+200 | 377,408 | (0.58) | ||||
+100 | 378,752 | (0.23) | ||||
— | 379,607 | — | ||||
-100 | 385,974 | 1.68 | ||||
-200 | 392,450 | 3.38 | ||||
-300 | 404,603 | 6.58 | ||||
The table above indicates that at June 30, 2026, in the event of an instantaneous and sustained parallel upward shift of 200 basis points in interest rates, the Company would experience a 0.58% decrease in net interest income. In the event of an instantaneous and sustained parallel downward shift of 200 basis points in interest rates, it would experience a 3.38% increase in net interest income.
Economic Value of Equity Analysis
The Company also analyzes the sensitivity of its financial condition to changes in interest rates through an EVE model. This analysis measures the difference between predicted changes in the fair value of assets and predicted changes in the present value of liabilities assuming various changes in current interest rates. The table below represents an analysis of IRR as measured by the estimated changes in EVE, resulting from instantaneous and sustained parallel shifts in the yield curve (+100, +200, +300 and -100, -200, -300 basis points) at June 30, 2026 (dollars in thousands):
Estimated | |||||||||
Increase (Decrease) in | |||||||||
EVE | |||||||||
Change in | |||||||||
Interest Rates | Estimated | ||||||||
(basis points) (1) | | EVE (2) | | Dollars | | Percent | | ||
+300 | $ | 1,389,060 | $ | (116,773) | (7.75) | % | |||
+200 | 1,430,333 | (75,499) | (5.01) | % | |||||
+100 | 1,473,902 | (31,931) | (2.12) | ||||||
— | 1,505,833 | — | — | ||||||
-100 | 1,538,697 | 32,864 | 2.18 | ||||||
-200 | 1,560,688 | 54,855 | 3.64 | ||||||
-300 | 1,576,039 | 70,206 | 4.66 | ||||||
| (1) | Assumes an immediate uniform change in interest rates at all maturities. |
| (2) | EVE is the fair value of expected cash flows from assets, less the fair value of the expected cash flows arising from the Company’s liabilities adjusted for the value of off-balance sheet contracts. |
The table above indicates that at June 30, 2026, in the event of an immediate upward shift of 200 basis points in interest rates, the Company would experience a 5.01% decrease in its EVE. In the event of an immediate downward shift of 200 basis points in interest rates, the Company would experience a 3.64% increase in its EVE.
The preceding simulation analyses do not represent a forecast of actual results and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions, which are
48
subject to change, including: the nature and timing of interest rate levels including the yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. Also, as market conditions vary, prepayment/refinancing levels, the varying impact of interest rate changes on caps and floors embedded in adjustable-rate loans, early withdrawal of deposits, changes in product preferences, and other internal/external variables will likely deviate from those assumed.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of its Chief Executive Officer, who is the Company’s principal executive officer, and the Chief Financial Officer, who is the Company’s principal financial officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2026, pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2026. In addition, there have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in reports filed by the Company under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
49
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, the Company is subject to various pending and threatened legal actions. With respect to the litigation brought by Michael Wyse, as Plan Administrator for the Voyager Wind-Down Debtor, the Company’s motion to dismiss, filed in February 2025, was granted as to all counts on August 4, 2025. The Plaintiff has since filed its appeal with the U.S. Court of Appeals for the Second Circuit and oral arguments on that appeal were heard in March 2026, the court’s ruling on which is pending. There have been no other significant developments with respect to other legal proceedings previously disclosed under Part I, Item 3 in our 2025 Form 10-K. While the future outcome of litigation or regulatory matters cannot be determined at this time, in the opinion of management, as of June 30, 2026, the aggregate liability, if any, arising out of any such pending or threatened legal actions are not expected, individually or in the aggregate, to be material to the Company’s financial condition, results of operations, and liquidity. For additional information regarding certain legal proceedings, see “Legal and Regulatory Proceedings” in NOTE 12 — COMMITMENTS AND CONTINGENCIES to the Company’s consolidated financial statements in this Form 10-Q.
ITEM 1A. RISK FACTORS
There are risks, many beyond our control, which could cause our results to differ significantly from management’s expectations. For a description of these risks, please see the risk factors previously described in Part I, “Item 1A. Risk Factors” in our 2025 Form 10-K. There have been no material changes to our risk factors since the date of that filing. Any of the risks described in our 2025 Form 10-K could by itself or together with one or more other factors, materially and adversely affect our business, results of operations or financial condition. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, results of operations or financial condition.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth information regarding the shares of common stock repurchased by the Company during the three months ended June 30, 2026:
Total | ||||||||||
Number of | Dollar | |||||||||
Shares | Value of | |||||||||
Purchased as | Shares That | |||||||||
Total | Part of | May Yet Be | ||||||||
Number of | Average | Publicly | Purchased | |||||||
Shares | Price Paid | Announced | Under | |||||||
Period |
| Purchased | |
| Per Share |
| Plans | |
| the Plans (1) |
April 1, 2026 to April 30, 2026 |
| — | $ | — |
| — | $ | 17,535,739 | ||
May 1, 2026 to May 31, 2026 | — | — | — | 17,535,739 | ||||||
June 1, 2026 to June 30, 2026 |
| — | — | — | 50,000,000 | |||||
Total |
| — | $ | — | — |
(1) On June 19, 2026, the Board of Directors approved the Share Repurchase Program with authorization to repurchase up to $50.0 million of the Company’s common stock. The Share Repurchase Program represents a newly authorized program that replaces and supersedes the previously disclosed program that was authorized by the Company’s Board of Directors on July 17, 2025. In aggregate, the Board of Directors has authorized $150 million of repurchases of the Company’s common stock since March 2025.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
50
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On
51
ITEM 6. EXHIBITS
3.1 | ||
3.2 | ||
3.3 | ||
31.1 | ||
31.2 | ||
32 | ||
101 | INS XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
101 | SCH XBRL Taxonomy Extension Schema | |
101 | CAL XBRL Taxonomy Extension Calculation Linkbase | |
101 | DEF XBRL Taxonomy Extension Definition Linkbase | |
101 | LAB XBRL Taxonomy Extension Label Linkbase | |
101 | PRE XBRL Taxonomy Extension Presentation Linkbase | |
104 | The cover page from Metropolitan Bank Holding Corp.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL | |
52
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Metropolitan Bank Holding Corp.
Date: July 31, 2026By:/s/ Mark R. DeFazio
Mark R. DeFazio
President and Chief Executive Officer
Date: July 31, 2026By:/s/ Daniel F. Dougherty
Daniel F. Dougherty
Executive Vice President and Chief Financial Officer
53
Exhibit 31.1
Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Mark R. DeFazio, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Metropolitan Bank Holding Corp.; |
| 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 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 Exchange Act Rules l3a-15(f) and 15d-15(f)):
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 control 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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 Examining Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
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: July 31, 2026/s/ Mark R. DeFazio
Mark R. DeFazio
President and Chief Executive Officer
Exhibit 31.2
Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Daniel F. Dougherty, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Metropolitan Bank Holding Corp.;
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 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 Exchange Act Rules l3a-15(f) and 15d-15(f)): |
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 control 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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 Examining Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
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: July 31, 2026/s/ Daniel F. Dougherty
Daniel F. Dougherty
Executive Vice President and Chief Financial Officer
Exhibit 32
Certification of Chief Executive Officer and Acting Principal Financial Officer
Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 of The Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Metropolitan Bank Holding Corp. (the “Company”) for the period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Mark R. DeFazio, as President and Chief Executive Officer of the Company, and Daniel F. Dougherty, as Executive Vice President and Chief Financial Officer of the Company, each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) | The Report fully complies with the requirements of Section 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: July 31, 2026/s/ Mark R. DeFazio
Mark R. DeFazio
President and Chief Executive Office
/s/ Daniel F. Dougherty
Daniel F. Dougherty
Executive Vice President and Chief Financial Officer