Metropolitan Bank Holding Corp.: Form 10-Q for the period ended Jun 30, 2025

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 market includes the New York metropolitan area, specifically Manhattan and the outer boroughs, and Nassau County, New York. This market is well-diversified and represents a large market for middle market businesses (defined as businesses with annual revenue of $5 million to $400 million). The Company’s market area has a diversified economy with the majority of employment provided by services, wholesale/retail trade, finance/insurance/real estate, technology companies and construction. A relationship-led strategy has provided the Company with select opportunities in other U.S. markets, with a particular focus on South Florida.

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 accounts for qualified foreign investors. 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 six strategically located banking centers, generate a stable source of deposits to support the growth of our diverse loan portfolio.

Recent Events

On July 17, 2025, the Company publicly announced that its Board of Directors declared a quarterly dividend of $0.15 per share on the Company’s common stock (the “Dividend”), the Company’s first cash dividend since its initial public offering in 2017. The Company expects to continue to distribute regular cash dividends subject to the discretion of the Board of Directors and in accordance with applicable securities, corporate and banking laws, rules, regulations, and guidance. The Dividend is payable on August 11, 2025 to holders of record of the Company’s common stock at the close of business on July 28, 2025.

In May 2025, the Company used substantially all available capacity under a $50 million share repurchase program authorized on March 12, 2025, resulting in the purchase of 878,807 shares of common stock at an average price of $56.90 per share. On July 17, 2025, the Company’s Board of Directors approved a new share repurchase plan with authorization to purchase up to an additional $50 million of the Company’s common stock. In aggregate, the Board of Directors has authorized $100 million of share repurchases since March 2025.

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 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.

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 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.

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 weights on the more optimistic and adverse scenarios. All else equal, the impact of this hypothetical forecast would result in a net increase of approximately $6.2 million, or 8.4%, in the Company’s total ACL for loans and loan commitments as of June 30, 2025. 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 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 $7.9 billion at June 30, 2025, an increase of $553.1 million, or 7.6%, from December 31, 2024.

Total cash and cash equivalents were $152.5 million at June 30, 2025, a decrease of $47.8 million, or 23.9%, from December 31, 2024. The decrease from December 31, 2024 primarily reflects an increase in the loan book of $578.7 million and a $250 million decrease in wholesale funding, partially offset by an increase of $808.3 million in deposits.

Investments

Total securities were $944.2 million at June 30, 2025, an increase of $28.5 million or 3.1%, from December 31, 2024. The increase was primarily due to the purchase of $85.1 million of AFS securities, and the $14.5 million unrealized gain on AFS securities during the first six months of 2025, partially offset by the $71.2 million paydown and maturities of AFS and HTM securities.

Loans

Total loans, net of deferred fees and unamortized costs, were $6.6 billion at June 30, 2025, an increase of $578.7 million, or 9.6%, from December 31, 2024. The increase in total loans from December 31, 2024 was due primarily to an increase of $252.5 million in CRE loans (including owner-occupied). At June 30, 2025, 77.1% of the CRE and C&I loan portfolio was concentrated in the New York metropolitan area, mainly New York City, and Florida.

As of June 30, 2025, 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):

(1) CRE, not including one-to four-family loans

The largest concentration in the loan portfolio is to the healthcare industry, which amounted to $2.6 billion, or 40.0% of total loans, at June 30, 2025, including $2.5 billion in loans to skilled nursing facilities.

Asset Quality

Non-performing loans increased to $39.9 million at June 30, 2025 compared to $32.6 million at December 31, 2024 primarily due to two secured CRE loans, a longstanding secured residential loan and a single unsecured C&I loan. The table below sets forth key asset quality ratios (dollars in thousands):

Allowance for Credit Losses – Loans and Loan Commitments

The ACL was $74.1 million at June 30, 2025, as compared to $63.3 million at December 31, 2024. The Company recorded a $10.8 million provision for credit losses for the six months ended June 30, 2025, which primarily reflects loan growth, provisioning for a commercial real estate loan and an unsecured C&I loan, and changes in the outlook for certain macroeonomic variables.

Deposits

Total deposits were $6.8 billion at June 30, 2025, an increase of $808.3 million, or 13.5%, from December 31, 2024. The increase from December 31, 2024 was due primarily to increases across most of the Company’s various deposit verticals. Non-interest-bearing demand deposits were 21.0% of total deposits at June 30, 2025, compared to 22.3% at December 31, 2024.

The table below summarizes the Company’s deposit composition by segment for the periods indicated (dollars in thousands):

At June 30, 2025, the aggregate estimated amount of FDIC uninsured deposits was $1.8 billion, and the aggregate estimated amount of uninsured time deposits was $29.5 million. The following table presents the scheduled maturities of time deposits greater than $250,000 (in thousands):

35

Borrowings

To support the balance sheet, the Company may at times utilize FHLB advances or other funding sources. At June 30, 2025, the Company had $50.0 million of Federal funds purchased and $150.0 million of FHLBNY advances. At December 31, 2024, the Company had $210.0 million of Federal funds purchased and $240.0 million of FHLBNY advances.

Accumulated Other Comprehensive Income

Accumulated other comprehensive loss, net of tax, was $45.5 million at June 30, 2025, a decrease of $7.7 million from December 31, 2024. The decrease from December 31, 2024 was primarily due to unrealized gains on AFS securities, as a result of changes in prevailing market interest rates.

Results of Operations

Net Income

Net income was $18.8 million for the second quarter of 2025, an increase of $2.0 million as compared to $16.8 million for the second quarter of 2024. This increase was due primarily to a $12.1 million increase in net interest income and a $3.3 million decrease in professional fees, partially offset by a $4.8 million increase in the provision for credit losses, the absence of $3.7 million of GPG revenue as a result of the exit from that business, and a $1.7 million increase in compensation and benefits related to the increase in the number of employees.

Net income was $35.1 million for the six months ended June 30, 2025, an increase of $2.1 million as compared to $33.0 million for the six months ended June 30, 2024. This increase was due primarily to a $19.4 million increase in net interest income and a $4.3 million decrease in professional fees, partially offset by an $8.8 million increase in the provision for credit losses, the absence of $7.8 million of GPG revenue as a result of the exit from that business, and a $3.6 million increase in compensation and benefits related to the increase in the number of employees.

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.

(dollars in thousands)

(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.

(dollars in thousands)

(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.

Net interest margin for the second quarter of 2025 was 3.83% compared to 3.44% for the second quarter of 2024. Net interest margin for the six months ended June 30, 2025 was 3.76% compared to 3.42% for the six months ended June 30, 2024. For the six months ended June 30, 2025, the 34 basis point increase in net interest margin is supported by rigorous loan and deposit pricing initiatives and an 18 basis point decrease in the total cost of funds which reflects the reduction in short-term interest rates.

Interest Income

Interest income increased $11.3 million to $127.0 million for the second quarter of 2025 as compared to $115.8 million for the second quarter of 2024, primarily due to the increase in the average balance of loans. The average balance of loans increased $732.4 million for the second quarter of 2025 as compared to the second quarter of 2024.

Interest income increased $17.7 million to $245.8 million for the six months ended June 30, 2025 as compared to $228.1 million for the six months ended June 30, 2024, primarily due to the increase in the average balance of loans. The average balance of loans increased $619.7 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Interest Expense

Interest expense decreased $826,000 to $53.4 million for the second quarter of 2025 as compared to $54.2 million for the second quarter of 2024 due primarily to the 24 basis point decrease in total cost of funds that reflects the reduction in short- term interest rates, partially offset by the $902.9 million increase in the average balance of interest-bearing deposits for the second quarter of 2025 as compared to the second quarter of 2024.

Interest expense decreased $1.6 million to $105.2 million for the six months ended June 30, 2025 as compared to $106.8 million for the six months ended June 30, 2024, due primarily to the 18 basis point decrease in the total cost of funds, partially offset by the $822.6 million increase in the average balance of interest-bearing deposits for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Provision for Credit Losses – Loans and Loan Commitments

The provision for credit losses for the three months ended June 30, 2025 was $6.4 million, which reflects loan growth and provisioning for a CRE loan. The provision for credit losses for the six months ended June 30, 2025 was $10.9 million, which reflects loan growth and provisioning for a CRE loan and an unsecured C&I loan.

Non-Interest Income

Non-interest income decreased $3.5 million to $2.6 million for the second quarter of 2025, as compared to the second quarter of 2024 driven primarily by the absence of GPG revenue due to the exit from that business. Non-interest income decreased $6.9 million to $6.2 million for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024 driven primarily by the absence of GPG revenue due to the exit from that business.

Non-Interest Expense

Non-interest expense increased $852,000 to $43.1 million for the second quarter of 2025, compared to the second quarter of 2024 due primarily to a $1.7 million increase in compensation and benefits related to the increase in the number of employees, a $1.7 million increase in deposit program related fees, and a $610,000 increase in technology costs, partially offset by decreases of $3.3 million in professional fees.

Non-interest expense increased $1.6 million to $85.8 million for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, due primarily to an increase of $3.6 million in compensation and benefits due to the increase in the number of employees and a $2.6 million increase in deposit program related fees, partially offset by decreases of $4.3 million in professional fees.

Income Tax Expense

The estimated effective tax rate for the second quarter of 2025 was 29.9% as compared to 29.7% for the second quarter of 2024.

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, 2025, the Company had $715.8 million in unused loan commitments and $27.9 million in standby and commercial letters of credit. At December 31, 2024, the Company had $695.4 million in unused commitments and $31.9 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, 2025 and December 31, 2024, cash and cash equivalents totaled $152.5 million and $200.3 million, respectively. Securities, which provide an additional source of liquidity, totaled $944.2 million at June 30, 2025 and $915.8 million at December 31, 2024. At June 30, 2025, there were $779.8 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $106.6 million were encumbered. At December 31, 2024, there were $750.3 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $65.5 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, 2025, the Company’s loan production was $492.0 million and $901.8 million as compared to $290.8 million and $560.4 million, respectively, for the three and six months ended June 30, 2024.

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 base for funds. Total deposits were $6.8 billion at June 30, 2025, an increase of $808.3 million, or 13.5%, from December 31, 2024.

At June 30, 2025, interest-bearing deposits were comprised of $5.2 billion of money market accounts and $123.4 million of time deposits. Time deposits due within one year of June 30, 2025 totaled $120.2 million, or 1.8%, of total deposits. At June 30, 2025, the aggregate estimated amount of FDIC uninsured deposits was $1.8 billion. At December 31, 2024, interest-bearing deposits were comprised of $4.5 billion of money market accounts and $125.4 million of time deposits. Time deposits due within one year of December 31, 2024 totaled $118.1 million or 2.0% of total deposits. Non-interest-bearing deposits were 21.0% of total deposits at June 30, 2025, as compared to 22.3% at December 31, 2024. At December 31, 2024, the aggregate estimated amount of FDIC uninsured deposits was $1.6 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, 2025, the Company had $50.0 million of Federal funds purchased and $150.0 million of FHLBNY advances. At December 31, 2024, the Company had $210.0 million of Federal funds purchased and $240.0 million of FHLBNY advances. At June 30, 2025 and December 31, 2024, the Company had cash on deposit with the FRBNY and available secured wholesale funding borrowing capacity of $2.9 billion.

Capital Resources

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. At June 30, 2025 and December 31, 2024, the Company and 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:

At June 30, 2025 and December 31, 2024, total non-owner-occupied CRE loans were 371.9% and 346.1% of risk-based capital, respectively. The increased CRE concentration ratio is primarily the result of the Bank funding the share repurchase program and the anticipated quarterly dividends at the holding company. See “—Recent Events” above for more information on the Company’s quarterly dividend and share repurchase program.

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, 2025 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.

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, 2025

The table above indicates that at June 30, 2025, in the event of an instantaneous and sustained parallel upward shift of 200 basis points in interest rates, the Company would experience a 0.67% 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 2.05% 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, and -100, -200, basis points) at June 30, 2025 (dollars in thousands):

(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, 2025, in the event of an immediate upward shift of 200 basis points in interest rates, the Company would experience a 4.01% decrease in its EVE. In the event of an immediate downward shift of 200 basis points in interest rates, the Company would experience a 0.28% 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 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.

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, 2025, 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, 2025. 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.

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 2024 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 2024 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.