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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
Commission file number 001-33013
FLUSHING FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
11-3209278
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
220 RXR Plaza, Uniondale, New York 11556
(Address of principal executive offices)
(718) 961-5400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock, $0.01 par value
FFIC
The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in rule 405 of the Securities Act. Yes X No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes X No
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 filing
requirements for the past 90 days. X Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files). X Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer X
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. X Yes No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. X
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes X No
As of June 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter; the aggregate market value of the voting
stock held by non-affiliates of the registrant was $378,464,000. This figure is based on the closing price on that date on the NASDAQ Global Select Market
for a share of the registrant’s Common Stock, $0.01 par value, which was $11.88.
The number of shares of the registrant’s Common Stock outstanding as of February 28, 2026 was 33,883,626 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 28, 2025 are incorporated herein
by reference in Part III.
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TABLE OF CONTENTS
Page
Item 1A. Risk Factors
43
Item 1B. Unresolved Staff Comments
57
Item 1C. Cybersecurity
57
Item 2. Properties
58
Item 3. Legal Proceedings
58
Item 4. Mine Safety Disclosures
58
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
58
Item 6. Reserved
60
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
61
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
72
Item 8. Financial Statements and Supplementary Data
73
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
142
Item 9A. Controls and Procedures
142
Item 9B. Other Information
142
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
142
PART III
Item 10. Directors, Executive Officers and Corporate Governance
143
Item 11. Executive Compensation
143
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
143
Item 13. Certain Relationships and Related Transactions, and Director Independence
143
Item 14. Principal Accounting Fees and Services
143
PART IV
Item 15. Exhibits, Financial Statement Schedules
144
(a) 1. Financial Statements
144
(a) 2. Financial Statement Schedules
144
(a) 3. Exhibits Required by Securities and Exchange Commission Regulation S-K
145
SIGNATURES
POWER OF ATTORNEY
PART I
Item 1. Business.
1
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1
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Statements contained in this Annual Report on Form 10-K (this “Annual Report”) relating to plans, strategies,
economic performance and trends, projections of results of specific activities or investments and other statements that are not
descriptions of historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and
uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors, which
include, but are not limited to, factors discussed under the captions “Business — General — Allowance for Credit Losses” and
“Business — General — Market Area and Competition” in Item 1 below, “Risk Factors” in Item 1A below, in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Overview” in Item 7 below, and elsewhere in this
Annual Report and in other documents filed by the Company with the Securities and Exchange Commission from time to
time. Forward-looking statements may be identified by terms such as “may,” “will,” “should,” “could,” “expects,” “plans,”
“intends,” “anticipates,” “believes,” “estimates,” “predicts,” “goals”, “forecasts,” “potential” or “continue” or similar terms or
the negative of these terms. Although we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We have no obligation to
update these forward-looking statements.
PART I
As used in this Report, the words “we,” “us,” “our” and the “Company” are used to refer to Flushing Financial
Corporation (the “Holding Company”) and its direct and indirect wholly owned subsidiaries, Flushing Bank (the “Bank”),
Flushing Service Corporation, FSB Properties Inc., and Flushing Preferred Funding Corporation, which was dissolved as of
June 30, 2021.
Item 1. Business.
GENERAL
Overview
The Holding Company is a Delaware corporation organized in 1994. The Bank was organized in 1929 as a New York
State-chartered mutual savings bank. Today the Bank operates as a full-service New York State commercial bank. Our primary
business is the operation of the Bank. The Bank owned two subsidiaries during 2025: Flushing Service Corporation and FSB
Properties Inc. The Bank also operates an internet branch (the “Internet Branch”), which operates under the brands of
iGObanking.com® and BankPurely®. The activities of the Holding Company are primarily funded by cash on hand,
dividends, if any, received from the Bank, issuances of subordinated debt and junior subordinated debt, and issuances of
equity securities. The Holding Company’s common stock is traded on the NASDAQ Global Select Market under the symbol
“FFIC.”
The Holding Company also owns Flushing Financial Capital Trust II, Flushing Financial Capital Trust III, and
Flushing Financial Capital Trust IV (the “Trusts”), which are special purpose business trusts formed to issue a total of $60.0
million of capital securities and $1.9 million of common securities (which are the only voting securities). The Holding
Company owns 100% of the common securities of the Trusts. The Trusts used the proceeds from the issuance of these
securities to purchase junior subordinated debentures from the Holding Company. The Trusts are not included in our
consolidated financial statements as we would not absorb the losses of the Trusts if losses were to occur.
Unless otherwise disclosed, the information presented in this Annual Report reflects the financial condition and
results of operations of the Company. Management views the Company as operating a single unit – a community bank. At
December 31, 2025, the Company had total assets of $8.7 billion, deposits of $7.3 billion and stockholders’ equity of $0.7
billion.
Our principal business is attracting retail deposits from the general public and investing those deposits together with
funds generated from ongoing operations and borrowings, primarily in (1) originations and purchases of multi-family
residential properties loans, commercial business loans, commercial real estate mortgage loans and, to a lesser extent, one-to-
four family loans (focusing on mixed-use properties, which are properties that contain both residential dwelling units
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and commercial units); (2) construction loans; (3) equipment financing loans; (4) Small Business Administration (“SBA”)
loans; (5) mortgage loan surrogates such as mortgage-backed securities; and (6) U.S. government securities, corporate fixed-
income securities and other marketable securities. We also originate certain other consumer loans including overdraft lines of
credit. At December 31, 2025, we had gross loans outstanding of $6,639.8 million, with gross mortgage loans totaling
$5,226.4 million, or 78.7% of gross loans, and commercial business loans totaling $1,413.4 million, or 21.3% of gross loans.
Mortgage loans are primarily multi-family, commercial and one-to-four family mixed-use properties, which represent 73.1%
of gross loans. Our revenues are derived principally from interest on loans, our mortgage-backed securities portfolio, and
interest and dividends on other investments in our securities portfolio. Our primary sources of funds are deposits, Federal
Home Loan Bank of New York (“FHLB-NY”) borrowings, principal and interest payments on loans, mortgage-backed, other
securities and to a lesser extent proceeds from sales of securities and loans. The Bank’s primary regulator is the New York
State Department of Financial Services (“NYDFS”), and its primary federal regulator is the Federal Deposit Insurance
Corporation (“FDIC”). Deposits are insured to the maximum allowable amount by the FDIC. Additionally, the Bank is a
member of the Federal Home Loan Bank (“FHLB”) system.
Proposed Merger
On December 29, 2025, the Company, OceanFirst Financial Corp. (“OceanFirst”), and Apollo Merger Sub Corp., a
wholly-owned subsidiary of OceanFirst (“Merger Sub”), entered into an Agreement and Plan of Merger (as it may be
amended, modified or supplemented from time to time in accordance with its terms, the “merger agreement”), pursuant to
which, on the terms and subject to the conditions set forth in the merger agreement, OceanFirst and the Company have agreed
to combine their respective businesses through a series of mergers.
In the terms and subject to the conditions set forth in the merger agreement, at the closing, Merger Sub will merge
with and into the Company (the “first merger”), with the Company as the surviving entity. Immediately following the first
merger, the Company will merge with and into OceanFirst (the “second merger” and together with the first merger, the
“mergers”), with OceanFirst as the surviving corporation (the “combined company” and certain references to “OceanFirst”
herein refer to the combined company following the second merger, as context requires). On the day immediately following
the mergers, Flushing Bank will merge with and into OceanFirst Bank, National Association, a national banking association
and a wholly-owned subsidiary of OceanFirst (“OceanFirst Bank,” and such merger, the “bank merger”), with OceanFirst
Bank continuing as the surviving bank (the “surviving bank”).
In the first merger, the Company’s stockholders will be entitled to receive 0.85 of a share of OceanFirst common
stock for each share of Company common stock they own, subject to certain exceptions. Although the number of shares of
OceanFirst common stock that the Company’s stockholders will be entitled to receive per share of Company common stock is
fixed, the market value of the merger consideration will fluctuate with the market price of OceanFirst common stock and will
not be known at the time the Company’s stockholders vote on the merger agreement.
Concurrently with its entry into the merger agreement, OceanFirst entered into an investment agreement (the
“investment agreement”), dated as of December 29, 2025, with affiliates of funds managed by Warburg Pincus LLC
(“Warburg”) pursuant to which a $225 million cash investment (the “investment”) will be made into the combined entity.
Market Area and Competition
We are a community oriented commercial bank offering a wide variety of financial services to meet the needs of the
communities we serve. The Bank’s main office and its executive offices are in Uniondale, New York, located in Nassau
County. At December 31, 2025, the Bank operated 30 full-service offices and the Internet Branch. We have offices located in
the New York City Boroughs of Queens, Brooklyn, and Manhattan, and in Nassau and Suffolk County, New York. The vast
majority of all our mortgage loans are secured by properties located in the New York City metropolitan area.
We face intense competition both in making loans and in attracting deposits. Our market area has a high density of
financial institutions, many of which have greater financial resources, name recognition and market presence than we do, and
all of which are competitors to varying degrees. Particularly intense competition exists for deposits, as we compete with 104
banks and thrifts in the counties in which we have branch locations. Our market share of deposits, as of June 30, 2025, in these
counties was 0.35% of the total deposits of these FDIC insured competing financial institutions, and we are
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the 23rd largest financial institution.1 In addition, we compete with credit unions, the stock market and mutual funds for
customers’ funds. Competition for deposits in our market and for national brokered deposits is primarily based on the types of
deposits offered and rate paid on the deposits. Particularly intense competition also exists in all the lending activities we
emphasize.
In addition to the financial institutions mentioned above, we compete against mortgage banks and insurance
companies located both within our market and available on the internet. Competition for loans in our market is primarily
based on the types of loans offered and the related terms for these loans, including fixed-rate versus adjustable-rate loans and
the interest rate on the loan. For adjustable-rate loans, competition is also based on the repricing period, the index to which the
rate is referenced, and the spread over the index rate. Also, competition is influenced by the ability of a financial institution to
respond to customer requests and to provide the borrower with a timely decision to approve or deny the loan application. The
internet banking arena also has many larger financial institutions which have greater financial resources, name recognition and
market presence than we do. Our future earnings prospects will be affected by our ability to compete effectively with other
financial institutions and to implement our business strategies. Our strategy for attracting deposits includes using various
marketing techniques, delivering enhanced technology and customer friendly banking services, and focusing on the unique
personal and small business banking needs of the multi-ethnic communities we serve. Our strategy for attracting new loans is
primarily dependent on providing timely response to applicants and maintaining a network of quality brokers and other
business sources. See “Risk Factors – The Markets in Which We Operate Are Highly Competitive” included in Item 1A of this
Annual Report.
For a discussion of our business strategies, see “Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Overview — Management Strategy” included in Item 7 of this Annual Report.
Lending Activities
Loan Portfolio Composition. Our loan portfolio consists primarily of mortgage loans secured by multi-family
residential, commercial real estate, one-to-four family mixed-use property, one-to-four family residential property, and
commercial business loans. In addition, we also offer construction loans, SBA loans and other consumer loans. Most of our
mortgage loans are secured by properties located within our market area.
We have focused our loan origination efforts on multi-family residential mortgage loans, commercial real estate and
commercial business loans with full banking relationships. All these loan types generally include prepayment penalties that we
collect if the loans pay in full prior to the contractual maturity. We expect to continue this emphasis through marketing and by
maintaining competitive interest rates and origination fees. Our marketing efforts include frequent contact with mortgage
brokers and other professionals who serve as referral sources.
Fully underwritten one-to-four family residential mortgage loans generally are considered by the banking industry to
have less risk than other types of loans. Multi-family residential, commercial real estate and one-to-four family mixed-use
property mortgage loans generally have higher yields than one-to-four family residential property mortgage loans and shorter
terms to maturity, but typically involve higher principal amounts and may expose the lender to a greater risk of credit loss than
one-to-four family residential property mortgage loans. The greater risk associated with multi-family residential, commercial
real estate and one-to-four family mixed-use property mortgage loans could require us to increase our provisions for credit
losses and to maintain an allowance for credit losses as a percentage of total loans in excess of the allowance we currently
maintain. We continually review the composition of our mortgage loan portfolio to manage the risk in the portfolio.
Our loan portfolio consists of adjustable-rate (“ARM”) and fixed-rate loans. Interest rates we charge on loans are
affected primarily by the demand for such loans, the supply of money available for lending purposes, the rate offered by our
competitors and the creditworthiness of the borrower. Many of those factors are, in turn, affected by local, regional and
national economic conditions, and the fiscal, monetary and tax policies of the federal, state and local governments.
In general, consumers show a preference for ARM loans in periods of high interest rates and for fixed-rate loans
when interest rates are low. In periods of declining interest rates, we may experience refinancing activity in ARM loans,
1 Per June 2025 FDIC Summary of Deposits for the New York State Counties of New York, Kings, Queens, Nassau and Suffolk
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as borrowers show a preference to lock-in the lower rates available on fixed-rate loans. In the case of ARM loans we
originated, volume and adjustment periods are affected by the interest rates and other market factors as discussed above as
well as consumer preferences. We have not in the past, nor do we currently, originate ARM loans that provide for negative
amortization.
Most of our commercial business loans are generated by the Company’s business banking group which focuses on
loan and deposit relationships to businesses located within our market area. These loans are generally personally guaranteed
by the owners, and may be secured by the assets of the business, which at times may include real estate. The interest rate on
these loans are generally adjustable based on a published index. These loans, while providing us a higher rate of return, also
present a higher level of risk. The greater risk associated with commercial business loans could require us to increase our
provision for credit losses, and to maintain an allowance for credit losses as a percentage of total loans in excess of the
allowance we currently maintain.
At times, we may purchase whole or participations in loans from banks, mortgage bankers and other financial
institutions when the loans complement our loan portfolio strategy. Loans purchased must meet our underwriting standards
when they were originated. Our lending activities are subject to federal and state laws and regulations. See “— Regulation.”
The following table sets forth the composition of our loan portfolio at the dates indicated:
At December 31,
2025
2024
2023
2022
2021
Percent
Percent
Percent
Percent
Percent
Amount
of Total
Amount
of Total
Amount
of Total
Amount
of Total
Amount
of Total
(Dollars in thousands)
Mortgage Loans:
Multi-family residential
$ 2,382,828
35.88 % $ 2,527,222
37.50 % $ 2,658,205
38.53 % $ 2,601,384
37.57 % $ 2,517,026
37.94 %
Commercial real estate (1)
1,993,018
30.02
1,973,124
29.28
1,958,252
28.39
1,913,040
27.62
1,775,629
26.77
One-to-four family - mixed-use property
476,423
7.18
511,222
7.59
530,243
7.69
554,314
8.00
571,795
8.62
One-to-four family - residential
319,353
4.81
244,282
3.63
220,213
3.19
241,246
3.48
276,571
4.17
Construction
54,821
0.83
60,399
0.90
58,673
0.85
70,951
1.02
59,761
0.90
Gross mortgage loans
5,226,443
78.72
5,316,249
78.90
5,425,586
78.65
5,380,935
77.69
5,200,782
78.40
Commercial business loans:
Small Business Administration
17,523
0.26
19,925
0.30
20,205
0.29
23,275
0.34
93,811
1.41
Commercial business and other
1,395,853
21.02
1,401,602
20.80
1,452,518
21.06
1,521,548
21.97
1,339,273
20.19
Gross commercial business loans
1,413,376
21.28
1,421,527
21.10
1,472,723
21.35
1,544,823
22.31
1,433,084
21.60
Gross loans
6,639,819
100.00 % 6,737,776
100.00 % 6,898,309
100.00 % 6,925,758
100.00 % 6,633,866
100.00 %
Unearned loan fees and deferred costs, net
12,488
10,097
9,590
9,011
4,239
Unallocated portfolio layer basis adjustments (2)
1,645
(2,025)
(949)
—
—
Less: Allowance for credit losses
(42,802)
(40,152)
(40,161)
(40,442)
(37,135)
Loans, net
$ 6,611,150
$ 6,705,696
$ 6,866,789
$ 6,894,327
$ 6,600,970
(1)
Balance consists almost exclusively of investor commercial real estate (non-owner occupied). Owner-occupied commercial real estate represents less than 1.0% of the total for
each period shown.
(2)
This amount represents portfolio layer method basis adjustments related to loans hedged in a closed portfolio. Under generally accepted accounting principles in the United
States of America (“GAAP”) portfolio layer method basis adjustments are not allocated to individual loans, however, the amounts impact the net loan balance. These basis
adjustments would be allocated to the amortized cost of specific loans within the pool if the hedge was de-designated. See Note 20 (“Derivative Financial Instruments”) of the
Notes to the Consolidated Financial Statements.
In the table above, commercial business and other loans include owner-occupied commercial real estate totaling $793.4
million, $745.1 million, $707.6 million, $732.0 million and $624.0 million at December 31, 2025, 2024, 2023, 2022 and 2021,
respectively.
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The following table sets forth our loan originations (including the net effect of refinancing) and the changes in our
portfolio of loans, including purchases, sales and principal reductions for the years indicated:
For the years ended December 31,
(In thousands)
2025
2024
2023
Mortgage Loans
At beginning of period
$
5,316,249
$
5,425,586
$
5,380,935
Mortgage loans originated:
Multi-family residential
63,962
115,531
232,715
Commercial real estate
210,683
162,611
184,382
One-to-four family mixed-use property
16,014
17,061
20,097
One-to-four family residential
1,875
3,358
6,883
Construction
13,767
20,890
34,253
Total mortgage loans originated
306,301
319,451
478,330
Mortgage loans purchased:
One-to-four family residential
121,505
52,314
—
Construction
—
—
128
Total mortgage loans purchased
121,505
52,314
128
Less:
Principal reductions
524,920
388,311
424,734
Loans transferred to (from) loans held for sale
(34,714)
73,879
—
Mortgage loan sales
23,264
18,148
9,042
Charge-offs
4,142
435
31
Loans transferred to OREO
—
329
—
At end of period
$
5,226,443
$
5,316,249
$
5,425,586
Commercial business loans
At beginning of period
$
1,421,527
$
1,472,723
$
1,544,823
Loans originated:
Small Business Administration
10,626
7,298
2,300
Commercial business
257,345
190,788
166,391
Other
5,295
7,183
4,715
Total commercial business and other loans originated
273,266
205,269
173,406
Commercial business loans purchased:
Commercial business
146,322
121,173
166,216
Total commercial business loans purchased
146,322
121,173
166,216
Less:
Small Business Administration sales
7,973
—
—
Principal reductions
412,506
370,106
400,598
Charge-offs
7,260
7,532
11,124
At end of period
$
1,413,376
$
1,421,527
$
1,472,723
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Loan Maturity and Repricing. The following table shows the maturity and repricing of our total loan portfolio at
December 31, 2025. Scheduled repayments are shown in the maturity category in which the payments become due.
Mortgage loans
Commercial business loans
One-to-four
family
One-to-four
Commercial
Multi-family
Commercial
mixed-use
family
Small Business
business
(In thousands)
residential
real estate property
residential Construction Administration and other
Total loans
Amounts due within one year
$
386,646
$
484,335
$
58,643
$
15,604
$
53,982
$
1,149
$
485,097 $ 1,485,456
Amounts due after one year:
One to two years
323,715
314,646
53,689
15,115
838
1,017
261,428
970,448
Two to three years
280,469
258,855
46,075
13,742
1
795
188,107
788,044
Three to five years
439,207
402,423
65,971
22,833
—
1,706
256,740 1,188,880
Five to fifteen years
765,370
511,916
168,680
102,207
—
6,549
202,980 1,757,702
Over fifteen years
187,421
20,843
83,365
149,852
—
6,307
1,501
449,289
Total due after one year
1,996,182
1,508,683
417,780
303,749
839
16,374
910,756 5,154,363
Total amounts due
$ 2,382,828
$ 1,993,018
$ 476,423
$ 319,353
$
54,821
$
17,523
$ 1,395,853 $ 6,639,819
Sensitivity of loans to changes in interest rates -
loans due after one year:
Fixed rate loans
$
232,834
$
69,129
$ 127,667
$
51,574
$
—
$
179
$
482,128 $
963,511
Adjustable rate loans
1,763,348
1,439,554
290,113
252,175
839
16,195
428,628 4,190,852
Total loans due after one year
$ 1,996,182
$ 1,508,683
$ 417,780
$ 303,749
$
839
$
16,374
$
910,756 $ 5,154,363
Multi-family Residential Lending. Loans secured by multi-family residential properties were $2,382.8 million, or
35.88% of gross loans, at December 31, 2025. Our multi-family residential mortgage loans had an average principal balance
of $1.1 million at December 31, 2025, and the largest multi-family residential mortgage loan held in our portfolio had a
principal balance of $27.3 million. We offer both fixed-rate and adjustable-rate multi-family residential mortgage loans, with
maturities of up to 30 years.
In underwriting multi-family residential mortgage loans, we review the expected net operating income generated by
the real estate collateral securing the loan, the age and condition of the collateral, the financial resources and income level of
the borrower and the borrower’s experience in owning or managing similar properties. We typically require debt service
coverage of at least 125% of the monthly loan payment. The weighted average debt service coverage for this portfolio is
approximately 180% based on the most recent annual loan review. We generally originate these loans up to only 75% of the
appraised value or the purchase price of the property, whichever is less. Any loan with a final loan-to-value ratio in excess of
75% must be approved by the Board of Directors of the Bank (the “Bank Board of Directors”) or the Loan Committee as an
exception to policy. The weighted average loan to value ratio for this loan portfolio is approximately 28.1% based on the most
recent appraisal and the loan balance at December 31, 2025. We generally rely on the income generated by the property as the
primary means by which the loan is repaid. However, personal guarantees may be obtained for additional security from these
borrowers. We typically order an environmental report on our multi-family and commercial real estate loans.
Loans secured by multi-family residential property generally involve a greater degree of risk than residential
mortgage loans and carry larger loan balances. The increased credit risk is the result of several factors, including the
concentration of principal in a smaller number of loans and borrowers, the effects of general economic conditions on income
producing properties and the increased difficulty in evaluating and monitoring these types of loans. Furthermore, the
repayment of loans secured by multi-family residential property is typically dependent upon the successful operation of the
related property, which is usually owned by a legal entity with the property being the entity’s only asset. If the cash flow from
the property is reduced, the borrower’s ability to repay the loan may be impaired. If the borrower defaults, our only remedy
may be to foreclose on the property, for which the market value may be less than the balance due on the related mortgage loan.
Loans secured by multi-family residential property also may involve a greater degree of environmental risk. We seek to
protect against this risk through obtaining an environmental report. See “Asset Quality — Environmental Concerns Relating
to Loans.”
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7
At December 31, 2025, $2,073.5 million, or 87.02% of our multi-family mortgage loans consisted of ARM loans. We
offer ARM loans with adjustment periods typically of five years and for terms of up to 30 years. Interest rates on ARM loans
currently offered by us are adjusted at the beginning of each adjustment period generally based upon a fixed spread above the
FHLB-NY corresponding Regular Advance Rate. From time to time, due to competitive forces, we may originate ARM loans
at an initial rate lower than the fully indexed rate as a result of a discount on the spread for the initial adjustment period. Multi-
family adjustable-rate mortgage loans generally are not subject to limitations on interest rate increases either on an adjustment
period or aggregate basis over the life of the loan; however, the loans generally contain interest rate floors. We originated and
purchased multi-family ARM loans totaling $58.4 million, $106.6 million, and $210.5 million during 2025, 2024, and 2023,
respectively.
At December 31, 2025, $309.3 million, or 12.98%, of our multi-family mortgage loans consisted of fixed rate loans.
Our fixed-rate multi-family mortgage loans are generally originated for terms up to 15 years and are competitively priced
based on market conditions and our cost of funds. We originated and purchased $5.6 million, $8.9 million, and $22.2 million
of fixed-rate multi-family mortgage loans in 2025, 2024, and 2023, respectively.
The following table shows the geographic distribution of our multi-family portfolio at December 31, 2025:
Percent
Amount
of Total
(Dollars in thousands)
Brooklyn
$
680,710
28.57 %
Manhattan
505,125
21.20
Queens
418,839
17.58
Bronx
386,546
16.22
New York State (excluding NYC)
271,955
11.41
Other states
111,221
4.67
Staten Island
8,432
0.35
Total
$
2,382,828
100.00 %
Commercial Real Estate Lending. Loans secured by commercial real estate were $1,993.0 million, or 30.02% of
gross loans, at December 31, 2025. Our commercial real estate mortgage loans are secured by properties such as
hotels/motels, small business facilities, strip shopping centers, warehouses, and office buildings. At December 31, 2025, our
commercial real estate mortgage loans had an average principal balance of $2.7 million and the largest of such loans had a
principal balance of $29.9 million. This loan was paid in full on January 31, 2026. Commercial real estate mortgage loans are
generally originated in a range of $100,000 to $10.0 million.
In underwriting commercial real estate mortgage loans, we employ the same underwriting standards and procedures
as are employed in underwriting multi-family residential mortgage loans. The weighted average debt service coverage for this
portfolio is approximately 180% based on the most recent annual loan review. The weighted average loan to value ratio for
this portfolio is approximately 43.1% based on the most recent appraisal and the loan balance at December 31, 2025.
Our commercial real estate loans are primarily investor properties (non-owner occupied) which are generally
considered to have higher credit risk than multi-family lending. The repayment of principal is primarily dependent on the
successful operation of the underlying tenant’s business.
At December 31, 2025, $1,827.2 million, or 91.68%, of our commercial mortgage loans consisted of ARM loans. We
offer ARM loans with adjustment periods of one to five years and generally for terms of up to 15 years. Interest rates on ARM
loans currently offered by us are adjusted at the beginning of each adjustment period based upon a fixed spread above the
FHLB-NY corresponding Regular Advance Rate. From time to time, we may originate ARM loans at an initial rate lower than
the index as a result of a discount on the spread for the initial adjustment period. Commercial adjustable-rate mortgage loans
generally are not subject to limitations on interest rate increases either on an adjustment period or aggregate basis over the life
of the loan; however, the loans generally contain interest rate floors. We originated and purchased commercial ARM loans
totaling $209.5 million, $157.3 million, and $172.1 million during 2025, 2024, and 2023, respectively.
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8
At December 31, 2025, $165.8 million, or 8.32%, of our commercial mortgage loans consisted of fixed-rate loans.
Our fixed-rate commercial mortgage loans are generally originated for terms up to 20 years and are competitively priced
based on market conditions and our cost of funds. We originated and purchased $1.2 million, $5.3 million, and $12.2 million
of fixed-rate commercial mortgage loans in 2025, 2024, and 2023, respectively.
The following table shows the diversification of our investor property commercial real estate loans by major industry
at December 31, 2025:
Percent
Amount
of Total
(Dollars in thousands)
General Commercial
$
445,732
22.36 %
Strip Mall
368,840
18.51
Shopping Center
303,407
15.22
Commercial Mixed Use
278,225
13.96
Single Tenant Retail
172,298
8.64
Industrial
146,611
7.36
Office Multi and Single Tenant
86,368
4.33
Commercial Special Use
67,135
3.37
Office Condo and Co-Op
63,295
3.18
Health Care / Medical Use
61,107
3.07
Total (1)
$
1,993,018
100.00 %
(1)
Includes owner-occupied commercial real estate totaling $1.5 million representing 0.07% of total commercial real estate.
One-to-Four Family Mortgage Lending – Mixed-Use Properties. We offer mortgage loans secured by one-to-four
family mixed-use properties. These properties contain up to four residential dwelling units and include a commercial
component. We offer both fixed-rate and adjustable-rate one-to-four family mixed-use property mortgage loans with
maturities of up to 30 years and a general maximum loan amount of $1.0 million. One-to-four family mixed-use property
mortgage loans were $476.4 million, or 7.18% of gross loans, at December 31, 2025.
In underwriting one-to-four family mixed-use property mortgage loans, we employ the same underwriting standards
as are employed in underwriting multi-family residential mortgage loans.
At December 31, 2025, $317.8 million, or 66.70%, of our one-to-four family mixed-use property mortgage loans
consisted of ARM loans. We offer adjustable-rate one-to-four family mixed-use property mortgage loans with adjustment
periods typically of five years and for terms of up to 30 years. Interest rates on ARM loans currently offered by the Bank are
adjusted at the beginning of each adjustment period based upon a fixed spread above the FHLB-NY corresponding Regular
Advance Rate. From time to time, we may originate ARM loans at an initial rate lower than the index as a result of a discount
on the spread for the initial adjustment period. One-to-four family mixed-use property adjustable-rate mortgage loans
generally are not subject to limitations on interest rate increases either on an adjustment period or aggregate basis over the life
of the loan; however, the loans generally contain interest rate floors. We originated and purchased one-to-four family mixed-
use property ARM loans totaling $15.8 million, $14.4 million, and $8.7 million during 2025, 2024, and 2023, respectively.
At December 31, 2025, $158.6 million, or 33.30%, of our one-to-four family mixed-use property mortgage loans
consisted of fixed-rate loans. Our fixed-rate one-to-four family mixed-use property mortgage loans are originated for terms of
up to 15 years and are competitively priced based on market conditions and the Bank’s cost of funds. We originated and
purchased $0.2 million, $2.6 million, and $11.4 million of fixed-rate one-to-four family mixed-use property mortgage loans in
2025, 2024, and 2023, respectively.
One-to-Four Family Mortgage Lending – Residential Properties. We offer mortgage loans secured by one-to-four
family residential properties, including townhouses and condominium units. For purposes of the description contained in this
section, one-to-four family residential mortgage loans, co-operative apartment loans and home equity loans are collectively
referred to herein as “residential mortgage loans.” We offer both fixed-rate and adjustable-rate residential
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9
mortgage loans with maturities of up to 30 years and a general maximum loan amount of $1.0 million. Residential mortgage
loans were $319.4 million, or 4.81% of gross loans, at December 31, 2025.
We generally originate residential mortgage loans in amounts up to 80% of the appraised value or the sale price,
whichever is less. Private mortgage insurance is required whenever loan-to-value ratios exceed 80% of the appraised value of
the property securing the loan.
At December 31, 2025, $264.7 million, or 82.87%, of our residential mortgage loans consisted of ARM loans. We
offer ARM loans with adjustment periods of one, three, five, seven or ten years. Interest rates on ARM loans currently offered
by us are adjusted at the beginning of each adjustment period based upon a fixed spread above the FHLB-NY corresponding
Regular Advance Rate. From time to time, we may originate ARM loans at an initial rate lower than the index as a result of a
discount on the spread for the initial adjustment period. ARM loans generally are subject to limitations on interest rate
increases of 2% per adjustment period and an aggregate adjustment of 6% over the life of the loan and have interest rate
floors. We originated and purchased residential ARM loans totaling $123.4 million, $55.1 million, and $6.5 million during
2025, 2024, and 2023, respectively.
The retention of ARM loans in our portfolio helps us reduce our exposure to interest rate risks. However, in an
environment of rapidly increasing interest rates, it is possible for the interest rate increase to exceed the maximum aggregate
adjustment on one-to-four family residential ARM loans and negatively affect the spread between our interest income and our
cost of funds.
ARM loans generally involve credit risks different from those inherent in fixed-rate loans, primarily because if
interest rates rise, the underlying payments of the borrower rise, thereby increasing the potential for default. However, this
potential risk is lessened by our policy of originating one-to-four family residential ARM loans with annual and lifetime
interest rate caps that limit the increase of a borrower’s monthly payment.
At December 31, 2025, $54.7 million, or 17.13%, of our residential mortgage loans consisted of fixed-rate loans. Our
fixed-rate residential mortgage loans typically are originated for terms of 15 and 30 years and are competitively priced based
on market conditions and our cost of funds. We did not originate or purchase any fixed-rate residential mortgages in 2025. We
originated and purchased $0.6 million and $0.4 million in fixed-rate residential mortgages in 2024 and 2023, respectively.
At December 31, 2025, home equity loans totaled $15.3 million, or 0.23%, of gross loans. Home equity loans are
included in our portfolio of residential mortgage loans. These loans are offered as adjustable-rate “home equity lines of credit”
on which interest only is due for an initial term of 10 years and thereafter principal and interest payments sufficient to
liquidate the loan are required for the remaining term, not to exceed 30 years. These adjustable “home equity lines of credit”
may include a “floor” and/or a “ceiling” on the interest rate that we charge for these loans. These loans also may be offered as
fully amortizing closed-end fixed-rate loans for terms up to 15 years. The majority of home equity loans originated are owner
occupied one-to-four family residential properties and condominium units. To a lesser extent, home equity loans are also
originated on one-to-four residential properties held for investment and second homes. All home equity loans are subject to an
80% loan-to-value ratio computed on the basis of the aggregate of the first mortgage loan amount outstanding and the
proposed home equity loan. They are generally granted in amounts from $25,000 to $300,000.
Construction Loans. At December 31, 2025, construction loans totaled $54.8 million, or 0.83%, of gross loans. Our
construction loans primarily are adjustable-rate loans to finance the construction of one-to-four family residential properties,
multi-family residential properties and owner-occupied commercial properties. We also, to a limited extent, finance the
construction of commercial properties. Our policies provide that construction loans may be made in amounts up to 70% of the
estimated value of the developed property and only if we obtain a first lien position on the underlying real estate. Construction
loans are generally made with terms of two years or less. Advances are made as construction progresses and inspection
warrants, subject to continued title searches to ensure that we maintain a first lien position. We originated and purchased
construction loans totaling $13.8 million, $20.9 million, and $34.4 million during 2025, 2024, and 2023, respectively.
Construction loans involve a greater degree of risk than other loans because, among other things, the underwriting of
such loans is based on an estimated value of the developed property, which can be difficult to ascertain in light of
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10
uncertainties inherent in such estimations. In addition, construction lending entails the risk that the project may not be
completed due to cost overruns or changes in market conditions.
Small Business Administration Lending. At December 31, 2025, SBA loans totaled $17.5 million, representing 0.26%
of gross loans. These loans are extended to small businesses and are guaranteed by the SBA up to a maximum of 85% of the
loan balance for loans with balances of $150,000 or less, and to a maximum of 75% of the loan balance for loans with
balances greater than $150,000. We also provide term loans and lines of credit up to $350,000 under the SBA Express
Program, on which the SBA provides a 50% guaranty. The maximum loan size under the SBA guarantee program is $5.0
million, with a maximum loan guarantee of $3.75 million. All SBA loans are underwritten in accordance with SBA Standard
Operating Procedures which requires collateral and the personal guarantee of the owners with more than 20% ownership from
SBA borrowers. Typically, SBA loans are originated in the range of $25,000 to $2.0 million with terms ranging from one to
seven years and up to 25 years for owner occupied commercial real estate mortgages. SBA loans are generally offered at
adjustable-rates tied to the prime rate (as published in the Wall Street Journal) with adjustment periods of one to three months.
At times, we may sell the guaranteed portion of certain SBA term loans in the secondary market, realizing a gain at the time of
sale, and retaining the servicing rights on these loans, collecting a servicing fee of approximately 1%.
We originated and purchased SBA loans totaling $10.6 million, $7.3 million and $2.3 million, during 2025, 2024, and
2023, respectively. We sold the guarantee portion of SBA loans totaling $8.0 million during 2025. There were no SBA sales in
2024 and 2023.
Commercial Business and Other Loans. At December 31, 2025, commercial business and other loans totaled
$1,395.9 million, or 21.02%, of gross loans. We originate and purchase commercial business loans and other loans for
business, personal, or household purposes. Commercial business loans are provided to businesses in the New York City
metropolitan area with annual sales of up to $250.0 million. Our commercial business loans include lines of credit and term
loans including owner occupied mortgages. These loans are secured by business assets, including accounts receivables,
inventory, equipment and real estate and generally require personal guarantees. The Bank also enters into
participations/syndications on senior secured commercial business loans, which are serviced by other banks. Commercial
business loans are generally originated in a range of $100,000 to $10.0 million. We generally offer adjustable-rate loans with
adjustment periods of five years for owner occupied mortgages and for lines of credit the adjustment period is
generally monthly. Interest rates on adjustable-rate loans currently offered by us are adjusted at the beginning of each
adjustment period based upon a fixed spread above the FHLB-NY corresponding Regular Advance Rate for owner occupied
mortgages and a fixed spread above the Secured Overnight Financing Rate (“SOFR”) or Prime Rate for lines of credit.
Commercial business adjustable-rate loans generally are not subject to limitations on interest rate increases either on an
adjustment period or aggregate basis over the life of the loan, however they generally are subject to interest rate floors. Our
fixed-rate commercial business loans are generally originated for terms up to 20 years and are competitively priced based on
market conditions and our cost of funds. We originated and purchased $394.9 million, $319.1 million, and $322.4 million of
commercial business loans during 2025, 2024, and 2023, respectively.
A portion of our commercial business and other loans are secured by owner-occupied real estate, which totaled
$793.4 million, $745.1 million and $707.6 million at December 31, 2025, 2024 and 2023, respectively. These loans are
secured by properties used by the borrower for commercial use where the primary source of repayment is expected to be the
income generated by the borrower’s business use of the property. The Company recognizes in circumstances where the
borrower is not performing, the real estate collateral would be the source of repayment. The Company considers these credits
to be less risky than commercial business loans, however, riskier than commercial real estate loans.
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11
The following table shows the diversification of our commercial business and other loan portfolio by major industry
at December 31, 2025:
Percent
Amount
of Total
(Dollars in thousands)
Automotive Businesses
$
202,319
14.31 %
Construction / Contractors
174,266
12.33
Wholesalers
141,355
10.00
Manufacturing
102,660
7.26
Professional Services
99,414
7.03
Financing Companies
97,112
6.87
Hotels
94,816
6.71
Healthcare
89,838
6.36
Retail
62,254
4.40
Restaurant
52,772
3.73
Other
296,570
20.98
Total
$
1,413,376
100.00 %
Other loans include overdraft lines of credit. Generally, unsecured consumer loans are limited to amounts of $5,000
or less for terms of up to five years. We originated and purchased $5.3 million, $7.2 million, and $4.7 million of non-overdraft
other loans during 2025, 2024, and 2023, respectively. The underwriting standards employed by us for consumer and other
loans include a determination of the applicant’s payment history on other debts and assessment of the applicant’s ability to
meet payments on all of his or her obligations. In addition to the creditworthiness of the applicant, the underwriting process
also includes a comparison of the value of the collateral, if any, to the proposed loan amount. Unsecured loans tend to have
higher risk, and therefore command a higher interest rate.
Loan Extensions, Renewals, Modifications and Restructuring. Extensions, renewals, modifications or restructurings
of a loan, other than a loan that is experiencing financial difficulties, require the loan to be fully underwritten in accordance
with our policy. The borrower must be current to have a loan extended, renewed, or modified. Our policy for modifying a
mortgage loan due to the borrower’s request for changes in the terms will depend on the changes requested. The borrower
must be current and have a good payment history to have a loan modified. If the borrower is seeking additional funds, the loan
is fully underwritten in accordance with our policy for new loans. If the borrower is seeking a reduction in the interest rate due
to a decline in interest rates in the market, we generally limit our review as follows: (1) for income producing properties and
commercial business loans, to a review of the operating results of the property/business and a satisfactory inspection of the
property, and (2) for one-to-four residential properties, to a satisfactory inspection of the property. Our policy on modifying a
loan requires the loan to be fully underwritten in accordance with Company policy. The borrower must demonstrate the ability
to repay the loan under the new terms. While our formal lending policies do not prohibit making additional loans to a
borrower or any related interest of the borrower who is past due in principal or interest more than 90 days, it has been our
practice not to make additional loans to a borrower or a related interest of the borrower if the borrower is past due more than
90 days as to principal or interest. During the most recent three fiscal years, we did not make any additional loans to a
borrower or any related interest of the borrower who was past due in principal or interest more than 90 days. All extensions,
renewals, restructurings, and modifications must be approved by the appropriate Loan Committee.
The Company may modify loans to enable a borrower experiencing financial difficulties to continue making
payments when it is deemed to be in the Company’s best long-term interest. When modifying a loan, an assessment of
whether a borrower is experiencing financial difficulty is made on the date of modification. This modification may include
reducing the loan interest rate, extending the loan term, any other-than-insignificant payment delay, principal forgiveness or
any combination of these types of modifications. When such modifications are performed, a change to the allowance for credit
losses is generally not required as the methodologies used to estimate the allowance already capture the effect of borrowers
experiencing financial difficulty. On December 31, 2025, there were no commitments to lend additional funds to borrowers
who have received a loan modification as a result of financial difficulty. See Note 3 (“Loans and Allowance for Credit
Losses”) of the Notes to the Consolidated Financial Statements.
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12
Loan Approval Procedures and Authority. The Board of Directors of the Company (the “Board of Directors”)
approved lending policies establishing loan approval requirements for our various types of loan products. Our Residential
Mortgage Lending Policy (which applies to all one-to-four family mortgage loans, including residential and mixed-use
property) establishes authorized levels of approval. One-to-four family mortgage loans that do not exceed $750,000 require
two signatures for approval, one of which must be from either the President, Senior Executive Vice President Chief of Real
Estate Lending, the Executive Vice President of Residential, Mixed Use & Small Multi-family Lending, or Executive Vice
President Real Estate Credit Center (collectively, “Authorized Officers”) and the other from a Senior Underwriter, Manager,
Underwriter, or Junior Underwriter in the Residential Mortgage Loan Department (collectively, “Loan Officers”), and
ratification by the Management Credit Committee. For one-to-four family mortgage loans in excess of $750,000 and up to
$2.0 million, three signatures are required for approval, at least two of which must be from Authorized Officers, and the other
one may be a Loan Officer, and ratification by the Management Credit Committee and the Director’s Loan Committee. The
Director’s Loan Committee or the Bank Board of Directors also must approve one-to-four family mortgage loans in excess of
$2.0 million up to and including $5.0 million after obtaining two signatures from authorized officers and one signature from
loan officers with Management Credit Committee approval. One-to-four family mortgage loans in excess of $5.0 million may
require Director’s inspection.
Pursuant to our Commercial Real Estate Lending Policy, loans secured by commercial real estate and multi-family
residential properties up to $2.0 million are approved by the Executive Vice President of Commercial Real Estate and the
Senior Executive Vice President, Chief of Real Estate Lending, or Executive Vice President Credit Center Manager and then
ratified by the Management Credit Committee and/or the Director’s Loan Committee. Loans provided in excess of $2.0
million and up to and including $5.0 million must be submitted with the two signatures of the officers to the Management
Credit Committee for final approval and then to the Director’s Loan Committee and/or Board of Directors for ratification.
Loans in excess of $5.0 million and up to and including $25.0 million must be submitted subsequently to the Director’s Loan
Committee and/or the Board of Directors for approval. Loan amounts in excess of $25.0 million must be approved by the
Board of Directors.
In accordance with our Business Banking Credit Policy, commercial business and other loans require two signatures
from the Business Loan Committee for approval up to $0.5 million. All commercial business loans and SBA loans over $0.5
million and up to $2.5 million must be approved by obtaining two signatures from the Business Loan Committee and ratified
by the Management Credit Committee. Commercial business loans and SBA loans in excess of $2.5 million up to $5.0 million
must be approved by the Management Credit Committee and ratified by the Director’s Loan Committee. Loans in excess of
$5.0 million must be submitted to the Director’s Loan Committee and/ or the Board of Directors for approval.
Our Construction Loan Policy requires construction loans up to and including $2.0 million must be approved by the
Senior Executive Vice President, Chief of Real Estate Lending and the Executive Vice President of Commercial Real Estate,
and ratified by the Management Credit Committee or the Director’s Loan Committee. Such loans in excess of $2.0 million up
to and including $5.0 million require the same officer approvals, approval of the Management Credit Committee, and
ratification of the Director’s Loan Committee or the Bank Board of Directors. Loan proposals in excess of $5.0 million up to
and including $25.0 million that are approved by Management Credit Committee will subsequently be submitted to either the
Directors Loan Committee and/or the Board of Directors for their approval. Construction loans in excess of $25.0 million
require the subsequent approval of the Bank Board of Directors. Any loan, regardless of type, that deviates from our written
credit policies must be approved by the Director’s Loan Committee or the Bank Board of Directors.
For all loans originated by us, upon receipt of a completed loan application, a credit report is ordered, and certain
other financial information is obtained. An appraisal of the real estate intended to secure the proposed loan is required to be
received. An independent appraiser designated and approved by us currently performs such appraisals. Our staff appraisers
review all appraisals. The Bank Board of Directors annually approves the independent appraisers used by the Bank and
approves the Bank’s appraisal policy. It is our policy to require borrowers to obtain title insurance and hazard insurance on all
real estate loans prior to closing. For certain borrowers, and/or as required by law, the Bank may require escrow funds on
a monthly basis together with each payment of principal and interest to a mortgage escrow account from which we make
disbursements for items such as real estate taxes and, in some cases, hazard insurance premiums.
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13
Loan Concentrations. The maximum amount of credit that the Bank can extend to any single borrower or related
group of borrowers generally is limited to 15% of the Bank’s unimpaired capital and surplus, or $136.4 million at
December 31, 2025. Applicable laws and regulations permit an additional amount of credit to be extended, equal to 10% of
unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real
estate. See “-Regulation.” However, it is currently our policy not to extend such additional credit. At December 31, 2025,
there were no loans in excess of the maximum dollar amount of loans to one borrower that the Bank was authorized to make.
At that date, the Bank’s three largest aggregate amount of outstanding loans to one borrower were $100.9 million, $84.2
million, and $73.8 million for each of the three borrowers, all of which were performing according to their terms.
Loan Servicing. At December 31, 2025, we were servicing $95.9 million of loans for others. Our policy is to retain
the servicing rights to the mortgage and SBA loans that we sell in the secondary market, other than sales of delinquent loans,
which are sold with servicing released to the buyer. For mortgage loans and commercial business loan participations
purchased by us for whom the seller retains the servicing rights, we receive monthly reports with which we monitor the loan
portfolio. Based upon servicing agreements with the servicers of the loans, we rely upon the servicer to contact delinquent
borrowers, collect delinquent amounts and initiate foreclosure proceedings, when necessary, all-in accordance with applicable
laws, regulations and the terms of the servicing agreements between us and our servicing agents. The servicers are required to
submit monthly reports on their collection efforts on delinquent loans. At December 31, 2025 and 2024, we held $288.7
million and $266.1 million, respectively, of loans that were serviced by others.
Asset Quality
Loan Collection. When a borrower fails to make a required payment on a loan, except for serviced loans as described
above, we take a number of steps to induce the borrower to cure the delinquency and restore the loan to current status. In the
case of mortgage loans, personal contact is made with the borrower after the loan becomes 30 days delinquent. We take a
proactive approach to managing delinquent loans, including conducting site examinations, and encouraging borrowers to meet
with one of our representatives. When deemed appropriate, we develop short-term payment plans that enable borrowers to
bring their loans current, generally within six to nine months. We review delinquencies on a loan-by-loan basis, diligently
exploring ways to help borrowers meet their obligations and return them back to current status.
In the case of commercial business or other loans, we generally send the borrower a written notice of non-payment
when the loan is first past due. In the event payment is not then received, additional letters and phone calls generally are made
in order to encourage the borrower to meet with one of our representatives to discuss the delinquency. If the loan still is not
brought current and it becomes necessary for us to take legal action, which typically occurs after a loan is delinquent 90 days
or more, we may attempt to repossess personal or business property that secures a SBA loan, commercial business loan or
consumer loan.
When the borrower has indicated that they will be unable to bring the loan current, or due to other circumstances
which, in our opinion, indicate the borrower will be unable to bring the loan current within a reasonable time, the loan is
classified as non-performing. All loans classified as non-performing, which includes all loans past due 90 days or more, are on
non-accrual status unless there is, in our opinion, compelling evidence the borrower will bring the loan current in the
immediate future. At December 31, 2025, there were no loans that were past due 90 days or more and still accruing interest.
Upon classifying a loan as non-performing, we review available information and conditions that relate to the status of
the loan, including the estimated value of the loan’s collateral and any legal considerations that may affect the borrower’s
ability to continue to make payments. Based upon the available information, we will consider the sale of the loan or retention
of the loan. If the loan is retained, we may continue to work with the borrower to collect the amounts due or start foreclosure
proceedings. If a foreclosure action is initiated and the loan is not brought current, paid in full, or refinanced before the
foreclosure sale, the real property securing the loan is sold at foreclosure or by us as soon thereafter as practicable.
Once the decision to sell a loan is made, we determine what we would consider adequate consideration to be obtained
when that loan is sold, based on the facts and circumstances related to that loan. Investors and brokers are then contacted to
seek interest in purchasing the loan. We have been successful in finding buyers for our non-performing loans offered for sale
that are willing to pay what we consider to be adequate consideration. Terms of the sale include cash due
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14
upon closing of the sale, no contingencies or recourse to us, servicing is released to the buyer and time is of the essence. These
sales usually close within a reasonably short time period.
This strategy of selling non-performing loans has allowed us to optimize our return by quickly converting our non-
performing loans to cash, which can then be reinvested in earning assets. This strategy also allows us to avoid lengthy and
costly legal proceedings that may occur with non-performing loans. There can be no assurances that we will continue this
strategy in the future, or if continued, we will be able to find buyers to pay adequate consideration.
The following table shows delinquent and non-performing loans sold during the periods indicated:
For the years ended December 31,
(Dollars in thousands)
2025
2024
2023
Count
17
15
13
Proceeds
$ 23,797
$ 10,439
$ 7,042
Net charge-offs
(1,736)
—
(8)
Gross gains
521
273
108
Troubled Debt Restructured (Legacy GAAP). For borrowers who are experiencing financial difficulties, we had
restructured certain problem loans by: reducing the interest rate until the next reset date, extending the amortization period
thereby lowering the monthly payments, deferring a portion of the interest payment, principal forgiveness and/or changing the
loan to interest only payments for a limited time period. At times, certain problem loans had been restructured by combining
more than one of these options. These restructurings have not included a reduction of principal balance. We believe that
restructuring these loans in this manner allowed certain borrowers to become and remain current on their loans. These
restructured loans were classified troubled debt restructured (“TDR”). Loans which have been current for six consecutive
months at the time they are restructured as TDR remain on accrual status. Loans which were delinquent at the time they are
restructured as a TDR were placed on non-accrual status until they have made timely payments for six consecutive months.
The following table shows loans classified as TDR under legacy GAAP at amortized cost that were performing
according to their restructured terms at the periods indicated at December 31:
At December 31,
(In thousands)
2022
2021
Accrual Status:
Multi-family residential
$
1,673
$
1,690
Commercial real estate
7,572
7,572
One-to-four family - mixed-use property
974
1,375
One-to-four family - residential
253
483
Commercial business and other
1,069
1,340
Total
11,541
12,460
Non-Accrual Status:
One-to-four family - mixed-use property
248
261
Commercial business and other
28
41
Total
276
302
Total performing troubled debt restructured
$
11,817
$
12,762
Loans that were restructured as TDR but are not performing in accordance with the restructured terms are excluded
from the TDR table above, as they are placed on non-accrual status and reported as non-performing loans. At December 31,
2022, there were two loans totaling $3.3 million which were restructured as TDR not performing in accordance with its
restructured terms.
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15
Delinquent Loans and Non-performing Assets. We generally discontinue accruing interest on delinquent loans when a
loan is 90 days past due. At that time, previously accrued but uncollected interest is reversed from income. Loans in default
90 days or more as to their maturity date but not their interest payments, however, continue to accrue interest as long as the
borrower continues to timely remit interest payments.
The following table shows our non-performing assets at the dates indicated. During the years ended December 31,
2025 and 2024, the amounts of additional interest income that would have been recorded on non-accrual loans, had they been
current, each totaled $2.9 million. During the year ended December 31, 2023, this amount was $2.0 million. These amounts
were not included in our interest income for the respective periods.
At December 31,
(Dollars in thousands)
2025
2024
2023
2022
2021
Loans 90 days or more past due and still accruing:
Multi-family residential
$
—
$
—
$
1,463
$
—
$
—
Construction
—
—
—
2,600
—
Total
—
—
1,463
2,600
—
Non-accrual mortgage loans:
Multi-family residential
10,214
11,031
3,206
3,206
2,431
Commercial real estate
21,786
6,283
—
237
613
One-to-four family mixed-use property (1)
236
116
981
790
1,309
One-to-four family residential
1,838
1,428
5,181
4,425
7,725
Total
34,074
18,858
9,368
8,658
12,078
Non-accrual commercial business loans:
Small Business Administration
554
2,445
2,552
937
937
Commercial Business and other (1)
6,936
12,015
11,789
20,187
1,918
Total
7,490
14,460
14,341
21,124
2,855
Total non-accrual loans
41,564
33,318
23,709
29,782
14,933
Total non-performing loans
41,564
33,318
25,172
32,382
14,933
Other non-performing assets:
Available for sale securities (2)
17,261
18,000
—
—
—
Held-to-maturity securities (2)
—
—
20,981
20,981
—
Total
17,261
18,000
20,981
20,981
—
Total non-performing assets
$ 58,825
$ 51,318
$ 46,153
$ 53,363
$ 14,933
Non-performing loans to gross loans
0.63 %
0.49 %
0.36 %
0.47 %
0.23 %
Non-performing assets to total assets
0.68 %
0.57 %
0.54 %
0.63 %
0.19 %
(1) Not included in the above analysis are the following non-accrual TDRs, under legacy GAAP, that are performing according to their restructured terms:
one-to-four family mixed-use property loans totaling $0.2 million and $0.3 million at December 31, 2022 and 2021, respectively, and commercial business
loans totaling less than $0.1 million at December 31, 2022, and 2021.
(2) During the year ended December 31, 2024, one held-to-maturity municipal security with an amortized cost of $20.6 million was transferred to available
for sale. The Company did not transfer any securities between classification categories during the years ended December 31, 2025, 2023, 2022 and 2021. See
“Allowance for Credit Losses”.
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16
The following table shows our delinquent loans at amortized cost that are less than 90 days past due and still accruing
interest at December 31:
2025
2024
30 - 59
60 - 89
30 - 59
60 - 89
days
days
days
days
(In thousands)
Multi-family residential
$ 3,914
$ 1,165
$ 12,596
$ 9,255
Commercial real estate
2,785
—
4,846
—
One-to-four family ― mixed-use property
263
—
870
1,234
One-to-four family ― residential
2,264
53
802
65
Small Business Administration
160
—
—
—
Commercial business and other
7,874
1
409
2,239
Total
$ 17,260
$ 1,219
$ 19,523
$ 12,793
Other Real Estate Owned. We aggressively market our Other Real Estate Owned (“OREO”) properties. At
December 31, 2025 and 2024, we held no OREO.
We may obtain physical possession of residential real estate collateralizing a consumer mortgage loan via foreclosure
through an in-substance repossession. The Company did not have any OREO during 2025 and 2023. During the year ended
December 31, 2024, the Company acquired and then subsequently sold one OREO for $0.8 million, resulting in a gain on sale
of $0.2 million. Included within net loans as of December 31, 2025 and 2024, was a recorded investment of $2.1 million and
$2.7 million, respectively, of consumer mortgage loans secured by residential real estate properties for which formal
foreclosure proceedings were in process according to local requirements of the applicable jurisdiction.
Criticized and Classified Assets. Our policy is to review our assets, focusing primarily on the loan portfolio, OREO,
and the investment portfolio, to ensure that the credit quality is maintained at the highest levels. When weaknesses are
identified, immediate action is taken to correct the problem through direct contact with the borrower or issuer. We then
monitor these assets, and, in accordance with our policy and current regulatory guidelines, we designate them as “Special
Mention,” which is considered a “Criticized Asset,” and “Substandard,” “Doubtful,” or “Loss” which are considered
“Classified Assets,” as deemed necessary. If a loan does not fall within one of the previous mentioned categories and
management believes weakness is evident then we designate the loan as “Watch”, all other loans would be considered “Pass”.
These loan designations are updated quarterly. We designate an asset as Substandard when a well-defined weakness is
identified that jeopardizes the orderly liquidation of the debt. We designate an asset as Doubtful when it displays the inherent
weakness of a Substandard asset with the added provision that collection of the debt in full, on the basis of existing facts, is
highly improbable. We designate an asset as Loss if it is deemed the debtor is incapable of repayment. We do not hold any
loans designated as loss, as loans that are designated as Loss are charged to the Allowance for Credit Losses. Assets that are
non-accrual are designated as Substandard, Doubtful, or Loss. We designate an asset as Special Mention if the asset does not
warrant designation within one of the other categories but contains a potential weakness that deserves closer attention. Our
Criticized and Classified Assets totaled $101.0 million at December 31, 2025, an increase of $9.1 million from $91.9 million
at December 31, 2024.
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17
The following table sets forth the Bank’s Criticized and Classified assets at amortized cost at December 31, 2025:
(In thousands)
Special Mention Substandard Doubtful Loss
Total
Loans:
Multi-family residential
$
20,752
$
12,367
$
—
$
—
$ 33,119
Commercial real estate
8,400
22,344
—
—
30,744
One-to-four family - mixed-use property
263
559
—
—
822
One-to-four family - residential
507
1,224
—
—
1,731
Construction
—
—
—
—
—
Small Business Administration
26
700
—
—
726
Commercial business and other
3,868
12,741
—
—
16,609
Total loans
33,816
49,935
—
—
83,751
Investment Securities:
Available for sale securities
—
17,261
—
—
17,261
Total investment securities
—
17,261
—
—
17,261
Total
$
33,816
$
67,196
$
—
$
—
$ 101,012
The following table sets forth the Bank’s Criticized and Classified assets at amortized cost at December 31, 2024:
(In thousands)
Special Mention Substandard Doubtful
Loss
Total
Loans:
Multi-family residential
$
12,551
$
13,161
$
—
$
— $ 25,712
Commercial real estate
—
6,376
—
—
6,376
One-to-four family - mixed-use property
1,718
117
—
—
1,835
One-to-four family - residential
1,053
916
—
—
1,969
Construction
2,616
—
—
—
2,616
Small Business Administration
325
2,736
—
—
3,061
Commercial business and other
14,434
16,895
1,032
—
32,361
Total loans
32,697
40,201
1,032
—
73,930
Investment Securities:
Available for sale securities
—
18,000
—
—
18,000
Total investment securities
—
18,000
—
—
18,000
Total
$
32,697
$
58,201
$
1,032
$
— $ 91,930
Environmental Concerns Relating to Loans. We currently obtain environmental reports in connection with the
underwriting of commercial real estate loans, and typically obtain environmental reports in connection with the underwriting
of multi-family loans. For all other loans, we obtain environmental reports only if the nature of the current or, to the extent
known to us, prior use of the property securing the loan indicates a potential environmental risk. However, we may not be
aware of such uses or risks in any case, and, accordingly, there can be no assurance that real estate acquired by us in
foreclosure is free from environmental contamination nor that we will not have any liability with respect thereto.
Allowance for Credit Losses
The Allowance for credit losses (“ACL”) is an estimate that is deducted from the amortized cost basis of the financial
asset to present the net carrying value at the amount expected to be collected on the financial assets. Loans are charged off
against that ACL when management believes that a loan balance is uncollectable based on quarterly analysis of credit risk.
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18
The amount of the ACL is based upon a loss rate model that considers multiple factors which reflects management’s
assessment of the credit quality of the loan portfolio. Management estimates the allowance balance using relevant information,
from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The
factors are both quantitative and qualitative in nature including, but not limited to, historical losses, economic conditions,
trends in delinquencies, value and adequacy of underlying collateral, volume and portfolio mix, and internal loan processes.
The quantitative allowance is calculated using a number of inputs and assumptions. The results of this process,
support management’s assessment as to the adequacy of the ACL at each period end presented in the Consolidated Statements
of Financial Condition.
The process for calculating the allowance for credit losses begins with our historical losses by portfolio segment. The
losses are then incorporated into reasonable and supportable forecast to develop the quantitative component of the allowance
for credit losses.
In calculating the ACL, the Company specifies both the reasonable and supportable forecast and reversion periods in
three economic conditions (expansion, transition, contraction). When calculating the ACL estimate for December 31, 2025,
the reasonable and supportable forecast was for a period of two quarters and the reversion period was four quarters. At
December 31, 2025 and 2024, the ACL for loans totaled $42.8 million, and $40.2 million, respectively.
Non-performing loans totaled $41.6 million and $33.3 million at December 31, 2025 and 2024, respectively. The
Bank’s underwriting standards generally require a loan-to-value ratio of no more than 75% at the time the loan is originated.
At December 31, 2025, the outstanding principal balance of our non-performing loans was 52.5% of the estimated current
value of the supporting collateral, after considering the charge-offs that have been recorded. We incurred total net charge-offs
of $9.8 million, $7.7 million and $10.8 million during the years ended December 31, 2025, 2024 and 2023, respectively. The
Company recorded a provision for credit losses on loans totaling $12.5 million, $7.7 million and $10.5 million for the years
ended December 31, 2025, 2024 and 2023, respectively. The provision recorded in 2025 was driven by a reserve applied to
one commercial real estate loan which lost its primary tenant, an increased reserve applied to one commercial business and
other loan, coupled with net charge-offs as a result of loan sales, short payoffs and previously reserved loans deemed
unrecoverable. The provision recorded in 2024 was driven by increased reserves on several commercial business and real
estate multi-family loans. The provision recorded in 2023 was driven by fully reserving for two non-accrual commercial
business loans and increasing reserves for the elevated risk presented by the current rate environment to adjustable-rate loan’s
debt coverage ratios. We believe that at December 31, 2025, the allowance was sufficient to absorb losses inherent in our loan
portfolio. The allowance for credit losses represented 0.64% and 0.60% of gross loans outstanding at December 31, 2025 and
2024, respectively. The allowance for credit losses represented 103.0% and 120.5% of non-performing loans at December 31,
2025 and 2024, respectively.
At December 31, 2023, the Company had one held-to-maturity (“HTM”) investment security totaling $21.0 million
that was modified in 2022 by granting a payment forbearance. During the year ended December 31, 2024, this security was
transferred to available for sale (“AFS”). Management determined it was appropriate to transfer the security to available for
sale due to a prolonged deterioration in creditworthiness, as such the transfer did not taint the remaining held-to-maturity
portfolio. The security was non-accrual at the time of transfer. The fair value of the security at December 31, 2024 was $18.0
million. It was determined after review that the whole decline in fair value was credit-related and as such was recorded as a
provision to the allowance for credit losses totaling $2.6 million. The Company did not transfer any securities between
classification categories during the years ended December 31, 2025 and 2023. At December 31, 2025 and 2024 the ACL for
securities totaled $3.3 million and $3.0 million, respectively.
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19
The following table sets forth changes in, and the balance of, our Allowance for credit losses.
For the years ended December 31,
(In thousands)
2025
2024
2023
Balance at beginning of period
$
40,152
$
40,161
$
40,442
Loans- charge-off
(11,403)
(7,969)
(11,157)
Loans- recovery
1,554
285
345
Loans- provision (benefit)
12,499
7,675
10,531
Allowance for credit losses - loans
$
42,802
$
40,152
$
40,161
Balance at beginning of period
$
353
$
1,087
$
1,100
Reversal of allowance upon transfer to AFS
—
(750)
—
HTM securities (benefit) provision
(5)
16
(13)
Allowance for credit losses - HTM securities
$
348
$
353
$
1,087
Balance at beginning of period
$
2,627
$
—
$
—
AFS securities (benefit) provision
294
2,627
—
Allowance for credit losses - AFS securities
$
2,921
$
2,627
$
—
Balance at beginning of period
$
1,037
$
1,102
$
970
Off-balance sheet- (benefit) provision
696
(65)
132
Allowance for credit losses - off-balance
sheet
$
1,733
$
1,037
$
1,102
Allowance for credit losses
$
47,804
$
44,169
$
42,350
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20
The following table sets forth changes in, and the balance of, our Allowance for credit losses - loans.
For the years ended December 31,
(Dollars in thousands)
2025
2024
2023
2022
2021
Balance at beginning of year
$ 40,152
$ 40,161
$ 40,442
$ 37,135
$ 45,153
Provision (benefit) for credit losses
12,499
7,675
10,531
4,842
(4,899)
Loans charged-off:
Multi-family residential
(2,935)
—
—
(208)
(43)
Commercial real estate
(1,347)
(421)
(8)
—
(64)
One-to-four family - mixed-use property
(55)
—
—
—
(33)
One-to-four family - residential
(5)
(14)
(23)
(20)
—
Small Business Administration
(279)
(7)
(7)
(1,053)
—
Taxi medallion
—
—
—
—
(2,758)
Commercial business and other
(6,782)
(7,527)
(11,119)
(2,067)
(2,236)
Total loans charged-off
(11,403)
(7,969)
(11,157)
(3,348)
(5,134)
Recoveries:
Multi-family residential
—
2
2
77
10
Commercial real estate
—
—
—
—
—
One-to-four family - mixed-use property
—
2
1
—
133
One-to-four family - residential
53
102
52
5
157
Small Business Administration
52
108
248
47
34
Taxi medallion
—
—
—
447
1,457
Commercial business and other
1,449
71
42
1,237
224
Total recoveries
1,554
285
345
1,813
2,015
Net (charge-offs) recoveries
(9,849)
(7,684)
(10,812)
(1,535)
(3,119)
Balance at end of year
$ 42,802
$ 40,152
$ 40,161
$ 40,442
$ 37,135
Ratio of net charge-offs to average loans outstanding
during the period
0.15 %
0.11 %
0.16 %
0.02 %
0.05 %
Ratio of ACL - loans to gross loans at end of period
0.64 %
0.60 %
0.58 %
0.58 %
0.56 %
Ratio of ACL - loans to non-accrual loans at end of
the period
102.98 %
120.51 %
169.39 % 135.79 % 248.66 %
Ratio of ACL - loans to non-performing loans at end
of period
102.98 %
120.51 % 159.55 % 124.89 % 248.66 %
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21
The following table sets forth our allocation of the allowance for credit losses to the total amount for loans in each of
the loan categories listed at the dates indicated. The numbers contained in the “Amount” column indicate the allowance for
credit losses allocated for each loan category. The numbers contained in the column entitled “Percentage of Loans in Category
to Total Loans” indicate the total amount of loans in each loan category as a percentage of our loan portfolio:
At December 31,
2025
2024
2023
2022
2021
Percent
Percent
Percent
Percent
Percent
of Loans in
of Loans in
of Loans in
of Loans in
of Loans in
Category to
Category to
Category to
Category to
Category to
Loan Category
Amount
Total loans
Amount Total loans
Amount Total loans
Amount Total loans
Amount Total loans
(Dollars in thousands)
Mortgage loans:
Multi-family residential
$
12,601
35.88 % $
13,145
37.50 % $
10,373
38.53 % $
9,552
37.57 % $
8,185
37.94 %
Commercial real estate
13,559
30.02
9,288
29.28
8,665
28.39
8,184
27.62
7,158
26.77
One-to-four family mixed-use
property
1,236
7.18
1,623
7.59
1,610
7.69
1,875
8.00
1,755
8.62
One-to-four family residential
875
4.81
759
3.63
668
3.19
901
3.48
784
4.17
Construction
171
0.83
371
0.90
158
0.85
261
1.02
186
0.90
Gross mortgage loans
28,442
78.72
25,186
78.90
21,474
78.65
20,773
77.69
18,068
78.40
Commercial business loans:
Small Business Administration
1,881
0.26
1,523
0.30
1,626
0.29
2,198
0.34
1,209
1.41
Commercial business and other
12,479
21.02
13,443
20.80
17,061
21.06
17,471
21.97
17,858
20.19
Gross commercial business loans
14,360
21.28
14,966
21.10
18,687
21.35
19,669
22.31
19,067
21.60
Total loans
$
42,802
100.00 % $
40,152
100.00 % $
40,161
100.00 % $
40,442
100.00 % $
37,135
100.00 %
Investment Activities
General. Our investment policy is designed primarily to manage the interest rate sensitivity of our overall assets and
liabilities, to generate a favorable return without incurring undue interest rate and credit risk, to complement our lending
activities and to provide and maintain liquidity. In establishing our investment strategies, we consider our business and growth
strategies, the economic environment, our interest rate risk exposure, our interest rate sensitivity “gap” position, the types of
securities to be held, and other factors. See “Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Overview—Management Strategy” in Item 7 of this Annual Report.
Although we have authority to invest in various types of assets, we primarily invest in mortgage-backed securities,
securities issued by mutual or bond funds that invest in government and government agency securities, municipal bonds,
corporate bonds and collateralized loan obligations (“CLO”). We did not hold any issues of foreign sovereign debt on either
December 31, 2025, and 2024.
Our ALCO Investment Committee meets quarterly to monitor investment transactions and to establish investment
strategy. The Board of Directors reviews the investment policy on an annual basis and investment activity monthly.
Investment securities are classified as available for sale when management intends to hold the securities for an
indefinite period, or when the securities may be utilized for tactical asset/liability purposes and may be sold from time to time
to effectively manage interest rate exposure and resultant prepayment risk and liquidity needs. Securities are classified as held-
to-maturity when management intends to hold the securities until maturity. We carry investments under the fair value option
totaling $14.4 million and $13.6 million at December 31, 2025, and 2024, respectively. Unrealized gains and losses for
investments carried under the fair value option are included in our Consolidated Statements of Operations. Unrealized gains
and losses on securities available for sale, are excluded from earnings and included in accumulated other comprehensive
income (loss), net of taxes. Securities held-to-maturity are carried at their amortized cost basis. As of December 31, 2025, we
had $1,389.9 million of available for sale securities and $50.2 million in held-to-maturity securities, together they represented
16.57% of total assets. Total securities had an aggregate market value that approximated 2.0 times the amount of our equity as
of December 31, 2025.
The Company had an allowance for credit losses for held-to-maturity securities totaling $0.3 million and $0.4 million
at December 31, 2025 and 2024, respectively. The Company’s estimate of expected credit losses for held-to-maturity debt
securities is based on historical information, current conditions and a reasonable and supportable forecast. At December 31,
2025, and 2024 the Company’s portfolio was made up of three securities: the first two were structured
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22
similar to a commercial owner occupied loan, and modeled for credit losses similar to commercial business loans secured by
real estate, and the third was issued and guaranteed by Fannie Mae, which is a government sponsored enterprise that has a
credit rating and perceived credit risk comparable to the U.S. government. Accordingly, the Company assumes a zero loss
expectation from the Fannie Mae security.
During the years ended December 31, 2025 and 2023, the Company did not transfer any securities between
classification categories. During the year ended December 31, 2024, one held-to-maturity municipal security with an
amortized cost of $20.6 million and a net carrying value of $19.9 million was transferred to available for sale. Management
determined it was appropriate to transfer the security to available for sale due to a prolonged deterioration in creditworthiness
and at the time of transfer was non-accrual. The transfer did not taint the remaining held-to-maturity portfolio. The fair value
of the security at December 31, 2025 was $17.3 million. It was determined after review that the decline in fair value was
credit-related and as such was recorded as a provision to the allowance for credit losses totaling $2.9 million.
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23
The table below sets forth certain information regarding the amortized cost and market values of our securities
portfolio, interest-earning deposits and federal funds sold at the dates indicated.
At December 31,
2025
2024
2023
Amortized
Fair
Amortized
Fair
Amortized
Fair
Cost
Value
Cost
Value
Cost
Value
(In thousands)
Securities held-to-maturity
Bonds and other debt securities:
Municipal securities (1)
$
42,711
$
39,021
$
44,002
$
37,815
$
66,155
$
58,697
Total bonds and other debt securities
42,711
39,021
44,002
37,815
66,155
58,697
Mortgage-backed securities:
FNMA
7,817
7,211
7,836
6,903
7,855
7,058
Total mortgage-backed securities
7,817
7,211
7,836
6,903
7,855
7,058
Total securities held-to-maturity (1)
50,528
46,232
51,838
44,718
74,010
65,755
Securities available for sale
Bonds and other debt securities:
U.S. government agencies
6,262
6,264
8,804
8,848
82,548
81,734
Municipals (2)
20,627
17,261
20,627
18,000
—
—
Corporate debentures
241,091
241,031
130,882
125,249
173,184
155,449
Collateralized loan obligations
289,349
289,229
420,260
420,817
269,600
270,129
Total bonds and other debt securities
557,329
553,785
580,573
572,914
525,332
507,312
Mutual funds
12,650
12,650
11,890
11,890
11,660
11,660
Equity securities:
Common stock
1,551
1,551
1,465
1,465
1,437
1,437
Total equity securities
1,551
1,551
1,465
1,465
1,437
1,437
Mortgage-backed securities:
REMIC and CMO
611,292
614,905
707,540
707,580
160,165
133,574
GNMA
60,116
60,363
30,099
29,945
12,402
10,665
FNMA
65,446
66,115
99,183
98,146
155,995
135,074
FHLMC
79,235
80,555
76,048
75,965
89,427
75,031
Total mortgage-backed securities
816,089
821,938
912,870
911,636
417,989
354,344
Total securities available for sale (3)
1,387,619
1,389,924
1,506,798
1,497,905
956,418
874,753
Interest-earning deposits and Federal funds
sold
94,048
94,048
125,157
125,157
145,322
145,322
Total
$ 1,532,195
$ 1,530,204
$ 1,683,793
$ 1,667,780
$ 1,175,750
$ 1,085,830
(1)
Does not include allowance for credit losses totaling $0.3 million, $0.4 million, and $1.1 million for the years ended December 31, 2025, 2024 and
2023, respectively.
(2)
Does not include allowance for credit losses totaling $2.9 million and $2.6 million for the years ended December 31, 2025 and 2024, respectively.
(3)
Does not include the unallocated portfolio layer basis adjustments totaling $2.3 million related to available for sale securities hedged in a closed pool at
December 31, 2023. See Note 20 (“Derivative Financial Instruments”) of the Notes to the Consolidated Financial Statements.
Mortgage-backed securities. At December 31, 2025, we had available for sale and held-to-maturity mortgage-backed
securities with a market value totaling $829.1 million, of which $472.8 million was invested in adjustable-rate mortgage-
backed securities. The mortgage loans underlying these adjustable-rate securities generally are subject to limitations on annual
and lifetime interest rate increases. We anticipate that investments in mortgage-backed securities may continue to be used in
the future to supplement mortgage-lending activities. Mortgage-backed securities are more
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24
liquid than individual mortgage loans and may be used more easily to collateralize our obligations, including collateralizing of
the governmental deposits of the Bank.
The following table sets forth our available for sale mortgage-backed securities purchases, sales and principal
repayments for the years indicated:
For the years ended December 31,
2025
2024
2023
(In thousands)
Balance at beginning of year
$ 911,636
$
354,344
$ 384,283
Purchases of mortgage-backed securities
233,775
1,009,611
5,431
Amortization of unearned premium, net of accretion of unearned discount
78
(890)
(975)
Net change in unrealized (losses) gains on mortgage-backed securities available
for sale
7,083
62,411
6,392
Net realized (losses) gains recorded on mortgage-backed securities carried at
fair value
-
6
6
Sales and maturities of mortgage-backed securities
(125,549)
(386,382)
-
Principal repayments received on mortgage-backed securities
(205,085)
(127,464)
(40,793)
Net (decrease) increase in mortgage-backed securities
(89,698)
557,292
(29,939)
Balance at end of year
$ 821,938
$
911,636
$ 354,344
While mortgage-backed securities carry a reduced credit risk as compared to whole loans, such securities remain
subject to the risk that a fluctuating interest rate environment, along with other factors such as the geographic distribution of
the underlying mortgage loans, may alter the prepayment rate of such mortgage loans and so affect both the prepayment speed
and value of such securities.
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25
The table below sets forth certain information regarding the amortized cost, fair value, annualized weighted average
yields and maturities of our investment in debt and equity securities and interest-earning deposits at December 31, 2025. The
stratification of balances is based on stated maturities. Assumptions for repayments and prepayments are not reflected for
mortgage-backed securities. Securities available for sale are carried at their fair value in the consolidated financial statements
and securities held-to-maturity are carried at their amortized cost.
One year or Less
One to Five Years
Five to Ten Years
More than Ten Years
Total Securities
Average
Weighted
Weighted
Weighted
Weighted
Remaining
Weighted
Amortized
Average
Amortized
Average
Amortized
Average
Amortized
Average
Years to
Amortized
Fair
Average
Cost
Yield
Cost
Yield
Cost
Yield
Cost
Yield
Maturity
Cost
Value
Yield
(Dollars in thousands)
Securities held-to-maturity
Bonds and other debt securities:
Municipal securities (1)
$
—
— % $
—
— % $
—
— % $
42,711
3.27 %
22.06
$
42,711
$
39,021
3.27 %
Total bonds and other debt
securities
—
—
—
—
—
—
42,711
3.27
22.06
42,711
39,021
3.27
Mortgage-backed securities:
FNMA
—
—
—
—
7,817
3.34
—
—
7.34
7,817
7,211
3.34
Total mortgage-backed
securities
—
—
—
—
7,817
3.34
—
—
7.34
7,817
7,211
3.34
Securities available for sale
Bonds and other debt securities:
US govt. and agencies
—
—
—
—
1,581
6.25
4,681
5.94
17.14
6,262
6,264
6.02
Municipals (2)
—
—
—
—
—
—
20,627
—
17.26
20,627
17,261
—
Corporate debentures
—
—
64,081
4.94
164,510
6.37
12,500
6.77
6.97
241,091
241,031
6.01
CLO
—
—
—
—
75,807
5.43
213,542
5.35
10.90
289,349
289,229
5.37
Total bonds and other debt
securities
—
—
64,081
4.94
241,898
6.08
251,350
4.99
9.50
557,329
553,785
5.46
Mutual funds
12,650
3.06
—
—
—
—
—
—
—
12,650
12,650
3.06
Equity securities:
Common stock
—
—
—
—
—
—
1,551
6.55
—
1,551
1,551
6.55
Total equity securities
—
—
—
—
—
—
1,551
6.55
—
1,551
1,551
6.55
Mortgage-backed securities:
REMIC and CMO
—
—
—
—
131
4.07
611,161
5.18
28.48
611,292
614,905
5.18
GNMA
—
—
—
—
—
—
60,116
5.38
29.43
60,116
60,363
5.38
FNMA
—
—
—
—
25,995
4.49
39,451
5.33
20.79
65,446
66,115
5.00
FHLMC
—
—
—
—
—
—
79,235
5.60
25.53
79,235
80,555
5.60
Total mortgage-backed
securities
—
—
—
—
26,126
4.49
789,963
5.24
27.64
816,089
821,938
5.22
Interest-earning deposits
94,048
3.55
—
—
—
—
—
—
—
94,048
94,048
3.55
Total
$ 106,698
3.49 % $ 64,081
4.94 % $ 275,841
5.85 % $ 1,085,575
5.11 %
20.06
$ 1,532,195
$ 1,530,204
5.13 %
(1)
Does not include allowance for credit losses totaling $0.3 million.
(2)
Does not include allowance for credit losses totaling $2.9 million.
Sources of Funds
General. Deposits, FHLB-NY borrowings, other borrowings, principal and interest payments on loans, mortgage-
backed and other securities, and proceeds from the sale of loans and securities are our primary sources of funds for lending,
investing and other general purposes.
Deposits. We offer a variety of deposit accounts having a range of interest rates and terms. Our deposits primarily
consist of savings accounts, money market accounts, demand accounts, NOW accounts and certificates of deposit. We have a
relatively stable retail deposit base drawn from our market area through our 30 full-service offices and our Internet Branch.
We seek to retain existing depositor relationships by offering quality service and competitive interest rates, while keeping
deposit growth within reasonable limits. It is management’s intention to balance its goal to maintain competitive interest rates
on deposits while seeking to manage its cost of funds to finance its strategies.
In addition to our full-service offices, we operate the Internet Branch and a government banking unit. The Internet
Branch currently offers savings accounts, money market accounts, checking accounts, and certificates of deposit. This allows
us to compete on a national scale without the geographical constraints of physical locations. At December 31, 2025
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26
and 2024, total deposits at our Internet Branch were $121.3 million and $149.2 million, respectively. The government banking
unit provides banking services to public municipalities, including counties, cities, towns, villages, school districts, libraries,
fire districts, and the various courts throughout the New York City metropolitan area. At December 31, 2025 and 2024, total
deposits in our government banking unit totaled $1,908.8 million and $1,775.5 million, respectively.
Our core deposits, consisting of savings accounts, NOW accounts, money market accounts, and non-interest bearing
demand accounts, are typically more stable and lower costing than other sources of funding. However, the flow of deposits
into a particular type of account is significantly influenced by general economic conditions, changes in prevailing interest
rates, and competition. We experienced an increase in our due to depositors’ during 2025 of $126.3 million, primarily due to
growth in our core deposits partially offset by a decrease in certificates of deposits. During the year ended December 31, 2025,
the cost of our interest-bearing due to depositors’ accounts decreased 33 basis points to 3.50% from 3.83% for the year ended
December 31, 2024. The FOMC decreased the target range for the federal funds rate three times and by a total of 75 basis
points during 2025 from a range of 4.25% to 4.50% in September, to a range of 3.50% to 3.75% in December. We are unable
to predict the direction or timing of future interest rate changes as there can be no assurances as to any future FOMC decisions
on interest rates. If interest rates decline in 2026, we could see a decline in our cost of deposits, which could increase our net
interest margin. Similarly, if interest rates rise during 2026, the result could be an increase in our cost of deposits, which could
reduce our net interest margin.
Included in deposits are certificates of deposit with balances of $250,000 or more (excluding brokered deposits
issued in $1,000 amounts under a master certificates of deposit) was $510.7 million and $514.4 million at December 31, 2025
and 2024, respectively.
We utilize brokered deposits as an additional funding source, to assist in the management of our interest rate risk and
as an underlying funding source for a portion of our interest rate swaps. At December 31, 2025 and 2024, we had $1,131.1
million and $1,319.0 million, respectively, classified as brokered deposits. We obtain brokered certificates of deposit as a
wholesale funding source when the interest rate on these deposits are below other wholesale options, or to extend the
maturities of our deposits. Brokered deposits generally have a higher beta than our retail deposits as the interest rates are
typically more sensitive to changes in the Fed funds rates. A portion of our brokered certificates of deposit are hedged against
rising interest rates using interest rate swaps. At December 31, 2025 and December 31, 2024, $725.8 million and $875.8
million, respectively, were hedged using interest rate swaps. See Note 20 (“Derivative Financial Instruments”) of the Notes to
the Consolidated Financial Statements. Brokered deposits obtained by the Bank are generally fully FDIC insured and cannot
be early redeemed. At December 31, 2025 and December 31, 2024, the Bank did not hold any uninsured brokered deposits.
The Depository Trust Company (“DTC”) is used as the clearing house, maintaining each deposit under the name of
CEDE & Co. These deposits are transferable just like a stock or bond investment and the customer can open the account with
only a phone call, just like buying a stock or bond. Unlike non-brokered certificates of deposit, where the deposit amount can
be withdrawn with a penalty for any reason, including increasing interest rates, brokered certificates of deposit can only be
withdrawn in the event of the death, or court declared mental incompetence, of the depositor. These instruments allow us to
better manage the maturity of our deposits and our interest rate risk. At times, we also utilize brokers to obtain money market
deposits and NOW accounts. The rate we pay on brokered money market and NOW accounts are similar to the rate we pay on
non-brokered accounts of these types, and the rate is agreed to in a contract between the Bank and the broker. These accounts
are similar to brokered certificates of deposit accounts in that we only maintain one account for the total deposit per broker,
with the broker maintaining the detailed records of each depositor.
We also offer access to FDIC insurance coverage in excess of $250,000 through the IntraFi Network which arranges
for the placement of funds into certificates of deposit accounts, demand accounts or money market accounts issued by other
member banks within the network in increments of less than $250,000. This allows us to accept deposits in excess of $250,000
from a depositor and to place the deposits through the network to other member banks to provide full FDIC deposit insurance
coverage. We may receive deposits from other member banks in exchange for the deposits we place into the network. We may
also obtain deposits from other network member banks without placing deposits into the network. We obtain these types of
deposits primarily as a short-term funding source. We can also place deposits with other member banks without receiving
deposits from other member banks. Depositors are allowed to withdraw funds, with a penalty, from these accounts at one or
more of the member banks that hold the deposits. Additionally, we place a portion of our government deposits in the IntraFi
Network money market and demand accounts which does not require us to
Table of Contents
27
provide collateral. This allows us to invest our funds in higher yielding assets. At December 31, 2025 and 2024, the Bank held
IntraFi Network money market and demand deposits totaling $701.5 million and $721.8 million, respectively. At December
31, 2025, $10.5 thousand were classified as brokered deposits, while at December 31, 2024, $18.3 thousand of these deposits
were classified as brokered deposits.
At December 31, 2025, the Bank had uninsured deposits totaling $2.6 billion, or 35% of deposits with $1.2 billion of
that fully collateralized by some other method leaving uninsured and uncollateralized deposits totaling $1.3 billion or 18% of
deposits. At December 31, 2024, the Bank had uninsured deposits totaling $2.3 billion, or 31% of deposits with $1.1 billion of
that fully collateralized by some other method leaving uninsured and uncollateralized deposits totaling $1.2 billion or 17% of
deposits. At December 31, 2023, the Bank had uninsured deposits totaling $2.1 billion, or 30% of deposits with $0.9 billion of
that fully collateralized by some other method leaving uninsured and uncollateralized deposits totaling $1.2 billion or 17% of
deposits.
The following table sets forth the distribution of our deposit accounts at the dates indicated and the weighted average
nominal interest rates on each category of deposits presented.
At December 31,
2025
2024
2023
Weighted
Weighted
Weighted
Percent
Average
Percent
Average
Percent
Average
of Total
Nominal
of Total
Nominal
of Total
Nominal
Amount
Deposits
Rate
Amount
Deposits
Rate
Amount
Deposits
Rate
(Dollars in thousands)
Savings accounts
$
93,752
1.28 %
0.39 % $
98,964
1.38 %
0.38 % $
108,605
1.59 %
0.45 %
NOW accounts
2,108,653
28.85
3.14
1,854,069
25.82
3.26
1,771,164
25.99
3.58
Demand accounts
969,287
13.26
0.00
836,545
11.65
0.00
847,416
12.43
0.00
Mortgagors' escrow deposits
59,590
0.81
0.30
53,082
0.74
0.27
50,382
0.74
0.25
Total
3,231,282
44.20
2.07
2,842,660
39.59
2.19
2,777,567
40.75
2.31
Money market accounts
1,791,616
24.50
3.39
1,686,109
23.49
3.48
1,726,404
25.33
3.91
Certificates of deposit accounts with
original maturities of:
Less than 6 Months
787,228
10.77
3.87
1,262,552
17.59
4.53
690,638
10.13
5.46
6 to less than 12 Months
743,850
10.17
3.70
499,734
6.96
4.54
346,073
5.08
4.94
12 to less than 30 Months
652,064
8.92
3.80
813,939
11.34
4.17
1,185,856
17.40
3.92
30 to less than 48 Months
102,775
1.41
3.82
68,912
0.96
4.12
75,541
1.11
3.64
48 to less than 72 Months
2,726
0.04
0.29
4,466
0.06
0.51
11,943
0.18
1.31
72 Months or more
201
—
0.11
561
0.01
0.11
1,239
0.02
0.18
Total certificates of deposit
accounts
2,288,844
31.30
3.79
2,650,164
36.92
4.41
2,311,290
33.92
4.51
Total deposits
$ 7,311,742
100.00 %
2.93 % $ 7,178,933
100.00 %
3.31 % $ 6,815,261
100.00 %
3.46 %
The following table shows the composition of brokered deposits at the periods indicated below:
At December 31,
(In thousands)
2025
2024
2023
NOW accounts
$
299,947
$
151,387
$
187,119
Money market accounts
—
73,622
96,596
Certificates of deposit
831,179
1,093,996
818,287
Total brokered deposits
$
1,131,126
$
1,319,005
$
1,102,002
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28
Interest expense on brokered deposits is summarized as follows for the periods indicated:
At December,
(In thousands)
2025
2024
2023
NOW accounts
$
10,429
$
2,124
$
1,286
Money market accounts
554
1,311
3,519
Certificates of deposit
28,211
31,509
17,411
Total interest expense on brokered deposits
$
39,194
$
34,944
$
22,216
The following table presents by various rate categories, the amount of time deposit accounts outstanding at the dates
indicated, and the years to maturity of the certificates accounts outstanding at the periods indicated:
At December 31, 2025
At December 31,
Within
One to
2025
2024
2023
One Year
Three Years Thereafter
(Dollars in thousands)
Interest rate:
1.99% or less(1)
$
60,735
$
89,007
$
98,900
$
53,921
$
4,311
$
2,503
2.00% to 2.99%
7,940
2,133
183,366
884
7,056
—
3.00% to 3.99% (2)
1,463,477
95,183
242,334
1,375,379
87,979
119
4.00% to 4.99% (3)
756,604
2,357,379
755,074
746,068
10,536
—
5.00% to 5.99% (4)
88
106,462
1,031,616
88
—
—
Total
$ 2,288,844
$ 2,650,164
$ 2,311,290
$ 2,176,340
$ 109,882
$
2,622
(1)
Includes brokered deposits of $5.6 million, $10.3 million, and $7.0 million at December 31, 2025, 2024 and 2023, respectively.
(2)
Includes brokered deposits of $495.7 million at December 31, 2025.
(3)
Includes brokered deposits of $329.9 million, $1,074.3 million and $131.9 million at December 31, 2025, 2024 and 2023, respectively.
(4)
Includes brokered deposits of $9.4 million, and $680.7 million at December 31, 2024 and 2023, respectively.
The following table presents by remaining maturity categories the amount of certificates of deposit accounts with
balances of $250,000 or more at December 31, 2025 and their annualized weighted average interest rates.
Weighted
Amount
Average Rate
(Dollars in thousands)
Maturity Period:
Three months or less
$ 207,247
3.94 %
Over three through six months
197,047
3.72
Over six through 12 months
78,577
3.59
Over 12 months
27,791
3.90
Total
$ 510,662
3.80 %
The following table presents the deposit activity, including mortgagors’ escrow deposits, for the periods indicated.
For the year ended December 31,
2025
2024
2023
(In thousands)
Net deposits
$
(96,569)
$
119,090
$
141,264
Amortization (accretion) of premiums, net
851
986
714
Interest on deposits
228,527
243,594
187,941
Net increase in deposits
$
132,809
$
363,670
$
329,919
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29
The following table sets forth the distribution of our average deposit accounts for the years indicated, the percentage
of total deposit portfolio, and the average interest cost of each deposit category presented. Average balances for all years
shown are derived from daily balances.
At December 31,
2025
2024
2023
Percent
Percent
Percent
Average
of Total
Average
Average
of Total
Average
Average
of Total
Average
Balance
Deposits
Cost
Balance
Deposits
Cost
Balance
Deposits
Cost
(Dollars in thousands)
Savings accounts
$
94,482
1.28 %
0.42 % $
102,843
1.38 %
0.46 % $
121,102
1.59 %
0.43 %
NOW accounts
2,245,412
28.85
3.44
1,965,774
25.82
3.85
1,937,974
25.99
3.31
Demand accounts
899,143
13.26
—
843,151
11.65
—
867,667
12.43
—
Mortgagors' escrow deposits
90,468
0.81
0.30
82,095
0.74
0.31
81,015
0.74
0.25
Total
3,329,505
44.20
2.34
2,993,863
39.59
2.55
3,007,758
40.75
2.16
Money market accounts
1,710,557
24.50
3.61
1,699,869
23.49
4.00
1,754,059
25.33
3.36
Certificates of deposit accounts
2,461,895
31.30
3.61
2,604,817
36.92
3.85
2,091,677
33.92
3.10
Total deposits
$ 7,501,957
100.00 %
3.05 % $ 7,298,549
100.00 %
3.35 % $ 6,853,494
100.00 %
2.76 %
Borrowings. Although deposits are our primary source of funds, we also use borrowings as an alternative and cost
effective source of funds for lending, investing and other general purposes. The Bank is a member of, and is eligible to obtain
advances from, the FHLB-NY. Such advances generally are secured by a blanket lien against the Bank’s mortgage portfolio
and the Bank’s investment in the stock of the FHLB-NY. In addition, the Bank may pledge mortgage-backed securities to
obtain advances from the FHLB-NY. See “— Regulation — Federal Home Loan Bank System.” The maximum amount that
the FHLB-NY will advance fluctuates from time to time in accordance with the policies of the FHLB-NY. The Bank may
enter into repurchase agreements with broker-dealers and the FHLB-NY. These agreements are recorded as financing
transactions and the obligations to repurchase are reflected as a liability in our consolidated financial statements. The Bank
also has unsecured lines of credit with other commercial banks. In addition, we issued junior subordinated debentures with a
total par of $61.9 million in 2007. These junior subordinated debentures are carried at fair value in the Consolidated Statement
of Financial Condition. At December 31, 2025, the Company holds subordinated debt with an aggregated principal balance of
$189.1 million.
The Bank maintains borrowing capacity at the Federal Reserve discount window through the pledge of eligible
investment securities and loans, including loans pledged under the Federal Reserve’s Borrower in Custody of Collateral
program. This capacity is intended to serve as a contingent source of liquidity and is not a primary funding source.
Borrowings, if any, are typically short term in nature and are secured by the pledged collateral, subject to applicable margins
and Federal Reserve requirements. During 2025 and 2024 there were no material outstanding balances with this program.
The Company uses interest rate swaps on borrowings to help mitigate the impact interest rate increases have on our
cost of funds. At December 31, 2025 and 2024, the Company had no active interest rate swaps on borrowings.
The average cost of borrowings was 4.62%, 4.87%, and 4.34% for the years ended December 31, 2025, 2024 and
2023, respectively. The average balances of borrowings were $479.6 million, $795.3 million, and $776.1 million for the
same years, respectively.
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30
The following table sets forth certain information regarding our borrowings at or for the periods ended on the dates
indicated.
At or for the years ended December 31,
2025
2024
2023
(Dollars in thousands)
FHLB-NY Advances
Average balance outstanding
$
242,073
$
520,235
$
425,050
Maximum amount outstanding at any month end during the period
283,933
810,050
764,219
Balance outstanding at the end of period
183,933
628,933
480,801
Weighted average interest rate during the period
3.41 %
3.89 %
3.53 %
Weighted average interest rate at end of period
3.97
4.37
4.88
Other Borrowings
Average balance outstanding
$
237,479
$
273,113
$
351,000
Maximum amount outstanding at any month end during the period
419,353
506,515
456,260
Balance outstanding at the end of period
300,720
287,121
360,480
Weighted average interest rate during the period
5.86 %
6.72 %
5.32 %
Weighted average interest rate at end of period
4.68
5.06
5.30
Total Borrowings
Average balance outstanding
$
479,552
$
793,348
$
776,050
Maximum amount outstanding at any month end during the period
603,286
1,316,565
1,001,010
Balance outstanding at the end of period
484,653
916,054
841,281
Weighted average interest rate during the period
4.62 %
4.87 %
4.34 %
Weighted average interest rate at end of period
4.41
4.59
5.06
Subsidiary Activities
At December 31, 2025, the Holding Company had four wholly owned subsidiaries: the Bank and the Trusts. In
addition, the Bank had two wholly owned subsidiaries: FSB Properties Inc and Flushing Service Corporation.
●
FSB Properties Inc., which is incorporated in the State of New York, was formed in 1976 with the original
purpose of engaging in joint venture real estate equity investments. These activities were discontinued in 1986
and no joint venture property remains. FSB Properties Inc. is currently used solely to hold title to real estate
owned that is obtained via foreclosure.
●
Flushing Service Corporation, which is incorporated in the State of New York, was formed in 1998 to market
insurance products and mutual funds.
Human Capital
On December 31, 2025, we had 567 full-time employees and 13 part-time employees. None of our employees are
represented by a collective bargaining unit, and we consider our relationship with our employees to be good. At the present
time, the Holding Company only employs certain officers of the Bank. These employees do not receive any extra
compensation as officers of the Holding Company.
We recognize that a diverse workforce with varied experiences, perspectives, and backgrounds is critical to driving
innovation, enhancing creativity, and ultimately achieving success. We pride ourselves on establishing a diverse workforce
that serves our diverse customer base in the New York City metro area. As of December 31, 2025, our multi-cultural employee
population spoke more than 20 different languages. Our inclusion and diversity approach focuses on workforce (our team
members), workplace (culture, tools, and programs) and community. We have undertaken a series of initiatives to further
enhance our existing diversity and inclusion approach, including Flushing Bank Serves volunteer program and the creation of
a Diversity & Inclusion Committee. We have also broadened our focus on inclusion and diversity by equipping and
empowering our team leaders with appropriate tools and training.
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31
Oversight & Governance. The over-riding principal of our human capital management strategy focuses on attracting,
developing, and retaining top quality talent regardless of gender, ethnicity, national origin, age, religion, or physical ability.
We strive to identify and select the best candidates for all open positions based solely on the qualifying factors for each job.
We are dedicated to providing a workplace for our associates that is inclusive, supportive, and free of any form of
discrimination or harassment; rewarding and recognizing our team members based on their individual results and team
performance; and recognizing and respecting all of the characteristics and differences that make each of our associates unique.
Our Board of Directors and Board committees provide oversight on certain human capital matters, including our inclusion and
diversity program and initiatives. The Board of Directors is responsible for discussing, evaluating, and reviewing regular
updates from management with regard to human capital matters. Our Board of Directors is comprised of diverse perspectives,
experiences, cultures, ethnicity, and gender.
Learning and Development. The Company provides comprehensive learning and development programs for our
employees. We believe that investing in the growth and development of our team members is not only beneficial for them
personally, but also critical to the success of our business. To that end, we have implemented a range of training initiatives,
including on-the-job learning opportunities, online courses, in-person workshops and mentorship programs. We believe that
by supporting the growth of our team members, we are creating a stronger, more capable workforce that will drive our
organization forward for years to come.
Total Rewards. The Company believes that our future success largely depends upon our continued ability to attract
and retain highly skilled employees. We provide our employees with a rich total rewards program which includes:
•
Competitive base salaries;
•
Incentive bonus opportunities;
•
Equity ownership;
•
401(k) plan access;
•
Healthcare and other insurance programs;
•
Health savings and flexible spending accounts;
•
Paid time off;
•
Volunteer time off;
•
Family leave, and
•
Employee assistance program.
Omnibus Incentive Plan
The 2014 Omnibus Incentive Plan (“2014 Omnibus Plan”) became effective on May 20, 2014 after adoption by the
Board of Directors and approval by the stockholders. The 2014 Omnibus Plan authorizes the Compensation Committee of the
Company’s Board of Directors (the “Compensation Committee”) to grant a variety of equity compensation awards as well as
long-term and annual cash incentive awards. To the extent that an award under the 2014 Omnibus Plan is cancelled, expired,
forfeited, settled in cash, settled by issuance of fewer shares than the number underlying the award, or otherwise terminated
without delivery of shares to a participant in payment of the exercise price or taxes relating to an award, the shares retained by
or returned to the Company will be available for future issuance under the 2014 Omnibus Plan. The 2014 Omnibus Plan
originally covered the issuance of 1,100,000 shares, which was increased. On May 31, 2017, stockholders approved an
amendment to the 2014 Omnibus Plan authorizing an additional 672,000 shares available for future issuance. In addition, that
amendment eliminated, in the case of stock options and stock appreciation rights, the ability to recycle shares used to satisfy
the exercise price or taxes for such awards. On May 18, 2021, stockholders approved a further amendment of the 2014
Omnibus Plan to authorize an additional 1,100,000 shares for future issuance. Including the additional shares authorized from
the amendments. 974,000 shares remained available for future issuance under the 2024 Omnibus Plan at December 31, 2025.
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For additional information concerning this plan, see Note 11 (“Stock-Based Compensation”) of Notes to the
Consolidated Financial Statements in Item 8 of this Annual Report.
REGULATION
General
The Bank is a New York State-chartered commercial bank whose deposit accounts are insured under the Deposit
Insurance Fund (the “DIF”) of the Federal Deposit Insurance Corporation (the “FDIC”) up to applicable legal limits. The
Bank is subject to extensive regulation and supervision by the New York State Department of Financial Services (“NYDFS”),
as its chartering agency, by the FDIC, as its insurer of deposits, and to a lesser extent by the Consumer Financial Protection
Bureau (the “CFPB”), which was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-
Frank Act”). The Bank must file reports with the NYDFS and the FDIC concerning its activities and financial condition, in
addition to obtaining regulatory approvals prior to certain transactions such as mergers with, or acquisitions of, other
depository institutions. Furthermore, the Bank is periodically examined by the NYDFS and the FDIC to assess compliance
with various regulatory requirements, including safety and soundness considerations. This regulation and supervision
established a comprehensive framework of activities in which a commercial bank can engage and is intended primarily for the
protection of the FDIC insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive
discretion in connection with its supervisory and enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan loss allowances for regulatory purposes. Any
change in such regulation, whether by the NYDFS, the FDIC, or through legislation, could have a material adverse impact on
the Company, the Bank and its operations, and the Company’s shareholders. While the regulatory environment has entered a
period of rebalancing of the post financial crisis framework, we expect that our business will remain subject to extensive
regulation and supervision.
The Company is required to file certain reports under, and otherwise comply with, the rules and regulations of the
Federal Reserve Board of Governors (the “FRB”), the FDIC, the NYDFS, and the Securities and Exchange Commission (the
“SEC”). In addition, the FRB periodically examines the Company. Certain of the regulatory requirements applicable to the
Bank and the Company are referred to below or elsewhere herein. However, such discussion is not meant to be a complete
explanation of all laws and regulations and is qualified in its entirety by reference to the actual laws and regulations.
Basel III
The Company and the Bank are subject to a comprehensive capital framework for U.S. banking organizations that
was issued by the FDIC and FRB in July 2013 (the “Basel III Capital Rules”), subject to phase-in periods for certain
components and other provisions. Under the Basel III Capital Rules, the minimum capital ratios are:
●
4.5% Common Equity Tier 1 (“CET1”) to risk-weighted assets;
●
6.0% Tier 1 capital that is CET1 plus Additional Tier 1 capital) to risk-weighted assets;
●
8.0% Total Capital that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and
●
4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the
“leverage ratio”).
The Basel III Capital Rules also introduced a “capital conservation buffer,” composed entirely of CET1, on top of
these minimum risk-weighted asset ratios. The Bank’s capital conservation buffer currently is 6.40%. Banking institutions
with a ratio of CET1 to risk-weighted assets below the effective minimum (4.5% plus the capital conservation
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buffer) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. As of
December 31, 2025, the Company and the Bank met all capital adequacy requirements under the Basel III Capital Rules.
Together with the FDIC, the Federal Reserve has issued proposed rules that would simplify the capital treatment of
certain capital deductions and adjustments, and the final phase-in period for these capital deductions and adjustments has been
indefinitely delayed. In addition, in December 2018, the federal banking agencies finalized rules that would permit bank
holding companies and banks to phase-in, for regulatory capital purposes, the day-one impact of the new current expected
credit loss accounting rule on retained earnings over a period of three years.
Economic Growth, Regulatory Relief, and Consumer Protection Act
The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”) provides
certain regulatory relief, including to community banks, which are generally characterized in the statute as banking
organizations with less than $10 billion in total consolidated assets and with limited trading activities. The Economic Growth
Act requires the federal banking agencies to develop a “community bank leverage ratio” (the ratio of a bank’s tangible equity
capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A financial institution
can elect to be subject to this new definition. The federal banking agencies, including the FDIC, have issued a rule pursuant to
the Economic Growth Act to establish for institutions with assets of less than $10 billion a “community bank leverage ratio”
(the ratio of a bank’s tier 1 capital to average total consolidated assets) of 9% that such institutions may elect to use in lieu of
the generally applicable leverage and risk-based capital requirements under Basel III. The Bank has elected not to be subject
to this new definition. See “FDIC Regulations – Prompt Corrective Regulatory Action.”
The Truth in Lending Act (“TILA”) is the commonly used name for Title I of the Consumer Credit Protection Act,
passed by Congress in 1968, which is the consumer protection law specifying what information lenders must share with
borrowers before giving them a loan or line of credit. This information includes the annual percentage rate, loan terms, and
total cost of the loan. Section 101 of the Economic Growth Act amended the TILA to add a safe harbor for "plain vanilla"
mortgage loans originated by banking organizations and credit unions with less than $10 billion in total consolidated assets
under existing qualified mortgage and ability to pay rules.
Section 619 of the Dodd-Frank Act, commonly referred to as the “Volcker Rule,” generally prohibits insured
depository institutions and any company affiliated with an insured depository institution from engaging in proprietary trading
and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private
equity fund. Under the Economic Growth Act, community banks, (which for this purpose are generally characterized in the
statute as banking organizations with less than $10 billion in total consolidated assets with limited trading activities), are
exempt from the Volcker Rule and its proprietary trading prohibitions.
New York State Law
The Bank derives its lending, investment, and other authority primarily from the applicable provisions of New York
State Banking Law and the regulations of the NYDFS, as limited by FDIC regulations. Under these laws and regulations,
banks, including the Bank, may invest in real estate mortgages, consumer and commercial loans, certain types of debt
securities (including certain corporate debt securities, and obligations of federal, state, and local governments and agencies),
certain types of corporate equity securities, and certain other assets. The lending powers of New York State-chartered
commercial banks are not subject to percentage-of-assets or capital limitations, although there are limits applicable to loans to
individual borrowers.
The exercise by an FDIC-insured commercial bank of the lending and investment powers under New York State
Banking Law is limited by FDIC regulations and other federal laws and regulations. In particular, the applicable provisions of
New York State Banking Law and regulations governing the investment authority and activities of an FDIC-insured state-
chartered savings bank and commercial bank have been effectively limited by the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and the FDIC regulations issued pursuant thereto.
With certain limited exceptions, a New York State-chartered commercial bank may not make loans or extend credit
for commercial, corporate, or business purposes (including lease financing) to a single borrower, or related group of
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borrowers, the aggregate amount of which would exceed 15% of the bank’s net worth. An additional amount may be loaned
up to an additional 10% of the bank’s net worth, if the loan is secured by readily marketable collateral, which is defined to
include certain financial instruments, but generally does not include real estate. The Bank currently complies with all
applicable loans-to-one-borrower limitations. As of December 31, 2025, the Bank’s largest aggregate amount of outstanding
loans to one borrower was $100.9 million, all of which were performing according to their terms. See “— General — Lending
Activities.”
Under New York State Banking Law, New York State-chartered stock-form commercial banks may declare and pay
dividends out of its net profits, unless there is an impairment of capital, but approval of the NYDFS Superintendent (the
“Superintendent”) is required if the total of all dividends declared by the bank in a calendar year would exceed the total of its
net profits for that year combined with its retained net profits for the preceding two years less prior dividends paid.
New York State Banking Law gives the Superintendent authority to issue an order to a New York State-chartered
banking institution to appear and explain an apparent violation of law, to discontinue unauthorized or unsafe practices, and to
keep prescribed books and accounts. Upon a finding by the NYDFS that any director, trustee, or officer of any banking
organization has violated any law or has continued unauthorized or unsafe practices in conducting the business of the banking
organization after having been notified by the Superintendent to discontinue such practices, such director, trustee, or officer
may be removed from office after notice and opportunity to be heard. The Superintendent also has authority to appoint a
conservator or a receiver for a savings or commercial bank under certain circumstances.
The Superintendent of the NYDFS has the authority to appoint a receiver or liquidator of any state-chartered bank or
trust company under specified circumstances, including where (i) the bank is conducting its business in an unauthorized or
unsafe manner, (ii) the bank has suspended payment of its obligations, or (iii) the bank cannot with safety and expediency
continue to do business.
The NYDFS has issued cybersecurity regulations in Part 500 of Title 23 of the New York Codes, Rules and
Regulations (“Part 500”), which cover five basic areas.
Governance: The regulation requires senior management and boards of directors to adopt a cybersecurity policy for
protecting information systems and most sensitive information. Covered companies are also required to designate a Chief
Information Security Officer (the “CISO”), who must report to the board annually.
Testing: The regulation requires the conduct of cybersecurity tests and analyses, including a “risk assessment” to
“evaluate and categorize risks,” evaluate the integrity and confidentiality of information systems and non-public information,
and develop a process to mitigate any identified risks.
Ongoing Requirements: The regulation imposes substantial day-to-day and technical requirements. Among others, we
are required to develop and/or maintain access controls for our information systems, ensure the physical security of our
computer systems, encrypt or protect personally identifiable information, perform reviews of in-house and externally created
applications, train employees, and build an audit trail system.
Vendors: The regulation also regulates third-party vendors with access to our information technology or non-public
information. We are required to develop and implement written policies and procedures to ensure the security of our
information technology systems or non-public information that can be accessed by our vendors, including identifying the risks
from third-party access, imposing minimum cybersecurity practices for vendors, and creating a due-diligence process for
evaluating those vendors.
Reports: The regulation imposes a notification process for any material cybersecurity event. Within 72 hours, a
cybersecurity event that has a “reasonable likelihood” of “materially harming” us or that must be reported to another
government or self-regulating agency must be reported to the NYDFS. In addition, an annual compliance certification to the
NYDFS from either the board or a senior officer is required.
The NYSDFS requires us to adopt broad cybersecurity protections. In particular, we have established a program
designed to ensure the safety of our information systems, adopted a written cybersecurity policy, and designated an
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information security officer. We are subject to ongoing compliance and reporting requirements of the NYSDFS. In November
2023, the NYSDFS amended its cybersecurity regulations to include heightened governance requirements and an expansion of
the breadth and depth of required policies and procedures, among other things.
U.S Patriot Act and Money Laundering
The Bank is subject to the Bank Secrecy Act (“BSA”), which incorporates several laws, including the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA
PATRIOT Act”) and related regulations. The USA PATRIOT Act gives the federal government powers to address money
laundering and terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased
information sharing, and broadened anti-money laundering requirements. By way of amendments to the BSA, Title III of the
USA PATRIOT Act implemented measures intended to encourage information sharing among bank regulatory agencies and
law enforcement bodies. Further, certain provisions of Title III impose affirmative obligations on a broad range of financial
institutions, including banks, thrifts, brokers, dealers, credit unions, money transfer agents and parties registered under the
Commodity Exchange Act.
Among other things, Title III of the USA PATRIOT Act and the related regulations require:
●
Establishment of anti-money laundering compliance programs that include policies, procedures, and internal
controls; the designation of a BSA officer; a training program; and independent testing;
●
Filing of certain reports to Financial Crimes Enforcement Network and law enforcement that are designated to
assist in the detection and prevention of money laundering and terrorist financing activities;
●
Establishment of a program specifying procedures for obtaining and maintaining certain records from customers
seeking to open new accounts, including verifying the identity of customers;
●
In certain circumstances, compliance with enhanced due diligence policies, procedures and controls designed to
detect and report money-laundering, terrorist financing and other suspicious activity;
●
Monitoring account activity for suspicious transactions; and
●
A heightened level of review for certain high-risk customers or accounts.
The USA PATRIOT Act also includes prohibitions on correspondent accounts for foreign shell banks and requires
compliance with record keeping obligations with respect to correspondent accounts of foreign banks.
The bank regulatory agencies have increased the regulatory scrutiny of the BSA and anti-money laundering programs
maintained by financial institutions. Significant penalties and fines, as well as other supervisory orders may be imposed on a
financial institution for non-compliance with these requirements. In addition, for financial institutions engaging in a merger
transaction, federal bank regulatory agencies must consider the effectiveness of the financial institution’s efforts to combat
money laundering activities. The Bank has adopted policies and procedures to comply with these requirements.
FDIC Regulation
Capital Requirements. The FDIC has adopted risk-based capital guidelines to which the Bank is subject. The
guidelines establish a systematic analytical framework that makes regulatory capital requirements sensitive to differences in
risk profiles among banking organizations. The Bank is required to maintain certain levels of regulatory capital in relation to
regulatory risk-weighted assets. The ratio of such regulatory capital to regulatory risk-weighted assets is referred to as a “risk-
based capital ratio.” Risk-based capital ratios are determined by allocating assets and specified off-balance-
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sheet items to risk-weighted categories ranging from 0% to 1250%, with higher levels of capital being required for the
categories perceived as representing greater risk.
These guidelines divide an institution’s capital into two tiers. The first tier (“Tier 1”) includes common equity,
retained earnings, certain non-cumulative perpetual preferred stock (excluding auction rate issues), and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and other intangible assets (except mortgage servicing rights and
purchased credit card relationships subject to certain limitations). Supplementary (“Tier 2”) capital includes, among other
items, cumulative perpetual and long-term limited-life preferred stock, mandatorily convertible securities, certain hybrid
capital instruments, term subordinated debt, and the ACL, subject to certain limitations, and up to 45% of pre-tax net
unrealized gains on equity securities with readily determinable fair market values, less required deductions. See “Prompt
Corrective Regulatory Action” below.
The regulatory capital regulations of the FDIC and other federal banking agencies provide that the agencies will take
into account the exposure of an institution’s capital and economic value to changes in interest rate risk in assessing capital
adequacy. According to such agencies, applicable considerations include the quality of the institution’s interest rate risk
management process, overall financial condition, and the level of other risks at the institution for which capital is needed.
Institutions with significant interest rate risk may be required to hold additional capital. The agencies have issued a joint
policy statement providing guidance on interest rate risk management, including a discussion of the critical factors affecting
the agencies’ evaluation of interest rate risk in connection with capital adequacy. Institutions that engage in specified amounts
of trading activity may be subject to adjustments in the calculation of the risk-based capital requirement to assure sufficient
additional capital to support market risk.
Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe, for the
depository institutions under its jurisdiction, standards that relate to, among other things, internal controls; information and
audit systems; loan documentation; credit underwriting; the monitoring of interest rate risk; asset growth; compensation; fees
and benefits; and such other operational and managerial standards as the agency deems appropriate. The federal banking
agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety and Soundness (the
“Guidelines”) to implement these safety and soundness standards. The Guidelines set forth the safety and soundness standards
that the federal banking agencies use to identify and address problems at insured depository institutions before capital
becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard
prescribed by the Guidelines, the agency may require the institution to provide it with an acceptable plan to achieve
compliance with the standard, as required by the Federal Deposit Insurance Act, as amended, (the “FDI Act”). The regulations
establish deadlines for the submission and review of such safety and soundness compliance plans.
Real Estate Lending Standards. The FDIC and the other federal banking agencies have adopted regulations that
prescribe standards for extensions of credit that are (i) secured by real estate, or (ii) made for the purpose of financing
construction or improvements on real estate. The FDIC regulations require each institution to establish and maintain written
internal real estate lending standards that are consistent with safe and sound banking practices, and appropriate to the size of
the institution and the nature and scope of its real estate lending activities. The standards also must be consistent with
accompanying FDIC guidelines. The institution’s standards establish requirements for loan portfolio diversification, prudent
underwriting (including loan-to-value limits) that are clear and measurable, loan administration procedures, documentation,
approval and reporting requirements. The real estate lending policies must reflect consideration of the federal bank regulators’
Interagency Guidelines for Real Estate Lending Policies. Institutions are also permitted to make a limited amount of loans that
do not conform to the proposed loan-to-value limitations so long as such exceptions are reviewed and justified appropriately.
The FDIC guidelines also list a number of lending situations in which exceptions to the loan-to-value standard are justified.
The FDIC and the FRB have also jointly issued the “Concentrations In Commercial Real Estate Lending, Sound Risk
Management Practices” (the “CRE Guidance”). The CRE Guidance, which addresses land development, construction, and
certain multi-family loans, as well as commercial real estate loans, does not establish specific lending limits but rather
reinforces and enhances these agencies’ existing regulations and guidelines for such lending and portfolio management.
Specifically, the CRE Guidance provides that a bank has a concentration in lending if (1) total reported loans for construction,
land development, and other land represent 100% or more of total risk-based capital; or (2) total reported loans secured by
multi-family properties, non-farm non-residential properties (excluding those that are owner-occupied), and loans for
construction, land development, and other land represent 300% or more of total risk-based capital and the bank’s commercial
real estate loan portfolio has increased 50% or more during the prior 36 months. If a concentration is
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present, management must employ heightened risk management practices that address key elements, including board and
management oversight, strategic planning, portfolio management, development of underwriting standards, risk assessment and
monitoring through market analysis and stress testing, along with maintenance of increased capital levels as needed to support
the level of commercial real estate lending.
Dividend Limitations. The FDIC has authority to use its enforcement powers to prohibit a commercial bank from
paying dividends if, in its opinion, the payment of dividends would constitute an unsafe or unsound practice. Federal law
prohibits the payment of dividends that will result in the institution failing to meet applicable capital requirements on a pro
forma basis. The Bank is also subject to dividend declaration restrictions imposed by New York State law as previously
discussed under “New York State Law.”
Investment Activities. Since the enactment of FDICIA, all state-chartered financial institutions, including commercial
banks and their subsidiaries, have generally been limited to such activities as principal and equity investments of the type, and
in the amount, authorized for national banks. State law, FDICIA, and FDIC regulations permit certain exceptions to these
limitations. In addition, the FDIC is authorized to permit institutions to engage in state-authorized activities or investments not
permitted for national banks (other than non-subsidiary equity investments) for institutions that meet all applicable capital
requirements if it is determined that such activities or investments do not pose a significant risk to the FDIC insurance fund.
The Gramm-Leach-Bliley Act of 1999 (the “GLBA”) and FDIC regulations impose certain quantitative and qualitative
restrictions on such activities and on a bank’s dealings with a subsidiary that engages in specified activities.
Prompt Corrective Regulatory Action. Federal law requires, among other things, that federal bank regulatory
authorities take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For
such purposes, the law establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized.
Under current FDIC regulations, a bank is deemed to be “well capitalized” if the bank has a total risk-based capital
ratio of 10% or greater, has a Tier 1 risk-based capital ratio of 8% or greater, has a common equity tier 1 capital ratio of 6.5%
or greater, has a leverage ratio of 5% or greater, and is not subject to any order or final capital directive by the FDIC to meet
and maintain a specific capital level for any capital measure. A bank may be deemed to be in a capitalization category that is
lower than is indicated by its actual capital position if it received an unsatisfactory safety and soundness examination rating.
As of December 31, 2025, the Bank was “well-capitalized”, as applicably defined. The Dodd-Frank Act made permanent the
standard single borrower of FDIC deposit insurance at $250,000 per depositor. In addition, the deposits of the Bank are
insured up to applicable limits by the FDIC under its Deposit Insurance Fund (“DIF”), to which insured depository institutions
are required to pay quarterly deposit insurance assessments. Under the FDIC’s risk-based assessment system, insured
institutions are assigned to one of four risk categories based upon supervisory evaluations, regulatory capital level, and certain
other factors, with less risky institutions paying lower assessments based on the assigned risk levels. An institution’s
assessment rate depends upon the category to which it is assigned and certain other factors. Assessment rates range from 1.5 to
40 basis points of the institution’s assessment base, which is calculated as average total assets minus average tangible equity.
Enforcement. Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in
unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC. The FDIC has extensive enforcement authority to correct unsafe or
unsound practices and violations of law or regulation. Such authority includes the issuance of cease-and-desist orders,
assessment of civil money penalties and removal of officers and directors. The FDIC may also appoint a conservator or
receiver for a non-member bank under specified circumstances, such as where (i) the bank’s assets are less than its obligations
to creditors, (ii) the bank is likely to be unable to pay its obligations or meet depositors’ demands in the normal course of
business, or (iii) a substantial dissipation of bank assets or earnings has occurred due to a violation of law of regulation or
unsafe or unsound practices. Management does not know of any practice, condition, or violation that would lead to
termination of the deposit insurance for the Bank.
Brokered Deposits
FDIC and other regulations generally limit the ability of an insured depository institution to accept, renew or roll over
any brokered deposit unless the institution’s capital category is “well capitalized” or, with the FDIC’s approval,
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“adequately capitalized.” Pursuant to the regulations the Bank, as a well-capitalized institution, may accept brokered deposits.
Incentive Compensation Guidance
Federal banking agencies and the NYDFS have issued comprehensive guidance intended to ensure that the incentive
compensation policies of banking organizations, including bank holding companies, do not undermine the safety and
soundness of those organizations by encouraging excessive risk-taking. The incentive compensation guidance sets
expectations for banking organizations concerning their incentive compensation arrangements and related risk-management,
control and governance processes. In addition, in October 2022, the SEC finalized a rule that directs stock exchanges to
require listed companies to implement claw-back policies to recover incentive-based compensation from current or former
executive officers in the event of certain financial restatements and requires companies to disclose their claw-back policies
and their actions under those policies.
Transactions with Affiliates
Sections 23A and 23B of the Federal Reserve Act and FRB’s Regulation W generally:
●
Limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any affiliate;
●
limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with all affiliates;
and
●
require that all such transactions be on terms substantially the same, or at least favorable to, the bank or
subsidiary, as those provided to a non-affiliate.
An affiliate of a bank is any company or entity which controls, is controlled by, or is under common control with the
bank. The term “covered transaction” includes the making of loans to the affiliate, the purchase of assets from the affiliate, the
issuance of a guarantee on behalf of the affiliate, the purchase of securities issued by the affiliate, and other similar types of
transactions.
A bank’s authority to extend credit to executive officers, directors and greater than 10 percent shareholders, as well as
entities controlled by such persons, is subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O
promulgated thereunder by the FRB. Among other things, these loans must be made on terms (including interest rates charged
and collateral required) substantially the same as those offered to unaffiliated individuals or be made as part of a benefit or
compensation program and on terms widely available to employees and must not involve a greater than normal risk of
repayment. In addition, the amount of loans a bank may make to these persons is based, in part, on the bank’s capital position,
and specified approval procedures must be followed in making loans which exceed specified amounts.
Community Reinvestment Act
Federal Regulation. Under the Community Reinvestment Act (“CRA”), as implemented by FDIC regulations, an
institution has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit
needs of its entire community, including low- and moderate-income neighborhoods. The CRA does not establish specific
lending requirements or programs for financial institutions, nor does it limit an institution’s discretion to develop the types of
products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires
the FDIC, in connection with its examinations, to assess the institution’s record of meeting the credit needs of its community
and to take such record into account in its evaluation of certain applications by such institution. The CRA requires public
disclosure of an institution’s CRA rating and further requires the FDIC to provide a written evaluation of an institution’s CRA
performance utilizing a four-tiered descriptive rating system. In October 2023, the FDIC, the Federal Reserve Board and the
FDIC issued a final rule to strengthen and modernize the CRA regulations and framework. Under the final rule, a bank with
assets of at least $2 billion as of December 31 in both of its prior two calendar years will be a “large bank” for purposes
thereof. The applicable agencies will evaluate such large banks under four performance tests: the Retail Lending Test, the
Retail Services and Products Test, the Community Development Financing
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Test, and the Community Development Services Test. The applicability date for most provisions in the CRA regulations is
January 1, 2026, with additional requirements to be applicable on January 1, 2027. As of the date of its most recent CRA
examination, which was conducted by the Federal Reserve Bank of New York and the NYSDFS, the Bank’s CRA
performance was rated “Outstanding”. New York law imposes a similar obligation on the Bank to serve the credit needs of its
community. New York law contains its own community invested-related provisions, which are substantially similar to those
of federal law.
New York State Regulation. The Bank is also subject to provisions of the New York State Banking Law that impose
continuing and affirmative obligations upon a banking institution organized in New York State to serve the credit needs of its
local community (the “NYCRA”). Such obligations are substantially similar to those imposed by the CRA. The NYCRA
requires the NYDFS to make a periodic written assessment of an institution’s compliance with the NYCRA, utilizing a four-
tiered rating system, and to make such assessment available to the public. The NYCRA also requires the Superintendent to
consider the NYCRA rating when reviewing an application to engage in certain transactions, including mergers, asset
purchases, and the establishment of branch offices or ATMs, and provides that such assessment may serve as a basis for the
denial of any such application.
Federal Home Loan Bank System
The Bank is a member of the FHLB-NY, one of 11 regional FHLBs comprising the FHLB system. Each regional
FHLB manages its customer relationships, while the 11 FHLBs use its combined size and strength to obtain its necessary
funding at the lowest possible cost. As a member of the FHLB-NY, the Bank is required to acquire and hold shares of FHLB-
NY capital stock. Pursuant to this requirement, as of December 31, 2025, the Bank was required to maintain $18.9 million of
FHLB-NY stock.
Holding Company Regulations
The Company is subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of
1956, as amended (the “BHCA”), as administered by the FRB. The Company is required to obtain the prior approval of the
FRB to acquire all, or substantially all, of the assets of any bank or bank holding company. Prior FRB approval would be
required for the Company to acquire direct or indirect ownership or control of any voting securities of any bank or bank
holding company if, after giving effect to such acquisition, it would, directly or indirectly, own or control more than 5% of any
class of voting shares of such bank or bank holding company. In addition, before any bank acquisition can be completed, prior
approval thereof may also be required to be obtained from other agencies having supervisory jurisdiction over the bank to be
acquired, including the NYDFS.
FRB regulations generally prohibit a bank holding company from engaging in, or acquiring, direct or indirect control
of more than 5% of the voting securities of any company engaged in non-banking activities. One of the principal exceptions to
this prohibition is for activities found by the FRB to be so closely related to banking or managing or controlling Bank as to be
a proper incident thereto. Some of the principal activities that the FRB has determined by regulation to be so closely related to
banking are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage
services; (iv) acting as fiduciary, investment, or financial advisor; (v) leasing personal or real property; (vi) making
investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings and
loan association.
The FRB has adopted capital adequacy guidelines for bank holding companies (on a consolidated basis). The Dodd-
Frank Act required the FRB to issue consolidated regulatory capital requirements for bank holding companies that are at least
as stringent as those applicable to insured depository institutions. Such regulations eliminated the use of certain instruments,
such as cumulative preferred stock and trust preferred securities, as Tier 1 holding company capital. As of December 31, 2025,
the Company’s consolidated capital exceeded these requirements.
Bank holding companies are generally required to give the FRB prior written notice of any purchase or redemption of
its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during the preceding twelve months, is equal to 10% or more of the
Company’s consolidated net worth. The FRB may disapprove such a purchase or redemption if it determines that the proposal
would constitute an unsafe or unsound practice, or would violate any law, regulation, FRB order or
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directive, or any condition imposed by, or written agreement with, the FRB. The FRB has adopted an exception to this
approval requirement for well-capitalized bank holding companies that meet certain other conditions.
The FRB has issued a policy statement regarding the payment of dividends by bank holding companies. In general,
the FRB’s policies provide that dividends should be paid only out of current earnings and only if the prospective rate of
earnings retention by the bank holding company appears consistent with the organization’s capital needs, asset quality, and
overall financial condition.
The FRB’s policies include that a bank holding company should pay cash dividends only to the extent that net
income is sufficient to fund the dividends and the prospective rate of earnings retention is consistent with capital needs, asset
quality and overall financial condition. In addition, FRB guidance sets forth the supervisory expectation that bank holding
companies will inform and consult with FRB staff in advance of issuing a dividend that exceeds earnings for the quarter and
should inform the FRB and should eliminate, defer or significantly reduce dividends if (i) net income available to stockholders
for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends, (ii)
prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current and
prospective financial condition, or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum
regulatory capital adequacy ratios. Moreover, the guidance indicates that a bank holding company should notify the FRB in
advance of declaring or paying a dividend that exceeds earnings for the period (e.g., quarter) for which the dividend is being
paid or that could result in a material adverse change to the organization’s capital structure. FRB guidance also provides for
consultation and nonobjection for material increases in the amount of a bank holding company’s common stock dividend.
The FRB’s policies also require that a bank holding company serve as a source of financial strength to its subsidiary
banks by standing ready to use available resources to provide adequate capital funds to those banks during periods of financial
stress or adversity, and by maintaining the financial flexibility and capital-raising capacity to obtain additional resources for
assisting its subsidiary banks where necessary. The Dodd-Frank Act codifies the source of financial strength policy and
requires regulations to facilitate its application. Under the prompt corrective action laws, the ability of a bank holding
company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. These regulatory policies could
affect the ability of the Company to pay dividends or otherwise engage in capital distributions.
Under the FDI Act, a depository institution may be liable to the FDIC for losses caused to the DIF if a commonly
controlled depository institution were to fail. The Bank is commonly controlled within the meaning of that law. In 2023, the
FDIC approved a final rule to implement a special assessment to recover the loss to the DIF associated with the closures of
Silicon Valley Bank and Signature Bank, however the Bank was not subject to this special assessment due to our uninsured
deposits being below the FDIC threshold.
The status of the Company as a registered bank holding company under the BHCA does not exempt it from certain
federal and state laws and regulations applicable to corporations generally, including, without limitation, certain provisions of
the federal securities laws.
The Company, the Bank, and their respective affiliates will be affected by the monetary and fiscal policies of various
agencies of the United States Government, including the Federal Reserve System. In view of changing conditions in the
national economy and in the money markets, it is difficult for management to accurately predict future changes in monetary
policy or the effect of such changes on the business or financial condition of the Company or the Bank.
Acquisition of the Holding Company
Under the Federal Change in Bank Control Act (“CIBCA”), a notice must be submitted to the FRB if any person
(including a company), or group acting in concert, seeks to acquire 10% or more of the Company’s shares of outstanding
common stock, unless the FRB has found that the acquisition will not result in a change in control of the Company. Under the
CIBCA, the FRB generally has 60 days within which to act on such notices, taking into consideration certain factors,
including the financial and managerial resources of the acquirer; the convenience and needs of the communities served by the
Company and the Bank; and the anti-trust effects of the acquisition. Under the BHCA, any company would be required to
obtain approval from the FRB before it may obtain “control” of the Company within the meaning of the BHCA. Control
generally is defined to mean the ownership or power to vote 25% or more of any class of voting securities of the Company
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or the ability to control in any manner the election of a majority of the Company’s directors. An existing bank holding
company would, under the BHCA, be required to obtain the FRB’s approval before acquiring more than 5% of the Company’s
voting stock. In addition to the CIBCA and the BHCA, New York State Banking Law generally requires prior approval of the
New York State Banking Board before any action is taken that causes any company to acquire direct or indirect control of a
banking institution that is organized in New York.
Consumer Financial Protection Bureau
Created under the Dodd-Frank Act, and given extensive implementation and enforcement powers, the CFPB has
broad rulemaking authority for a wide range of consumer financial laws that apply to all banks, including, among other things,
the authority to prohibit “unfair, deceptive, or abusive” acts and practices. Abusive acts or practices are defined as those that
(1) materially interfere with a consumer’s ability to understand a term or condition of a consumer financial product or service,
or (2) take unreasonable advantage of a consumer’s (a) lack of financial savvy, (b) inability to protect himself or herself in the
selection or use of consumer financial products or services, or (c) reasonable reliance on a covered entity to act in the
consumer’s interests. The CFPB has the authority to investigate possible violations of federal consumer financial law, hold
hearings and commence civil litigation. The CFPB can issue cease-and-desist orders against banks and other entities that
violate consumer financial laws. The CFPB may also institute a civil action against an entity in violation of federal consumer
financial law to impose a civil penalty or an injunction. Notwithstanding certain ongoing, legal, budgetary and structural
challenges affecting the CFPB, the CFPB remains an active federal regulatory agency with continuing supervisory and
enforcement authority and retains its broad authority to pursue enforcement actions, including investigations, civil actions and
cease and desist actions.
Mortgage Banking and Related Consumer Protection Regulations
The retail activities of the Bank, including lending and the acceptance of deposits, are subject to a variety of statutes
and regulations designed to protect consumers. Interest and other charges collected or contracted for by the Bank are subject to
state usury laws and federal laws concerning interest rates. Loan operations are also subject to federal laws applicable to credit
transactions, such as:
●
The federal Truth-In-Lending Act and Regulation Z issued by the FRB, governing disclosures of credit terms to
consumer borrowers;
●
The Home Mortgage Disclosure Act and Regulation C issued by the FRB, requiring financial institutions to
provide information to enable the public and public officials to determine whether a financial institution is
fulfilling its obligation to help meet the housing needs of the community it serves;
●
The Equal Credit Opportunity Act and Regulation B issued by the FRB, prohibiting discrimination on the basis
of race, creed or other prohibited factors in extending credit;
●
The Fair Credit Reporting Act and Regulation V issued by the FRB, governing the use and provision of
information to consumer reporting agencies;
●
The Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection
agencies; and
●
The guidance of the various federal agencies charged with the responsibility of implementing such federal laws.
Deposit operations also are subject to:
●
The Truth in Savings Act and Regulation DD issued by the FRB, which requires disclosure of deposit terms to
consumers;
●
Regulation CC issued by the FRB, which relates to the availability of deposit funds to consumers;
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●
The Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial
records and prescribes procedures for complying with administrative subpoenas of financial records; and
●
The Electronic Funds Transfer Act and Regulation E issued by the FRB, which governs automatic deposits to
and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated
teller machines and other electronic banking services.
In addition, the Bank and its subsidiaries may also be subject to certain state laws and regulations designed to protect
consumers.
Many of the foregoing laws and regulations are subject to change resulting from the provisions in the Dodd-Frank
Act, which in many cases calls for revisions to implementing regulations. In addition, oversight responsibilities of these and
other consumer protection laws and regulations will, in large measure, transfer from the Bank’s primary regulators to the
CFPB. We cannot predict the effect that being regulated by a new, additional regulatory authority focused on consumer
financial protection, or any new implementing regulations or revisions to existing regulations that may result from the
establishment of this new authority, will have on our businesses.
Data Privacy
Federal and state laws contain extensive consumer privacy protection provisions. The GLBA requires financial
institutions to periodically disclose their privacy practices and policies relating to sharing such information and enable retail
customers to opt out of the Bank’s ability to share certain information with affiliates and non-affiliates for marketing and/or
non-marketing purposes, or to contact customers with marketing offers. The GLBA also requires financial institutions to
implement a comprehensive information security program that includes administrative, technical, and physical safeguards to
ensure the security and confidentiality of customer records and information. See “Consumer Protection Finance Bureau”
above.
Cybersecurity
The SEC has rules requiring registered public companies (“registrants”) to disclose material cybersecurity incidents
that they experience and to disclose on an annual basis material information regarding their cybersecurity risk management,
strategy and governance. The rules require registrants to disclose on item 1.05 of Form 8-K any cybersecurity incident they
determine to be material and to describe the material aspects of the incident’s nature, scope, and timing, as well as its material
impact or reasonably likely impact on the registrant. The rules also add Regulation S-K Item 106, which will require
registrants to describe their processes, if any, for assessing, identifying, and managing material risks from cybersecurity
threats, as well as the material effects or reasonably likely material effects of risks from cybersecurity threats and previous
cybersecurity incidents. Item 106 requires registrants to describe the board of directors’ oversight of risks from cybersecurity
threats and management’s role and expertise in assessing and managing material risks from cybersecurity threats, which
description is included herein.
In addition, the Federal Reserve and the FDIC require, among other things, a banking organization to notify its
primary federal regulator within 36 hours after identifying a “computer-security incident” that the banking organization
believes in good faith could materially disrupt, degrade or impair its business or operations in a manner that would, among
other things, jeopardize the viability of its operations, result in customers being unable to access their deposit and other
accounts, result in a material loss of revenue, profit or franchise value, or pose a threat to the financial stability of the United
States. The FDIC has issued a report setting forth safety and soundness standards and a computer-security incident notification
rule under which a banking organization must notify its primary federal regulator of any significant computer-security incident
as soon as possible, but no later than 36 hours after determining that such an incident has occurred.
In addition, as noted above, the NYSDFS requires us to adopt broad cybersecurity protections.
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Federal Securities Laws
The Company’s common stock is registered with the SEC and listed for trading on The Nasdaq Stock Market
(“Nasdaq”). Accordingly, the Company is subject to the information, proxy solicitation, insider trading restrictions and other
requirements under the Securities Exchange Act of 1934 and the rules of Nasdaq.
Available Information
We are a reporting company and file annual, quarterly and current reports, proxy statements and other information
with the SEC. We make available free of charge on or through our web site at http://www.flushingbank.com our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC. Our SEC filings are also available to the public free of charge
over the Internet at the SEC’s web site at http://www.sec.gov.
You may also read and copy any document we file at the SEC’s public reference room located at 100 F. Street, N.E.,
Room 1580, Washington, D.C. 20549. You may obtain information about the operation of the public reference room by
calling the SEC at 1 800 SEC 0330. You may request copies of these documents by writing to the SEC and paying a fee for
the copying cost.
Item 1A. Risk Factors.
In addition to the other information contained in this Annual Report, the following factors and other considerations
should be considered carefully in evaluating us and our business.
Risks Relating to the Consummation of the Mergers and OceanFirst following the Mergers
Because the market price of OceanFirst common stock may fluctuate prior to the effective time of the first merger,
including as a result of OceanFirst’s and the Company’s financial performance prior to that effective time, stockholders
cannot be certain of the market value of the merger consideration to be received by the Company’s stockholders.
In the first merger, the Company’s stockholders will be entitled to receive 0.85 of a share of OceanFirst common
stock for each share of Company common stock they own, subject to certain exceptions. Although the number of shares of
OceanFirst common stock that Company stockholders will be entitled to receive per share of Company common stock is
fixed, the market value of the merger consideration will fluctuate with the market price of OceanFirst common stock and will
not be known at the time of the OceanFirst special meeting and the Company special meeting for approval of the (collectively,
the “meetings”). The merger agreement can be terminated by the Company if, for the 35 consecutive trading days ending on
the determination date, the volume weighted average trading price of OceanFirst common stock (a) drops below $15.81 and
(b) underperforms the KBW Nasdaq Regional Banking Index by twenty percent (20%).
Stock price changes may result from a variety of factors, including general market and economic conditions, changes
in OceanFirst’s and the Company’s businesses, operations and prospects, the performance of peer companies and other
financial companies, volatility in the prices of securities in global financial markets, including market prices of OceanFirst
common stock, Company common stock and the other public traded banking institutions as well as changes in applicable laws
and regulations, many of which are beyond OceanFirst’s and the Company’s control. Therefore, at the time of the meetings,
OceanFirst’s stockholders and the Company’s stockholders will not know the market value of the merger consideration that
the Company’s stockholders will receive at the effective time. Furthermore, the implied value of OceanFirst common stock to
be paid to the Company’s stockholders upon completion of the first merger could be at the closing of the mergers significantly
less than $19.76, which was the closing price per share of the OceanFirst common stock on the last trading day before the
public announcement of the merger agreement, based on any fluctuations in the market price of OceanFirst common stock.
You should obtain current market quotations for shares of OceanFirst common stock (Nasdaq: OCFC) and for shares of
Company common stock (Nasdaq: FFIC).
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The market price of OceanFirst common stock after the mergers may be affected by factors different from those currently
affecting the shares of OceanFirst common stock or Company common stock.
As a result of the first merger, the Company’s stockholders will become OceanFirst stockholders, and certain
adjustments may be made to the combined company’s business as a result of the mergers. Accordingly, the results of
operations of the combined company and the market price of OceanFirst common stock after the completion of the mergers
may be affected by factors different from those currently affecting the independent results of operations of each of OceanFirst
and the Company.
Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently
anticipated or that could have an adverse effect on the combined company following the mergers.
Before the mergers and the bank merger may be completed, the requisite approvals, consents and non-
objections must be obtained from the Federal Reserve, Office of the Controller of the Currency and the New York Department
of Financial Services. Under the investment agreement, before the investment by Warburg may be completed, Warburg must
have received reasonably satisfactory oral confirmation from staff of the legal division of the Federal Reserve that the
consummation of the transactions contemplated by the investment agreement will not result in Warburg being deemed to have,
or have acquired, “control” of OceanFirst or any of its subsidiaries for purposes of the BHC Act or CIBC Act and the
implementing regulations thereunder, either (a) individually or (b) as part of an “association” or group “acting in concert” with
any other person with respect to the transactions contemplated by the investment agreement contemplated to occur at the
investment closing, as those terms are defined and interpreted by the Federal Reserve under Regulation Y (12 C.F.R. Part
225). Other approvals, waivers or consents from regulators may also be required, both for the mergers and for the investment.
In determining whether to grant these approvals and confirmations, such regulatory authorities consider a variety of
factors. These approvals or confirmations could be delayed or not obtained at all, including due to (a) a party’s regulatory
standing (or adverse development in respect thereof), (b) any other factors considered by regulators when granting such
approvals or confirmations, including governmental, political or community group inquiries, investigations or opposition, or
(c) changes in legislation or the political environment generally.
The approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place
restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions
contemplated by the merger agreement or the investment agreement. There can be no assurance that regulators will not
impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or
restrictions will not have the effect of delaying or jeopardizing the completion of any of the transactions contemplated by the
merger agreement or the investment agreement, imposing additional material costs on or materially limiting the revenues of
the combined company following the mergers or otherwise reducing the anticipated benefits of the mergers (including the
investment and its inclusion as common equity tier 1 capital, assuming the mergers and the investment are consummated
successfully and within the expected timeframe). In addition, there can be no assurance that any such conditions, limitations,
obligations or restrictions will not result in abandonment of the mergers and the investment. Additionally, the completion of
the mergers and the investment is conditioned on the absence of certain orders, injunctions or decrees by any governmental
entity of competent jurisdiction that would prevent, prohibit or make illegal the completion of any of the transactions
contemplated by the merger agreement or the investment agreement, as applicable.
OceanFirst and the Company have agreed in the merger agreement to use commercially reasonable efforts to
(a) promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as
promptly as practicable all permits, consents, approvals and authorizations of all third parties and governmental entities which
are necessary or advisable to consummate the transactions contemplated by the merger agreement (including the mergers, the
bank merger and the OceanFirst issuance), and to comply with the terms and conditions of all such permits, consents,
approvals and authorizations of all such governmental entities and (b) respond to any request for information and to resolve
any objection that may be asserted by any governmental entity with respect to the merger agreement or the transactions
contemplated thereby in each case in a reasonably prompt and timely matter, including the sale, divestiture or disposition of
assets, properties or businesses of OceanFirst, the Company or their respective subsidiaries. However, under the terms of the
merger agreement, neither OceanFirst nor the Company, nor any of their respective subsidiaries, is required or permitted
(without the written consent of the other party), to take any action, or agree to any condition or restriction, in connection with
obtaining the requisite regulatory approvals that would reasonably be expected to have, individually or in
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the aggregate, a material adverse effect (measured on a scale relative to OceanFirst and its subsidiaries, taken as a whole) on
the combined company and its subsidiaries, taken as a whole, after giving effect to the mergers.
OceanFirst and Warburg have agreed in the investment agreement to use reasonable best efforts to promptly prepare
and file for all permits, consents, approvals, confirmations and authorizations of all third parties and governmental entities that
are necessary or advisable to consummate the investment as promptly as reasonably practicable, and to respond to any request
for information from any government authority related to the foregoing, so as to enable the parties to consummate the
transactions contemplated by the investment agreement. However, under the terms of the investment agreement, neither
OceanFirst nor any of its subsidiaries is permitted (without the written consent of the other party), and none of Warburg or any
of their affiliates is required, to take any action, or commitment to take or refrain from taking any action, or acceptance or
agreement to any condition or restriction, in each case, that would reasonably be expected to cause Warburg, its affiliates or
any of their partners or principals to (a) “control” OceanFirst or be required to become a bank holding company, in each case,
pursuant to the BHC Act; (b) “control” OceanFirst or be required to provide prior notice pursuant to the CIBC Act; (c) serve
as a source of financial strength to OceanFirst pursuant to the BHC Act; or (d) enter into any capital or liquidity maintenance
agreement or any similar agreement with any governmental entity, provide capital support to OceanFirst, the Company or any
of their respective subsidiaries or otherwise commit to or contribute any additional capital to, provide other funds to, or make
any other investment in, OceanFirst, the Company or any of their respective subsidiaries.
Consummation of the mergers is conditioned upon the prior or concurrent closing of the investment.
Although OceanFirst has a legally binding agreement with Warburg pursuant to which Warburg will make the
investment, the obligation of Warburg to make such investment is subject to various conditions. Failure to consummate (or a
delay in consummating) the investment may cause the failure or delay in the ability of the parties to consummate the mergers.
Failure to consummate the mergers and investment could negatively impact the Company.
The consummation of the mergers is subject to the receipt of requisite regulatory and requisite stockholder approvals
and the satisfaction of other customary closing conditions, including the substantially concurrent consummation of the
investment, as noted above. If the mergers are not completed for any reason, including as a result of OceanFirst’s
stockholders or the Company’s stockholders failing to grant the applicable requisite stockholder approval at the applicable
company’s special stockholders meeting or the imposition of a materially burdensome regulatory condition resulting in either
OceanFirst or the Company refusing to consummate the mergers, there may be various adverse consequences and the
Company may experience negative reactions from the financial markets and from their customers and employees. For
example, the Company’s business may be impacted adversely by the failure to pursue other beneficial opportunities due to the
focus of management on the mergers, without realizing any of the anticipated benefits of consummating the mergers.
Additionally, if the merger agreement is terminated, the market price of Company common stock could decline to the
extent that current market prices reflect a market assumption that the mergers will be beneficial and will be consummated.
The Company also could be subject to litigation related to any failure to complete the mergers. If the merger agreement is
terminated under certain circumstances, either party may be required to pay a termination fee equal to $21,431,924 to the
other party.
Additionally, the Company has incurred and will incur substantial expenses in connection with the negotiation and
completion of the transactions contemplated by the merger agreement as well as the costs and expenses of preparing, filing,
printing and mailing of a proxy statement in connection with the mergers, and all filing and other fees paid in connection with
the mergers. If the mergers and/or the investment are not completed, the Company would have to pay its expenses without
realizing the expected benefits of the mergers. Although the Company may be entitled to receive a termination fee from
OceanFirst if the merger agreement is terminated under certain circumstances, such payments may not be sufficient to fully
compensate the Company for the losses it may incur in connection with a failure of the mergers to be consummated.
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Combining OceanFirst and the Company may be more difficult, costly or time-consuming than expected, and the
combined company may fail to realize the anticipated benefits of the mergers.
The success of the mergers will depend, in part, on the anticipated cost savings from combining the businesses of
OceanFirst and the Company. To realize certain anticipated benefits and cost savings from the mergers, OceanFirst and the
Company must successfully integrate and combine their businesses in a manner that permits those benefits and cost savings to
be realized without adversely affecting current revenues and future growth. If OceanFirst and the Company are not able to
successfully achieve these objectives, such anticipated benefits and cost savings of the mergers may not be realized fully or at
all or may take longer to realize than expected. In addition, the actual cost savings of the mergers could be less than
anticipated, and integration may result in additional and unforeseen expenses.
An inability to realize the full extent of the anticipated benefits of the mergers and the other transactions
contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse
effect upon the capital position, revenues, levels of expenses and operating results of the combined company following the
completion of the mergers, which may adversely affect the value of the common stock of the combined company following
the completion of the mergers.
OceanFirst and the Company have operated and, until the completion of the mergers, must continue to operate
independently.
It is possible that the integration process could result in the loss of key employees, the disruption of each company’s
ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’
ability to maintain relationships with their stakeholders or to achieve the anticipated benefits and cost savings of the mergers.
Integration efforts between the companies may also divert management attention and resources. These integration matters
could have an adverse effect on the Company during this pre-closing period and for an undetermined period after
consummation of the mergers on the combined company.
Furthermore, the board of directors and executive leadership of the combined company and the surviving bank will
consist of former directors and executive officers from each of OceanFirst and the Company, as well as a Warburg director.
Combining the boards of directors and management teams of each company into a single board of directors and a single
management team could require the reconciliation of differing priorities and philosophies.
The combined company may be unable to retain OceanFirst and/or the Company personnel successfully after the mergers
are completed.
The success of the mergers will depend, in part, on the combined company’s ability to retain the talent and dedication
of key employees currently employed by OceanFirst and the Company. It is possible that these employees may decide not to
remain with OceanFirst or the Company, as applicable, while the mergers are pending or with the combined company after the
mergers are consummated. If OceanFirst and the Company are unable to retain key employees, including management, who
are critical to the successful integration and future operations of the companies, OceanFirst and the Company could face
disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated
additional recruitment costs. In addition, following the mergers, if key employees terminate their employment, the combined
company’s business activities may be adversely affected, and management’s attention may be diverted from successfully
hiring suitable replacements, all of which may cause the combined company’s business to suffer. OceanFirst and the
Company also may not be able to locate or retain suitable replacements for any key employees who leave either company.
OceanFirst and the Company will be subject to business uncertainties and contractual restrictions while the mergers are
pending.
Uncertainty about the effect of the mergers on employees and customers may have an adverse effect on OceanFirst or
the Company. These uncertainties may impair OceanFirst’s or the Company’s ability to retain and motivate key personnel
until the mergers are completed and could cause customers and others that deal with OceanFirst or the Company to seek to
change existing business relationships with OceanFirst or the Company. In addition, subject to certain exceptions, each of
OceanFirst and the Company has agreed to operate its business in the ordinary course in all material
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respects and to refrain from taking certain actions that may adversely affect its ability to (a) consummate the transactions
contemplated by the merger agreement on a timely basis without the consent of the other party and (b) in the case of
OceanFirst, obtain any necessary approvals of any governmental entity in connection with the investment without the consent
of Warburg. These restrictions may prevent OceanFirst or the Company from pursuing attractive business opportunities that
may arise prior to the completion of the mergers.
OceanFirst and the Company have incurred, and the combined company is expected to incur substantial costs related to
the mergers and integration.
OceanFirst and the Company have incurred and expect to incur a number of non-recurring costs associated with the
mergers and, in the case of OceanFirst, the investment. These costs include legal, financial, accounting, consulting and other
advisory fees, retention, severance and employee benefit-related costs, public company filing fees and other regulatory fees,
financial printing and other printing costs, closing, integration and other related costs. Some of these costs are payable by the
Company regardless of whether the mergers are completed.
In addition, the combined company will incur integration costs following the completion of the mergers as
OceanFirst and the Company integrate their businesses, including facilities and systems consolidation costs and employment-
related costs. OceanFirst and the Company may also incur additional costs to maintain employee morale and to retain key
employees. There are many processes, policies, procedures, operations, technologies and systems that may need to be
integrated, including purchasing, accounting and finance, payroll, compliance, treasury management, branch operations,
vendor management, risk management, lines of business, pricing and benefits. While OceanFirst and the Company have
assumed that a certain level of costs will be incurred, there are many factors beyond their control that could affect the total
amount or the timing of the integration costs. Moreover, many of the costs that will be incurred are, by their nature, difficult
to estimate accurately. These integration costs may result in the combined company taking charges against earnings following
the completion of the mergers, and the amount and timing of such charges are uncertain at present. There can be no
assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these
transaction and integration costs over time.
Stockholder litigation related to the mergers and/or the investment could prevent or delay the completion of the mergers
and/or the investment, result in the payment of damages or otherwise negatively impact the business and operations of
OceanFirst or the Company.
Stockholders may bring claims in connection with the mergers and/or the investment and, among other remedies,
may seek damages or an injunction preventing the mergers and/or the investment from closing. If any plaintiff were
successful in obtaining an injunction prohibiting OceanFirst or the Company from completing the mergers or any other
transactions contemplated by the merger agreement or OceanFirst and Warburg from consummating the investment (or any
portion thereof), then such injunction may delay or prevent the effectiveness of the mergers and the investment and could
result in costs to OceanFirst or the Company, including costs in connection with the defense or settlement of any stockholder
lawsuits filed in connection with the mergers and/or the investment. Further, such lawsuits and the defense or settlement of
any such lawsuits may have an adverse effect on the financial condition and results of operations of OceanFirst, the Company
or the combined company.
The merger agreement may be terminated in accordance with its terms, and the mergers may not be consummated.
The obligation of the merger agreement parties to consummate the first merger is subject to a number of conditions
that must be satisfied or waived in order to consummate the mergers. Those conditions include, among other things:
(a) receiving the requisite OceanFirst and Company stockholder approvals of certain matters relating to the mergers at each
company’s respective special stockholders meeting; (b) the authorization for listing on the Nasdaq, subject to official notice of
issuance, of the shares of OceanFirst common stock to be issued pursuant to the merger agreement, (c) the receipt of the
requisite regulatory approvals and that no requisite regulatory approval contains any materially burdensome regulatory
condition; (d) the absence of any order, injunction, decree or other legal restraint preventing the consummation of the mergers,
the bank merger or any of the other transactions contemplated by the merger agreement or making the completion of the first
merger, the bank merger or any of the other transactions contemplated by the merger agreement illegal; (e) the registration
statement filed by OceanFirst relating to OceanFirst common stock to be issued in the first merger, being declared effective by
the SEC under the Securities Act and not withdrawn; and (f) the consummation of the investment concurrently with the
closing of the mergers. Each party’s obligation to consummate the mergers is also subject
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to certain additional conditions, including: (i) subject to applicable materiality standards, the accuracy of the representations
and warranties of the other party (including the absence of any material adverse effect, as defined in the merger agreement);
(ii) the performance in all material respects by the other party of its obligations under the merger agreement; and (iii) the
receipt by each party of an opinion from its counsel to the effect that the mergers will qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986.
These conditions to the consummation of the first merger may not be satisfied or waived in a timely manner or at all,
and, accordingly, the mergers may not be consummated. In addition, the parties can mutually decide to terminate the merger
agreement at any time, before or after the requisite stockholder approvals, or the Company or OceanFirst may elect to
terminate the merger agreement in certain other circumstances.
The investment agreement may be terminated in accordance with its respective terms and the investment may not be
consummated.
The obligation of the parties to the investment agreement to consummate the investment is subject to a number of
conditions which must be satisfied or waived in order to consummate the investment. Those conditions include, among other
things: (a) all of the conditions to the first merger closing will have been satisfied or waived, other than the investment
condition and those conditions that by their nature can only be satisfied or waived at the merger closing (but subject to such
conditions then being satisfied or waived), (b) the first merger will have been consummated, or will be consummated
substantially concurrently with the investment closing, in accordance with the terms and conditions of the merger agreement;
(c) Warburg must have received reasonably satisfactory oral confirmation from staff of the legal division of the Federal
Reserve that the consummation of the investment will not result in Warburg being deemed to have, or to have acquired,
“control” of OceanFirst or any of its subsidiaries for purposes of The Bank Holding Company Act of 1956 or the Change in
Bank Control Act; and (d) the absence of any order, injunction, decree or other legal restraint preventing the completion of the
investment or making the completion of the investment or any of the other transactions contemplated by the investment
agreement illegal. Each party’s obligation to consummate the investment is also subject to certain additional customary
conditions, including (i) subject to applicable materiality standards, the accuracy of the representations and warranties of the
other party, and (ii) the performance in all material respects by the other party of its obligations under the investment
agreement.
These conditions to the consummation of the investment may not be satisfied or waived in a timely manner or at all,
and, accordingly, the investment may not be consummated. In addition, the parties to the investment agreement can mutually
decide to terminate the investment agreement at any time, before or after the requisite stockholder approvals, or the parties
may elect to terminate the investment agreement in certain other circumstances.
The announcement of the mergers could disrupt OceanFirst’s and the Company’s relationships with their employees,
customers, suppliers, business partners and others, as well as their operating results and business generally.
Whether or not the mergers are ultimately consummated, as a result of uncertainty related to the proposed
transactions, risks relating to the impact of the announcement of the mergers on OceanFirst’s and the Company’s business
include the following:
●
their employees may experience uncertainty about their future roles, which might adversely affect OceanFirst’s and
the Company’s ability to retain and hire key personnel and other employees;
●
customers, suppliers, business partners and other parties with which OceanFirst and the Company maintain business
relationships may experience uncertainty about their future and seek alternative relationships with third parties, seek
to alter their business relationships with OceanFirst and the Company or fail to extend existing relationships with
OceanFirst and the Company; and
●
OceanFirst and the Company have each expended and will continue to expend significant costs, fees and expenses
for professional services and transaction costs in connection with the mergers.
If any of the aforementioned risks were to materialize, they could lead to significant costs which may impact each party’s
results of operations and financial condition.
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The merger agreement limits the Company’s ability to pursue alternatives to the mergers and may discourage other
companies from trying to acquire the Company.
The merger agreement contains “no shop” covenants that restrict the Company’s ability to, directly or indirectly,
among other things, initiate, solicit, knowingly encourage or knowingly facilitate inquiries or proposals with respect to, or,
subject to certain exceptions generally related to the exercise of fiduciary duties by each respective board of directors, engage
or participate in any negotiations concerning, or provide any confidential or nonpublic information or data relating to, any
alternative acquisition proposals, subject to certain exceptions. These provisions, which could result in a $21,431,924
termination fee payable under certain circumstances, may discourage a potential third-party acquirer that might have an
interest in acquiring all or a significant part of the Company from considering or making that acquisition proposal.
The shares of OceanFirst common stock to be received by the Company’s stockholders as a result of the first merger will
have different rights from the shares of Company common stock.
Upon completion of the first merger, the rights of the Company’s former stockholders who receive shares of
OceanFirst common stock in the first merger and thereby become OceanFirst stockholders will be governed by the OceanFirst
charter and the OceanFirst bylaws. The rights associated with Company common stock are different from the rights
associated with OceanFirst common stock.
Each Company stockholder will have a reduced ownership and voting interest in the combined company after the
consummation of the mergers than the holder’s interest in the Company prior to the consummation of the mergers and
may exercise less influence over management.
The Company’s stockholders currently have the right to vote in the election of the board of directors and on other
matters affecting the Company. Each Company stockholder before the mergers will be an OceanFirst stockholder upon
completion of the mergers, with a percentage ownership of the shares of common stock of the combined company that is
smaller than the holder’s percentage ownership of shares of the Company common stock individually, as applicable, prior to
the consummation of the mergers. Further, based on the number of shares of OceanFirst common stock and Company
common stock outstanding as of the date of this report, and based on the number of shares of OceanFirst common stock
expected to be issued in the first merger and the investment, the Company’s former stockholders, as a group, are estimated to
receive approximately 30% of the outstanding shares of the combined company immediately after the first merger and the
investment. As such, a former stockholder of the Company will, immediately after the first merger closing, own a percentage
of OceanFirst common stock equal to such stockholder’s current percentage ownership of the Company multiplied by
approximately thirty percent (30%) (disregarding any ownership of OceanFirst such stockholder may otherwise hold).
Because of this, the Company’s stockholders may have less influence on the management and policies of the combined
company than they now have on the management and policies of the Company.
Changes in Interest Rates May Impact Our Financial Condition and Results of Operations
Our primary source of income is net interest income, which is the difference between the interest income generated
by our interest-earning assets (consisting primarily of multi-family residential loans, investment property commercial business
loans, commercial real estate mortgage loans and investment securities) and the interest expense paid on our interest-bearing
liabilities (consisting primarily of deposits and borrowings). The level of net interest income is primarily a function of the
average balance of our interest-earning assets and our interest-bearing liabilities, along with the spread between the yield on
such assets and the cost of such liabilities. These factors are influenced by both the pricing and mix of our interest-earning
assets and our interest-bearing liabilities which, in turn, are impacted by such external factors as the local economy,
competition for loans and deposits, the monetary policy of the Federal Open Market Committee of the Federal Reserve Board
(the “FOMC”), and market interest rates. The FOMC decreased the target range for the federal funds rate three times and by
75 basis points during 2025 from a range of 4.25% to 4.50% in September, to a range of 3.50% to 3.75% in December. There
can be no assurances as to any future FOMC decisions on interest rates. It is possible that due to changes in fiscal and
economic policies, including tariffs, US economic activity may slow or decrease in 2026, applying pressure on interest rates.
Economic weakness or persistent inflation could lead to decreased business and consumer confidence and weaker-than-
anticipated spending, thereby leading to increased interest rates and other related possible adverse impacts to our business
including asset quality, deposit levels, loan demand and results of operations. A significant portion of our loans have fixed
interest rates (or, if adjustable, are initially fixed for periods of
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five to 10 years) and longer terms than our deposits and borrowings. Our net interest income could be adversely affected if
the rates we pay on deposits and borrowings increase more rapidly than the rates we earn on loans. Our interest rate risk has
been partially mitigated by the addition of certain derivative financial instruments along with additional floating rate assets
and we believe that our current interest rate position is more neutral, with a bias toward liability sensitivity. There can be no
assurance that such derivatives will remain effective in such mitigation nor that our interest rate position will remain as is and
be appropriate in our operating environment.
As a result of our historical focus on the origination of multi-family residential mortgage loans, commercial business
loans and commercial real estate mortgage loans, most of our loans are adjustable rate, however, many adjust at periods of
five to 10 years. In addition, we have certain investment securities and mortgage-backed securities that have fixed interest
rates and are classified as available for sale. As is the case with many financial institutions, our emphasis on increasing the
generation of core deposits, those with no stated maturity date, has resulted in our interest-bearing liabilities having a shorter
duration than our interest-earning assets. This imbalance can create significant earnings volatility because interest rates
change over time. As interest rates increase, our cost of funds generally increases more rapidly than the yields on a substantial
portion of our interest-earning assets. In addition, the estimated fair value of our fixed-rate assets, such as our securities
portfolios, would decline (and our unrealized gains on such assets would ordinarily decrease and unrealized losses would
ordinarily increase) if interest rates increased. However, the derivative portfolio increases in fair value as interest rates
increase, partially mitigating the effects of such increases on other securities.
Prevailing interest rates also affect the extent to which borrowers repay and refinance loans. In a declining interest
rate environment, the number of loan prepayments and loan refinancing may increase, as well as prepayments of mortgage-
backed securities. Call provisions associated with our investment in U.S. government agency and corporate securities may
also adversely affect yield in a declining interest rate environment. Such prepayments and calls may adversely affect the yield
of our loan and securities portfolios as we reinvest the prepaid funds in a lower interest rate environment. However, we
typically receive additional loan fees when existing loans are refinanced, which partially offset the reduced yield on our loan
portfolio resulting from prepayments. In periods of low interest rates, our level of core deposits also may decline if depositors
seek higher-yielding instruments or other investments not offered by us, which in turn may increase our cost of funds and
decrease our net interest margin to the extent alternative funding sources are utilized. An increasing interest rate environment
would tend to extend the average lives of lower yielding fixed rate mortgages and mortgage-backed securities, which could
adversely affect net interest income. Also, in an increasing interest rate environment, mortgage loans and mortgage-backed
securities may prepay at slower rates than experienced in the past, which could result in a reduction of prepayment penalty
income. Depositors tend to open longer term, higher costing certificates of deposit accounts which could adversely affect our
net interest income if rates were to subsequently decline. Additionally, adjustable-rate mortgage loans and mortgage-backed
securities generally contain interim and lifetime caps that limit the amount the interest rate can increase or decrease at
repricing dates. Significant increases in prevailing interest rates may significantly affect demand for loans and the value of the
Bank’s collateral. See “— Local Economic Conditions.
Risks relating to our Business and Operations
Our Lending Activities Involve Risks that May Be Exacerbated Depending on the Mix of Loan Types
At December 31, 2025, our gross loan portfolio was $6,639.8 million, of which 90.7% was loans secured by real
estate. Most of these real estate loans were secured by multi-family residential property ($2,382.8 million), commercial real
estate property ($1,993.0 million) and one-to-four family mixed-use property ($476.4 million), which combined represented
73.1% of our loan portfolio. Our loan portfolio is concentrated in the New York City metropolitan area. Multi-family
residential, one-to-four family mixed-use property, commercial real estate mortgage loans, commercial business loans and
construction loans, are generally viewed as exposing the lender to a greater risk of loss than fully underwritten one-to-four
family residential mortgage loans and typically involve higher principal amounts per loan. Multi-family residential, one-to-
four family mixed-use property and commercial real estate mortgage loans are typically dependent upon the successful
operation of the related property, which is usually owned by a legal entity with the property being the entity’s only asset. If
the cash flow from the property is reduced, the borrower’s ability to repay the loan may be impaired. If the borrower defaults,
our only remedy may be to foreclose on the property, for which the market value may be less than the balance due on the
related mortgage loan. We attempt to mitigate this risk by generally requiring a loan-to-value ratio of no more than 75% at a
time the loan is originated, except for one-to-four family residential mortgage loans, where we require a loan-to value ratio of
no more than 80%. Repayment of construction loans is contingent upon
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the successful completion and operation of the project. The repayment of commercial business loans is contingent on the
successful operation of the related business. Changes in local economic conditions and government regulations, which are
outside the control of the borrower or lender, also could affect the value of the security for the loan or the future cash flow of
the affected properties. We continually review the composition of our mortgage loan portfolio to manage the risk in the
portfolio.
Failure to Effectively Manage Our Liquidity Could Significantly Impact Our Financial Condition and Results of
Operations
Our liquidity is critical to our ability to operate our business. Our primary sources of liquidity are deposits, both
retail deposits from our branch network including our Internet Branch and brokered deposits, as well as borrowed funds,
primarily wholesale borrowing from the FHLB-NY. Additionally, we have unsecured lines of credit with other commercial
banks. Funds are also provided by the repayment and sale of securities and loans. Our ability to obtain funds are influenced
by many external factors, including but not limited to, local, regional and national economic conditions, the direction of
interest rates and competition for deposits in the markets we serve. Additionally, changes in the FHLB-NY underwriting
guidelines may limit or restrict our ability to borrow effectively. A decline in available funding caused by any of the above
factors could adversely impact our ability to originate loans, invest in securities, meet our expenses, or fulfill our obligations
such as repaying our borrowings or meeting deposit withdrawal demands.
Our Ability to Obtain Brokered Deposits as an Additional Funding Source Could be Limited
We utilize brokered deposits as an additional funding source and to assist in the management of our interest rate risk.
The Bank had $1,131.1 million or 15.5% of total deposits and $1,319.0 million, or 18.4% of total deposits, in brokered
deposit accounts as of December 31, 2025 and 2024, respectively. At December 31, 2025 approximately $725.8 million are
hedged using interest rate swaps. We have obtained brokered certificates of deposit when the interest rate on these deposits is
below the prevailing interest rate for non-brokered wholesale funding with similar maturities in our market, or when obtaining
them allowed us to extend the maturities of our deposits at favorable rates compared to borrowing funds with similar
maturities, or when we are seeking to extend the maturities of our funding to assist in the management of our interest rate risk.
Brokered certificates of deposit provide a large deposit for us at a lower operating cost as compared to non-brokered
certificates of deposit since we only have one account to maintain versus several accounts with multiple maturity checks.
Unlike non-brokered certificates of deposit where the deposit amount can be withdrawn with a penalty for any reason,
including increasing interest rates, a brokered certificates of deposit can only be withdrawn in the event of the death or court
declared mental incompetence of the depositor. This allows us to better manage the maturity of our deposits and our interest
rate risk. We also at times utilize brokers to obtain money market account deposits. The rate we pay on brokered money
market accounts is similar to the rate we pay on non-brokered money market accounts, and the rate is agreed to in a contract
between the Bank and the broker. These accounts are similar to brokered certificates of deposit accounts in that we only
maintain one account for the total deposit per broker, with the broker maintaining the detailed records of each depositor.
Additionally, we place a portion of our government deposits in the IntraFi Network money market or demand product,
allowing us to invest our funds in higher yielding assets without providing collateral. As of December 31, 2025, total deposit
balances include brokered deposits of certificates of deposit of $831.2 million, NOW deposits of $299.9 million. As of
December 31, 2024, total deposit balances include brokered deposits of money market deposits of $73.6 million, certificates
of deposit of $1,094.0 million, and NOW deposits of $151.4 million.
FDIC regulations limit brokered deposits. Under the regulations, well-capitalized institutions are not subject to
brokered deposit limitations, while adequately capitalized institutions are able to accept, renew or roll over brokered deposits
only with a waiver from the FDIC and subject to restrictions on the interest rate that can be paid on such deposits.
Undercapitalized institutions are not permitted to accept brokered deposits. Pursuant to the regulation, the Bank, as a well-
capitalized institution, may accept brokered deposits. Should our capital ratios decline, this could limit our ability to replace
brokered deposits when they mature. As of December 31, 2025, the Bank met or exceeded all applicable requirements to be
deemed “well-capitalized” for purposes of these regulations. However, there can be no assurance that the Bank will continue
to meet those requirements. Limitations on the Bank’s ability to accept brokered deposits for any reason (including limitations
on the amount of brokered deposits in total or as a percentage of total assets) could materially adversely impact our funding
costs and liquidity.
The maturity of brokered certificates of deposit could result in a significant funding source maturing at one time.
Should this occur, it might be difficult to replace the maturing certificates with new brokered certificates of deposit or
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other wholesale funding. We have used brokers to obtain these deposits which results in depositors with whom we have no
other relationships since these depositors are outside of our market, and there may not be a sufficient source of new brokered
certificates of deposit at the time of maturity. In addition, upon maturity, wholesale funding could require us to offer some of
the highest interest rates in the country to retain the funding, which would negatively impact our earnings.
The Markets in Which We Operate Are Highly Competitive
We face intense and increasing competition both in making loans and in attracting deposits. Our market area has a
high density of financial institutions, many of which have greater financial resources, name recognition and market presence
than us, and all of which are our competitors to varying degrees. Particularly intense competition exists for deposits and in all
the lending activities we emphasize. Our competition for loans comes principally from other commercial banks, savings
banks, savings and loan associations, mortgage banking companies, insurance companies, finance companies and credit
unions. Management anticipates that competition for mortgage loans will continue to increase in the future. Our most direct
competition for deposits historically has come from savings banks, other commercial banks, savings and loan associations and
credit unions. In addition, we face competition for deposits from products offered by brokerage firms, insurance companies
and other financial intermediaries, such as money market and other mutual funds and annuities. Consolidation in the banking
industry and the lifting of interstate banking and branching restrictions have made it more difficult for smaller, community-
oriented banks, such as us, to compete effectively with large, national, regional and super-regional banking institutions. Our
Internet Branch provides us with access to consumers in markets outside our geographic branch locations. The internet
banking arena exposes us to competition with many larger financial institutions that have greater financial resources, name
recognition and market presence than we do.
Our Results of Operations May Be Adversely Affected by Changes in National, Regional and/or Local Economic
Conditions
Our operating results are affected by national, regional and local economic and competitive conditions, including
changes in market interest rates, the strength of the local economy, government policies and actions of regulatory authorities.
Adverse economic conditions can result in borrowers defaulting on their loans or withdrawing their funds on deposit at the
Bank to meet their financial obligations. A decline in the local, regional or national economy or the New York City
metropolitan area real estate market could adversely affect our financial condition and results of operations, including through
decreased demand for loans or increased competition for good loans, increased non-performing loans and credit losses
resulting in additional provisions for credit losses and for losses on real estate owned. Many factors could require additions to
our allowance for credit losses in future periods above those currently maintained. These factors include, but are not limited
to: (1) adverse changes in economic conditions and changes in interest rates that may affect the ability of borrowers to make
payments on loans, (2) changes in the financial capacity of individual borrowers, (3) changes in the local real estate market
and the value of our loan collateral, and (4) future review and evaluation of our loan portfolio, internally or by regulators. The
amount of our allowance for credit losses at any time represents good faith estimates that are susceptible to significant changes
due to changes in appraisal values of collateral, national and local economic conditions, prevailing interest rates and other
factors. See “Business — General — Allowance for Credit Losses” in Item 1 of this Annual Report.
These same factors could cause delinquencies to increase for the mortgages which are the collateral for the mortgage-
backed securities we hold in our investment portfolio. Combining increased delinquencies with liquidity problems in the
market could result in a decline in the market value of our investments in privately issued mortgage-backed securities. There
can be no assurance that a decline in the market value of these investments will not result in other-than-temporary impairment
charges in our financial statements.
New York City Mayor Mamdani campaigned on a pledge to freeze rent increases on rent regulated apartments. In
early 2026, he proposed increasing property taxes by 9.5%. If these proposals are enacted, the value of the multi-family loan
portfolio may decrease with delinquencies increasing.
Changes in Laws and Regulations Could Adversely Affect Our Business
From time to time, legislation, is enacted or regulations are promulgated that have the effect of increasing the cost of
doing business, limiting or expanding permissible activities or affecting the competitive balance between banks and other
financial institutions. Proposals to change the laws and regulations governing the operations and taxation of
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banks and other financial institutions are frequently made in Congress, in the New York legislature and before various bank
regulatory agencies. There can be no assurance as to the impact that any laws, regulations or governmental programs that may
be introduced or implemented in the future will have on the financial markets and the economy, any of which could adversely
affect our business. For a discussion of regulations affecting us, see “Business — Regulation” and “Business — Federal, State
and Local Taxation” in Item 1 of this Annual Report.
Our financial and operational results could be impacted by emerging risk and changes to the regulatory landscape.
We closely monitor and respond to emerging topics that include longer lifespans, income and wealth inequalities,
environmental challenges and opportunities to expand global access to the financial system across all segments of the
population. Updated and changing regulatory and societal environment requirements could impact financial and operational
results.
We currently obtain environmental reports in connection with the underwriting of commercial real estate loans, and
typically obtain environmental reports in connection with the underwriting of multi-family loans. For all other loans, we
obtain environmental reports only if the nature of the current or, to the extent known to us, prior use of the property securing
the loan indicates a potential environmental risk. However, we may not be aware of such uses or risks in any particular case,
and, accordingly, there can be no assurance that real estate acquired by us in foreclosure is free from environmental
contamination nor we will not have any liability with respect thereto.
Changes and uncertainty in United States legislation, policy or regulation regarding climate risk management or other
practices may result in higher regulatory and compliance costs, increased capital expenditures, and changes in regulations may
impact security asset prices, resulting in realized or unrealized losses on our investments. Physical risks and transitional risks
could increase the Company’s cost of doing business and actual or perceived failure to adequately address expectations of our
various stakeholders could lead to a tarnished reputation and loss of customers and clients.
Current Conditions in, and Regulation of, the Banking Industry May Have a Material Adverse Effect on Our Results of
Operations
Financial institutions have been the subject of significant legislative and regulatory changes, including the adoption
of The Dodd Frank Act, which imposes a wide variety of regulations affecting us, and may be the subject of further significant
legislation or regulation in the future, none of which is within our control. Significant new laws or regulations or changes in,
or repeals of, existing laws or regulations, including those with respect to federal and state taxation, may cause our results of
operations to differ materially. In addition, the cost and burden of compliance, over time, have significantly increased and
could adversely affect our ability to operate profitably.
The Bank faces several minimum capital requirements imposed by federal regulation. Failure to adhere to these
minimums could limit the dividends the Bank may pay, including the payment of dividends to the Company, and could limit
the annual growth of the Bank. Under the Dodd Frank Act, banks with assets greater than $100.0 billion in total assets are
required to complete stress tests, which predict capital levels under certain stress levels. See “Regulation.” The Bank is
subject to extensive supervision, regulation, and examination by the NYDFS, as its chartering agency, the FDIC, as its insurer
of deposits, and to a lesser extent the CFPB under the Dodd-Frank Act. The Company is subject to similar regulation and
oversight by the Federal Reserve Bank. Such regulations limit the manner in which the Company and Bank conduct business,
undertake new investments and activities and obtain financing. The regulatory structure also provides the regulatory
authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies,
including policies with respect to capital levels, the classification of assets and the establishment of adequate loan loss
reserves for regulatory purposes. Failure to comply with applicable laws and regulations could subject the Company and
Bank to regulatory enforcement action that could result in the assessment of significant civil money penalties against the
Company and/or the Bank.
The FDIC regulations are designed primarily for the protection of the deposit insurance fund and the Bank’s
depositors, and not to benefit the Company, the Bank, or its creditors.
The fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on
the Company’s results of operations. The Federal Reserve regulates the supply of money and credit in the United States.
Changes in Federal Reserve or governmental policies are beyond the Company’s control and difficult to predict;
consequently, the impact of these changes on the Company’s activities and results of operations is also difficult to predict.
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See “Changes in Interest Rates may impact our Financial Condition and Results of Operations” Risk Factor in this Form 10-K.
A Failure in or Breach of Our Operational or Security Systems or Infrastructure, or Those of Our Third Party Vendors
and Other Service Providers, Including as a Result of Cyber-attacks, Could Disrupt Our Business, Result in the Disclosure
or Misuse of Confidential or Proprietary Information, Damage Our Reputation, Increase Our Costs and Cause Losses
We depend upon our ability to process, record, and monitor our client transactions on a continuous basis. As client,
public and regulatory expectations regarding operational and information security have increased, our operational systems and
infrastructure must continue to be safeguarded and monitored for potential failures, disruptions and breakdowns. Our
business, financial, accounting and data processing systems, or other operating systems and facilities, may stop operating
properly or become disabled or damaged as a result of a number of factors, including events that are wholly or partially
beyond our control. For example, there could be electrical or telecommunications outages; natural disasters such as
earthquakes, tornadoes, hurricanes and floods; disease pandemics; events arising from local or larger scale political or social
matters, including terrorist acts; and, as described below, cyber-attacks. Although we have business continuity plans and other
safeguards in place, our business operations may be adversely affected by significant and widespread disruption to our
physical infrastructure or operating systems that support our business and clients.
Information security risks for financial institutions have generally increased in recent years in part because of the
proliferation of new technologies, the use of the internet and telecommunications technologies to conduct financial
transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external
parties. Threat actor organizations are becoming more formal and now frequently include specialized “departments” within an
organization. These “departments” may act together to sell access to interested parties, which install malware and infiltrating
data. This increases cybersecurity risk as indicators of an attack may spread across multiple detection platforms and originate
from disparate sources. Our business relies on our digital technologies, computer and email systems, software, and networks
to conduct its operations. In addition, to access our products and services, our clients may use personal smartphones, tablet
PC’s, personal computers and other devices that are beyond our control systems. Although we have information security
procedures and controls in place, our technologies, systems, and networks, and our clients’ devices, may become the target of
cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss,
or destruction of our or our clients’ confidential, proprietary, and other information, or otherwise disrupt our or our clients’ or
other third parties’ business operations. We may be subject to increasingly more risk related to cybersecurity for our Internet
Branch as we expand our suite of online direct banking products, acquire new or outsource some of our business operations,
expand our internal usage of web-based products and applications, and otherwise attempt to keep pace with rapid
technological changes in the financial services industry.
We rely on external infrastructure, proprietary information technology and third-party systems and services to
conduct business, including customer service, marketing and sales activities, customer relationship management, producing
financial statements and technology/data centers. In addition, we store and process confidential and proprietary business
information on both company-owned and third-party and/or vendor managed systems, including cloud service providers. We
increasingly rely on the internet in order to conduct business and may be adversely impacted by outages in critical
infrastructure such as electric grids, undersea cables, satellites or other communications used by us or our third parties. This
reliance includes consumer access to the internet and communications systems due to more work taking place outside of
corporate locations. A security breach in the systems of our third-party service providers can create a gateway for
unauthorized access to our network, potentially compromising the integrity and confidentiality of our data and systems. The
failure of our or any third party’s information technology, infrastructure or other internal and external systems, for any reason,
could disrupt our operations, result in the loss of business and adversely impact our profitability. Any compromise of the
security of our or any third party’s systems that results in the disclosure of personally identifiable customer or employee
information could damage our reputation, deter customers from purchasing or using our products and services, expose us to
litigation, increase regulatory scrutiny and require us to incur significant technical, legal and other expenses. We may also be
adversely impacted by successful cyberattacks of our partners, third-party vendors and others in our supply chain with whom
we conduct business or share information.
Financial services companies are regularly targeted by cyber criminals, resulting in unauthorized access to
confidential information, theft of funds from online accounts, disruption or degradation of service or other damage. These
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attacks may take a variety of forms, including web application attacks, denial of service attacks, ransomware, other malware,
and social engineering, including phishing. As automation and machine intelligence technologies progress, attackers are
adopting this technology to speed up their reconnaissance and attacks while reducing their costs. This improved efficiency
and tooling means that a lower-skilled adversary is able to perform more attacks at a higher complexity level than in the past.
Economic and political instability offers a fertile ground for adversaries to recruit new talent. This could be either people
looking for financial gains amid job losses and high inflation, politically motivated actors driven by state conflicts or internal
political unrest, or other personal reasons. In addition, the reengineering and reuse of prior attack methodologies is made
easier by advances in these technologies.
Information security incidents may also occur due to the failure to control access to, and use of, sensitive systems or
information by our workforce. Employee risk exposure remains high as cybersecurity awareness training must be
continuously refined and updated as technology advances and threat actors become increasingly more sophisticated.
Additionally, there is a potential increase in this threat due to the increase in remote work. The failure of our controls (such as
policies, procedures, security controls and monitoring, automation and backup plans) designed to prevent, or limit the effect
of, failure, inadvertent use or abuse could result in disruptions or breaches beyond our control. Although to date we have not
experienced any material losses relating to cyber-attacks or other information security breaches, there can be no assurance that
we will not suffer such losses in the future. Our risk and exposure to these matters remains heightened because of the
evolving nature of these threats. As a result, cyber security and the continued development and enhancement of our controls,
processes and practices designed to protect our systems, computers, software, data and networks from attack, damage or
unauthorized access remain a focus for us. As technology evolves, we can increase our ability to detect and prevent cyber-
attacks through automation and the implementation of security controls which leverage machine learning and artificial
intelligence. As threats continue to evolve, we may be required to expend additional resources to continue to modify or
enhance our protective measures or to investigate and remediate information security vulnerabilities. Additionally,
information security vulnerabilities can pose increased cyber-risk as they can be combined and chained together more easily
with machine learning technology.
Disruptions or failures in the physical infrastructure or operating systems that support our business and clients, or
cyberattacks or security breaches of the networks, systems or devices that our clients use to access our products and services
could result in significant legal and financial exposure, client attrition, regulatory fines, penalties or intervention, reputational
damage, reimbursement or other compensation costs and/or additional compliance costs, a loss of confidence in the security of
our systems, any of which may not be covered by insurance and could materially and adversely affect our financial condition
or results of operations.
Operational risks, including risks associated with Flushing Bank’s dependence on its operational systems, its ability
to maintain appropriately staffed workforces and the competence, integrity, health and safety of its employees, are of primary
concern. The legal and regulatory risks related to safeguarding personal information and the harm that could be caused by a
successful cyber-attack affecting Flushing Bank are proactively monitored and addressed according to current regulations and
bank policies. Additionally, Flushing Bank monitors and addresses risks associated with its risk management framework and
its models and estimations with monthly reports to the board of directors. Flushing Bank coordinates these activities to ensure
that potential adverse effects of failing to comply with heightened regulatory and other standards for the oversight of the cyber
and risk management programs are significantly reduced.
Changes in Cybersecurity or Privacy Regulations may Increase our Compliance Costs, Limit Our Ability to Gain Insight
from Data and Lead to Increased Scrutiny
We collect, process, store, share, disclose and use information from and about our customers, plan participants and
website and application users, including personal information and other data. Any actual or perceived failure by us to comply
with our privacy policies, privacy-related obligations to customers or third parties, data disclosure and consent obligations or
privacy or security-related legal obligations may result in governmental enforcement actions, litigation, or public statements
critical of us. Such actual or perceived failures could also cause our customers to lose trust in us, which could have an adverse
effect on our business.
Restrictions on data collection and use may limit opportunities to gain business insights useful to running our
business and offering innovative products and services.
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We are subject to numerous federal, state, and international regulations regarding the privacy and security of personal
information. These laws vary widely by jurisdiction. Applicable regulations include the NYDFS 23 NYCRR Part 500
Cybersecurity Requirements for Financial Services Companies, Gramm-Leach-Bliley Title V Subtitle A- Safeguards Rule,
FDIC Part 364 Appendix B- Interagency Guidelines Establishing Information Security Standards and other regulations. See
“Regulation – Cybersecurity.” Similar legislation continues to be enacted around the world with requirements and protections
specific to data security requirements, notification requirements for data breaches, the right to access personal data and the
right to be forgotten. For example, the Federal Reserve and the FDIC require a banking organization to notify its primary
federal regulator within 36 hours after identifying a “computer-security incident” that the banking organization believes in
good faith could materially disrupt, degrade or impair its business or operations in a manner that would, among other things,
jeopardize the viability of its operations, result in customers being unable to access their deposit and other accounts, result in a
material loss of revenue, profit or franchise value, or pose a threat to the financial stability of the United States.
We May Experience Increased Delays in Foreclosure Proceedings
Foreclosure proceedings face increasing delays. While we cannot predict the ultimate impact of any delay in
foreclosure sales, we may be subject to additional borrower and non-borrower litigation and governmental and regulatory
scrutiny related to our past and current foreclosure activities. Delays in foreclosure sales, including any delays beyond those
currently anticipated could increase the costs associated with our mortgage operations and make it more difficult for us to
prevent losses in our loan portfolio.
Our Inability to Hire or Retain Key Personnel Could Adversely Affect Our Business
Our success depends, in large part, on our ability to retain and attract key personnel. We face intense competition
from commercial banks, savings banks, savings and loan associations, mortgage banking companies, insurance companies,
finance companies and credit unions. As a result, it could prove difficult to retain and attract key personnel. The inability to
hire or retain key personnel may result in the loss of customer relationships and may adversely affect our financial condition
or results of operations.
We Are Not Required to Pay Dividends on Our Common Stock
Holders of shares of our common stock are only entitled to receive such dividends as our Board of Directors may
declare out of funds legally available for such payments. Although we have historically declared cash dividends on our
common stock, we are not required to do so and may reduce or eliminate our common stock dividend in the future. A
reduction or elimination of our common stock dividend could adversely affect the market price of our common stock.
Our Financial Results May be Adversely Impacted by Global Climate Changes
Atmospheric concentrations of carbon dioxide and other greenhouse gases have increased dramatically since the
industrial revolution, resulting in a gradual increase in average global temperatures and an increase in the frequency and
severity of weather patterns and natural disasters. These trends are expected to continue in the future and have the potential to
impact nearly all sectors of the economy to varying degrees. We cannot predict the long-term impacts of climate change, but
we will continue to monitor new developments in the future.
Potential impacts may include the following:
●
Changes in temperatures and air quality may adversely impact the health, welfare, economic and other prospects of
customers in our target markets. For example, increases in the level of pollution and airborne allergens in local
industrial areas may cause an increase in upper respiratory and cardiovascular diseases. Such impacts may adversely
change the long-term prospects for the communities we serve and the investing and banking services these
communities seek.
●
Climate change may impact asset prices, as well as general economic conditions. For example, rising sea levels may
lead to decreases in real estate values in at-risk areas. Additionally, government policies to slow climate change (e.g.,
setting limits on carbon emissions) may have an adverse impact on sectors such as utilities, transportation and
manufacturing. Changes in asset prices may impact the value of our fixed income, real estate
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57
and commercial mortgage investments. Although we seek to manage our investment risks by maintaining a
diversified portfolio and monitor our investments on an ongoing basis, allowing us to adjust our exposure to sectors
and/or geographical areas that face severe risks due to climate change, there can be no assurances that our efforts will
be successful.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Overview
The Company maintains comprehensive information technology and cybersecurity programs which encompass
policies, procedures, assessments, monitoring, response plans, and testing to ensure technical, administrative, and physical
controls are effective.
The Bank’s Incident Response and Business Continuity Programs are inclusive of cyber resiliency, business
continuity and disaster recover strategies to help mitigate the impact of a cybersecurity incident across all business lines.
Management Role and Board Oversight
The cybersecurity programs are supervised by the Bank’s Chief Information Security Officer (“CISO”) reporting to
the Chief Risk Officer (“CRO”) and dotted line to the Chief Information Officer. The Chief Risk Officer has reporting
responsibility to the Board’s Risk and Compliance Committee while the Chief Information Officer has reporting responsibility
to the Board’s Information Technology Committee. The Risk and Compliance Committee consists of eight directors, seven of
whom are independent, while the Information Technology Committee consists of three directors, two of whom are
independent and members of the Risk and Compliance Committee. The Company Board includes members who have
expertise in cybersecurity, fraud, and risk management. Cybersecurity risks are primarily assessed, monitored, and remediated
by the CISO who has a Ph.D. in Information Technology with a concentration in Information Assurance and experience in the
information technology and cybersecurity fields and maintains advanced cybersecurity centric certifications. The CISO’s
knowledge and experience in the cybersecurity field are key to executing our cybersecurity program. Our CISO oversees
proactive initiatives, remediation plans of known risks, compliance with regulations and standards and disaster recovery,
business continuity, and incident response efforts. Additionally, the Bank’s CRO who leads the management risk function, has
extensive experience in risk management.
The cybersecurity programs include a cross-function team of trained internal and external information security
professionals, all of whom are required to maintain industry accredited certifications. We have an Incident Response Team
chaired by our Chief Operating Officer that is comprised of executive management and designated managers, including the
CISO. The purpose of our incident response plan is to manage incidents, including information security incidents, efficiently
and effectively to minimize loss and destruction, mitigate weaknesses, restore services, notify customers, as required by law,
comply with regulatory requirement and any third-party obligations.
The CISO and CRO play a pivotal role in informing the Board of all cybersecurity risks. These positions provide
comprehensive updates to the Risk Management Committee of the Board, at least quarterly. The briefings combine a range of
updates, including the cybersecurity program, emerging risks, and risk reporting. The CISO and CRO also provide a monthly
overview of the cybersecurity landscape to the Board of Directors.
Managing Material Risks and Integrated Overall Risk Management
The Company maintains documented processes, procedures, and controls for assessing, identifying, and managing
material risks from cybersecurity threats. Cybersecurity threats are identified utilizing risk assessments, detection tools,
information gathering and performing internal, external, and third-party contracted security assessments.
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58
Cybersecurity Threats
To assess and manage cybersecurity threats, the Company maintains an Incident Response Team comprised of
members from the major business areas in the Company to ensure appropriate subject matter specialists are represented. All
cybersecurity events include a determination of whether the incident has materially affected or is reasonably likely to
materially affect the Company’s business strategy, results of operations or financial condition by following implemented
processes.
The Company has not identified any cybersecurity threats that have materially affected operations or financial
position.
Oversee Third-Party Risk
The Company has processes to oversee and identify material risks from reported cybersecurity threats from any third-
party service providers or vendors. The Company’s vendor management program requires initial due diligence, on-going
monitoring, and annual recertification of third-party cybersecurity controls.
Cybersecurity Risks
Management and the Board of Directors acknowledge that technology systems, managed both by the Company and
third-party service providers, are critical to business operations and therefore require appropriate risk management.
Engagement with Third Parties on Risk Management
Cybersecurity is an integral part of the risk management program, which is supported through the use of consultants,
auditors and other third-parties who assist with reviewing and validating the effectiveness of cybersecurity controls. Our
internal audit function actively participates and engages with those managing the cybersecurity program to validate the
effectiveness of implemented safeguards. Our external audit results are reviewed and reported in our annual filing and to the
Board Audit Committee. Additionally, the Company and the Bank are regulated entities and undergo regulatory reviews to
ensure the Company and the Bank are in compliance will all appropriate standards.
Item 2. Properties.
As of December 31, 2025, the Bank conducted its business through 30 full-service offices and its Internet Branch.
The Company neither owns nor leases any property but instead uses the premises and equipment of the Bank.
Item 3. Legal Proceedings.
We are involved in various legal actions arising in the ordinary course of our business which, in the aggregate,
involve amounts which are believed by management to be immaterial to our financial condition, results of operations and cash
flows.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
The Holding Company’s Common Stock is traded on the NASDAQ Global Select Market® under the symbol
“FFIC.” As of December 31, 2025, we had approximately 764 shareholders of record, not including the number of persons or
entities holding stock in nominee or street name through various brokers and banks.
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59
The following table sets forth information regarding the shares of common stock repurchased by us during the
quarter ended December 31, 2025:
Maximum
Total Number of
Number of
Total
Shares Purchased
Shares That May
Number
as Part of Publicly
Yet Be Purchased
of Shares
Average Price
Announced Plans
Under the Plans
Period
Purchased
Paid per Share
or Programs
or Programs
October 1 to October 31, 2025
—
—
—
807,964
November 1 to November 30, 2025
—
—
—
807,964
December 1 to December 31, 2025
—
—
—
807,964
Total
—
$
—
—
On July 27, 2021, the Company announced the authorization by the Board of Directors of a common stock
repurchase program, which authorizes the purchase of up to 1,000,000 shares of its common stock. This program was
completed in 2022 and on May 17, 2022, an additional 1,000,000 share authorization was announced. This program was
completed in 2023 and on May 31, 2023, an additional 1,000,000 share authorization was announced. During the years ended
December 31, 2025 and 2024, the Company did not repurchase any of the Company’s common stock. During the year ended
December 31, 2023, the Company repurchased 786,498 shares of the Company’s common stock at an average cost of $14.59
per share, respectively. At December 31, 2025, 807,964 shares remained available to be repurchased under the current stock
repurchase program. The merger agreement precludes the Company from purchasing Company common stock.
The following table sets forth securities authorized for issuance under all equity compensation plans of the Company
at December 31, 2025:
(c)
Number of securities
remaining available for
(a)
(b)
future issuance under
Number of securities to
Weighted-average
equity compensation
be issued upon exercise
exercise price of
plans (excluding
of outstanding options,
outstanding options,
securities reflected in
warrants and rights
warrants and rights
column (a)
Equity compensation plans approved by
security holders
—
$
—
974,000
Equity compensation plans not approved by
security holders
—
—
—
—
$
—
974,000
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Stock Performance Graph
The following graph shows a comparison of cumulative total stockholder return on the Company’s common stock
since December 31, 2020 with the cumulative total returns of a broad equity market index as well as comparative published
industry indices. The broad equity market index chosen was the Nasdaq Composite and the comparative published industry
indices used were the S&P U.S. MidCap Banks Index and the S&P U.S. BMI Banks - Mid-Atlantic Region Index. The S&P
U.S. BMI Banks - Mid-Atlantic Region Index was chosen for inclusion in the Company’s Stock Performance Graph because
the Company believes it provides valuable comparative information reflecting the Company’s geographic peer group. The
S&P U.S. MidCap Banks Index was chosen for inclusion in the Company’s Stock Performance Graph because it uses a
broader group of banks and therefore more closely reflects the Company’s size. The Company believes that both geographic
area and size are important factors in analyzing the Company’s performance against its peers. The graph below reflects
historical performance only, which is not indicative of possible future performance of the common stock.
The total return assumes $100 invested on December 31, 2020 and all dividends reinvested through the end of the
Company’s fiscal year ended December 31, 2025. The performance graph above is based upon closing prices on the trading
date specified.
Period Ending
Index
12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25
Flushing Financial Corporation
100.00
151.31
125.72
113.74
105.00
118.94
NASDAQ Composite Index
100.00
122.18
82.43
119.22
154.48
187.14
60
S&P U.S. MidCap Banks Index
100.00
145.53
107.01
79.78
106.43
123.12
S&P U.S. BMI Banks - Mid-Atlantic Region Index
100.00
126.30
106.67
129.34
179.73
247.07
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As used in this discussion and analysis, the words “we,” “us,” “our” and the “Company” are used to refer to
Flushing Financial Corporation (the “Holding Company”) and its direct and indirect wholly owned subsidiaries, Flushing
Bank (the “Bank”), Flushing Service Corporation and FSB Properties Inc. Discussion and analysis of our 2024 fiscal year
specifically, as well as the year-over-year comparison of our 2024 financial performance to 2023, are located under Part II,
Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 13, 2025, which is available on our
investor relations website at FlushingBank.com and the SEC’s website at sec.gov.
General
We are a Delaware corporation organized in 1994. The Bank was organized in 1929 as a New York State-chartered
mutual savings bank. Today the Bank operates as a full-service New York State commercial bank. The primary business of the
Holding Company has been the operation of the Bank. The Bank owned two subsidiaries: Flushing Service Corporation, and
FSB Properties Inc. The Bank also operates an internet branch, which operates under the brands of iGObanking® and
BankPurely® (the “Internet Branch”). The Bank’s primary regulator is the New York State Department of Financial Services,
and its primary federal regulator is the Federal Deposit Insurance Corporation (“FDIC”). The Bank’s deposits are insured to
the maximum allowable amount by the FDIC.
The Holding Company also owns Flushing Financial Capital Trust II, Flushing Financial Capital Trust III, and
Flushing Financial Capital Trust IV (the “Trusts”), which are special purpose business trusts formed during 2007 to issue a
total of $60.0 million of capital securities, and $1.9 million of common securities (which are the only voting securities). The
Holding Company owns 100% of the common securities of the Trusts. The Trusts used the proceeds from the issuance of these
securities to purchase junior subordinated debentures from the Holding Company. The Trusts are not included in our
consolidated financial statements, as we would not absorb the losses of the Trusts if losses were to occur.
The following discussion of financial condition and results of operations includes the collective results of the
Holding Company and its subsidiaries (collectively, the “Company”), but reflects principally the Bank’s activities.
Management views the Company as operating as a single unit - a community bank. Therefore, segment information is not
provided.
Recent Developments
As announced, on December 29 2025, we entered into a definitive merger agreement pursuant to which we and
OceanFirst, will combine in the first merger. Upon completion of the first merger, Flushing Bank will merge into OceanFirst
Bank, with OceanFirst Bank surviving that bank merger. Based on OceanFirst’s closing stock price on December 26, 2025, of
$19.76, the transaction was valued at $579 million and is intended to create a high-performing regional bank with a significant
presence across New Jersey, Long Island and New York markets. Immediately following closing of the mergers, the combined
company is expected to have approximately $23 billion in assets, $17 billion in total loans, and $18 billion in total deposits
across 71 retail branches.
OceanFirst has entered into an investment agreement with affiliates of funds managed by Warburg, which committed
to invest $225 million for newly issued equity securities subject to the closing of the first merger.
Upon completion of the proposed transaction, (a) the shares issued to our stockholders in the first merger are
expected to represent approximately 30% of the outstanding shares of the combined company, (b) the shares issued to
Warburg Pincus in the equity capital raise transaction discussed above are expected to represent approximately 12% of the
outstanding shares of the combined company and (c) the shares of OceanFirst common stock that are outstanding immediately
prior to completion of the first merger are expected to represent approximately 58% of the outstanding shares of the combined
company.
The mergers are expected to close in the second quarter of 2026, subject to the receipt of regulatory approvals,
approval by OceanFirst’s shareholders and our shareholders, and the satisfaction of other customary closing conditions. The
equity capital raise with Warburg is expected to close concurrently with the first merger, subject to the concurrent
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closing of the first merger and other closing conditions. See “Risk Factors – Risks Relating to the Consummation of the
Mergers and OceanFirst following the Mergers.
Overview
Our principal business is attracting retail deposits from the general public and investing those deposits together with
funds generated from ongoing operations and borrowings, primarily in (1) originations and purchases of multi-family
residential properties, commercial business loans, commercial real estate mortgage loans and, to a lesser extent, one-to-four
family (focusing on mixed-use properties, which are properties that contain both residential dwelling units and commercial
units); (2) construction loans; (3) equipment financing loans; (4) Small Business Administration (“SBA”) loans; (5) mortgage
loan surrogates such as mortgage-backed securities; and (6) U.S. government securities, corporate fixed-income securities and
other marketable securities. We also originate certain other consumer loans including overdraft lines of credit. Our results of
operations depend primarily on net interest income, which is the difference between the income earned on its interest-earning
assets and the cost of our interest-bearing liabilities. Net interest income is the result of our interest rate margin, which is the
difference between the average yield earned on interest-earning assets and the average cost of interest-bearing liabilities,
adjusted for the difference in the average balance of interest-earning assets as compared to the average balance of interest-
bearing liabilities. We also generate non-interest income from loan fees, service charges on deposit accounts, mortgage
servicing fees, and other fees, income earned on Bank Owned Life Insurance (“BOLI”), dividends on Federal Home Bank of
New York (“FHLB-NY”) stock and net gains and losses on sales of securities and loans. Our operating expenses consist
principally of employee compensation and benefits, occupancy and equipment costs, other general and administrative
expenses and income tax expense. Our results of operations can also be significantly affected by our periodic provision for
credit losses and specific provision for losses on real estate owned.
Interest Rate Risk
Interest rate risk is the impact on earnings and capital from changes in interest rates. Interest rate risk exists because
our interest-earning assets and interest-bearing liabilities may mature or reprice at different times or by different amounts. We
assess interest rate risk by comparing the results of several income and capital simulations scenarios to the base case compared
to scenarios with changes in interest rates, degree of change over time, speed of change, and changes in the shape of the yield
curve. These scenarios have assumptions including loan originations, investment securities purchases and sales, prepayment
rates on loans and investment securities, deposit flows, and mix and pricing decisions.
Asset/Liability Management. Asset/liability management involves assessing, monitoring and managing interest rate
risk. The Asset Liability Investment Committee of the Board of Directors (“Board ALCO”) has primary oversight
responsibility of interest rate risk. The actions and activities of the Board ALCO are dictated by the “ALCO and Investment
Committee Charter of the Company Board of Directors (the “Charter”)”. The Board ALCO has established policy limits for
changes of net interest income and the economic value of equity under various scenarios and liquidity risk limits to ensure the
Company has sufficient liquid assets to meet its short-term obligations, even during periods of financial stress and is reviewed
no less frequently than quarterly. The ALCO policy and oversight is interconnected to the Company’s capital plan.
The Board ALCO reviews simulations of various interest rate scenarios to assess the potential impact on the
Company’s Consolidated Statements of Financial Condition and Consolidated Statements of Operations. The model employed
by the Company uses a static balance sheet as of the date the modeling is being generated. The limitation to this model is that
unexpected events may not be captured in the output. The model is validated no less frequently than annually with the
variables in the model subjected to annual stress tests. In addition, the interest rate risk model is back-tested no less frequently
than quarterly to ensure the model remains consistent with actual results. The information from the interest rate risk modeling
allows the Board ALCO to assess the potential impact of interest rate changes on the Company’s profitability and future
earnings.
The interest rate risk scenarios affect the position the Company may take with the pricing of assets and liabilities.
Models are inherently imperfect and subject to assumptions and limitations. The model output is affected by the data
quality and the assumptions used. The Company uses both internal and external inputs into the model. The change in deposit
betas is based upon deposit studies completed by an independent third party; loan prepayment assumptions are
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based upon internal analysis; loan origination data is Company generated; and additions to assets and liabilities is derived
from the budget or forecast or internally generated projected cash flows.
There was no material change in the source of the data used in our interest rate risk modeling in the current year.
Current economic factors such as interest rate forecasts as changed from period over period may affect the modeling. Key
assumptions include deposit betas and loan origination yields. Deposit betas vary by product and direction of interest rates. In
an upward shock, weighted average deposit betas (based on period end balances) were 69% at December 31, 2025 compared
to 70% at December 31,2024. In a downward shock, weighted average deposit betas (based on period end balances) were 60%
at December 31, 2025 compared to 61% at December 31, 2024. Loan origination yields vary by product and the weighted
average yield (based on period end loan balances) was 6.29% at December 31, 2025 compared to 6.99% at December 31,
2024.
Management ALCO, which consists of representatives from treasury, finance, business units, and senior
management, oversees the interest rate risk, liquidity risk and capital risk while providing regular reports to the Board ALCO.
These reports quantify the potential changes in net interest income and economic value of equity through various rate
scenarios. The Management ALCO also provides the results of the liquidity stress test prepared by the Chief Risk Officer, the
sensitivity analyses of the interest rate risk model variables, and the capital position of the Company and the Bank.
Economic Value of Equity Analysis. The Consolidated Statements of Financial Condition have been prepared in
accordance with generally accepted accounting principles in the United States of America (“GAAP”), which require the
measurement of financial position and operating results in terms of historical dollars without considering the changes in fair
value of certain investments due to changes in interest rates. Generally, the fair value of financial investments such as loans
and securities fluctuate inversely with changes in interest rates. As a result, increases in interest rates could result in decreases
in the fair value of the Company’s interest-earning assets which could adversely affect the Company’s results of operations if
such assets were sold, or, in the case of securities classified as available for sale, decreases in the Company’s stockholders’
equity, if such securities were retained.
The Company quantifies the net portfolio value should interest rates immediately go up or down 100 or 200 basis
points, assuming the yield curves of the rate shocks will be parallel to each other. Net portfolio value is defined as the market
value of assets net of the market value of liabilities. The market value of assets and liabilities is determined using a discounted
cash flow calculation. The net portfolio value ratio is the ratio of the net portfolio value to the market value of assets. The
changes in value are measured as percentage changes from the net portfolio value at the base interest rate scenario. The base
interest rate scenario assumes interest rates at December 31, 2025. Various estimates regarding prepayment assumptions are
made at each level of rate shock. At December 31, 2025, the Company was within the guidelines set forth by the Board of
Directors for each interest rate level.
The following table presents the Company’s interest rate shock as of December 31:
Projected Percentage Change In
Net Portfolio Value (NPV)
Net Portfolio Value Ratio
December 31,
December 31,
December 31,
December 31,
Change in Interest Rate
2025
2024
2025
2024
-200 Basis points
7.6 %
2.9 %
9.7 %
9.0 %
-100 Basis points
3.2
1.2
9.5
9.0
Base interest rate
-
-
9.4
9.0
+100 Basis points
(5.7)
(5.0)
9.0
8.7
+200 Basis points
(11.6)
(10.9)
8.6
8.3
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64
Income Simulation Analysis. The Company manages the mix of interest-earning assets and interest-bearing liabilities
on a continuous basis to maximize return and adjust its exposure to interest rate risk. The starting point for the net interest
income simulation is an estimate of the next twelve months’ net interest income assuming that both interest rates and the
Company’s interest-sensitive assets and liabilities remain at period-end levels. The report quantifies the potential changes in
net interest income should interest rates go up or down 100 or 200 basis points (shocked), assuming the yield curves of the
rate shocks will be parallel to each other. All changes in income are measured as percentage changes from the projected net
interest income at the base interest rate scenario. The base interest rate scenario assumes interest rates at December 31, 2025
and 2024. Prepayment penalty income is excluded from this analysis. Actual results could differ significantly from these
estimates. At December 31, 2025, the Company was within the guidelines set forth by the Board of Directors for each interest
rate level.
The following table presents the Company’s interest rate shock as of December 31:
Projected Percentage Change in Net Interest Income
Change in Interest Rate
2025
2024
-200 Basis points
2.1 %
0.5 %
-100 Basis points
0.5
0.1
Base interest rate
-
-
+100 Basis points
(4.7)
(4.8)
+200 Basis points
(9.5)
(10.4)
Another net interest income simulation assumes that changes in interest rates change gradually in equal increments
over the twelve-month period. Prepayment penalty income is excluded from this analysis. Based on these assumptions, net
interest income would be reduced by 5.4% from a 200 basis point increase in rates over the next twelve months and increase
by 1.3% from a 200 basis point decrease in rates over the same period. Actual results could differ significantly from these
estimates.
At December 31, 2025 and 2024, the Company had a derivative portfolio with a notional value totaling $2.8 billion
and $2.6 billion, respectively. This portfolio is designed to provide protection against rising interest rates. See Note 20
(“Derivative Financial Instruments”) of the Notes to the Consolidated Financial Statements.
A portion of this portfolio is comprised of cash flow hedges on certain short-term advances and brokered deposits
totaling $1.0 billion at December 31, 2025. At December 31, 2025, $725.8 million of the cash flow hedges are effective swaps
at a weighted average rate of 3.07% compared to $875.8 million at 2.46% at December 31, 2024. Of the $1.0 billion
outstanding at December 31, 2025, $180.0 million at an average rate of 1.56% will mature during 2026, and will be partially
replaced by forward starting cash flow hedges totaling $180.0 million at an average rate of 3.35%.
Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning assets and expense on interest-
bearing liabilities. Net interest income depends upon the relative amount of interest-earning assets and interest-bearing
liabilities and the interest rate earned or paid on them.
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65
The following table sets forth certain information relating to our Consolidated Statements of Financial Condition and
Consolidated Statements of Operations for the years ended December 31, 2025, 2024, and 2023, and reflects the average yield
on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or
expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from
average daily balances. The yields include amortization of fees that are considered adjustments to yields.
For the years ended December 31,
2025
2024
2023
Average
Yield/
Average
Yield/
Average
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
Balance
Interest
Cost
(Dollars in thousands)
Assets
Interest-earning assets:
Loans held for sale
$
21,962
$
911
4.15 % $
192
$
7
3.65 % $
—
$
—
— %
Mortgage loans, net
$ 5,227,869
$ 294,961
5.64 % $ 5,346,975
$ 291,437
5.45 %
5,328,067
267,178
5.01
Other loans, net
1,406,092
81,559
5.80
1,420,424
84,134
5.92
1,517,282
88,170
5.81
Total loans, net (1) (2)
6,633,961
376,520
5.68
6,767,399
375,571
5.55
6,845,349
355,348
5.19
Taxable securities:
Mortgage-backed securities
868,289
47,607
5.48
765,700
37,485
4.90
442,228
11,505
2.60
Other securities
570,044
31,915
5.60
655,428
40,230
6.14
485,118
24,700
5.09
Total taxable securities
1,438,333
79,522
5.53
1,421,128
77,715
5.47
927,346
36,205
3.90
Tax-exempt securities: (3)
Other securities
43,325
1,829
4.22
65,245
1,887
2.89
66,533
1,923
2.89
Total tax-exempt securities
43,325
1,829
4.22
65,245
1,887
2.89
66,533
1,923
2.89
Interest-earning deposits and federal
funds sold
203,221
7,831
3.85
218,829
10,578
4.83
184,565
8,405
4.55
Total interest-earning assets
8,340,802
466,613
5.59
8,472,793
465,758
5.50
8,023,793
401,881
5.01
Other assets
528,936
481,698
477,771
Total assets
$ 8,869,738
$ 8,954,491
$ 8,501,564
Interest-bearing liabilities:
Deposits:
Savings accounts
$
94,482
395
0.42
$
102,843
472
0.46
$
121,102
520
0.43
NOW accounts
2,245,412
77,235
3.44
1,965,774
75,683
3.85
1,937,974
64,191
3.31
Money market accounts
1,710,557
61,804
3.61
1,699,869
67,992
4.00
1,754,059
58,898
3.36
Certificates of deposit accounts
2,461,895
88,823
3.61
2,604,817
100,235
3.85
2,091,677
64,844
3.10
Total due to depositors
6,512,346
228,257
3.50
6,373,303
244,382
3.83
5,904,812
188,453
3.19
Mortgagors' escrow accounts
90,468
270
0.30
82,095
254
0.31
81,015
202
0.25
Total interest-bearing deposits
6,602,814
228,527
3.46
6,455,398
244,636
3.79
5,985,827
188,655
3.15
Borrowings
479,552
22,170
4.62
795,348
38,715
4.87
776,050
33,670
4.34
Total interest-bearing liabilities
7,082,366
250,697
3.54
7,250,746
283,351
3.91
6,761,877
222,325
3.29
Non interest-bearing demand deposits
899,143
843,151
867,667
Other liabilities
170,090
189,808
196,869
Total liabilities
8,151,599
8,283,705
7,826,413
Equity
718,139
670,786
675,151
Total liabilities and equity
$ 8,869,738
$ 8,954,491
$ 8,501,564
Net interest income / net interest rate
spread (4)
$ 215,916
2.05 %
$ 182,407
1.59 %
$ 179,556
1.72 %
Net interest-earning assets / net
interest margin (5)
$ 1,258,436
2.59 % $ 1,222,047
2.15 % $ 1,261,916
2.24 %
Ratio of interest-earning assets to interest-bearing
liabilities
1.18 X
1.17 X
1.19 X
(1)
Average balances include non-accrual loans.
(2)
Loan interest income includes net loan fee income (which includes net amortization of deferred fees and costs, late charges, and prepayment penalties)
of approximately $3.1 million, $1.0 million, and $0.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.
(3)
Interest and yields are calculated on the tax equivalent basis using statutory federal income tax rate of 21% for the years ended December 31, 2025,
2024, and 2023.
(4)
Interest rate spread represents the difference between the average rate on interest-earning assets and the average cost of interest-bearing liabilities.
(5)
Net interest margin represents net interest income before the provision for credit losses divided by average interest-earning assets.
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66
Rate/Volume Analysis
The following table presents the impact of changes in interest rates and in the volume of interest-earning assets and
interest-bearing liabilities on the Company’s interest income and interest expense during the periods indicated. Information is
provided in each category with respect to (1) changes attributable to changes in volume (changes in volume multiplied by the
prior rate), (2) changes attributable to changes in rate (changes in rate multiplied by the prior volume) and (3) the net change.
The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to
volume and the changes due to rate.
Increase (Decrease) in Net Interest Income for the years ended December 31,
2025 vs. 2024
2024 vs. 2023
Due to
Due to
Volume
Rate
Net
Volume
Rate
Net
(Dollars in thousands)
Interest-Earning Assets:
Loans held for sale
$
903
$
1
$
904
$
—
$
7
$
7
Mortgage loans, net
(6,547)
10,071
3,524
942
23,317
24,259
Other loans, net
(855)
(1,720)
(2,575)
(5,687)
1,651
(4,036)
Mortgage-backed securities
5,374
4,748
10,122
11,759
14,221
25,980
Other securities
(4,964)
(3,351)
(8,315)
9,782
5,748
15,530
Tax-Exempt securities
(757)
699
(58)
(36)
—
(36)
Interest-earning deposits and federal
funds sold
(714)
(2,033)
(2,747)
1,632
541
2,173
Total interest-earning assets
(7,560)
8,415
855
18,392
45,485
63,877
Interest-Bearing Liabilities:
Deposits:
Savings accounts
(37)
(40)
(77)
(82)
34
(48)
NOW accounts
10,106
(8,554)
1,552
929
10,563
11,492
Money market accounts
429
(6,617)
(6,188)
(1,864)
10,958
9,094
Certificates of deposit accounts
(5,342)
(6,070)
(11,412)
17,818
17,573
35,391
Mortgagors' escrow accounts
24
(8)
16
3
49
52
Borrowings
(14,651)
(1,894)
(16,545)
854
4,191
5,045
Total interest-bearing liabilities
(9,471)
(23,183)
(32,654)
17,658
43,368
61,026
Net change in net interest income
$
1,911
$ 31,598
$ 33,509
$
734
$
2,117
$
2,851
Comparison of Operating Results for the Years Ended December 31, 2025 and 2024
General. Net (loss) income for the year ended December 31, 2025 was $18.9 million, an increase of $50.2 million, or
160.3%, compared to ($31.3) million for the year ended December 31, 2024. Diluted (loss) earnings per common share was
$0.54 for the year ended December 31, 2025, an increase of $1.59 per common share, or 151.4%, from ($1.05) per common
share for the year ended December 31, 2024.
Return on average equity increased to 2.63% for the year ended December 31, 2025, from (4.67%) for the
comparable prior year period. Return on average assets increased to 0.21% for the year ended December 31, 2025 from
(0.35%) for the comparable prior year period.
Interest Income. Interest income increased $0.8 million, or 0.2%, to $466.2 million for the year ended December 31,
2025 from $465.4 million for the year ended December 31, 2024. The increase in interest income was primarily due to an
increase of nine basis points in the yield of interest-earning assets to 5.59% for the year ended December 31, 2025 from 5.50%
for the year ended December 31, 2024, coupled with a decrease of $132.0 million in the average balance of interest-earning
assets to $8,340.8 million for the year ended December 31, 2025 from $8,472.8 million for the year ended December 31,
2024. The nine basis point increase in the yield of interest-earning assets was primarily due to increases of 13 basis points in
both the yield of total loan net and of total securities. Excluding prepayment penalty income from loans
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67
and securities, net recoveries/(reversals) of interest from non-accrual loans, net gains from fair value adjustments on hedges,
swap termination fees and purchase accounting adjustments, the yield on total loans, net, increased 11 basis points to 5.59%
for the year ended December 31, 2025 from 5.48% for the year ended December 31, 2024.
Interest Expense. Interest expense decreased $32.7 million, or 11.5% to $250.7 million for the year ended December
31, 2025 from $283.4 million for the year ended December 31, 2024. The decrease in interest expense was primarily due to an
increase of 37 basis points in the average cost of interest-bearing liabilities to 3.54% for the year ended December 31, 2025
from 3.91% for the year ended December 31, 2024, coupled with a decrease of $168.4 million in the average balance of
interest-bearing liabilities to $7,082.4 million for the year ended December 31, 2025 from $7,250.7 million for the comparable
prior year period.
Net Interest Income. Net interest income for the year ended December 31, 2025 totaled $215.5 million, an increase of
$33.5 million, or 18.4% from $182.0 million for the year ended December 31, 2024. The increase in net interest income was
driven by the net interest margin increasing 44 basis points to 2.59% for the year ended December 31, 2025 compared to the
prior year period. Included in net interest income was prepayment penalty income and net recoveries/(reversals) loans and
securities totaling $4.1 million and $3.5 million for the years ended December 31, 2025 and 2024, respectively, net gains
(losses) from fair value adjustments on hedges and swap termination fees totaling $0.3 million and $3.5 million for the years
ended December 31, 2025 and 2024, respectively, and purchase accounting income of $0.9 million and $0.8 million for the
years ended December 31, 2025 and 2024, respectively. Excluding all of these items, the net interest margin for the year ended
December 31, 2025 was 2.53%, an increase of 47 basis points, from 2.06% for the year ended December 31, 2024.
Provision for Credit Losses. Provision for credit losses was $12.8 million for the year ended December 31, 2025,
compared to $9.6 million during the comparable prior year period. The provision recorded in 2025 was primarily due to a
reserve applied to one commercial real estate loan which lost its primary tenant, an increased reserve applied to one
commercial business and other loan, coupled with net charge-offs as a result of loan sales, short payoffs and previously
reserved loans deemed unrecoverable. The provision recorded in 2024 was driven by increased reserves on several
commercial business and real estate multi-family loans. During the year ended December 31, 2025, non-performing loans
increased $8.3 million to $41.6 million from $33.3 million at December 31, 2024. During the year ended December 31, 2025,
the Bank recorded net charge-offs totaling $9.8 million compared to $7.7 million recorded in the comparable prior year
period. The average loan-to-value ratio for our non-performing assets collateralized by real estate was 61.5% at December 31,
2025. The Bank continues to maintain conservative underwriting standards.
Non-Interest (Loss) Income. Non-interest (loss) income for the year ended December 31, 2025 was $23.4 million, an
increase of $80.8 million, or 140.7% from ($57.4) million for the year ended December 31, 2024. Non-interest income
increased primarily due to the prior year sale of securities associated with the balance sheet restructuring.
Non-Interest Expense. Non-interest expense was $191.6 million for the year ended December 31, 2025, an increase
of $28.4 million, or 17.4% from $163.3 million for the year ended December 31, 2024. The increase in non-interest expense
was primarily due to increases in impairment of Goodwill, professional services, and salaries and employee benefits related to
increased staffing.
Income Tax Provision (Benefit). Income tax expense for the year ended December 31, 2025 increased $32.6 million,
or 192.4% to $15.6 million, compared to a benefit of ($16.9) million for the year ended December 31, 2024. The increase was
primarily due to a tax benefit relating to the balance sheet restructuring during the year ended December 31, 2024. The
effective tax rate was 45.3% for the year ended December 31, 2025 compared to 35.1% in the prior year.
Liquidity, Regulatory Capital and Capital Resources
Liquidity and Capital Resources. Liquidity is the ability to economically meet current and future financial
obligations. The Company’s primary objectives in terms of managing liquidity is to maintain the ability to originate and
purchase loans, repay borrowings as they mature, satisfy financial obligations that arise in the normal course of business and
meet our customer’s deposit withdrawal needs. Our primary sources of funds are deposits, borrowings, principal and interest
payments on loans, mortgage-backed and other securities, and proceeds from sales of securities and loans. Deposit flows and
mortgage prepayments, however, are greatly influenced by general interest rates, economic conditions and competition. The
Company has other sources of liquidity, including unsecured overnight lines of credit, brokered deposits
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68
and other types of borrowings. At December 31, 2025, the Company had $3.9 billion in combined available liquidity through
cash lines with the FHLB-NY, Federal Reserve Bank, and other commercial banks as well as unencumbered securities
compared to $3.6 billion at December 31, 2024.
The following tables present the Company’s available liquidity by source at the periods indicated below:
At December 31, 2025
Total
Amount
Net
Available
Used
Availability
(In millions)
Internal Sources:
Unencumbered Securities
$
957.1
$
—
$
957.1
Interest Earnings Deposits
45.7
—
45.7
External Sources:
Federal Home Loan Bank
2,661.6
1,727.3
934.3
Federal Reserve Bank
1,383.6
—
1,383.6
Other Banks
627.0
60.0
567.0
Total Liquidity
$
5,675.0
$
1,787.3
$
3,887.7
At December 31, 2024
Total
Amount
Net
Available
Used
Availability
(In millions)
Internal Sources:
Unencumbered Securities
$
954.3
$
—
$
954.3
Interest Earnings Deposits
57.4
—
57.4
External Sources:
Federal Home Loan Bank
2,730.3
2,034.7
695.6
Federal Reserve Bank
1,528.9
—
1,528.9
Other Banks
379.0
50.0
329.0
Total Liquidity
$
5,649.9
$
2,084.7
$
3,565.2
Liquidity management is both a short and long-term function of management. During 2025, funds were provided by
the Company’s operating and financing activities, which were used to fund our investing activities. In 2025, the Company
mainly used cash to invest in its business and pay down debt. Operating activities brought in $61.0 million of cash. The
Company used the cash to invest in securities and loans, partly paid for by securities and loan paydowns. We also paid off
$435.0 million in borrowings and paid $30.0 million in dividends. Our most liquid assets are cash and cash equivalents, which
include cash and due from banks, overnight interest-earning deposits and federal funds sold with original maturities of 90 days
or less. The level of these assets is dependent on our operating, financing, lending and investing activities during any given
period. At December 31, 2025, cash and cash equivalents totaled $126.1 million, a decrease of $26.5 million from December
31, 2024. We also held marketable securities available for sale with a market value of $1,389.9 million at December 31, 2025.
A portion of our cash and cash equivalents is restricted cash held as collateral for interest rate swaps, totaled $16.6 million and
$43.2 million, at December 31, 2025 and 2024, respectively. At December 31, 2025 and 2024, cash (including restricted cash)
held in excess of FDIC deposit insurance limits at other commercial banks totaling $34.8 million, and $62.4 million,
respectively.
At December 31, 2025, we had commitments to extend credit totaling $435.2 million. Since generally all of the loan
commitments are expected to be drawn upon, the total loan commitments approximate future cash requirements, whereas the
amounts of lines of credit may not be indicative of our future cash requirements. The loan commitments generally expire in 90
days, while construction loan lines of credit mature within 18 months and home equity loan lines of credit mature within 10
years. We use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet
instruments. See Note 16 (“Commitments and Contingencies”) in Notes to the Consolidated Financial Statements.
Our total interest expense and non-interest expense in 2025 were $250.7 million and $191.6 million, respectively.
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69
We maintain three postretirement defined benefit plans for our employees: a noncontributory defined benefit pension
plan which was frozen as of September 30, 2006, a contributory medical plan, and a noncontributory life insurance plan. The
life insurance plan was amended to discontinue providing life insurance benefits to future retirees after January 1, 2010 and
the medical plan was frozen to employees hired after January 1, 2011. We also maintain a noncontributory defined benefit
plan for certain of our non-employee directors, which was frozen as of January 1, 2004. The employee pension plan is the only
plan that we have funded. During 2025, we incurred cash expenditures of $0.2 million for the medical and life insurance plans
and we modified these plans as fully described in Note 12 (“Pension and Other Postretirement Benefit Plans”) of Notes to the
Consolidated Financial Statements. We did not make a contribution to the employee pension plan in 2025. We expect to pay
similar amounts for these plans in 2026. See Note 12 (“Pension and Other Postretirement Benefit Plan”) of Notes to the
Consolidated Financial Statements.
The amounts reported in our financial statements are obtained from reports prepared by independent actuaries and are
based on significant assumptions. The most significant assumption is the discount rate used to determine the accumulated
postretirement benefit obligation (“APBO”) for these plans. The APBO is the present value of projected benefits that
employees and retirees have earned to date. The discount rate is a single rate at which the liabilities of the plans are discounted
into today’s dollars and could be effectively settled or eliminated. The discount rate used is based on the FTSE Pension
Discount Curve and reflects a rate that could be earned on bonds over a similar period that we anticipate the plans’ liabilities
will be paid. An increase in the discount rate would reduce the APBO, while a reduction in the discount rate would increase
the APBO.
The Company’s actuaries use several other assumptions that could have a significant impact on our APBO and
periodic expense for these plans. These assumptions include, but are not limited to, expected rate of return on plan assets,
future increases in medical and life insurance premiums, turnover rates of employees, and life expectancy. The accounting
standards for postretirement plans involve mechanisms that serve to limit the volatility of earnings by allowing changes in the
value of plan assets and benefit obligations to be amortized over time when actual results differ from the assumptions used,
there are changes in the assumptions used, or there are plan amendments. At December 31, 2025, our employee pension plan
had an unrecognized loss of $4.8 million. The medical and life insurance plan and non-employee director plan had
unrecognized gains of $2.3 million and $1.0 million, respectively.
The change in the discount rate is the only significant change made to the assumptions used for these plans for each
of the three years ended December 31, 2025. During the years ended December 31, 2025, 2024, and 2023, the actual (loss)
return on the employee pension plan assets was approximately 7%, (105%), and 15%, respectively, of the assumed return used
to determine the periodic pension expense for that respective year.
The market value of the assets of our employee pension plan is $18.0 million at December 31, 2025, which is $2.0
million more than the projected benefit obligation. We do not anticipate a change in the market value of these assets which
would have a significant effect on liquidity, capital resources, or results of operations.
At the time of the Bank’s conversion from a federally chartered mutual savings bank to a federally chartered stock
savings bank, the Bank was required by its primary regulator to establish a liquidation account which is reduced as and to the
extent that eligible account holders reduce their qualifying deposits. The balance of the liquidation account at December 31,
2025 was $0.2 million. In the unlikely event of a complete liquidation of the Bank, each eligible account holder will be
entitled to receive a distribution from the liquidation account. The Bank is not permitted to declare or pay a dividend or to
repurchase any of its capital stock if the effect would be to cause the Bank’s regulatory capital to be reduced below the amount
required for the liquidation account but approval of the NYDFS Superintendent (the “Superintendent”) is required if the total
of all dividends declared by the Bank in a calendar year would exceed the total of its net profits for that year combined with its
retained net profits for the preceding two years less prior dividends paid. The amount of dividends the Holding Company can
declare and pay is generally limited to its net profits for the preceding year less dividends paid during that period. In addition,
dividends paid by the Holding Company would be prohibited if the effect thereof would cause the Holding Company’s capital
to be reduced below applicable minimum capital requirements.
We have significant obligations that arise in the normal course of business. We finance our assets with deposits and
borrowings. We also use borrowings to manage our interest-rate risk. We have the means to refinance these borrowings as they
mature or are called through our financing arrangements with the FHLB-NY and access to unsecured lines of credit with other
commercial banks. See Note 8 (“Deposits”) and Note 9 (“Borrowed Funds”) in Notes to the Consolidated Financial
Statements. At December 31, 2025, we had borrowings obligations of $484.7 million of which $256.4 million
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70
represents our current obligations within one year, including borrowing callable within one year. At December 31, 2025, we
had deposit obligations of $7,311.7 million of which $7,199.2 million represents our current obligations within one year.
At December 31, 2025, the Bank had 30 branches, which were all leased. In addition, we lease our executive offices.
We currently outsource our data processing, loan servicing and check processing functions. We believe that this is the most
cost effective method for obtaining these services. These arrangements are usually volume dependent and have varying terms.
The contracts for these services usually include annual increases based on the increase in the consumer price index. At
December 31, 2025, we had operating lease and purchasing obligations totaling $74.0 million.
We currently provide a non-qualified deferred compensation plan for officers who have achieved the designated level
and completed one year of service. However, certain officers who have not reached the designated level but were already
participants remain eligible to participate in the Plan. In addition to the amounts deferred by the officers, we match 50% of
their contributions, generally up to a maximum of 5% of the officer’s salary. These plans generally require the deferred
balance to be credited with earnings at a rate earned by certain mutual funds. At December 31, 2025, we had deferred
compensation plan obligations of $25.3 million. This expense is provided in the Consolidated Statements of Operations, and
the liability has been provided in the Consolidated Statements of Financial Condition.
Regulatory Capital Position. Under applicable regulatory capital regulations, the Bank and the Company are required
to comply with each of four separate capital adequacy standards: leverage capital, common equity Tier I risk-based capital,
Tier I risk-based capital and total risk-based capital. Such classifications are used by the FDIC and other bank regulatory
agencies to determine matters ranging from each institution’s quarterly FDIC deposit insurance premium assessments, to
approvals of applications authorizing institutions to grow their asset size or otherwise expand business activities. At December
31, 2025 and 2024, the Bank and the Company exceeded each of their four regulatory capital requirements. See Note 14
(“Regulatory Capital”) of Notes to the Consolidated Financial Statements.
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with generally accepted accounting principles
generally accepted in the United States requires the use of estimates, judgments and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses, as well as related disclosures. These estimates and assumptions are
subject to uncertainty, and actual results may differ materially from those estimates. Changes in these assumptions, including
changes in the significant inputs used in our models, could have a material effect on our consolidated financial statements
from period to period. Our critical accounting estimates, which involve assumptions that are highly uncertain and reasonably
likely to have a material impact on our financial condition or results of operations, are discussed below. Additional
information about these critical accounting estimates and other significant accounting policies, including our use of estimates,
is provided in Note 2 (“Summary of Significant Accounting Policies – Use of Estimates”) to the Consolidated Financial
Statements.
The Company’s accounting policies are integral to understanding its results of operations and statement of financial
condition and are described in the Notes to the Consolidated Financial Statements. Several of these policies require
management’s judgment to determine the value of the Company’s assets and liabilities. The Company has established detailed
written policies, models and control procedures designed to support the consistent application of these significant inputs and
assumptions and to monitor changes in them over time. The Company has identified four accounting areas that involve
significant management valuation judgment and higher levels of estimation uncertainty—the allowance for credit losses, the
fair value of financial instruments, goodwill impairment and income taxes—and, for each, we describe below the significant
inputs and assumptions used, why those inputs and assumptions are subject to uncertainty, and, where material and reasonably
available, how they have changed from period to period and how such changes have affected the amounts reported in the
consolidated financial statements.
Allowance for Credit Losses. An allowance for credit losses (“ACL”) is an estimate that is deducted from the
amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the
financial assets. The amount of the ACL is based upon a loss rate model that considers multiple factors which reflects
management’s assessment of the credit quality of the financial assets. Management estimates the allowance balance using
relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and
supportable forecasts. The factors are both quantitative and qualitative in nature including, but not limited to, historical
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71
losses, economic conditions, trends in delinquencies, value and adequacy of underlying collateral, volume and portfolio mix,
and internal loan processes Judgment is required to determine how many years of historical loss experience are to be included
when reviewing historical loss experience. A full credit cycle must be used, or loss estimates may be inaccurate. This
evaluation is inherently subjective, as it requires estimates that are susceptible to significant revisions as more information
becomes available.
The quantitative allowance is calculated using a number of inputs and assumptions. The results of this process
support management’s assessment as to the adequacy of the ACL at each period end presented in the Consolidated Statements
of Financial Condition.
In determining the allowance for credit losses, assumptions are input for economic forecasts, baseline loss rates,
prepayment rates, utilization rates for off-balance sheet commitments, and forecast and reversion periods. The allowance for
credit losses is estimated utilizing internal and external data, information derived from historical events, current conditions,
and economic forecasts. Historically observed credit loss experience adjusted for prepayment and macro-economic variables,
provide the basis for the estimation of quantitatively modeled expected credit losses.
The Company includes quantitative factors in the allowance model which include (1) amortized costs, (2) collective
and individual loan evaluations, (3) contractual terms, (4) prepayments, (5) basis for credit loss estimates, (6) recoveries, (7)
reasonable and supportable forecast assumptions, and (8) off-balance sheet commitments.
Notwithstanding the judgment required in assessing the components of the ACL, the Company believes that the ACL
is adequate to cover losses inherent in the loan portfolio. The policy has been applied on a consistent basis for all periods
presented in the Consolidated Financial Statements. In calculating the ACL, the Company specifies both the reasonable and
supportable forecast and reversion periods in three economic conditions (expansion, transition, contraction). When calculating
the ACL estimate for December 31, 2025 and 2024, the reasonable and supportable forecast was for a period of two quarters
and the reversion period was four quarters. See Notes 2 (“Summary of Significant Accounting Policies”) and 3 (“Loans and
Allowance for Credit Losses”) of Notes to the Consolidated Financial Statements.
Fair Value of Financial Instruments. The Company carries certain financial assets and financial liabilities at fair
value under the fair value option. Fair value is considered the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
The securities portfolio also consists of mortgage-backed and other securities for which the fair value election was
not selected. These securities are classified as available for sale or held-to-maturity. Securities classified as available for sale
are carried at fair value in the Consolidated Statements of Financial Condition, with changes in fair value recorded in
accumulated other comprehensive loss. Securities held-to-maturity are carried at their amortized cost in the Consolidated
Statements of Financial Condition.
Financial assets and financial liabilities reported at fair value are required to be measured based on the following
alternatives: (1) quoted prices in active markets for identical financial instruments (Level 1), (2) significant other observable
inputs (Level 2), or (3) significant unobservable inputs (Level 3). Judgment is required in selecting the appropriate level to be
used to determine fair value. The majority of investments classified as available for sale and held-to-maturity, were measured
using Level 2 inputs, which require judgment to determine the fair value. The trust preferred securities held in the investment
portfolio, and the Company’s junior subordinated debentures, were measured using Level 3 inputs due to the inactive market
for these securities. The significant unobservable inputs used in the fair value measurement of the Company’s trust preferred
securities and junior subordinated debentures valued under Level 3 at December 31, 2025 and 2024, are the effective yields
used in the cash flow models. Significant increases or decreases in the effective yield in isolation would result in a
significantly lower or higher fair value measurement. See Notes 2 (“Summary of Significant Accounting Policies”), 6
(“Securities”) and 19 (“Fair Value of Financial Instruments”) of Notes to the Consolidated Financial Statements.
Goodwill Impairment. Goodwill is presumed to have an indefinite life and is tested for impairment, rather than
amortized, on at least an annual basis. For the purpose of goodwill impairment testing, management has concluded that
Company has one reporting unit. If the fair value of the reporting unit exceeds its carrying amount, there is no impairment of
goodwill.
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72
Quoted market prices in active markets are the best evidence of fair value and are to be used as the basis for
measurement, when available. Other acceptable valuation methods include an asset approach, which determines a fair value
based upon the value of assets net of liabilities, an income approach, which determines fair value using one or more methods
that convert anticipated economic benefits into a present single amount, and a market approach, which determines a fair value
based on the similar businesses that have been sold.
During the first quarter of 2025, the Company identified the economic uncertainty resulting from the recent tariff
increases by the United States on many of its trading partners in conjunction with the prolonged decline in the Company’s
stock price as a triggering event as of March 31, 2025. As such, the Company initiated a quantitative impairment test which
indicated goodwill was fully impaired as of March 31, 2025, resulting in the Company recording an impairment charge of the
entire goodwill balance of $17.6 million. This accounting adjustment removed all goodwill from the financial statements. See
Note 2 (“Summary of Significant Accounting Policies”) of Notes to Consolidated Financial Statements.
Income Taxes. The Company estimates its income taxes payable based on the amounts it expects to owe to the
various taxing authorizes (i.e., federal, state and local). In estimating income taxes, management assesses the relative merits
and risks of the tax treatment of transactions, taking into account statutory, judicial and regulatory guidance in the context of
the Company’s tax position. Management also relies on tax opinions, recent audits, and historical experience.
The Company also recognizes deferred tax assets and liabilities for the future tax consequences of differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation
allowance is required for deferred tax assets that the Company estimates are more likely than not to be unrealizable, based on
evidence available at the time the estimate is made. These estimates can be affected by changes to tax laws, statutory tax rates,
and future income levels. See Notes 2 (“Summary of Significant Accounting Policies”) and 10 (“Income Taxes”) of Notes to
Consolidated Financial Statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
This information is contained in the section captioned “Interest Rate Risk” under Item. 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations and in Notes 19 (“Fair Value of Financial Instruments”) and 20
(“Derivative Financial Instruments”) of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report.
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73
Item 8. Financial Statements and Supplementary Data.
FLUSHING FINANCIAL CORPORATION
Consolidated Statements of Financial Condition
December 31,
December 31,
2025
2024
(Dollars in thousands, except per share data)
Assets
Cash and due from banks (restricted cash of $16,615 and $43,165, respectively)
$
126,076
$
152,574
Securities held-to-maturity, net of allowance of $348 and $353, respectively (assets pledged of $4,695 and
$4,494, respectively; fair value of $46,232 and $44,718, respectively)
50,180
51,485
Securities available for sale, at fair value (amortized cost of $1,387,619 and $1,506,798, respectively; net of an
allowance of $2,921 and $2,627, respectively; assets pledged of $115,974 and $49,914, respectively; $14,412
and $13,591 at fair value pursuant to the fair value option, respectively)
1,389,924
1,497,905
Loans held for sale, at fair value
—
70,098
Loans held for investment, net of fees and costs
6,653,952
6,745,848
Less: Allowance for credit losses
(42,802)
(40,152)
Net loans held of investment
6,611,150
6,705,696
Interest and dividends receivable
59,436
62,036
Bank premises and equipment, net
17,734
17,852
Federal Home Loan Bank of New York stock, at cost
18,937
38,096
Bank owned life insurance
226,939
218,174
Goodwill
—
17,636
Core deposit intangibles
773
1,123
Right-of-use assets
53,118
45,800
Other assets
139,035
160,497
Total assets
$
8,693,302
$
9,038,972
Liabilities
Due to depositors:
Non-interest bearing
$
969,287
$
836,545
Interest-bearing
6,282,865
6,289,306
Total Due to depositors
7,252,152
7,125,851
Mortgagors' escrow deposits
59,590
53,082
Borrowed funds:
Federal Home Loan Bank advances and other borrowings
243,933
678,933
Subordinated debentures
189,054
188,326
Junior subordinated debentures, at fair value
51,666
48,795
Total borrowed funds
484,653
916,054
Operating lease liability
53,842
46,443
Other liabilities
135,090
173,003
Total liabilities
7,985,327
8,314,433
Stockholders' Equity
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued)
—
—
Common stock ($0.01 par value; 100,000,000 shares authorized; 38,677,787 shares issued; 33,778,438 and
33,659,067 shares outstanding, respectively)
387
387
Additional paid-in capital
326,613
326,671
Treasury stock, at average cost (4,899,349 and 5,018,720 shares, respectively)
(98,948)
(101,655)
Retained earnings
480,376
492,003
Accumulated other comprehensive income, net of taxes
(453)
7,133
Total stockholders' equity
707,975
724,539
Total liabilities and stockholders' equity
$
8,693,302
$
9,038,972
The accompanying notes are an integral part of these consolidated financial statements.
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74
FLUSHING FINANCIAL CORPORATION
Consolidated Statements of Operations
For the years ended December 31,
2025
2024
2023
(In thousands, except per share data)
Interest and dividend income
Interest and fees on loans
$
377,431
$
375,578
$
355,348
Interest and dividends on securities:
Interest
80,856
79,076
37,598
Dividends
111
130
126
Other interest income
7,831
10,578
8,405
Total interest and dividend income
466,229
465,362
401,477
Interest expense
Deposits
228,527
244,636
188,655
Other interest expense
22,170
38,715
33,670
Total interest expense
250,697
283,351
222,325
Net interest income
215,532
182,011
179,152
Provision (benefit) for credit losses
12,788
9,568
10,518
Net interest income after provision (benefit) for credit losses
202,744
172,443
168,634
Non-interest income (loss)
Banking services fee income
7,455
6,947
8,651
Net gain (loss) on sale of loans
3,719
(3,563)
108
Net gain (loss) on sale of securities
708
(72,315)
—
Net gain (loss) from fair value adjustments
(2,312)
(939)
2,573
Federal Home Loan Bank of New York stock dividends
1,863
2,790
2,513
Gain on life insurance proceeds
—
285
1,281
Bank owned life insurance
8,765
6,005
4,573
Other income
3,202
3,345
2,889
Total non-interest income (loss)
23,400
(57,445)
22,588
Non-interest expense
Salaries and employee benefits
96,448
91,398
85,957
Occupancy and equipment
16,526
15,117
14,396
Professional services
17,166
10,846
9,569
FDIC deposit insurance
5,628
6,297
3,994
Data processing
7,349
6,890
5,976
Depreciation and amortization of bank premises and equipment
5,339
5,730
5,965
Other real estate owned / foreclosure expense
1,139
681
605
Net (gain) loss on sales of real estate owned
—
(174)
—
Prepayment penalty on borrowings
—
2,572
—
Impairment of goodwill
17,636
—
—
Other operating expenses
24,394
23,908
24,927
Total non-interest expense
191,625
163,265
151,389
Income (loss) before income taxes
34,519
(48,267)
39,833
Provision (benefit) for income taxes
15,639
(16,934)
11,169
Net income (loss)
$
18,880
$
(31,333)
$
28,664
Basic earnings (loss) per common share
$
0.54
$
(1.07)
$
0.96
Diluted earnings (loss) per common share
$
0.54
$
(1.07)
$
0.96
The accompanying notes are an integral part of these consolidated financial statements
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75
FLUSHING FINANCIAL CORPORATION
Consolidated Statements of Comprehensive Income
For the years ended December 31,
2025
2024
2023
(In thousands)
Net income (loss)
$
18,880
$
(31,333)
$
28,664
Other comprehensive income (loss), net of tax:
Amortization of actuarial (gains) losses, net of taxes of $2, $113 and $123, respectively.
(27)
(254)
(276)
Unrecognized actuarial gains (losses), net of taxes of $773, $94, and ($75), respectively.
(1,773)
(213)
170
Change in net unrealized gains (losses) on securities available for sale, net of taxes of ($3,736),
$271 and ($4,451), respectively.
8,464
429
8,362
Reclassification adjustment for net (gains) losses included in net income, net of taxes of $215
and $22,331, respectively.
(493)
49,984
—
Net unrealized (losses) gains on cashflow hedges, net of taxes of $6,141, $1,874 and $4,762,
respectively.
(13,821)
(4,068)
(10,584)
Change in fair value of liabilities related to instrument-specific credit risk, net of taxes of $10,
($49) and ($74), respectively.
64
(94)
165
Other comprehensive income (loss), net of tax:
(7,586)
45,784
(2,163)
Comprehensive net income (loss)
$
11,294
$
14,451
$
26,501
The accompanying notes are an integral part of these consolidated financial statements.
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76
FLUSHING FINANCIAL CORPORATION
Consolidated Statements of Changes in Stockholders’ Equity
Additional
Accumulated Other
Shares
Common
Paid-in
Treasury
Retained
Comprehensive
(Dollars in thousands, except per share data)
Outstanding
Stock
Capital
Stock
Earnings
Income (Loss)
Total
Balance at December 31, 2022
29,476,391 $
341
$
264,332
$
(98,535) $
547,507 $
(36,488) $
677,157
Net income (loss)
—
—
—
28,664
—
28,664
Vesting of restricted stock unit awards
263,918
—
(5,402)
5,630
(228)
—
—
Purchase of treasury stock
(786,498)
—
—
(11,473)
—
—
(11,473)
Stock-based compensation expense
—
—
5,604
—
—
—
5,604
Repurchase of shares to satisfy tax obligation
(88,001)
—
—
(1,692)
—
—
(1,692)
Dividends on common stock ($0.22 per share)
—
—
—
—
(26,260)
—
(26,260)
Other comprehensive income (loss)
—
—
—
—
—
(2,163)
(2,163)
Balance at December 31, 2023
28,865,810 $
341
$
264,534
$ (106,070) $
549,683 $
(38,651) $
669,837
Net income (loss)
—
—
—
—
(31,333)
—
(31,333)
Vesting of restricted stock unit awards
301,859
—
(5,818)
6,122
(304)
—
—
Shares issued in common stock offering
4,590,164
46
65,494
—
—
—
65,540
Stock-based compensation expense
—
—
2,461
—
—
—
2,461
Repurchase of shares to satisfy tax obligation
(98,766)
—
—
(1,707)
—
—
(1,707)
Dividends on common stock ($0.22 per share)
—
—
—
—
(26,043)
—
(26,043)
Other comprehensive income (loss)
—
—
—
—
—
45,784
45,784
Balance at December 31, 2024
33,659,067 $
387
$
326,671
$ (101,655) $
492,003 $
7,133 $
724,539
Net income (loss)
—
—
—
—
18,880
—
18,880
Vesting of restricted stock unit awards
169,483
—
(3,211)
3,428
(217)
—
—
Stock-based compensation expense
—
—
3,153
—
—
—
3,153
Repurchase of shares to satisfy tax obligation
(50,112)
—
—
(721)
—
—
(721)
Dividends on common stock ($0.22 per share)
—
—
—
—
(30,290)
—
(30,290)
Other comprehensive income (loss)
—
—
—
—
—
(7,586)
(7,586)
Balance at December 31, 2025
33,778,438 $
387
$
326,613
$
(98,948) $
480,376 $
(453) $
707,975
The accompanying notes are an integral part of these consolidated financial statements.
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77
FLUSHING FINANCIAL CORPORATION
Consolidated Statements of Cash Flows
For the years ended December 31,
2025
2024
2023
(In thousands)
Operating Activities
Net income (loss)
$
18,880
$
(31,333)
$
28,664
Adjustments to reconcile net income (loss) to net cash provided by (used
in) operating activities:
Provision (benefit) for credit losses
12,788
9,568
10,518
Depreciation and amortization of premises and equipment
5,339
5,730
5,965
Net (gain) loss on sales of loans
(3,719)
3,563
(108)
Net amortization (accretion) of premiums and discounts
3,725
3,494
498
Net (gain) loss on sales of OREO
—
(174)
—
Impairment of goodwill
17,636
—
—
Net loss (gain) from sale of securities
(708)
72,315
—
Deferred income tax provision (benefit)
11,099
(15,862)
3,721
Net loss (gain) from fair value adjustments
2,312
939
(2,573)
Net (gain) loss from fair value adjustments of hedges
(256)
(55)
(371)
Gain from life insurance proceeds
—
(285)
(1,281)
Income from Bank owned life insurance
(8,765)
(6,005)
(4,573)
Stock-based compensation expense
3,153
2,461
5,604
Deferred compensation
(2,271)
(2,775)
(4,210)
Amortization of core deposit intangibles
350
414
480
Decrease (increase) in other assets
(2,657)
(22,525)
(19,308)
(Decrease) increase in other liabilities
4,114
(7,058)
11,559
Net cash provided by (used in) operating activities
61,020
12,412
34,585
Investing Activities
Purchases of premises and equipment
(5,221)
(2,310)
(5,488)
Purchases of Federal Home Loan Bank New York stock
(8,597)
(51,609)
(122,102)
Redemptions of Federal Home Loan Bank New York stock
27,756
44,579
136,878
Proceeds from prepayments of securities held-to-maturity
1,302
1,538
794
Purchases of securities available for sale
(496,945)
(1,302,609)
(187,442)
Proceeds from sales and calls of securities available for sale
367,510
522,096
-
Proceeds from maturities and prepayments of securities available for sale
224,425
203,265
57,493
Proceeds from sale of real estate owned
—
839
—
Proceeds from bank owned life insurance
1,633
14
3,068
Change in cash collateral
(26,550)
(4,780)
(18,400)
Net repayments (originations) of loans
359,763
238,100
198,240
Purchases of loans
(267,827)
(173,487)
(166,344)
Proceeds from sale of loans originally classified as held for investment
69,286
18,760
9,042
Net cash provided by (used in) investing activities
246,535
(505,604)
(94,261)
Continued
The accompanying notes are an integral part of these consolidated financial statements.
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78
FLUSHING FINANCIAL CORPORATION
Consolidated Statements of Cash Flows (continued)
For the years ended December 31,
2025
2024
2023
(In thousands)
Financing Activities
Net increase (decrease) in noninterest-bearing deposits
$
132,742
$
(10,871) $
(73,822)
Net increase (decrease) in interest-bearing deposits
(7,292)
370,857
400,804
Net increase (decrease) in mortgagors' escrow deposits
6,508
2,700
2,223
Net (repayments) proceeds from short-term borrowed funds
(435,000)
324,250
(605,750)
Proceeds from long-term borrowing
—
300,000
661,050
Repayment of long-term borrowings
—
(551,117)
(265,001)
Purchase of treasury stock
—
—
(11,473)
Repurchase of shares to satisfy tax obligations
(721)
(1,707)
(1,692)
Net proceeds received in common stock offering
—
65,540
—
Cash dividends paid
(30,290)
(26,043)
(26,260)
Net cash provided by (used in) financing activities
(334,053)
473,609
80,079
Net (decrease) increase in cash and cash equivalents, and restricted cash
(26,498)
(19,583)
20,403
Cash, cash equivalents, and restricted cash, beginning of period
152,574
172,157
151,754
Cash, cash equivalents, and restricted cash, end of period
$
126,076
$
152,574
$
172,157
Supplemental disclosure of cash flow information:
Cash payments for:
Interest paid
$
254,036
$
278,702
$
214,610
Income taxes paid, net of refunds (See Note 10 “Income Taxes”)
1,326
8,578
6,269
Supplemental disclosure of non- cash flow investing activities:
Transfer of loans held for investment to other real estate owned
—
665
—
Transfer of loans held for investment to loans held for sale
24,067
92,027
8,506
Transfer of loans held for sale to loans held for investment
58,781
—
—
Securities purchased not yet settled
—
25,023
—
Securities transferred from held to maturity to available for sale
—
20,627
—
The accompanying notes are an integral part of these consolidated financial statements.
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79
FLUSHING FINANCIAL CORPORATION
Notes to Consolidated Financial Statements
1. Nature of Operations
Flushing Financial Corporation (the “Holding Company”), a Delaware business corporation, is the bank holding
company of its wholly-owned subsidiary Flushing Bank (the “Bank”). The Holding Company and its direct and indirect
wholly-owned subsidiaries, including the Bank, Flushing Service Corporation (“FSC”) and FSB Properties Inc. (“Properties”)
are collectively herein referred to as “we”, “us”, ‘our”, and the “Company.”
The Company’s principal business is attracting deposits from public entities and the general public, while investing
those deposits together with funds generated from ongoing operations and borrowings, primarily in (1) originations and
purchases of multi-family residential properties, commercial business loans, commercial real estate mortgage loans and, to a
lesser extent, one-to-four family (focusing on mixed-use properties, which are properties that contain both residential dwelling
units and commercial units); (2) construction loans, (3) equipment financing loans; (4) Small Business Administration
(“SBA”) loans and other small business loans; (5) mortgage loan surrogates such as mortgage-backed securities; and (6) U.S.
government securities, corporate fixed-income securities and other marketable securities. The Bank also originates certain
other consumer loans including overdraft lines of credit. The Bank primarily conducts its business through thirty full-service
banking offices, 11 of which are located in Queens County, four in Nassau County, five in Suffolk County, six in Kings
County (Brooklyn), and four in New York County (Manhattan), New York. The Bank also operates an internet branch, which
operates under the brands of iGObanking® and BankPurely® (the “Internet Branch”), offering checking, savings, money
market and certificates of deposit accounts.
On December 29, 2025, the Company, OceanFirst Financial Corp. (“OceanFirst”), and Apollo Merger Sub Corp., a
wholly-owned subsidiary of OceanFirst (“Merger Sub”), entered into an Agreement and Plan of Merger (as it may be
amended, modified or supplemented from time to time in accordance with its terms, the “merger agreement”), pursuant to
which, on the terms and subject to the conditions set forth in the merger agreement, OceanFirst and the Company have agreed
to combine their respective businesses through a series of mergers.
In the terms and subject to the conditions set forth in the merger agreement, at the closing, Merger Sub will merge
with and into the Company (the “first merger”), with the Company as the surviving entity. Immediately following the first
merger, the Company will merge with and into OceanFirst (the “second merger” and together with the first merger, the
“mergers”), with OceanFirst as the surviving corporation (the “combined company” and certain references to “OceanFirst”
herein refer to the combined company following the second merger, as context requires). On the day immediately following
the mergers, Flushing Bank will merge with and into OceanFirst Bank, National Association, a national banking association
and a wholly-owned subsidiary of OceanFirst (“OceanFirst Bank”), with OceanFirst Bank continuing as the surviving bank.
In the first merger, the Company’s stockholders will be entitled to receive 0.85 of a share of OceanFirst common
stock for each share of Company common stock they own, subject to certain exceptions. Although the number of shares of
OceanFirst common stock that the Company’s stockholders will be entitled to receive per share of Company common stock is
fixed, the market value of the merger consideration will fluctuate with the market price of OceanFirst common stock and will
not be known at the time the Company’s stockholders vote on the merger agreement.
Concurrently with its entry into the merger agreement, OceanFirst entered into an investment agreement (the
“investment agreement”), dated as of December 29, 2025, with affiliates of funds managed by Warburg Pincus LLC pursuant
to which a $225 million cash investment will be made into the combined entity.
2. Summary of Significant Accounting Policies
The accounting and reporting policies of the Company follow accounting principles generally accepted in the United
States of America (“GAAP”) and general practices within the banking industry. The policies which materially affect the
determination of the Company’s financial position, results of operations and cash flows are summarized below.
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Principles of Consolidation:
The accompanying consolidated financial statements include the accounts of the Holding Company and the following
direct and indirect wholly-owned subsidiaries of the Holding Company: the Bank, FSC, and Properties. FSC was formed to
market insurance products and mutual funds. Properties is currently used to hold title to real estate owned acquired via
foreclosure. Amounts held in a rabbi trust for certain non-qualified deferred compensation plans are included in the
consolidated financial statements. All intercompany transactions and accounts are eliminated in consolidation.
The Holding Company also owns Flushing Financial Capital Trust II, Flushing Financial Capital Trust III, and
Flushing Financial Capital Trust IV (the “Trusts”), which are special purpose business trusts formed to issue a total of $60.0
million of capital securities and $1.9 million of common securities (which are the only voting securities). The Holding
Company owns 100% of the common securities of the Trusts. The Trusts used the proceeds from the issuance of these
securities to purchase junior subordinated debentures from the Holding Company. The Trusts are not included in our
consolidated financial statements as we would not absorb the losses of the Trusts if losses were to occur. See Note 9,
“Borrowed Funds,” of the Notes to the Consolidated Financial Statements for additional information regarding these trusts.
Use of Estimates:
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the
date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Estimates that are
particularly susceptible to change in the near term are used in connection with the determination of the allowance for credit
losses, the review of the need for a valuation allowance of the Company’s deferred tax assets and the fair value of financial
instruments.
Cash and Cash Equivalents:
For the purpose of reporting cash flows, the Company defines cash and due from banks, overnight interest-earning
deposits and federal funds sold with original maturities of 90 days or less as cash and cash equivalents. Included in cash and
cash equivalents at December 31, 2025 and 2024, were $94.0 million and $125.2 million, respectively, in interest-earning
deposits in other financial institutions, primarily comprised of funds due from the Federal Reserve Bank of New York and the
Federal Home Loan Bank of New York (“FHLB-NY”) and restricted cash held as collateral for interest rate swaps. The
restricted cash totaled $16.6 million and $43.2 million at December 31, 2025 and 2024, respectively. At December 31, 2025
and 2024, cash (including restricted cash) held in excess of Federal Deposit Insurance Corporation (“FDIC”) deposit insurance
limits at other commercial banks totaling $34.8 million, and $62.4 million, respectively.
Securities:
Securities are classified as held-to-maturity when management intends to hold the securities until maturity. Held-to-
maturity securities are stated at amortized cost, adjusted for unamortized purchase premiums and discounts and an allowance
for credit losses. Securities are classified as available for sale when management intends to hold the securities for an indefinite
period of time or when the securities may be utilized for tactical asset/liability purposes and may be sold from time to time to
effectively manage interest rate exposure and resultant prepayment risk and liquidity needs. Unrealized gains and losses on
securities available for sale are excluded from earnings and reported as part of accumulated other comprehensive income/loss,
net of taxes. Premiums and discounts are amortized or accreted, respectively, using the level-yield method. Realized gains and
losses on the sales of securities are determined using the specific identification method.
The Company has made a policy election to exclude accrued interest from amortized cost basis of debt securities.
Accrued interest receivable for debt securities is reported in “Interest and dividends receivable” on the Consolidated
Statements of Financial Condition. The accrual of income on securities is generally discontinued when certain factors, such as
contractual delinquency of 90 days or more, indicate reasonable doubt as to the timely collectability of such income.
Uncollected interest previously recognized on non-accrual securities is reversed from interest income at the time the security
is placed on non-accrual status.
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The Company’s estimate of expected credit losses for held-to-maturity debt securities is based on historical
information, current conditions and a reasonable and supportable forecast. At December 31, 2025, and 2024 the Company’s
portfolio was made up of three securities: the first two were structured similar to a commercial owner occupied loan, and
modeled for credit losses similar to commercial business loans secured by real estate, and the third was issued and guaranteed
by Fannie Mae, which is a government sponsored enterprise that has a credit rating and perceived credit risk comparable to the
U.S. government. Accordingly, the Company assumes a zero loss expectation from the Fannie Mae security. The Company
had an allowance for credit losses for held-to-maturity securities totaling $0.3 million and $0.4 million at December 31, 2025
and 2024, respectively.
The Company reviewed each available for sale debt security that had an unrealized loss at December 31, 2025 and
December 31, 2024. The Company does not have the intent to sell these securities and it is more likely than not the Company
will not be required to sell the securities before recovery of the securities’ amortized cost basis. If the Company evaluates any
decline in the fair value is due to credit loss factors and this valuation indicates that a credit loss exists, then the present value
of cash flows expected to be collected from the security is compared to the amortized cost basis of security. If the present
value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for
credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. At
December 31, 2025 and 2024, there was one security which was under forbearance and was individually evaluated for
allowance for credit losses. The Company had an allowance for credit losses for available for sale securities totaling $2.9
million and $2.6 million at December 31, 2025 and 2024, respectively.
The Company recorded tax exempt interest income totaling $1.4 million, $1.5 million and $1.5 million for the years
ended December 31, 2025, 2024 and 2023, respectively.
Goodwill:
Goodwill represents the excess purchase price over the value assigned to tangible and identifiable intangible assets
and liabilities assumed of business acquired. Goodwill is presumed to have an indefinite life and is tested annually for
impairment, or more frequently when certain conditions are met. If the fair value of the reporting unit is greater than the
carrying value, no further evaluation is required. If the fair value of the reporting unit is less than the carrying value, further
evaluation would be required to compare the fair value of the reporting unit to the carrying value and determine if impairment
is required.
Quoted market prices in active markets are the best evidence of fair value and are to be used as the basis for
measurement, when available. Other acceptable valuation methods include an asset approach, which determines a fair value
based upon the value of assets net of liabilities, an income approach, which determines fair value using one or more methods
that convert anticipated economic benefits into a present single amount, and a market approach, which determines a fair value
based on the similar businesses that have been sold.
During the first quarter of 2025, the Company identified the economic uncertainty resulting from the recent tariff
increases by the United States on many of its trading partners in conjunction with the prolonged decline in the Company’s
stock price as a triggering event as of March 31, 2025. As such, the Company initiated a quantitative impairment test which
indicated goodwill was fully impaired as of March 31, 2025, resulting in the Company recording an impairment charge of the
entire goodwill balance of $17.6 million. This accounting adjustment removed all goodwill from the financial statements.
Loans:
Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, deferred loan fees
and costs on originated loans, certain market value adjustments related to hedging and unamortized premiums or discounts on
purchased loans. Loan fees and certain loan origination costs are deferred. Net loan origination costs and premiums or
discounts on loans purchased are amortized into interest income over the contractual life of the loans using the level-yield
method. Prepayment penalties received on loans which pay in full prior to their scheduled maturity are included in interest
income in the period they are collected.
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Interest on loans is recognized on an accrual basis. The Company has made a policy election to exclude accrued
interest from the amortized cost basis of loans. Accrued interest receivable for loans totaled $46.4 million and $46.3 million at
December 31, 2025 and 2024, respectively and was reported in “Interest and dividends receivable” on the Consolidated
Statements of Financial Condition. The accrual of income on loans is generally discontinued when certain factors, such as
contractual delinquency of 90 days or more, indicate reasonable doubt as to the timely collectability of such income.
Uncollected interest previously recognized on non-accrual loans is reversed from interest income at the time the loan is placed
on non-accrual status. A non-accrual loan can be returned to accrual status when contractual delinquency returns to less than
90 days delinquent. Payments received on non-accrual loans that do not bring the loan to less than 90 days delinquent are
recorded on a cash basis. Payments can also be applied first as a reduction of principal until all principal is recovered and then
subsequently to interest, if in management’s opinion, it is evident that recovery of all principal due is likely to occur.
The Company recognizes a loan as non-performing when the borrower has demonstrated the inability to bring the
loan current, or due to other circumstances which, in management’s opinion, indicate the borrower will be unable to bring the
loan current within a reasonable time. All loans classified as non-performing, which includes all loans past due 90 days or
more, are classified as non-accrual unless the loan is well secured and there is, in our opinion, compelling evidence the
borrower will bring the loan current in the immediate future. Prior to a real estate secured loan becoming 90 days delinquent,
an updated appraisal is ordered and/or an internal evaluation is prepared.
The Company may purchase loans to supplement originations. Loan purchases are evaluated at the time of purchase
to determine the appropriate accounting treatment. Performing loans purchased at a premium/discount are recorded at the
purchase price with the premium/discount being amortized/accreted into interest income over the life of the loan. All loans
purchased during the years ended December 31, 2025 and 2024 were performing loans that did not display credit deterioration
from origination at the time of purchase. The Company purchased loans totaling $267.8 million, $173.5 million, and $166.3
million during the years ended December 31, 2025, 2024, and 2023, respectively.
Allowance for Credit Losses:
The Allowance for credit losses (“ACL”) is an estimate that is deducted from the amortized cost basis of the financial
asset to present the net carrying value at the amount expected to be collected on the financial assets. Financial assets are
charged off against that ACL when management believes that the balance is uncollectable based on quarterly analysis of credit
risk. Additionally, certain off-balance sheet commitments are subject to the same estimate of credit losses.
The amount of the ACL is based upon a loss rate model that considers multiple factors which reflects management’s
assessment of the credit quality of the loan portfolio. Management estimates the allowance balance using relevant information,
from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The
factors are both quantitative and qualitative in nature including, but not limited to, historical losses, economic conditions,
trends in delinquencies, value and adequacy of underlying collateral, volume and portfolio mix, and internal loan processes.
Accrued interest receivable is excluded from our financial assets that are carried on an amortized cost basis.
The quantitative allowance is calculated using a number of inputs and assumptions. The results of this process,
support management’s assessment as to the adequacy of the ACL at each period end presented in the Consolidated Statements
of Financial Condition.
The process for calculating the allowance for credit losses begins with our historical losses by portfolio segment. The
losses are then adjusted to incorporate current conditions and reasonable and supportable forecast to develop the quantitative
component of the allowance for credit losses.
The Bank has established an Asset Classification Committee which carefully evaluates loans which are past due 90
days and/or are classified. The Asset Classification Committee thoroughly assesses the condition and circumstances
surrounding each loan meeting the criteria. The Bank also has a Delinquency Committee that evaluates loans meeting specific
criteria. The Bank’s loan policy requires loans to be placed into non-accrual status once the loan becomes 90 days delinquent
unless there is compelling evidence the borrower will bring the loan current in the immediate future.
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For the quantitative measurement, the Company’s portfolio consists of mortgage loans secured by real estate (both
commercial and retail) and commercial business loans, which are primarily commercial business term loans and line of credit.
Based on the Company’s evaluation of the loan portfolio, listed below are the pools that were established as a baseline level of
segmentation with their primary risk factor. The Company confirms this data remains relevant in absence of changes to the
composition of the portfolio.
The mortgage portfolio is a substantial component of the Company’s portfolio and it is a focus of the Company’s
lending strategy, primarily focusing on multi-family and commercial real estate. While the mortgage portfolio consists of real-
estate secured loans, the source of repayment and types of properties securing these loans varies and thus the Company first
considered these differences as follows:
One-to-four family residential – These loans are secured by residential properties for which the primary source of
repayment is the income generated by the residential borrower. Delinquency status is considered a risk factor in this pool.
One-to-four family mixed use property – These loans are secured by residential properties for which the primary
source of repayment is the income generated by the property. Unlike the one-to-four residential credits, properties securing
mixed use loans include a commercial space component. Delinquency status is considered a risk factor in this pool.
Multi-family residential – These loans are secured by multi-unit residential buildings for which the primary source
of repayment is the income generated by the property. Properties securing multi-family loans have five or more residential
units and thus a greater number of cash flow streams compared to one-to-four mixed use loans. Delinquency status and risk
rating are considered risk factors in this pool.
Commercial real estate – These loans are secured by properties for commercial use for which the primary source of
repayment is the income generated by the property. Delinquency status, risk rating and collateral type are considered risk
factors in this pool.
Construction – These loans are provided to fund construction projects for both residential and commercial
properties. These loans are inherently different from all others as they represent “work in progress” and expose the Company
to risk from non-completion and less recovery value should the sponsor of an unfinished property default. Delinquency status
and risk rating are considered risk factors in this pool.
Relative to the commercial business portfolio, the Company considered the following categories as a baseline for
evaluation:
Commercial Business – These loans are not typically secured by real estate. The primary source of repayment is
cash flows from operations of the borrower’s business. Within this category are SBA credits and equipment finance credits.
Delinquency status, risk rating and industry are considered risk factors in this pool.
Commercial Business secured by real estate – These loans are secured by properties used by the borrower for
commercial use where the primary source of repayment is expected to be the income generated by the borrower’s business use
of the property. The Company recognizes in circumstances where the borrower is not performing, the real estate collateral
would be the source of repayment. The Company considers these credits to be less risky than commercial business loans,
however, riskier than commercial real estate loans. Delinquency status, risk rating and industry are considered risk factors in
this pool.
Overdrafts – These are unsecured consumer lines of credits and are an immaterial component of the Company’s
portfolio.
For the qualitative measurement, the Company aggregated the portfolio segments according to three business units:
business banking, residential and commercial real estate. Management evaluates nine qualitative risk factors to determine if
the risk is captured elsewhere in the ACL process. If not captured elsewhere, the Company has identified specific risk factors
to evaluate and incorporate into its Qualitative Framework. Some risk factors include time to maturity,
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origination loan-to-value, loan type composition, the value of underlying collateral, changes in policies and procedures for
lending strategies and underwriting standards, collection and recovery practices, internal credit review, changes in personnel,
loan debt coverage ratios, divergence between the levels of NYC and national unemployment, divergence between the NYC
GDP and national GDP, industry concentrations and riskiness and large borrower concentrations.
The Company may modify loans to enable a borrower experiencing financial difficulties to continue making
payments when it is deemed to be in the Company’s best long-term interest. This modification may include reducing the
interest rate or amount of the monthly payment for a specified period of time, after which the interest rate and repayment
terms revert to the original terms of the loan, any other-than-insignificant payment delay, principal forgiveness or any
combination of these types of modifications.
Loans Held for Sale:
At December 31, 2025 the Company did not have loans held for sale. At December 31, 2024 the Company had $70.1
million of performing multi-family loans held for sale.
We sold the guarantee portion of SBA loans totaling $8.0 million during 2025. There were no SBA sales in 2024 and
2023.
The Company has implemented a strategy of selling certain delinquent and non-performing loans. Once the
Company has decided to sell a loan, the sale usually closes in a short period of time, generally within the same quarter. Terms
of sale include cash due upon the closing of the sale, no contingencies or recourse to the Company and servicing is released to
the buyer. Additionally, at times the Company may sell participating interests in performing loans and maintain servicing.
Loans designated held for sale are reclassified from loans held for investment to loans held for sale. At the time of transfer,
any ACL is reversed and the loans are transferred at the new amortized cost basis and accounted for at the lower of amortized
cost or fair value. Write-downs of loans transferred from held for investment to held for sale are recorded as charge-offs at the
time of transfer. Subsequent lower of cost or fair value adjustments are recognized in non-interest income as a valuation
allowance adjustment.
Bank Owned Life Insurance:
Bank owned life insurance (“BOLI”) represents life insurance on the lives of certain current and past employees who
have provided positive consent allowing the Company to be the beneficiary of such policies. BOLI is carried in the
Consolidated Statements of Financial Condition at its cash surrender value. Increases in the cash value of the policies, as well
as proceeds received, are recorded in other non-interest income, and are not subject to income taxes. During 2024, the
Company entered into a noncash exchange of certain lower yielding BOLI policies to higher yielding policies totaling $101.5
million, which was settled in 2025 totaling $98.0 million in accordance with Internal Revenue Code (“IRC”) Section 1035. No
gain or loss was recognized as part of this exchange. During 2025 and 2024, the Company did not purchase any additional
BOLI.
Other Real Estate Owned:
Other Real Estate Owned (“OREO”) consists of property acquired through foreclosure. At the time of foreclosure
these properties are acquired at fair value and subsequently carried at the lower of cost or fair value, less estimated selling
costs. The fair value is based on appraised value through a current appraisal, or at times through an internal review,
additionally adjusted by the estimated costs to sell the property. This determination is made on an individual asset basis. If the
fair value of a property is less than the carrying amount of the loan, the difference is recognized as a charge to the ACL.
Further decreases to the estimated value will be recorded directly to the Consolidated Statements of Operations. At December
31, 2025 and 2024, the Company did not hold any OREO.
Bank Premises and Equipment:
Bank premises and equipment are stated at cost, less depreciation accumulated on a straight-line basis over the
estimated useful lives of the related assets, recorded in Depreciation and amortization of bank premises and equipment in the
Consolidated Statements of Operations. For equipment and furniture the useful life is between 3 to 10 years.
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As of December 31, 2025 and 2024, the Bank leased all branches and its executive offices. Leasehold improvements
are amortized on a straight-line basis over the term of the related leases or the lives of the assets, whichever is shorter.
Maintenance, repairs and minor improvements are charged to non-interest expense in the period incurred.
Federal Home Loan Bank Stock:
The FHLB-NY has assigned to the Company a mandated membership stock ownership requirement, based on its
asset size. In addition, for all borrowing activity, the Company is required to purchase shares of FHLB-NY non-marketable
capital stock at par. Such shares are redeemed by FHLB-NY at par with reductions in the Company’s borrowing levels. The
Company carries its investment in FHLB-NY stock at historical cost. The Company periodically reviews its FHLB-NY stock
to determine if impairment exists. At December 31, 2025 and 2024, the Company considered among other things the earnings
performance, credit rating and asset quality of the FHLB-NY. Based on this review, the Company did not consider the value of
our investment in FHLB-NY stock to be impaired at December 31, 2025 and 2024.
Income Taxes:
Deferred income tax assets and liabilities are determined using the asset and liability (or balance sheet) method.
Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences
between book and tax basis of the various balance sheet assets and liabilities. A deferred tax liability is recognized on all
taxable temporary differences and a deferred tax asset is recognized on all deductible temporary differences and operating
losses and tax credit carry-forwards. A valuation allowance is recognized to reduce the potential deferred tax asset, if it is
“more likely than not” that all or some portion of that potential deferred tax asset will not be realized. Uncertain tax positions
that meet the more likely than not recognition threshold are measured to determine the amount to recognize. An uncertain tax
position is measured at the amount that management believes has a greater than 50% likelihood of realization upon settlement.
The Company must also take into account changes in tax laws or rates when valuing the deferred income tax amounts it
carries on its Consolidated Statements of Financial Condition. The Company recognizes interest and penalties on income taxes
in income tax expense.
Stock Compensation Plans:
The Company accounts for its stock-based compensation using a fair-value-based measurement method for share-
based payment transactions with employees and directors. The Company measures the cost of employee and directors services
received in exchange for an award of an equity instrument based on the grant date fair value of the award. That cost is
recognized over the period during which the employee and directors are required to provide services in exchange for the
award. The requisite service period is usually the vesting period, as such according to the terms of these awards, at times
provide for vesting upon retirement, the cost for these awards are fully recognized at the earlier of the retirement eligibility
date or vesting date. Forfeitures are recorded in the period they occur.
Benefit Plans:
The Company sponsors a 401(k), and profit sharing plan for its employees. The Company also sponsors a non-
qualified deferred compensation plan for certain senior officers, and a non-qualified pension plan for its outside directors. The
Company had also sponsored post retirement healthcare and life insurance benefit plans for its employees, for which the
Company adopted the resolution to terminate effective December 29, 2025. The qualified pension plan was frozen in 2006, no
longer allowing additional participants or accruals from that point forward.
The Company recognizes the funded status of a benefit plan – measured as the difference between plan assets at fair
value and the benefit obligation – in the Consolidated Statements of Financial Condition, with the unrecognized credits and
charges recognized, net of taxes, as a component of accumulated other comprehensive income (loss). These credits or charges
arose as a result of gains or losses and prior service costs or credits that arose during prior periods but were not recognized as
components of net periodic benefit cost.
Treasury Stock:
The Company records treasury stock at cost. Treasury stock is reissued at average cost.
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Leases:
The Company determines whether an arrangement contains a lease at inception. An arrangement contains a lease if it
implicitly or explicitly identifies an asset to be used and conveys the right to control the use of the identified asset in exchange
for consideration. As a lessee, we recognize operating right-of-use (“ROU”) leases in Right of use asset and operating lease
liabilities in Operating lease liability on the Consolidated Statements of Financial Condition.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized upon
commencement of the lease based on the present value of the lease payments over the lease term. As most of the Company’s
leases do not provide an implicit interest rate, we generally use the Company’s incremental borrowing rate based on the
estimated rate of interest for fully collateralized and fully amortizing borrowings over a similar term of the lease payments at
commencement date to determine the present value of lease payments. When readily determinable, we use the implicit
rate. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that we
will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease
expense is recognized in line items Occupancy and equipment, Other operating expenses, and Professional services on the
Consolidated Statements of Operations. The Company’s variable lease payments were recorded in Occupancy and equipment
expense within the Consolidated Statements of Operations and are not included in the recognition of ROU assets and related
lease liabilities.
Derivatives:
The Company’s derivative instruments are carried at fair value in the Company’s financial statements as part of Other
assets for derivatives with positive fair values and Other liabilities for derivatives with negative fair values. The accounting for
changes in the fair value of a derivative instrument is dependent upon whether or not it qualifies and has been designated as a
hedge for accounting purposes, and further, by the type of hedging relationship.
To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the
exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy
must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability or forecasted
transaction and type of risk to be hedged, and how the effectiveness of the derivative is assessed prospectively and
retrospectively. The extent to which a derivative has been, and is expected to continue to be, effective at offsetting changes in
the fair value of the hedged item must be assessed at least quarterly. If it is determined that a derivative is not highly effective
at hedging the designated exposure, hedge accounting is discontinued. For cash flow hedges, the changes in the fair value of
the derivative are recorded as a component of accumulated other comprehensive income or loss, net of tax, and subsequently
reclassified into earnings when the hedged transaction effects earnings. For fair value hedges, the gain or loss on the
derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, is recognized in earnings on
the same line as the hedged item. Cash flows from cash flow hedges and fair value hedges are disclosed in the Consolidated
Statements of Cash Flows within operating activities. At December 31, 2025, our cash flow hedges have a maximum
remaining term of 43 months.
For non-portfolio layer method fair value hedges, the hedge basis (the amount of the change in fair value) is added to
(or subtracted from) the carrying amount of the hedged item. For portfolio layer method hedges, the hedge basis does not
adjust the carrying value of the hedged item and is instead maintained on a closed portfolio basis. These basis adjustments
would be allocated to the amortized cost of specific loans or available for sale securities within the pools if either of the
hedges were de-designated.
Comprehensive Income:
Comprehensive net income (loss) consists of net income (loss) and other comprehensive income (loss). Other
comprehensive income (loss) includes (i) unrealized gains and losses on securities available for sale and reclassification
adjustments for realized gains and losses on securities available for sale; (ii) unrealized gains and losses on derivatives in cash
flow hedge relationships and reclassifications of deferred gains and losses when the hedge item impacts earnings;
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(iii) adjustments to net periodic pension costs; and (iv) changes in the fair value of instrument-specific credit risk from the
Company’s liabilities carried at fair value pursuant to the fair value option.
The Company releases the income tax effects related to components of accumulated other comprehensive income
into income when the underlying item to which the deferred tax effects relate is recognized in earnings.
Segment Reporting:
Management views the Company as operating as a single unit, a community bank.
Advertising Expense:
Costs associated with advertising are expensed as incurred. The Company recorded advertising expenses of $3.0
million, $2.5 million, and $2.1 million for the years ended December 31, 2025, 2024, and 2023, respectively, recorded in the
Professional services in the Consolidated Statements of Operations.
Earnings per Common Share:
Basic earnings per common share is computed by dividing net income (loss) available to common shareholders by
the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is
computed using the same net income (loss) amount, but the denominator is adjusted to reflect the potential dilution that would
occur if outstanding potentially dilutive securities were converted into common stock. The dilutive effect of stock options,
warrants and other similar stock-based awards is determined using the treasury stock method, under which it is assumed that
the proceeds that would be received upon exercise are used to repurchase shares at the average market price during the period.
The dilutive effect of other potentially dilutive common shares, such as convertible preferred stock or convertible debt, is
determined using the if-converted method, when applicable. Potentially dilutive common shares are included in the
computation of diluted earnings per common share only when their inclusion is dilutive; securities that are anti-dilutive are
excluded from the diluted earnings per common share calculation.
Unvested stock-based compensation awards containing non-forfeitable rights to dividends paid on the Company’s
common stock are considered participating securities and therefore are included in the two-class method for calculating
earnings per common share. Under the two-class method, all earnings (distributed and undistributed) are allocated to common
shares and participating securities based on their respective rights to receive dividends on the common stock. The Company
grants restricted stock to certain employees under its stock-based compensation plan. Recipients receive cash dividends during
the vesting periods of these awards, including on the unvested portion of such awards. Since these dividends are non-
forfeitable, the unvested awards are considered participating securities and therefore have earnings allocated to them.
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88
Earnings per common share have been computed based on the following, for the years ended December 31:
2025
2024
2023
(Dollars in thousands, except per share data)
Net income (loss), as reported
$
18,880
$
(31,333)
$
28,664
Less: Dividends paid and earnings allocated to participating securities
(501)
(386)
(339)
Income (loss) attributable to common stock
$
18,379
$
(31,719)
$
28,325
Divided by:
Weighted average common stock and participating securities
outstanding
34,492
29,949
29,925
Less: Weighted average participating securities
(557)
(435)
(384)
Total weighted average common stock outstanding
33,935
29,514
29,541
Basic earnings (loss) per common share
$
0.54
$
(1.07)
$
0.96
Diluted earnings (loss) per common share (1)
$
0.54
$
(1.07)
$
0.96
Dividend Payout ratio
163.0 %
n/m
91.7 %
(1)
There were no common stock equivalents outstanding during the periods presented. All RSU’s and PRSU’s are included in the participant
securities.
There were no options that were anti-dilutive for the years ended December 31, 2025, 2024, and 2023.
3. Loans and Allowance for Credit Losses
The composition of loans, net of fees and costs, is as follows at the periods indicated:
December 31,
2025
2024
(In thousands)
Multi-family residential
$
2,382,828
$
2,527,222
Commercial real estate
1,993,018
1,973,124
One-to-four family ― mixed-use property
476,423
511,222
One-to-four family ― residential
319,353
244,282
Construction
54,821
60,399
Small Business Administration
17,523
19,925
Commercial business and other
1,395,853
1,401,602
Net unamortized premiums and unearned loan fees
12,488
10,097
Total loans, net of fees and costs excluding portfolio layer basis adjustments
6,652,307
6,747,873
Unallocated portfolio layer basis adjustments (1)
1,645
(2,025)
Total loans, net of fees and costs
$
6,653,952
$
6,745,848
(1)
This amount represents portfolio layer method basis adjustments related to loans hedged in a closed portfolio. Under GAAP portfolio layer
method basis adjustments are not allocated to individual loans, however, the amounts impact the net loan balance. These basis adjustments would
be allocated to the amortized cost of specific loans within the pool if the hedge was de-designated. See Note 20 (“Derivative Financial
Instruments”) of the Notes to the Consolidated Financial Statements.
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89
The majority of our loan portfolio is invested in multi-family residential, commercial real estate and commercial
business loans, which totaled 86.9% and 87.9% of our gross loans at December 31, 2025 and 2024, respectively. Our
concentration in these types of loans increases the overall level of credit risk inherent in our loan portfolio. The greater risk
associated with these types of loans could require us to increase our allowance and provision for credit losses and to maintain
an ACL as a percentage of total loans in excess of the allowance currently maintained. In addition to our loan portfolio, at
December 31, 2025, we were servicing $95.9 million of loans for others.
Loans secured by multi-family residential property and commercial real estate generally involve a greater degree of
risk than residential mortgage loans and generally carry larger loan balances. The increased credit risk is the result of several
factors, including the concentration of principal in a smaller number of loans and borrowers, the effects of general economic
conditions on income producing properties and the increased difficulty in evaluating and monitoring these types of loans.
Furthermore, the repayments of loans secured by these types of properties are typically dependent upon the successful
operation of the related property, which is usually owned by a legal entity with the property being the entity’s only asset. If the
cash flow from the property is reduced, the borrower’s ability to repay the loan may be impaired. If the borrower defaults, our
only remedy may be to foreclose on the property, for which the market value may be less than the balance due on the related
mortgage loan.
Loans secured by commercial business and other loans involve a greater degree of risk for the same reasons as for
multi-family residential and commercial real estate loans with the added risk that many of the loans are not secured by
improved properties.
Loan originations and purchases were $847.4 million, $698.2 million, and $818.1 million for the years ended
December 31, 2025, 2024, and 2023, respectively. While we primarily rely on originating our own loans, we purchased $267.8
million, $173.5 million, and $166.3 million during the years ended December 31, 2025, 2024, and 2023, respectively. We
purchase loans when the loans complement our loan portfolio strategy. Loans purchased must meet our underwriting standards
when they were originated.
To minimize the risks involved in the origination of multi-family residential, commercial real estate and commercial
business and other loans, the Company adheres to defined underwriting standards, which include reviewing the expected net
operating income generated by the real estate collateral securing the loan, the age and condition of the collateral, the financial
resources and income level of the borrower and the borrower’s experience in owning or managing similar properties. We
typically require debt service coverage of at least 125% of the monthly loan payment. We generally originate these loans up to
a maximum of 75% of the appraised value or the purchase price of the property, whichever is less. Any loan with a final loan-
to-value ratio in excess of 75% must be approved by the Bank’s Board of Directors or the Loan Committee as an exception to
policy. We generally rely on the income generated by the property as the primary means by which the loan is repaid. However,
personal guarantees may be obtained for additional security from these borrowers. Additionally, for commercial business and
other loans which are not secured by improved properties, the Bank will secure these loans with business assets, including
accounts receivables, inventory and real estate and generally require personal guarantees.
The Company may modify loans to enable a borrower experiencing financial difficulties to continue making
payments when it is deemed to be in the Company’s best long-term interest. When modifying a loan, an assessment of
whether a borrower is experiencing financial difficulty is made on the date of modification. This modification may include
reducing the loan interest rate, extending the loan term, any other-than-insignificant payment delay, principal forgiveness or
any combination of these types of modifications. When such modifications are performed, a change to the allowance for credit
losses is generally not required as the methodologies used to estimate the allowance already capture the effect of borrowers
experiencing financial difficulty. At December 31, 2025 and 2024, there were no commitments to lend additional funds to
borrowers who have received a loan modification because of financial difficulty.
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90
The following tables show loan modifications made to borrowers experiencing financial difficulty during 2025:
For the year ended December 31, 2025
(Dollars in thousands)
Other-than-insignificant Payment Delay
Loan Modifications Made to Borrowers
Experiencing Financial Difficulty
Number
Amortized Cost
Basis
% of Total
Class of
Financing
Receivable
Financial Effect
Multi-family residential
2
$
14,164
0.6 %
One loan to make reduced monthly
principal payments to June 2027. One
loan to make interest only payments to
October 2029.
Commercial business and other
1
2,155
0.2 %
Provided payment deferral to be
collected at maturity (January 2027)
Total
3
$
16,319
For the year ended December 31, 2025
(Dollars in thousands)
Combination - Rate Reduction and Other-than-insignificant Payment Delay
Loan Modifications Made to Borrowers
Experiencing Financial Difficulty
Number
Amortized Cost
Basis
% of Total
Class of
Financing
Receivable
Financial Effect
Multi-family residential
1
$
5,128
0.2 %
Borrower to make interest only payment
to October 2029 (48 months) and rate
reduced to 5.00% from 6.88%
Commercial real estate
1
8,400
0.4 %
Borrower to make interest only payment
to December 2026 (18 months) and rate
reduced to 6.00% from 7.22%
Total
2
$
13,528
For the year ended December 31, 2025
(Dollars in thousands)
Combination - Rate Reduction,Term Extension and Principal Forgiveness
Loan Modifications Made to Borrowers
Experiencing Financial Difficulty
Number
Amortized Cost
Basis
% of Total
Class of
Financing
Receivable
Financial Effect
Commercial business and other
1
$
572
— %
Provided principal forgiveness for a
portion of the loan. Extended
maturity to March 2031 (65 months)
and rate reduced to 7.92% from
14.75%
Total
1
$
572
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91
The following tables show loan modifications made to borrowers experiencing financial difficulty during 2024:
For the year ended December 31, 2024
(Dollars in thousands)
Combination - Term Extension and Reduced Interest Rate
Loan Modifications Made to Borrowers
Experiencing Financial Difficulty
Number
Amortized Cost
Basis
% of Total
Class of
Financing
Receivable
Financial Effect
Commercial business and other
1
$
378
— %
Extended Maturity to August 2026 (3
months) and reduced the interest rate to
zero percent
Total
1
$
378
For the year ended December 31, 2024
(Dollars in thousands)
Other-than-insignificant Payment Delay
Loan Modifications Made to
Borrowers Experiencing Financial
Difficulty
Number
Amortized
Cost Basis
% of Total
Class of
Financing
Receivable
Financial Effect
Multi-family residential
1
$
7,472
0.3 %
Provided principal payment
deferral to be collected at 18-
month deferral period (April 2026)
Commercial real estate
1
$
29,890
1.5 %
Provided payment deferral through
April 2026 to be collected at
maturity (January 2027)
Total
2
$
37,362
For the year ended December 31, 2024
(Dollars in thousands)
Combination - Term Extension and Other-than-insignificant Payment Delay
Loan Modifications Made to
Borrowers Experiencing Financial
Difficulty
Number
Amortized
Cost Basis
% of Total
Class of
Financing
Receivable
Financial Effect
Commercial real estate
1
$
2,793
0.1 %
Extended Maturity to January 2027
(32 months) and provided payment
deferral to be collected at maturity
Total
1
$
2,793
For the year ended December 31, 2024
(Dollars in thousands)
Term Extension
Loan Modifications Made to
Borrowers Experiencing Financial
Difficulty
Number Amortized Cost Basis
% of Total
Class of
Financing
Receivable
Financial Effect
Commercial business and other
1
$
8
— %
Extended Maturity to
December 2028 (28 months)
Total
1
$
8
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92
The following table shows the payment status of borrowers experiencing financial difficulty and for which a modification has
occurred at:
Payment Status of Borrowers Experiencing Financial Difficulty (Amortized Cost Basis)
(In thousands)
Current
30-89 Days Past
Due
90+ Days Past
Due
Total Modified
December 31, 2025
Multi-family residential
$
19,292
$
—
$
—
$
19,292
Commercial real estate
8,400
—
—
8,400
Commercial business and other
2,727
—
—
2,727
Total
$
30,419
$
—
$
—
$
30,419
December 31, 2024
Multi-family residential
$
7,472
$
—
$
—
$
7,472
Commercial real estate
32,706
—
—
32,706
Commercial business and other
8
—
266
274
Total
$
40,186
$
—
$
266
$
40,452
The following tables show our non-accrual loans at amortized cost with no related allowance and interest income
recognized for loans ninety days or more past due and still accruing for periods shown below:
At or for the year ended December 31, 2025
(In thousands)
Non-accrual
amortized
cost
beginning of
the
reporting
period
Non-accrual
amortized
cost end of
the
reporting
period
Non-
accrual
with no
related
allowance
Interest
income
recognized
Loans
ninety days
or more past
due and still
accruing
Multi-family residential
$
11,707
$
11,558
$
8,642
$
53
$
—
Commercial real estate
6,376
22,344
5,115
20
—
One-to-four family - mixed-use property
117
237
237
6
—
One-to-four family - residential
812
1,224
1,224
3
—
Small Business Administration
2,531
558
558
366
—
Commercial business and other
12,454
7,621
4,188
145
—
Total
$
33,997
$
43,542
$
19,964
$
593
$
—
At or for the year ended December 31, 2024
(In thousands)
Non-accrual
amortized
cost
beginning of
the
reporting
period
Non-accrual
amortized
cost end of
the
reporting
period
Non-
accrual
with no
related
allowance
Interest
income
recognized
Loans
ninety days
or more past
due and still
accruing
Multi-family residential
$
3,640
$
11,707
$
6,476
$
5
$
—
Commercial real estate
—
6,376
6,376
—
—
One-to-four family - mixed-use property
1,005
117
117
1
—
One-to-four family - residential
4,670
812
812
2
—
Small Business Administration
2,576
2,531
2,531
—
—
Commercial business and other
11,768
12,454
6,046
3
—
Total
$
23,659
$
33,997
$
22,358
$
11
$
—
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93
The following is a summary of interest foregone on non-accrual loans for the years ended December 31:
2025
2024
2023
(In thousands)
Interest income that would have been recognized had the loans performed in
accordance with their original terms
$
3,444
$
2,885
$
1,995
Less: Interest income included in the results of operations
593
11
25
Total foregone interest
$
2,851
$
2,874
$
1,970
The following tables show the aging of the amortized cost basis in past-due loans at the period indicated by class of
loan at:
At December 31, 2025
(In thousands)
30 - 59
Days Past
Due
60 - 89
Days Past
Due
Greater
than 90
Days
Total Past
Due
Current
Total Loans
(1)
Multi-family residential
$
3,914
$
1,165
$ 11,558
$ 16,637
$ 2,371,513
$ 2,388,150
Commercial real estate
2,785
—
22,344
25,129
1,970,023
1,995,152
One-to-four family - mixed-use property
263
—
237
500
478,310
478,810
One-to-four family - residential
2,264
53
1,224
3,541
316,744
320,285
Construction
—
—
—
—
54,748
54,748
Small Business Administration
160
—
558
718
17,029
17,747
Commercial business and other
7,874
1
7,050
14,925
1,382,490
1,397,415
Total
$ 17,260
$
1,219
$ 42,971
$ 61,450
$ 6,590,857
$ 6,652,307
At December 31, 2024
(In thousands)
30 - 59
Days Past
Due
60 - 89
Days Past
Due
Greater
than 90
Days
Total Past
Due
Current
Total Loans
(1)
Multi-family residential
$ 12,596
$
9,255
$ 11,707
$ 33,558
$ 2,498,055
$ 2,531,613
Commercial real estate
4,846
—
6,376
11,222
1,963,400
1,974,622
One-to-four family - mixed-use property
870
1,234
117
2,221
511,717
513,938
One-to-four family - residential
802
65
812
1,679
242,914
244,593
Construction
—
—
—
—
60,114
60,114
Small Business Administration
—
—
2,531
2,531
17,664
20,195
Commercial business and other
409
2,239
12,432
15,080
1,387,718
1,402,798
Total
$ 19,523
$ 12,793
$ 33,975
$ 66,291
$ 6,681,582
$ 6,747,873
(1) The tables above excludes the unallocated portfolio layer basis adjustments totaling $1.6 million, and ($2.0) million related to loans hedged in a closed
pool at December 31, 2025, and 2024, respectively. See Note 20 (“Derivative Financial Instruments”) of the Notes to the Consolidated Financial Statements.
Table of Contents
94
The following tables show the activity in the allowance for credit losses for the periods indicated:
December 31, 2025
One-to-four
One-to-four
Commercial
Multi-family
Commercial
family - mixed-
family -
Construction
Small Business
business and
(In thousands)
residential
real estate
use property
residential
loans
Administration
other
Total
Beginning balance
$
13,145
$
9,288
$
1,623
$
759
$
371
$
1,523
$
13,443
$ 40,152
Charge-offs
(2,935)
(1,347)
(55)
(5)
—
(279)
(6,782)
(11,403)
Recoveries
—
—
—
53
—
52
1,449
1,554
Provision (benefit)
2,391
5,618
(332)
68
(200)
585
4,369
12,499
Ending balance
$
12,601
$
13,559
$
1,236
$
875
$
171
$
1,881
$
12,479
$ 42,802
December 31, 2024
One-to-four
One-to-four
Commercial
Multi-family
Commercial
family - mixed-
family -
Construction
Small Business
business and
(In thousands)
residential
real estate
use property
residential
loans
Administration
other
Total
Beginning balance
$
10,373
$
8,665
$
1,610
$
668
$
158
$
1,626
$
17,061
$ 40,161
Charge-offs
—
(421)
—
(14)
—
(7)
(7,527)
(7,969)
Recoveries
2
—
2
102
—
108
71
285
Provision (benefit)
2,770
1,044
11
3
213
(204)
3,838
7,675
Ending balance
$
13,145
$
9,288
$
1,623
$
759
$
371
$
1,523
$
13,443
$ 40,152
December 31, 2023
One-to-four
One-to-four
Commercial
Multi-family
Commercial
family - mixed-
family -
Construction
Small Business
business and
(In thousands)
residential
real estate
use property
residential
loans
Administration
other
Total
Beginning balance
$
9,552
$
8,184
$
1,875
$
901
$
261
$
2,198
$
17,471
$ 40,442
Charge-offs
—
(8)
—
(23)
—
(7)
(11,119)
(11,157)
Recoveries
2
—
1
52
—
248
42
345
Provision (benefit)
819
489
(266)
(262)
(103)
(813)
10,667
10,531
Ending balance
$
10,373
$
8,665
$
1,610
$
668
$
158
$
1,626
$
17,061
$ 40,161
In accordance with our policy and the current regulatory guidelines, we designate loans as “Special Mention,” which
are considered “Criticized Loans,” and “Substandard,” “Doubtful,” or “Loss,” which are considered “Classified Loans”. If a
loan does not fall within one of the previous mentioned categories and management believes weakness is evident then we
designate the loan as “Watch”, all other loans would be considered “Pass.” Loans that are non-accrual are designated as
Substandard, Doubtful, or Loss. These loan designations are updated quarterly. We designate a loan as Substandard when a
well-defined weakness is identified that may jeopardize the orderly liquidation of the debt. We designate a loan Doubtful when
it displays the inherent weakness of a Substandard loan with the added provision that collection of the debt in full, on the basis
of existing facts, is highly improbable. We designate a loan as Loss if it is deemed the debtor is incapable of repayment. The
Company does not hold any loans designated as Loss, as loans that are designated as Loss are charged to the Allowance for
Credit Losses. We designate a loan as Special Mention if the asset does not warrant classification within one of the other
classifications, but contains a potential weakness that deserves closer attention.
The provision recorded in 2025 was driven by a reserve applied to one commercial real estate loan which lost its
primary tenant, an increased reserve applied to one commercial business and other loan, coupled with net charge-offs as a
result of loan sales, short payoffs and previously reserved loans deemed unrecoverable. The provision recorded in 2024 was
primarily driven by increased reserves on several commercial business and real estate multi-family loans. The provision
recorded in 2023 was primarily driven by fully reserving for two non-accrual commercial business and increasing reserves for
the elevated risk presented by the current rate environment to adjustable-rate loan’s debt coverage ratios. The Company
specifies both the reasonable and supportable forecast and reversion periods in three economic conditions (expansion,
transition, contraction). The Company uses the straight-line method to revert back to historical losses. During 2025 and 2024,
the Company’s reasonable and supportable forecast and reversion period was two quarters and four quarters, respectively.
Table of Contents
95
The following tables summarize the risk category of mortgage and commercial business loans by loan portfolio
segments and class of loans by year of origination for the periods indicated:
December 31, 2025
Revolving Loans
Revolving Loans
Amortized Cost
converted to
(In thousands)
2025
2024
2023
2022
2021
Prior
Basis
term loans
Total
Multi-family Residential
Pass
$
70,542
$ 107,310
$ 226,950
$
401,808
$ 262,801
$ 1,237,130
$
3,489
$
—
$ 2,310,030
Watch
—
924
900
3,727
3,296
36,154
—
—
45,001
Special Mention
—
—
—
—
—
20,752
—
—
20,752
Substandard
—
—
—
810
—
11,557
—
—
12,367
Total Multi-family Residential
$
70,542
$ 108,234
$ 227,850
$
406,345
$ 266,097
$ 1,305,593
$
3,489
$
—
$ 2,388,150
Gross charge-offs
$
—
$
—
$
—
$
1,681
$
—
$
1,254
$
—
$
—
$
2,935
Commercial Real Estate
Pass
$ 231,927
$ 190,608
$ 187,887
$
285,929
$ 129,592
$
858,072
$
—
$
—
$ 1,884,015
Watch
—
1,978
3,697
4,211
9,027
61,480
—
—
80,393
Special Mention
8,400
—
—
—
—
—
—
—
8,400
Substandard
—
—
—
—
—
22,344
—
—
22,344
Total Commercial Real Estate
$ 240,327
$ 192,586
$ 191,584
$
290,140
$ 138,619
$
941,896
$
—
$
—
$ 1,995,152
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
1,347
$
—
$
—
$
1,347
1-4 Family Mixed-Use Property
Pass
$
16,863
$
17,055
$
20,271
$
42,216
$
36,388
$
339,151
$
—
$
—
$
471,944
Watch
—
—
—
—
287
5,757
—
—
6,044
Special Mention
—
—
—
—
—
263
—
—
263
Substandard
—
—
—
—
—
559
—
—
559
Total 1-4 Family Mixed-Use Property
$
16,863
$
17,055
$
20,271
$
42,216
$
36,675
$
345,730
$
—
$
—
$
478,810
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
55
$
—
$
—
$
55
1-4 Family Residential
Pass
$
2,573
$
15,545
$ 102,740
$
51,485
$
6,573
$
120,572
$
5,755
$
7,531
$
312,774
Watch
—
—
855
484
—
2,939
—
1,502
5,780
Special Mention
—
—
—
—
—
450
—
57
507
Substandard
—
—
—
—
—
722
—
502
1,224
Total 1-4 Family Residential
$
2,573
$
15,545
$ 103,595
$
51,969
$
6,573
$
124,683
$
5,755
$
9,592
$
320,285
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
5
$
—
$
—
$
5
Construction
Pass
$
353
$
—
$
—
$
—
$
—
$
—
$
36,145
$
—
$
36,498
Watch
—
—
—
—
18,250
—
—
—
18,250
Total Construction
$
353
$
—
$
—
$
—
$
18,250
$
—
$
36,145
$
—
$
54,748
Small Business Administration
Pass
$
7,811
$
1,619
$
1,125
$
3,134
$
875
$
2,283
$
—
$
—
$
16,847
Watch
—
—
—
—
—
174
—
—
174
Special Mention
—
—
—
—
—
26
—
—
26
Substandard
—
—
—
—
1
699
—
—
700
Total Small Business Administration
$
7,811
$
1,619
$
1,125
$
3,134
$
876
$
3,182
$
—
$
—
$
17,747
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
279
$
—
$
—
$
279
Commercial Business
Pass
$ 118,366
$
61,302
$
67,109
$
51,852
$
19,275
$
78,080
$
179,583
$
—
$
575,567
Watch
72
2,939
—
—
2,394
4,335
2,968
—
12,708
Special Mention
—
—
—
—
1,487
2,381
—
—
3,868
Substandard
572
639
267
2,155
—
94
6,227
—
9,954
Total Commercial Business
$ 119,010
$
64,880
$
67,376
$
54,007
$
23,156
$
84,890
$
188,778
$
—
$
602,097
Gross charge-offs
$
—
$
—
$
871
$
2,621
$
—
$
3,115
$
95
$
—
$
6,702
Commercial Business - Secured by RE
Pass
$ 107,989
$
67,865
$
54,158
$
161,875
$ 105,186
$
260,238
$
—
$
—
$
757,311
Watch
—
8,543
—
—
8,405
18,041
—
—
34,989
Substandard
—
—
—
—
—
2,787
—
—
2,787
Total Commercial Business - Secured by RE
$ 107,989
$
76,408
$
54,158
$
161,875
$ 113,591
$
281,066
$
—
$
—
$
795,087
Other
Pass
$
—
$
—
$
—
$
—
$
—
$
147
$
84
$
—
$
231
Total Other
$
—
$
—
$
—
$
—
$
—
$
147
$
84
$
—
$
231
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
80
$
—
$
—
$
80
Total by Loan Type
Total Pass
$ 556,424
$ 461,304
$ 660,240
$
998,299
$ 560,690
$ 2,895,673
$
225,056
$
7,531
$ 6,365,217
Total Watch
72
14,384
5,452
8,422
41,659
128,880
2,968
1,502
203,339
Total Special Mention
8,400
—
—
—
1,487
23,872
—
57
33,816
Total Substandard
572
639
267
2,965
1
38,762
6,227
502
49,935
Total Loans (1)
$ 565,468
$ 476,327
$ 665,959
$ 1,009,686
$ 603,837
$ 3,087,187
$
234,251
$
9,592
$ 6,652,307
Total Gross charge-offs
$
—
$
—
$
871
$
4,302
$
—
$
6,135
$
95
$
—
$
11,403
Table of Contents
96
December 31, 2024
Revolving Loans
Revolving Loans
Amortized Cost
converted to
(In thousands)
2024
2023
2022
2021
2020
Prior
Basis
term loans
Total
Multi-family Residential
Pass
$ 116,814
$ 248,004
$
375,084
$ 272,747
$ 195,539
$ 1,250,368
$
5,369
$
—
$ 2,463,925
Watch
—
—
7,587
—
2,724
31,665
—
—
41,976
Special Mention
—
—
10,163
—
—
2,388
—
—
12,551
Substandard
—
—
—
704
2,811
9,646
—
—
13,161
Total Multi-family Residential
$ 116,814
$ 248,004
$
392,834
$ 273,451
$ 201,074
$ 1,294,067
$
5,369
$
—
$ 2,531,613
Commercial Real Estate
Pass
$ 199,396
$ 197,228
$
310,725
$ 144,569
$ 122,576
$
924,520
$
—
$
—
$ 1,899,014
Watch
—
—
430
4,023
6,660
58,119
—
—
69,232
Substandard
—
—
—
—
—
6,376
—
—
6,376
Total Commercial Real Estate
$ 199,396
$ 197,228
$
311,155
$ 148,592
$ 129,236
$
989,015
$
—
$
—
$ 1,974,622
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
421
$
—
$
—
$
421
1-4 Family Mixed-Use Property
Pass
$
17,759
$
23,552
$
45,487
$
40,515
$
27,448
$
352,004
$
—
$
—
$
506,765
Watch
—
—
—
—
—
5,338
—
—
5,338
Special Mention
—
—
—
—
445
1,273
—
—
1,718
Substandard
—
—
—
—
—
117
—
—
117
Total 1-4 Family Mixed-Use Property
$
17,759
$
23,552
$
45,487
$
40,515
$
27,893
$
358,732
$
—
$
—
$
513,938
1-4 Family Residential
Pass
$
2,136
$
53,556
$
22,382
$
7,117
$
16,039
$
121,653
$
6,256
$
8,588
$
237,727
Watch
—
—
496
254
—
2,769
113
1,265
4,897
Special Mention
—
—
—
—
—
838
—
215
1,053
Substandard
—
—
—
—
—
477
—
439
916
Total 1-4 Family Residential
$
2,136
$
53,556
$
22,878
$
7,371
$
16,039
$
125,737
$
6,369
$
10,507
$
244,593
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
14
$
—
$
—
$
14
Construction
Pass
$
—
$
51
$
2
$
18,215
$
—
$
—
$
39,230
$
—
$
57,498
Special Mention
—
2,616
—
—
—
—
—
—
2,616
Total Construction
$
—
$
2,667
$
2
$
18,215
$
—
$
—
$
39,230
$
—
$
60,114
Small Business Administration
Pass
$
7,356
$
1,906
$
3,211
$
1,092
$
1,672
$
1,123
$
—
$
—
$
16,360
Watch
—
—
—
—
—
774
—
—
774
Special Mention
—
—
—
—
—
325
—
—
325
Substandard
—
—
—
1,691
—
1,045
—
—
2,736
Total Small Business Administration
$
7,356
$
1,906
$
3,211
$
2,783
$
1,672
$
3,267
$
—
$
—
$
20,195
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
7
$
—
$
—
$
7
Commercial Business
Pass
$ 109,139
$
92,916
$
71,479
$
29,665
$
17,744
$
99,620
$
208,419
$
—
$
628,982
Watch
166
4,850
—
1,630
4,310
1,720
1,500
—
14,176
Special Mention
—
—
—
—
—
16
—
—
16
Substandard
716
429
4,891
—
—
3,119
3,856
—
13,011
Doubtful
—
462
—
—
—
—
570
—
1,032
Total Commercial Business
$ 110,021
$
98,657
$
76,370
$
31,295
$
22,054
$
104,475
$
214,345
$
—
$
657,217
Gross charge-offs
$
—
$
—
$
—
$
4,121
$
—
$
266
$
3,083
$
—
$
7,470
Commercial Business - Secured by RE
Pass
$
68,613
$
45,976
$
169,904
$ 125,523
$
99,794
$
203,839
$
673
$
—
$
714,322
Watch
8,671
—
—
—
3,721
396
—
—
12,788
Special Mention
—
—
—
—
—
14,418
—
—
14,418
Substandard
—
—
—
—
—
3,884
—
—
3,884
Total Commercial Business - Secured by RE
$
77,284
$
45,976
$
169,904
$ 125,523
$ 103,515
$
222,537
$
673
$
—
$
745,412
Other
Pass
$
—
$
—
$
—
$
—
$
—
$
85
$
84
$
—
$
169
Total Other
$
—
$
—
$
—
$
—
$
—
$
85
$
84
$
—
$
169
Gross charge-offs
$
—
$
—
$
—
$
—
$
—
$
57
$
—
$
—
$
57
Total by Loan Type
Total Pass
$ 521,213
$ 663,189
$
998,274
$ 639,443
$ 480,812
$ 2,953,212
$
260,031
$
8,588
$ 6,524,762
Total Watch
8,837
4,850
8,513
5,907
17,415
100,781
1,613
1,265
149,181
Total Special Mention
—
2,616
10,163
—
445
19,258
—
215
32,697
Total Substandard
716
429
4,891
2,395
2,811
24,664
3,856
439
40,201
Total Doubtful
—
462
—
—
—
—
570
—
1,032
Total Loans (1)
$ 530,766
$ 671,546
$ 1,021,841
$ 647,745
$ 501,483
$ 3,097,915
$
266,070
$
10,507
$ 6,747,873
Total Gross charge-offs
$
—
$
—
$
—
$
4,121
$
—
$
765
$
3,083
$
—
$
7,969
(1) The tables above excludes the unallocated portfolio layer basis adjustments totaling $1.6 million, and ($2.0) million related to loans hedged in a closed
pool at December 31, 2025, and 2024, respectively. See Note 20 (“Derivative Financial Instruments”) of the Notes to the Consolidated Financial Statements.
Although classified and criticized credits and non-accrual loans increased during the period, this deterioration did not
result in a corresponding increase in the allowance for credit losses. The impacted loans are generally well secured with low
loan-to-value ratios, and the underlying collateral coverage and expected losses remained low. The credit quality indicators
used in our allowance for credit losses methodology are monitored and updated on an ongoing basis to reflect current portfolio
performance, borrower-specific information and changes in economic conditions.
Table of Contents
97
Included within net loans as of December 31, 2025 and 2024, was $2.1 million and $2.7 million, respectively, of
consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in
process according to local requirements of the applicable jurisdiction.
The following table presents types of collateral-dependent loans by class of loan which were individually evaluated
for impairment:
Collateral Type
December 31, 2025
December 31, 2024
(In thousands)
Real Estate
Business Assets
Real Estate
Business Assets
Multi-family residential
$
11,558
$
—
$
11,707
$
—
Commercial real estate
22,344
—
6,376
—
One-to-four family - mixed-use property
237
—
117
—
One-to-four family - residential
1,224
—
812
—
Small Business Administration
—
558
—
2,531
Commercial business and other
2,787
4,834
3,884
8,570
Total
$
38,150
$
5,392
$
22,896
$
11,101
For collateral dependent loans, the Company has adopted the practical expedient to measure the ACL based on the
fair value of collateral. The ACL is calculated on an individual loan basis based on the shortfall between the fair value of the
loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds
the amortized cost, no allowance is required.
Off-Balance Sheet Credit Losses
Also included within scope of the current expected credit losses (“CECL”) standard are off-balance sheet loan
commitments, which includes the unfunded portion of committed lines of credit and commitments “in-process”.
Commitments “in‐process” reflect loans not on the Company’s books but rather negotiated loan / line of credit terms and rates
that the Company has offered to customers and is committed to honoring. In reference to “in‐process” credits, the Company
defines an unfunded commitment as a credit that has been offered to and accepted by a borrower, which has not closed and by
which the obligation is not unconditionally cancellable.
The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit
risk through a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company.
The allowance for credit losses on off-balance sheet exposures is adjusted as a provision for credit loss expense. The Company
uses similar assumptions and risk factors that are developed for collectively evaluated financing receivables. This estimate
includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments to
be funded over its estimated life.
The provision (benefit) for credit losses for off-balance-sheet items are included in “Other operating expenses” on the
Consolidated Statements of Operations.
The following table presents the activity in the allowance for off-balance sheet credit losses:
For the years ended December 31,
(In thousands)
2025
2024
2023
Balance at beginning of period
$
1,037
1,102
$
970
Provision (benefit) (1)
696
(65)
132
Allowance for off-balance sheet - credit losses (2)
$
1,733
$
1,037
$
1,102
(1) Included in “Other operating expenses” on the Consolidated Statements of Operations.
(2) Included in “Other liabilities” on the Consolidated Statements of Financial Condition.
Table of Contents
98
4. Loans held for sale
At December 31, 2025, the Company did not have loans held for sale. At December 31, 2024, the Company had
$70.1 million in performing multi-family loans held for sale. A valuation allowance of $3.8 million was recorded to mark
these loans down to the estimated price that could be obtained in a whole loan sale. The valuation allowance was recorded in
net gain (loss) on sale of loans in the Consolidated Statements of Operations.
We sold the guarantee portion of SBA loans totaling $8.0 million during 2025. There were no SBA sales in 2024 and
2023.
The Company has implemented a strategy of selling certain delinquent and non-performing loans. Once the
Company has decided to sell a loan, the sale usually closes in a short period of time, generally within the same quarter. Loans
designated held for sale are reclassified from loans held for investment to loans held for sale. Terms of sale generally includes
cash due upon the closing of the sale, no contingencies or recourse to the Company and servicing is released to the buyer.
Additionally, at times the Company may sell participating interests in performing loans.
The following tables show loans sold during the period indicated:
For the year ended December 31, 2025
(Dollars in thousands)
Loans sold
Proceeds
Net charge-offs
Net gain (1)
Performing loans
Multi-family residential
12
$
33,721
$
—
$
—
Commercial
1
3,120
—
—
Small Business Administration
8
8,648
—
802
Total
21
$
45,489
$
—
$
802
Delinquent and non-performing loans
Multi-family residential
10
$
16,869
$
(1,681)
$
250
Commercial
1
5,098
—
238
One-to-four family - mixed-use property
6
1,830
(55)
33
Total
17
$
23,797
$
(1,736)
$
521
For the year ended December 31, 2024
(Dollars in thousands)
Loans sold
Proceeds
Net charge-offs
Net gain
Performing loans
Multi-family residential
1
$
2,446
$
—
$
—
Commercial
1
5,875
—
—
Total
2
$
8,321
$
—
$
—
Delinquent and non-performing loans
Multi-family residential
5
$
2,973
$
—
$
55
Commercial
3
3,797
—
—
One-to-four family - mixed-use property
6
2,446
—
194
One-to-four family - residential
1
1,223
—
24
Total
15
$
10,439
$
—
$
273
For the year ended December 31, 2023
(Dollars in thousands)
Loans sold
Proceeds
Net charge-offs
Net gain
Performing loans
Commercial
2
$
2,000
$
—
$
—
Total
2
$
2,000
$
—
$
—
Delinquent and non-performing loans
Multi-family residential
7
$
3,622
$
—
$
69
Commercial
3
1,867
(8)
—
One-to-four family - mixed-use property
3
1,553
—
39
Total
13
$
7,042
$
(8)
$
108
(1)
Does not include $2.6 million net gain on sale recorded from the reversal of a previously recorded valuation allowance upon the transfer of $32.1
million of loans held for sale to loans held for investment and $0.2 million net loss on sale recorded to write-down performing mortgage loans to their
anticipated sales price.
Table of Contents
99
5. Other Real Estate Owned
During the years ended December 31, 2025 and 2023, the Company did not have any OREO. During the year ended
December 31, 2024, the Company acquired and then subsequently sold one OREO for $0.8 million, resulting in a gain on sale
of $0.2 million.
6. Securities
The following table summarizes the Company’s portfolio of securities held-to-maturity at:
Allowance
Net
Gross
Gross
Amortized
for
Carrying
Unrecognized
Unrecognized
December 31, 2025
Cost
Credit Losses Amount
Gains
Losses
Fair Value
(In thousands)
Municipals
$
42,711
$
(348)
$
42,363
$
—
$
(3,342)
$
39,021
FNMA
7,817
—
7,817
—
(606)
7,211
Total
$
50,528
$
(348)
$
50,180
$
—
$
(3,948)
$
46,232
Allowance
Net
Gross
Gross
Amortized
for
Carrying
Unrecognized
Unrecognized
December 31, 2024
Cost
Credit Losses Amount
Gains
Losses
Fair Value
(In thousands)
Municipals
$
44,002
$
(353)
$
43,649
$
—
$
(5,834)
$
37,815
FNMA
7,836
—
7,836
—
(933)
6,903
Total
$
51,838
$
(353)
$
51,485
$
—
$
(6,767)
$
44,718
The following table summarizes the Company’s portfolio of securities available for sale at:
Allowance
Gross
Gross
Amortized
for
Unrealized
Unrealized
December 31, 2025
Cost
Credit Losses
Gains
Losses
Fair Value
(In thousands)
U.S. government agencies
$
6,262
$
—
$
31
$
(29)
$
6,264
Municipals
20,627
(2,921)
—
(445)
17,261
Corporate
241,091
—
2,674
(2,734)
241,031
Mutual funds
12,650
—
—
—
12,650
Collateralized loan obligations
289,349
—
168
(288)
289,229
Other
1,551
—
—
—
1,551
Total other securities
571,530
(2,921)
2,873
(3,496)
567,986
REMIC and CMO
611,292
—
3,830
(217)
614,905
GNMA
60,116
—
247
—
60,363
FNMA
65,446
—
669
—
66,115
FHLMC
79,235
—
1,320
—
80,555
Total mortgage-backed securities
816,089
—
6,066
(217)
821,938
Total Securities available for sale
$ 1,387,619
$
(2,921)
$
8,939
$
(3,713)
$ 1,389,924
Table of Contents
100
Allowance
Gross
Gross
Amortized
for
Unrealized
Unrealized
December 31, 2024
Cost
Credit Losses
Gains
Losses
Fair Value
(In thousands)
U.S. government agencies
$
8,804
$
—
$
77
$
(33)
$
8,848
Municipals
20,627
(2,627)
—
—
18,000
Corporate
130,882
—
735
(6,368)
125,249
Mutual funds
11,890
—
—
—
11,890
Collateralized loan obligations
420,260
—
1,126
(569)
420,817
Other
1,465
—
—
—
1,465
Total other securities
593,928
(2,627)
1,938
(6,970)
586,269
REMIC and CMO
707,540
—
1,107
(1,067)
707,580
GNMA
30,099
—
—
(154)
29,945
FNMA
99,183
—
11
(1,048)
98,146
FHLMC
76,048
—
13
(96)
75,965
Total mortgage-backed securities
912,870
—
1,131
(2,365)
911,636
Total securities available for sale
$ 1,506,798
$
(2,627)
$
3,069
$
(9,335)
$ 1,497,905
The corporate securities held by the Company at December 31, 2025 and 2024 are issued by U.S. banking
institutions. The CMOs held by the Company at December 31, 2025 and 2024 are either fully guaranteed or issued by a
government sponsored enterprise.
The following tables detail the amortized cost and fair value of the Company’s securities classified as held-to-
maturity and available for sale at December 31, 2025, by contractual maturity. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized
Securities held-to-maturity:
Cost
Fair Value
(In thousands)
Due after ten years
$
42,711
$
39,021
Total other securities
42,711
39,021
Mortgage-backed securities
7,817
7,211
Total securities held-to-maturity
$
50,528
$
46,232
Amortized
Securities available for sale:
Cost
Fair Value
(In thousands)
Due after one year through five years
$
64,081
$
63,263
Due after five years through ten years
241,897
242,680
Due after ten years
252,902
249,393
Total other securities
558,880
555,336
Mutual funds
12,650
12,650
Mortgage-backed securities
816,089
821,938
Total securities available for sale
$
1,387,619
$
1,389,924
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101
The following tables show the Company’s securities without an allowance for credit losses with gross unrealized
losses and their fair value, aggregated by category and length of time that individual securities have been in a continuous
unrealized loss position:
At December 31, 2025
Total
Less than 12 months
12 months or more
Unrealized
Unrealized
Unrealized
Count
Fair Value
Losses
Fair Value
Losses
Fair Value
Losses
(Dollars in thousands)
Held-to-maturity securities
FNMA
1
7,211
(606)
—
—
7,211
(606)
Total mortgage-backed securities
1
7,211
(606)
—
—
7,211
(606)
Total
1
$
7,211
$
(606)
$
—
$
—
$
7,211
$
(606)
Available for sale securities
U.S. government agencies
3
$
3,819
$
(29)
$
1,159
$
(7)
$
2,660
$
(22)
Corporate
17
118,976
(2,734)
27,310
(190)
91,666
(2,544)
Collateralized loan obligations
13
164,174
(288)
144,154
(281)
20,020
(7)
Total other securities
33
286,969
(3,051)
172,623
(478)
114,346
(2,573)
REMIC and CMO
7
43,674
(217)
28,296
(105)
15,378
(112)
Total mortgage-backed securities
7
43,674
(217)
28,296
(105)
15,378
(112)
Total
40
$
330,643
$
(3,268)
$
200,919
$
(583)
$
129,724
$
(2,685)
At December 31, 2024
Total
Less than 12 months
12 months or more
Unrealized
Unrealized
Unrealized
Count
Fair Value
Losses
Fair Value
Losses
Fair Value
Losses
(Dollars in thousands)
Held-to-maturity securities
FNMA
1
6,903
(933)
—
—
6,903
(933)
Total mortgage-backed securities
1
6,903
(933)
—
—
6,903
(933)
Total
1
$
6,903
$
(933)
$
—
$
—
$
6,903
$
(933)
Available for sale securities
U.S. government agencies
2
$
3,339
$
(33)
$
—
$
—
$
3,339
$
(33)
Corporate
13
95,758
(6,368)
—
—
95,758
(6,368)
Collateralized loan obligations
18
201,470
(569)
201,470
(569)
—
—
Total other securities
33
300,567
(6,970)
201,470
(569)
99,097
(6,401)
REMIC and CMO
19
287,948
(1,067)
281,570
(936)
6,378
(131)
GNMA
4
29,945
(154)
28,443
(134)
1,502
(20)
FNMA
6
97,417
(1,048)
97,417
(1,048)
—
—
FHLMC
3
56,540
(96)
56,540
(96)
—
—
Total mortgage-backed securities
32
471,850
(2,365)
463,970
(2,214)
7,880
(151)
Total
65
$
772,417
$
(9,335)
$
665,440
$
(2,783)
$
106,977
$
(6,552)
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102
During the years ended December 31, 2025 and 2023, the Company did not transfer any securities between
classification categories. During the year ended December 31, 2024, one held-to-maturity municipal security with an
amortized cost of $20.6 million and a net carrying value of $19.9 million was transferred to available for sale. Management
determined it was appropriate to transfer the security to available for sale due to a prolonged deterioration in creditworthiness
and at the time of transfer was non-accrual. The transfer did not taint the remaining held-to-maturity portfolio. The fair value
of the security at December 31, 2025 and 2024 was $17.3 million, and $18.0 million, respectively. It was determined after
review that the decline in fair value was credit-related and as such was recorded as a provision to the allowance for credit
losses totaling $2.9 million and $2.6 million, at December 31, 2025 and 2024, respectively.
Except for the security discussed above, the Company reviewed each available for sale debt security that had an
unrealized loss at December 31, 2025 and December 31, 2024. The Company does not have the intent to sell these securities
and it is more likely than not the Company will not be required to sell the securities before recovery of the securities’
amortized cost basis. This conclusion is based upon considering the Company’s cash and working capital requirements and
contractual and regulatory obligations, none of which the Company believes would cause the sale of the securities. All but one
of these securities are rated investment grade or better, and all these securities have a long history of no credit losses. The
Bank holds approximately $10.0 million of corporate debt from a New York based bank holding company that on February 6,
2024 was downgraded two levels to Ba2 (Moody’s non-investment grade). On March 1, 2024, the bond was downgraded four
levels to B3 and then on March 15, 2024, the bond was upgraded one level to B2. On March 12, 2025, the bond rating was
upgraded from B2 to a B1 rating. At this time, we do not consider the decline in fair value to be credit related given the
underlying bond has not missed any payments and financial performance has not deteriorated to a level where the institution is
not well capitalized. The Company has placed the security on the watch list and will continue to monitor this risk position
closely to determine if any action steps and valuation adjustments are required in the future. It is not anticipated that this
security or any other available for sale security held at December 31, 2025, would be settled at a price that is less than the
amortized cost of the Company’s investment.
In determining the risk of loss for available for sale securities, the Company considered that mortgage-backed
securities are either fully guaranteed or issued by a government sponsored enterprise, which has a credit rating and perceived
credit risk comparable to U.S. government, the tranche of the purchased collateralized loan obligations (“CLO”) and the issuer
of Corporate securities are global systematically important banks. Each of these securities is performing according to its terms
and, in the opinion of management, will continue to perform according to its terms. Based on this review, management
believes that the unrealized losses have resulted from other factors not deemed credit-related and no allowance for credit loss
was recorded.
The Company reviewed each held-to-maturity security at December 31, 2025 and 2024, as part of its quarterly ACL
process, resulting in an allowance for credit losses of $0.3 million and $0.4 million at December 31, 2025 and 2024,
respectively.
Accrued interest receivable on held-to-maturity debt securities totaled $0.1 million at both December 31, 2025 and
2024, and is excluded from the estimate of credit losses. Accrued interest receivable on available for sale debt securities
totaled $8.3 million and $8.8 million at December 31, 2025 and 2024, respectively.
The following table presents the activity in the allowance for credit losses for debt securities available for sale:
For the years ended December 31,
2025
2024
2023
(In thousands)
Beginning balance
$
2,627
$
—
$
—
Provision (benefit)
294
2,627
—
Allowance for credit losses
$
2,921
$
2,627
$
—
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103
The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity:
For the years ended December 31,
2025
2024
2023
(In thousands)
Beginning balance
$
353
$
1,087
$
1,100
Reversal of allowance upon transfer to AFS
—
(750)
—
Provision (benefit)
(5)
16
(13)
Allowance for credit losses
$
348
$
353
$
1,087
During 2025, the Company sold available for sale securities with carrying values at the time of sale totaling $175.4
million at an average yield of 5.57% and purchased $496.6 million of securities at an average yield of 5.69%. During 2024,
the Company sold available for sale securities with carrying values at the time of sale totaling $489.2 million at an average
yield of 2.32% and purchased $1,327.3 million of securities at an average yield of 6.40%. During 2023, the Company did not
sell any available for sale securities but purchased $187.2 million at an average yield of 6.56%.
The following table represents the gross gains and gross losses realized from the sale of securities available for sale
for the periods indicated:
For the years ended December 31,
2025
2024
2023
(In thousands)
Gross gains from the sale of securities
$
1,331
$
276
$
—
Gross losses from the sale of securities
(623)
(72,591)
—
Net gain (loss) from the sale of securities
$
708
$
(72,315)
$
—
Included in “Other assets” within our Consolidated Statements of Financial Condition are amounts held in a rabbi
trust for certain non-qualified deferred compensation plans totaling $28.6 million and $27.2 million at December 31, 2025 and
2024, respectively.
7. Bank Premises and Equipment, net
Bank premises and equipment are as follows at December 31:
2025
2024
(In thousands)
Leasehold improvements
$
55,599
$
51,979
Equipment and furniture
37,007
35,405
Total
92,606
87,384
Accumulated depreciation and amortization
(74,872)
(69,532)
Bank premises and equipment, net
$
17,734
$
17,852
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104
8. Deposits
Total deposits at the periods shown and the weighted average rate on deposits at December 31, 2025, are as follows:
Weighted Average
December 31,
Nominal Rate
2025
2024
2025 (1)
(In thousands)
Interest-bearing deposits:
Certificates of deposit accounts
$
2,288,844
$
2,650,164
3.79 %
Savings accounts
93,752
98,964
0.39
Money market accounts
1,791,616
1,686,109
3.39
NOW accounts
2,108,653
1,854,069
3.14
Total interest-bearing deposits
6,282,865
6,289,306
Non-interest bearing demand deposits
969,287
836,545
Total due to depositors
7,252,152
7,125,851
Mortgagors' escrow deposits
59,590
53,082
0.30
Total deposits
$
7,311,742
$
7,178,933
(1) The weighted average rate does not reflect the benefit of interest rate swaps.
The aggregate amount of time deposits with denominations of $250,000 or more (excluding brokered deposits issued
in $1,000 amounts under a master certificates of deposit) was $510.7 million and $514.4 million at December 31, 2025 and
2024, respectively. The aggregate amount of brokered deposits was $1,131.1 million and $1,319.0 million at December 31,
2025 and 2024, respectively.
At December 31, 2025 and 2024, reciprocal deposits totaled $724.4 million and $753.2 million, respectively.
Government deposits are collateralized by either securities, letters of credit issued by FHLB-NY or are placed in the
IntraFi Network which arranges for placement of funds into certificates of deposit accounts, demand accounts or money
market accounts issued by other member banks of the network in increments of less than $250,000 to ensure that both
principal and interest are eligible for full FDIC deposit insurance. The letters of credit are collateralized by mortgage loans
pledged by the Company.
At December 31, 2025, government deposits totaled $1,908.8 million, of which $582.6 million were IntraFi Network
deposits and $1,326.2 million were collateralized by $69.4 million in securities and $1,543.4 million of letters of credit. At
December 31, 2024, government deposits totaled $1,775.5 million, of which $599.1 million were IntraFi Network deposits
and $1,176.4 million were collateralized by $41.9 million in securities and $1,405.7 million of letters of credit.
Interest expense on deposits is summarized as follows for the years ended December 31:
2025
2024
2023
(In thousands)
Certificates of deposit accounts
$
88,823
$ 100,235
$
64,844
Savings accounts
395
472
520
Money market accounts
61,804
67,992
58,898
NOW accounts
77,235
75,683
64,191
Total due to depositors
228,257
244,382
188,453
Mortgagors' escrow deposits
270
254
202
Total interest expense on deposits
$ 228,527
$ 244,636
$ 188,655
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105
Scheduled remaining maturities of certificates of deposit accounts are summarized as follows for the years ended
December 31:
2025
2024
(In thousands)
Within 12 months
$ 2,176,340
$ 2,522,666
More than 12 months to 24 months
16,087
114,053
More than 24 months to 36 months
93,795
8,192
More than 36 months to 48 months
1,715
3,799
More than 48 months to 60 months
773
1,185
More than 60 months
134
269
Total certificates of deposit accounts
$ 2,288,844
$ 2,650,164
9. Borrowed Funds
Borrowed funds are summarized as follows at December 31:
2025
2024
Weighted
Weighted
Average
Average
Amount
Rate
Amount
Rate
(Dollars in thousands)
FHLB-NY advances - fixed rate:
Due in 2025
$
—
— % $ 445,000
4.54 %
Due in 2026
20,162
4.16
20,162
4.16
Due in 2027
136,656
3.97
136,656
3.97
Due in 2028
27,115
3.83
27,115
3.83
Total FHLB-NY advances
183,933
3.97
628,933
4.37
Other Borrowings:
Due in 2025
—
—
50,000
4.39
Due in 2026
60,000
3.69
—
—
Total Other Borrowings
60,000
3.69
50,000
4.39
Subordinated debentures
Due in 2031
124,575
3.48
124,131
3.50
Due in 2032
64,479
6.45
64,195
6.49
Total Subordinated debentures
189,054
4.49
188,326
4.52
Junior subordinated debentures at fair value - adjustable rate due
in 2037
51,666
6.55
48,795
7.82
Total borrowings
$ 484,653
4.41 % $ 916,054
4.59 %
FHLB-NY Advances
The FHLB-NY advances are fixed rate borrowings with no call provisions. The borrowings original terms range from
one week to five years.
At December 31, 2025, the Company has borrowing availability totaling $2,661.6 million from the FHLB-NY in
Federal Home Loan Bank advances and letters of credit secured with pledged real estate loans totaling $4.0 billion. As of
December 31, 2025, the Company had $1,727.3 million outstanding in combined balances of FHLB-NY advances and letters
of credit.
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106
Other Borrowings
At December 31, 2025, the Company’s available borrowing capacity through the Federal Reserve Bank Discount
Window totaled $1,383.6 million, with no borrowings outstanding, secured by pledged loans and securities totaling $1.9
billion. The Company also has unsecured lines of credit with other commercial banks totaling $567.0 million, with $60.0
million outstanding.
Subordinated Debentures
Subordinated debt totaled $189.1 million at December 31, 2025, which included $0.9 million of unamortized debt
issuance costs. These costs are being amortized to interest expense using the level yield method through the first call date of
the subordinated debt.
The following table shows the terms of the subordinated debt issued by the Holding Company which is outstanding
at December 31, 2025:
Subordinated Debentures
(Dollars in thousands)
Amount
$
65,000 $
125,000
Issue Date
August 24, 2022
November 22, 2021
Initial Rate
6.000 %
3.125 %
First Reset Date
September 1, 2027
December 1, 2026
First Call Date
September 1, 2027
December 1, 2026
Holding Type
Variable
Variable
Spread over 3-month SOFR
3.130 %
2.035 %
Maturity Date
September 1, 2032
December 1, 2031
The subordinated debentures issued by the Company may not be redeemed prior to their respective first call dates,
except that the Company may redeem the subordinated debentures at any time, at its option, in whole but not in part, subject to
obtaining any required regulatory approvals, if (i) a change or prospective change in law occurs that could prevent the
Company from deducting interest payable on the subordinated debt for U.S. federal income tax purposes, (ii) a subsequent
event occurs that precludes the subordinated debt from being recognized as Tier 2 capital for regulatory capital purposes, or
(iii) the Company is required to register as an investment company under the Investment Company Act of 1940, as amended,
in each case, at a redemption price equal to 100% of the principal amount of the subordinated debt plus any accrued and
unpaid interest through, but excluding, the redemption date.
Junior Subordinated Debentures
The Holding Company has three trusts formed under the laws of the State of Delaware for the purpose of issuing
capital and common securities, and investing the proceeds thereof in $61.9 million of junior subordinated debentures of the
Holding Company. The Holding Company has guaranteed the payment of these trusts’ obligations under their capital
securities. The terms of the junior subordinated debentures are the same as those of the capital securities issued by the trusts.
The securities are callable at any time. The junior subordinated debentures issued by the Holding Company are carried at fair
value in the consolidated financial statements.
The table below shows the terms of the securities issued by the trusts which are outstanding at December 31, 2025.
Flushing Financial Flushing Financial
Flushing Financial
Capital Trust II
Capital Trust III
Capital Trust IV
Issue Date
June 20, 2007
June 21, 2007
July 3, 2007
Initial Rate
7.14 %
6.89 %
6.85 %
First Reset Date
September 1, 2012
June 15, 2012
July 30, 2012
Spread over 3-month SOFR
1.41 %
1.44 %
1.42 %
Maturity Date
September 1, 2037
September 15, 2037
July 30, 2037
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107
The consolidated financial statements do not include the securities issued by the trusts, but rather include the junior
subordinated debentures of the Holding Company.
10. Income Taxes
The Company and its subsidiaries are subject to income tax within U.S. federal, New York, New York City, and
various other state and local jurisdictions. The New York City examination of tax years 2015 through 2017 was closed in May
2025 with adjustments that are not material to the financial statements. The New York examination of tax years 2017 through
2019 was closed in September 2024 with no changes. The Company remains subject to examination for its federal and various
other states income tax returns for the years ending on or after December 31, 2022.
As of December 31, 2025, the Company had net operating loss carry-forwards for federal, New York, and New York
City. The gross federal net operating loss carry-forward is $4.2 million and has no expiration. The post-apportioned gross New
York net operating loss carry-forward is $6.9 million and will expire in 2044. The post-apportioned gross New York City net
operating loss carry-forward is $54.4 million and will begin to expire in 2037.
Income tax expense (benefit) from continuing operations is summarized as follows for the years ended December 31:
2025
2024
2023
(In thousands)
Federal:
Current
$
2,387
$
(2,092)
$
4,904
Deferred
7,696
(8,387)
2,681
Total federal income tax expense (benefit)
10,083
(10,479)
7,585
State and Local:
Current
2,153
1,020
2,544
Deferred
3,403
(7,475)
1,040
Total state and local tax expense (benefit)
5,556
(6,455)
3,584
Total income tax expense (benefit)(1)
$
15,639
$ (16,934)
$
11,169
(1) We do not have pretax income from continuing foreign operations or foreign tax expense.
During 2025, the Company adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures on a Prospective Basis”. The effective tax rates differs from the statutory federal income tax rate as follows for the
years ended December 31, in accordance with ASU 2023-09:
2025
(Dollars in thousands)
U.S. federal statutory tax rate
$
7,249
21.0 %
State and local income tax, net of federal income tax benefit(1)
4,389
12.7
Nontaxable or non-deductible items
Goodwill impairment
3,704
10.7
Tax-exempt income, net (2)
(1,662)
(4.8)
Non-deductible acquisition expenses
1,016
2.9
Non-deductible compensation
563
1.6
Other
74
0.2
Other adjustments
306
1.0
Effective tax rate
$
15,639
45.3 %
(1) New York and New York City made up the majority (greater than 50%) of the state tax effect in this category.
(2) Includes income from tax-exempt securities, net of disallowed interest expense, and income from bank-owned life insurance.
Table of Contents
108
The effective tax rates differ the statutory federal income tax rate as follows for the years ended December 31, prior
to adoption of ASU 2023-09:
2024
2023
(Dollars in thousands)
Taxes at federal statutory rate
$
(10,136)
21.0 % $
8,365
21.0 %
Increase (reduction) in taxes resulting from:
State and local income tax, net of federal income tax
benefit
(5,099)
10.6
2,831
7.1
Tax exempt income, net
(1,258)
2.6
(1,079)
(2.7)
Other
(441)
0.9
1,052
2.6
Taxes at effective rate
$
(16,934)
35.1 % $
11,169
28.0 %
The components of the net deferred tax assets are as follows at December 31:
2025
2024
(In thousands)
Deferred tax assets:
Allowance for credit losses on loans
$
12,991
$
12,400
Net unrealized losses on securities available for sale(1)
—
1,935
Operating lease liabilities
16,341
14,343
Accrued compensation
10,193
10,599
Stock based compensation
2,117
2,181
Depreciation
3,627
3,553
Derivative adjustments
177
426
Pension and post-retirement benefits
1,379
1,941
Other allowances
1,797
2,619
Acquisition fair value marks
366
535
Net operating losses
4,898
15,218
Net unrealized gains on cash flow hedges(1)
1,348
—
Net unrealized losses on pension and post-retirement benefits(1)
1,154
379
Other
903
1,000
Deferred tax assets
57,291
67,129
Deferred tax liabilities:
Right of use assets
16,122
14,144
Net unrealized losses on securities available for sale(1)
1,586
—
Net unrealized gains on cash flow hedges(1)
—
4,793
Deferred loan fees, net
4,055
3,933
Fair value adjustments
1,948
2,748
Net unrealized gains on entity specific fair value(1)
709
698
Other
181
408
Deferred tax liabilities
24,601
26,724
Net deferred tax asset included in other assets
$
32,690
$
40,405
(1) Represents the amount of deferred taxes recorded in accumulated other comprehensive income.
At December 31, 2025, after considering all available positive and negative evidence, management concluded that a
valuation allowance against deferred tax assets was not necessary because it is more likely than not that these tax benefits will
be fully realized in future periods. While management continues to evaluate the need for a valuation allowance prospectively,
it is not expected that a valuation allowance will be required based upon projected profitability.
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109
Income taxes paid (net of refunds received):
For the year ended December 31,
2025
(In thousands)
Federal
$
—
State and local:
New York City (exceeded 5% of total income taxes paid)
1,292
Other
34
Total taxes paid
$
1,326
At December 31, 2025 and 2024, the Company had no material unrecognized tax benefits or accrued interest and
penalties recorded. The Company does not expect the total amount of unrecognized tax benefits to significantly increase
within the next twelve months. The Company's policy is to recognize interest and penalties on income taxes in income tax
expense.
11. Stock-Based Compensation
For the years ended December 31, 2025, 2024, and 2023, the Company’s net income (loss), as reported, includes $3.5
million, $2.2 million, and $5.3 million, respectively, of stock-based compensation costs as recorded in salaries and employee
benefits on the Consolidated Statements of Operations, including the benefit or expense of phantom stock awards, and $1.6
million, $0.8 million, and $1.5 million, respectively, of income tax benefits related to the stock-based compensation plans.
The 2024 Omnibus Incentive Plan (“2024 Omnibus Plan”) became effective on May 29, 2024, after adoption by the
Board of Directors and approval by the stockholders to replace the 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2024
Plan is an “omnibus” stock plan that provides for a variety of equity award vehicles to maintain flexibility. The 2024 Plan, like
the 2014 Plan, permits the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units
(“RSUs”), performance-based restricted stock units (“PRSUs”), and other stock-based awards. Currently, awards to employees
primarily consist of RSUs and PRSUs and to Company directors of RSUs. The 2024 Plan authorizes the issuance of up to
974,000 shares. Although no further awards may be granted under the 2014 Plan, outstanding awards granted prior to
February 29, 2024, will continue in accordance with their terms. To the extent that an award under the 2024 Omnibus Plan is
cancelled, expired, forfeited, settled in cash, settled by issuance of fewer shares than the number underlying the award, or
otherwise terminated without delivery of shares to a participant in payment of the exercise price or taxes relating to an award,
the shares retained by or returned to the Company will be available for future issuance under the 2024 Omnibus Plan. To fund
restricted stock unit awards or option exercises, shares are issued from treasury stock, if available; otherwise, new shares are
issued. Options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards granted under
the 2024 Omnibus Plan are generally subject to a minimum vesting period of three years with stock options having a 10-year
maximum contractual term. Other awards do not have a contractual term of expiration. The Compensation Committee of the
Company’s Board of Directors (the “Compensation Committee”) is authorized to grant awards that vest upon a participant’s
retirement. These amounts are included in stock-based compensation expense at the time of the participant’s retirement
eligibility.
The Company has a long-term incentive compensation program for certain Company executive officers that includes
grants of PRSUs in addition to time-based RSU’s. Under the terms of the PRSU Agreement, the number of PRSUs that may
be earned depends on the extent to which performance goals for the award are achieved over a three-year performance period,
as determined by the Compensation Committee of the Board. The number of PRSUs that may be earned ranges from 0% to
150% of the target award, with no PRSUs earned for below threshold-level performance, 50% of PRSUs earned for threshold-
level performance, 100% of PRSUs earned for target-level performance, and 150% of PRSUs earned for maximum-level
performance. As of December 31, 2025, PRSU’s granted in 2025 and 2024 are being accrued at target with no accrual for the
2023 PRSU’s. The different levels of accrual are commensurate with the projected Company’s performance for the respective
grant.
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The following table summarizes the Company’s RSU and PRSU awards under the 2024 Omnibus Plan for the year
ended December 31, 2025:
RSU Awards
PRSU Awards
Weighted-Average
Weighted-Average
Grant-Date
Grant-Date
Shares
Fair Value
Shares
Fair Value
Non-vested awards at December 31, 2024
322,796
$
18.91
83,160
$
17.42
Granted
228,501
14.44
71,700
14.56
Reduced shares due to performance factor
—
—
(15,810)
19.99
Vested
(126,160)
18.36
—
—
Forfeitures
(23,602)
16.58
—
—
Non-vested awards at December 31, 2025
401,535
$
16.68
139,050
$
15.65
Vested but unissued at December 31, 2025
167,831
$
19.29
—
$
—
As of December 31, 2025, there was $4.6 million of total unrecognized compensation cost related to RSU and PRSU
awards granted under the 2024 and 2014 Omnibus Plans. That cost is expected to be recognized over a weighted-average
period of 1.7 years. The total fair value of awards vested for the years ended December 31, 2025, 2024, and 2023 were $1.5
million, $2.9 million, and $5.8 million, respectively. The vested but unissued RSU awards consist of awards made to
employees and directors who are eligible for retirement. The vested but unissued PRSU awards consist of awards made to
employees who are eligible for retirement. According to the terms of these awards, which provide for vesting upon retirement,
these employees and directors have no risk of forfeiture. These shares will be issued at the original contractual vesting and
settlement dates.
Phantom Stock Plan: The Company maintains a non-qualified phantom stock plan as a supplement to its profit
sharing plan for officers who have achieved the designated level and completed one year of service. Awards are made under
this plan on certain compensation not eligible for contributions made under the profit sharing plan, due to the terms of the
profit sharing plan and the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Employees receive
awards under this plan proportionate to the amount they would have received under the profit sharing plan, but for limits
imposed by the profit sharing plan and the Internal Revenue Code. The awards are made as cash awards, and then converted to
common stock equivalents (phantom shares) at the then current fair value of the Company’s common stock. Dividends are
credited to each employee’s account in the form of additional phantom shares each time the Company pays a dividend on its
common stock. In the event of a change of control (as defined in this plan), an employee’s interest is converted to a fixed
dollar amount and deemed to be invested in the same manner as their interest in the Bank’s non-qualified deferred
compensation plan. Employees vest under this plan 20% per year for the first 5 years of employment and are 100% vested
thereafter. Employees also become 100% vested upon a change of control. Employees receive their vested interest in this plan
in the form of a cash lump sum payment or installments, as elected by the employee, after termination of employment. The
Company adjusts its liability under this plan to the fair value of the shares at the end of each period.
The following table summarizes the Company’s Phantom Stock Plan at or for the year ended December 31, 2025:
Phantom Stock Plan
Shares
Fair Value
Weighted-
Average Fair
Value
Outstanding at December 31, 2024
195,871
$
14.28
Granted
20,845
$
13.86
Distributions
(1,460)
$
13.47
Outstanding and vested at December 31, 2025
215,256
$
15.17
The Company recorded stock-based compensation (benefit) expense for the phantom stock plan of $0.4 million,
($0.2) million, and ($0.3) million for the years ended December 31, 2025, 2024, and 2023, respectively. The total fair value of
distributions from the phantom stock plan were $20,000, $26,000, and $21,000 for the years ended December 31, 2025, 2024,
and 2023, respectively.
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111
12. Pension and Other Postretirement Benefit Plans
The amounts recognized in accumulated other comprehensive loss, on a pre-tax basis, consist of the following, as of
December 31:
Net Actuarial
Loss (Gain)
2025
2024
2023
(In thousands)
Employee Retirement Plan
$
4,777
$
4,380
$
3,978
Other Postretirement Benefit Plans
—
(2,074)
(2,268)
Outside Directors Plan
(974)
(1,079)
(1,158)
Total
$
3,803
$
1,227
$
552
Employee Retirement Plan:
The Company has a funded noncontributory defined benefit retirement plan covering substantially all of its salaried
employees who were hired before September 1, 2005 (the “Retirement Plan”). The benefits are based on years of service and
the employee’s compensation during the three consecutive years out of the final ten years of service, which was completed
prior to September 30, 2006, the date the Retirement Plan was frozen, that produces the highest average. The Bank’s funding
policy is to contribute annually the amount recommended by the Retirement Plan’s actuary. At December 31, 2025 and 2024,
the Bank's Retirement Plan is invested 100% in fixed income funds. The Company did not make a contribution to the
Retirement Plan during the years ended December 31, 2025, 2024, and 2023. Net pension (benefit) expense is recorded in
salaries and employee benefits on the Consolidated Statements of Operations. The Company uses a December 31
measurement date for the Retirement Plan.
The following table sets forth, for the Retirement Plan, the change in benefit obligation and assets, and for the
Company, the amounts recognized in the Consolidated Statements of Financial Condition at December 31:
2025
2024
(In thousands)
Change in benefit obligation:
Projected benefit obligation at beginning of year
$
15,808
$
17,032
Interest cost
820
774
Actuarial (gain) loss
473
(789)
Benefits paid
(1,091)
(1,209)
Projected benefit obligation at end of year
16,010
15,808
Change in plan assets:
Market value of assets at beginning of year
17,922
19,220
Actual return on plan assets
1,139
(89)
Benefits paid
(1,091)
(1,209)
Market value of plan assets at end of year
17,970
17,922
Accrued pension asset included in other assets
$
1,960
$
2,114
Assumptions used to determine the Retirement Plan’s benefit obligations are as follows at December 31:
2025
2024
Weighted average discount rate
5.18 %
5.39 %
Rate of increase in future compensation levels
n/a
n/a
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The mortality assumptions for 2025 and 2024 were based on the Pri-2012 Total Dataset with Scale MP-2021.
The components of the net pension (benefit) expense for the Retirement Plan are as follows for the years ended
December 31:
2025
2024
2023
(In thousands)
Interest cost
$
820
$
774
$
812
Amortization of unrecognized (gain) loss
—
—
—
Expected return on plan assets
(1,062)
(1,135)
(1,109)
Net pension (benefit) expense
(242)
(361)
(297)
Current year actuarial (gain) loss
397
402
34
Amortization of actuarial (gains) losses
—
—
—
Total recognized in other comprehensive (income) loss
397
402
34
Total recognized in net pension (benefit) expense and other comprehensive
(income) loss
$
155
$
41
$
(263)
Assumptions used to develop periodic pension cost for the Retirement Plan for the years ended December 31:
2025
2024
2023
Weighted average discount rate
5.39 %
4.73 %
4.93 %
Rate of increase in future compensation levels
n/a
n/a
n/a
Expected long-term rate of return on assets
5.00 %
5.00 %
4.75 %
The following benefit payments are expected to be paid by the Retirement Plan for the years ending December 31:
Future Benefit
Payments
(In thousands)
2026
$
1,305
2027
1,310
2028
1,304
2029
1,302
2030
1,333
2031-2035
6,060
The long-term rate of return on assets assumption was set based on historical returns earned by fixed income
securities, adjusted to reflect expectations of future returns as applied to the plan’s target allocation of asset classes. Fixed
income securities were assumed to earn real rates of return in the ranges of 3-5%. When these overall return expectations are
applied to the plans target allocation, the result is an expected rate return of 5.00% for 2025.
The Retirement Plan’s weighted average asset allocations by asset category at December 31:
2025
2024
Debt securities
100 %
100 %
At December 31, 2025, Plan assets are invested in a diversified mix of fixed income funds.
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113
The long-term investment objectives are to maintain plan assets at a level that will sufficiently cover long-term
obligations and to generate a return on plan assets that will meet or exceed the rate at which long-term obligations will grow.
Adjustments to this mix are made periodically based on current capital market conditions and plan funding levels.
Performance of the investment fund managers is monitored on an ongoing basis using modern portfolio risk analysis and
appropriate index benchmarks.
The Company does not expect to make a contribution to the Retirement Plan in 2026.
The following table sets forth the Retirement Plan’s assets at the periods indicated:
At December 31,
2025
2024
(In thousands)
Pooled Separate Accounts
Long duration bond fund (a)
$
4,351
$
4,349
Long corporate bond fund (b)
3,488
3,496
Prudential short term (c)
328
271
Mutual Fund
Investment grade bond fund (d)
9,803
9,806
Total
$ 17,970
$ 17,922
a.
Comprised of fixed income securities with durations of longer than six years that seek to maximize total return consistent
with the preservation of capital and prudent investment management.
b.
Comprised of corporate bonds with an average duration within 0.25 years of the benchmark and its average credit quality
is no lower than BBB. The fund seeks to outperform the Bloomberg Barclays Long Corporate Bond Index.
c.
Comprised of money market instruments with an emphasis on safety and liquidity.
d.
Comprised of high quality corporate bonds diversified broadly across industries, issuers and regions. The funds primary
benchmark is the Bloomberg Barclays U.S. Credit Index.
The fair value of the mutual fund is determined daily using quoted market prices in an open market (level 1). The fair
value of the pooled separate accounts is determined by the investment manager and is based on the value of the underlying
assets held at December 31, 2025 and 2024. These are measured at net asset value under the practical expedient with future
redemption dates.
The fair values of the Plan’s investments in pooled separate accounts are calculated each business day. All
investments can be redeemed on a daily basis without restriction. The investments in pooled separate accounts, which are
valued at net asset value, have not been classified in the fair value hierarchy in accordance with Accounting Standards Update
(“ASU”) No. 2015-07 “Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its
Equivalent)”.
Other Postretirement Benefit Plans:
The Company sponsored two unfunded postretirement benefit plans (the “Postretirement Plans”) that covered all
retirees hired prior to January 1, 2011, who were full-time permanent employees with at least five years of service, and their
spouses. Effective January 1, 2011, the Postretirement Plans were no longer available for new hires. One plan provided
medical benefits through a 50% cost sharing arrangement. Effective January 1, 2000, the spouses of future retirees were
required to pay 100% of the premiums for their coverage. The other plan provided life insurance benefits and is
noncontributory. Effective January 1, 2010, life insurance benefits were not available for future retirees. Under these
programs, eligible retirees receive lifetime medical and life insurance coverage for themselves and lifetime medical coverage
for their spouses. Net postretirement (benefit) expense is recorded in salaries and employee benefits on the Consolidated
Statements of Operations.
During December 2025, the Company modified its Postretirement Plans through the following actions:
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114
Curtailment
The Company approved a restructuring program that resulted in the elimination of future service benefits for all
active employees and current retirees. As a result, the Company recognized a curtailment gain of $4.9 million,
reflecting the reduction in future benefits.
Special Termination Benefits
The Company approved a restructuring program that provided benefits to certain senior executives in excess of what
the plan already provided totaling $4.4 million. These amounts paid to senior executives were contractual obligations.
As a result, the Company recognized special termination benefit expense of $6.7 million, reflecting the additional
benefits.
Settlement
As part of the restructuring program, the Company adopted the resolution to terminate the Postretirement Plans
effective December 29, 2025 recognizing a settlement gain of $2.3 million. Final distribution totaling $6.1 million is
expected to be made in the first quarter of 2026.
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115
The following table sets forth, for the Postretirement Plans, the change in benefit obligation and assets, and for the
Company, the amounts recognized in the Consolidated Statements of Financial Condition at December 31:
2025
2024
(In thousands)
Change in benefit obligation:
Projected benefit obligation at beginning of year
$
8,655
$
8,272
Service cost
152
164
Interest cost
458
385
Actuarial (gain) loss
(374)
(20)
Benefits paid
(161)
(146)
Settlements
(10,523)
—
Curtailment
(4,911)
—
Termination Benefits
6,704
—
Projected benefit obligation at end of year
—
8,655
Change in plan assets:
Market value of assets at beginning of year
—
—
Employer contributions
10,684
146
Benefits paid
(10,684)
(146)
Market value of plan assets at end of year
—
—
Accrued pension cost included in other liabilities
$
—
$
8,655
Assumptions used in determining the actuarial present value of the accumulated postretirement benefit obligations at
December 31 are as follows:
2025
2024
Discount rate
5.36 %
5.39 %
Rate of increase in health care costs
Initial
18.00 %
8.00 %
Ultimate (years 2091 and 2090)
4.54 %
4.54 %
Annual rate of salary increase for life insurance
n/a
n/a
The mortality assumptions for 2025 and 2024 were based on the Pri-2012 with Scale MP-2021.
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116
The resulting net periodic postretirement expense consisted of the following components for the years ended
December 31:
2025
2024
2023
(In thousands)
Service cost
$
152
$
164
$
158
Interest cost
458
385
381
Amortization of unrecognized (gain) loss
(190)
(214)
(238)
Amortization of past service credit
—
—
—
Net postretirement benefit expense
420
335
301
Curtailment income
(4,911)
—
—
Settlement income
(2,257)
—
—
Special termination benefits charge
6,704
—
—
Total net periodic benefit (income) cost
(44)
335
301
Current year actuarial gain (loss)
(374)
(20)
6
Amortization of actuarial (gain) loss
2,447
214
238
Amortization of prior service credit
—
—
—
Total recognized in other comprehensive income (loss)
2,073
194
244
Total recognized in net postretirement (benefit) expense and
other comprehensive income (loss)
$ 2,029
$
529
$
545
Assumptions used to develop periodic postretirement expense for the Postretirement Plans for the years ended
December 31:
2025 2024 2023
Rate of return on plan assets
n/a
n/a
n/a
Discount rate
5.36 %
4.73 %
4.93 %
Rate of increase in health care costs
Initial
18.00 %
7.50 %
7.50 %
Ultimate (years 2091, 2090 and 2090)
4.54 %
4.54 %
4.44 %
Annual rate of salary increase for life insurance
n/a
n/a
n/a
There are no expected future benefit payments under the Postretirement Plan, as the Company adopted a resolution to
terminate effective December 29, 2025.
Defined Contribution Plans:
The Bank maintains a tax qualified 401(k) plan which covers substantially all salaried employees who have
completed one year of service. Currently, annual matching contributions under the Bank’s 401(k) plan equal 50% of the
employee’s contributions, up to a maximum of 3% of the employee’s base salary. In addition, the 401(k) plan includes the
Defined Contribution Retirement Plan (“DCRP”), under which the Bank contributes an amount equal to 4% of an employee’s
eligible compensation as defined in the plan, and the Profit Sharing Plan (“PSP”) under, which at the discretion of the
Company’s Board of Directors, a contribution is made. Employees hired after December 31, 2019 are not eligible to receive
DCRP and PSP contributions. Contributions for the DCRP and PSP are made in the form of Company common stock at or
after the end of each year. Annual contributions under these plans are subject to the limits imposed under the Internal Revenue
Code. Contributions by the Company into the 401(k) plan vest 20% per year over the employee’s first five years of service.
Contributions to these plans are 100% vested upon a change of control (as defined in the applicable plan). Compensation
expense recorded by the Company for these plans amounted to $2.8 million, $4.6 million, and $3.4 million for the years ended
December 31, 2025, 2024, and 2023, respectively.
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117
The Bank provides a non-qualified deferred compensation plan as an incentive for officers who have achieved the
designated level and completed one year of service. In addition to the amounts deferred by the officers, the Bank matches 50%
of their contributions, generally up to a maximum of 5% of the officers’ base salary. Matching contributions under this plan
vest 20% per year for five years. The non-qualified deferred compensation plan assets are held in a rabbi trust totaling $23.6
million and $21.1 million at December 31, 2025 and 2024, respectively. Contributions become 100% vested upon a change of
control (as defined in the plan). Compensation expense recorded by the Company for this plan amounted to $0.5 million for
each of the years 2025, 2024, and 2023.
Outside Director Retirement Plan:
The Bank has an unfunded noncontributory defined benefit Outside Director Retirement Plan (the “Directors’ Plan”), which
provides benefits to each non-employee director who became a non-employee director before January 1, 2004. Upon
termination an eligible director will be paid an annual retirement benefit equal to $48,000. Such benefit will be paid in
equal monthly installments for 120 months. In the event of a termination of Board service due to a change of control, an
eligible non-employee director will receive a cash lump sum payment equal to 120 months of benefit. In the event of the
director’s death, the surviving spouse will receive the equivalent benefit. No benefits will be payable to a director who is
removed for cause. The Holding Company has guaranteed the payment of benefits under the Directors’ Plan, for this reason
the Bank has assets held in a rabbi trust totaling $2.2 million and $2.1 million at December 31, 2025 and 2024, respectively.
Net pension (benefit) expense is recorded in other operating expense on the Consolidated Statements of Operations. The Bank
uses a December 31 measurement date for the Directors’ Plan.
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118
The following table sets forth, for the Directors’ Plan, the change in benefit obligation and assets, and for the
Company, the amounts recognized in the Consolidated Statements of Financial Condition at December 31:
2025
2024
(In thousands)
Change in benefit obligation:
Projected benefit obligation at beginning of year
$
971
$
1,016
Service cost
9
9
Interest cost
50
45
Actuarial (gain) loss
7
(75)
Benefits paid
—
(24)
Projected benefit obligation at end of year
1,037
971
Change in plan assets:
Market value of assets at beginning of year
—
—
Employer contributions
—
24
Benefits paid
—
(24)
Market value of plan assets at end of year
—
—
Accrued pension cost included in other liabilities
$
1,037
$
971
The components of the net pension expense for the Directors’ Plan are as follows for the years ended December 31:
2025
2024
2023
(In thousands)
Service cost
$
9
$
9
$
8
Interest cost
50
45
59
Amortization of unrecognized (gain) loss
(98)
(154)
(161)
Net pension expense (income)
(39)
(100)
(94)
Current actuarial (gain) loss
7
(75)
(285)
Amortization of actuarial gain (loss)
98
154
161
Total recognized in other comprehensive income (loss)
105
79
(124)
Total recognized in net pension expense and other
comprehensive income (loss)
$
66
$
(21)
$
(218)
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119
Assumptions used to determine benefit obligations and periodic pension expense for the Directors’ Plan for the years
ended December 31:
2025
2024
2023
Weighted average discount rate for the benefit obligation
5.18 %
5.39 %
4.73 %
Weighted average discount rate for periodic pension benefit expense
5.39 %
4.73 %
4.93 %
Rate of increase in future compensation levels
n/a
n/a
n/a
The following benefit payments under the Directors’ Plan, which reflect expected future service, are expected to be
paid for the years ending December 31:
Future Benefit
Payments
(In thousands)
2026
$
96
2027
96
2028
96
2029
96
2030
108
2031 - 2035
720
13. Stockholders’ Equity
Dividend Restrictions on the Bank:
In connection with the Bank’s conversion from mutual to stock form in November 1995, a special liquidation account
was established at the time of conversion, in accordance with the requirements of its primary regulator, which was equal to its
capital as of June 30, 1995. The liquidation account is reduced as and to the extent that eligible account holders have reduced
their qualifying deposits. Subsequent increases in deposits do not restore an eligible account holder’s interest in the liquidation
account. In the event of a complete liquidation of the Bank, each eligible account holder will be entitled to receive a
distribution from the liquidation account in an amount proportionate to the current adjusted qualifying balances for accounts
then held. As of December 31, 2025 and 2024, the Bank’s liquidation account was $0.2 million and $0.3 million, respectively,
and was presented within retained earnings.
In addition to the restriction described above, New York State and Federal banking regulations place certain
restrictions on dividends paid by the Bank to the Holding Company. The total amount of dividends which may be paid at any
date is generally limited to the net income of the Bank for the current year and prior two years, less any dividends previously
paid from those earnings. As of December 31, 2025, the Bank did not have retained earnings available to distribute to the
Holding Company in the form of cash dividends.
In addition, dividends paid by the Bank to the Holding Company would be prohibited if the effect thereof would
cause the Bank’s capital to be reduced below applicable minimum capital requirements.
The amount of dividends the Holding Company can declare and pay is generally limited to its net profits for the
preceding year less dividends paid during that period. In addition, dividends paid by the Holding Company would be
prohibited if the effect thereof would cause the Holding Company’s capital to be reduced below applicable minimum capital
requirements.
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120
Treasury Stock Transactions:
The Holding Company did not repurchase any of its common stock during the year ended December 31, 2025 and
2024. At December 31, 2025, 807,964 shares remained subject to repurchase under the authorized stock repurchase program.
Stock will be purchased under the authorized stock repurchase program from time to time, in the open market or through
private transactions, subject to market conditions and at the discretion of the management of the Company. There is no
expiration or maximum dollar amount under this authorization.
Accumulated Other Comprehensive Income (Loss):
The following are changes in accumulated other comprehensive loss by component, net of tax, for the years ended:
Unrealized Gains
Unrealized Gains
(Losses) on
(Losses) on
Fair Value
Available for Sale
Cash flow
Defined Benefit
Option Elected
December 31, 2025
Securities
Hedges
Pension Items on Liabilities
Total
(In thousands)
Beginning balance, net of tax
$
(4,331)
$
10,728
$
(848)
$
1,584
$
7,133
Other comprehensive income (loss) before reclassifications,
net of tax
8,464
(5,759)
(1,773)
64
996
Amounts reclassified from accumulated other comprehensive
income (loss), net of tax
(493)
(8,062)
(27)
—
(8,582)
Net current period other comprehensive income (loss), net of tax
7,971
(13,821)
(1,800)
64
(7,586)
Ending balance, net of tax
$
3,640
$
(3,093)
$
(2,648)
$
1,648
$
(453)
Unrealized Gains
Unrealized Gains
(Losses) on
(Losses) on
Fair Value
Available for Sale
Cash flow
Defined Benefit
Option Elected
December 31, 2024
Securities
Hedges
Pension Items on Liabilities
Total
(In thousands)
Beginning balance, net of tax
$
(54,744)
$
14,796
$
(381)
$
1,678
$ (38,651)
Other comprehensive income (loss) before reclassifications,
net of tax
429
13,449
(213)
(94)
13,571
Amounts reclassified from accumulated other
comprehensive income (loss), net of tax
49,984
(17,517)
(254)
—
32,213
Net current period other comprehensive income (loss), net of
tax
50,413
(4,068)
(467)
(94)
45,784
Ending balance, net of tax
$
(4,331)
$
10,728
$
(848)
$
1,584
$
7,133
Unrealized Gains Unrealized Gains
(Losses) on
(Losses) on
Fair Value
Available for Sale
Cash flow
Defined Benefit
Option Elected
December 31, 2023
Securities
Hedges
Pension Items on Liabilities
Total
(In thousands)
Beginning balance, net of tax
$
(63,106)
$
25,380
$
(275)
$
1,513 $
(36,488)
Other comprehensive income (loss) before reclassifications,
net of tax
8,362
6,943
170
165
15,640
Amounts reclassified from accumulated other
comprehensive income (loss), net of tax
—
(17,527)
(276)
—
(17,803)
Net current period other comprehensive income (loss), net of tax
8,362
(10,584)
(106)
165
(2,163)
Ending balance, net of tax
$
(54,744)
$
14,796
$
(381)
$
1,678 $
(38,651)
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121
The following tables set forth significant amounts reclassified out of accumulated other comprehensive loss by
component for the periods indicated:
For the year ended December 31, 2025
Amounts Reclassified from
Details about Accumulated Other
Accumulated Other
Affected Line Item in the Statement
Comprehensive Income Components
Comprehensive Income (Loss) Where Net Income (Loss) is Presented
(In thousands)
Unrealized gains (losses) on available for sale
securities
$
708
Net gain (loss) on sale of securities
(215)
Provision (benefit) for income taxes
$
493
Net of tax
Cash flow hedges:
Interest rate swaps benefit (expense)
$
11,897
Interest expense
Interest rate floors options benefit (expense)
(322)
Interest and fees on loans
11,575
Total before tax
(3,513)
Provision (benefit) for income taxes
$
8,062
Net of tax
Amortization of defined benefit pension items:
Actuarial losses benefit (expense)
$
29 (1) Other operating expense
(2)
Provision (benefit) for income taxes
$
27
Net of tax
For the year ended December 31, 2024
Amounts Reclassified from
Details about Accumulated Other
Accumulated Other
Affected Line Item in the Statement
Comprehensive Income Components
Comprehensive Income (Loss)
Where Net Income (Loss) is Presented
(In thousands)
Unrealized gains (losses) on available
for sale securities:
$
(72,315)
Net gain (loss) on sale of securities
22,331
Provision for income taxes
$
(49,984)
Net of tax
Cash flow hedges:
Interest rate swaps benefit (expense)
$
25,344
Interest expense
(7,827)
Provision for income taxes
$
17,517
Net of tax
Amortization of defined benefit pension
items:
Actuarial losses benefit (expense)
$
367 (1) Other operating expense
(113)
Provision for income taxes
$
254
Net of tax
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122
For the year ended December 31, 2023
Amounts Reclassified from
Details about Accumulated Other
Accumulated Other
Affected Line Item in the Statement
Comprehensive Income Components
Comprehensive Income
Where Net Income is Presented
(In thousands)
Cash flow hedges:
Interest rate swaps benefit (expense)
$
25,424
Interest expense
(7,897)
Provision (benefit) for income taxes
$
17,527
Net of tax
Amortization of defined benefit pension items:
Actuarial losses benefit (expense)
$
399 (1) Other operating expenses
(123)(1) Provision (benefit) for income taxes
276
Net of tax
(1) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 12 (“Pension and Other
Postretirement Benefit Plans”) for additional information.
14. Regulatory Capital
Under current capital regulations, the Bank is required to comply with four separate capital adequacy standards.
These capital adequacy standards require maintaining minimum ratios of tier 1 capital (4.0%), common equity tier 1 capital
(“CET1”) (4.5%), tier 1 risk-based capital (6.0%) and total risk-based capital (8.0%). As of December 31, 2025 and 2024, the
Bank continued to exceed all capital adequacy levels and was categorized as “well-capitalized” under these regulations.
Additionally, the Bank is also required to comply with a capital conservation buffer (“CCB”). The CCB is designed to
establish a capital range above minimum capital requirements and impose constraints on dividends, share buybacks and
discretionary bonus payments when capital levels fall below prescribed levels. The minimum CCB is 2.5%. The CCB for the
Bank at December 31, 2025 and 2024 was 6.40% and 5.11%, respectively.
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123
Set forth below is a summary of the Bank’s compliance with banking regulatory capital standards.
December 31, 2025
December 31, 2024
Percent of
Percent of
Amount
Assets
Amount
Assets
(Dollars in thousands)
Tier I (leverage) capital:
Capital level
$
909,636
10.29 % $
847,588
9.31 %
Requirement to be well-capitalized
441,813
5.00
455,335
5.00
Excess
467,823
5.29
392,253
4.31
Common Equity Tier I risk-based capital:
Capital level
$
909,636
13.73 % $
847,588
12.51 %
Requirement to be well-capitalized
430,567
6.50
440,259
6.50
Excess
479,069
7.23
407,329
6.01
Tier I risk-based capital:
Capital level
$
909,636
13.73 % $
847,588
12.51 %
Requirement to be well-capitalized
529,929
8.00
541,857
8.00
Excess
379,707
5.73
305,731
4.51
Total risk-based capital:
Capital level
$
954,061
14.40 % $
887,902
13.11 %
Requirement to be well-capitalized
662,411
10.00
677,321
10.00
Excess
291,650
4.40
210,581
3.11
The Holding Company is subject to the same regulatory capital requirements as the Bank. As of December 31, 2025,
the Holding Company continues to exceed all capital adequacy levels and was categorized as “well-capitalized” under these
regulations. The CCB for the Holding Company at December 31, 2025 and 2024 was 5.36% and 4.82%, respectively.
Set forth below is a summary of the Holding Company’s compliance with banking regulatory capital standards.
December 31, 2025
December 31, 2024
Percent of
Percent of
Amount
Assets
Amount
Assets
(Dollars in thousands)
Tier I (leverage) capital:
Capital level
$
752,523
8.52 % $
731,958
8.04 %
Requirement to be well-capitalized
441,788
5.00
455,297
5.00
Excess
310,735
3.52
276,661
3.04
Common Equity Tier I risk-based capital:
Capital level
$
702,747
10.61 % $
685,004
10.13 %
Requirement to be well-capitalized
430,555
6.50
439,533
6.50
Excess
272,192
4.11
245,471
3.63
Tier I risk-based capital:
Capital level
$
752,523
11.36 % $
731,958
10.82 %
Requirement to be well-capitalized
529,914
8.00
540,964
8.00
Excess
222,609
3.36
190,994
2.82
Total risk-based capital:
Capital level
$
986,948
14.90 % $
962,272
14.23 %
Requirement to be well-capitalized
662,392
10.00
676,205
10.00
Excess
324,556
4.90
286,067
4.23
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124
15. Leases
The Company has 33 operating leases for branches (including headquarters) and office spaces, and one operating
lease for equipment. Our leases have remaining lease terms ranging from ten months to approximately 11 years, none of
which has a renewal option reasonably certain of exercise, which has been reflected in the Company’s calculation of lease
term.
The Company has elected the short-term lease recognition exemption such that the Company will not recognize ROU
assets or lease liabilities for leases with a term of less than 12 months from the commencement date. The Company has one
agreement in 2025 and two agreements in 2024 that qualified as short-term leases.
Certain leases have escalation clauses for operating expenses and real estate taxes. The Company’s non-cancelable
Operating lease agreements expire through 2036.
Supplemental information related to leases was as follows:
(Dollars in thousands)
December 31, 2025
December 31, 2024
Operating lease ROU assets
$
53,118
$
45,800
Operating lease liabilities
$
53,842
$
46,443
Weighted-average remaining lease term-operating leases
7.2 years
7.3 years
Weighted average discount rate-operating leases
4.4%
4.0%
The components of lease expense and cash flow information related to leases were as follows:
For the years ended December 31,
(In thousands)
Line Item Presented
2025
2024
2023
Lease Cost
Operating lease cost
Occupancy and equipment
$
9,723
$
9,100
$
8,737
Operating lease cost
Other operating expenses
16
65
89
Short-term lease cost
Professional services and other operating
expenses
193
137
212
Variable lease cost
Occupancy and equipment
1,287
1,247
1,128
Total lease cost
$
11,219
$
10,549
$
10,166
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
9,745
$
9,835
$
10,429
Supplemental disclosure of non-cash activities:
Right-of-use assets obtained in exchange for new operating lease liabilities
$
15,400
$
13,806
$
3,866
The Company’s minimum annual rental payments at December 31, 2025 for Bank facilities due under non-cancelable
leases are as follows:
Minimum Rental
(In thousands)
Years ended December 31:
2026
$
9,227
2027
10,023
2028
9,895
2029
8,699
2030
5,327
Thereafter
20,538
Total minimum payments required
63,709
Less: implied interest
(9,867)
Total lease obligations
$
53,842
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125
16. Commitments and Contingencies
Commitments:
The Company is a party to financial instruments with off balance-sheet risk in the normal course of business to meet
the financing needs of its customers. These financial instruments include commitments to extend credit and lines of credit. The
instruments involve, to varying degrees, elements of credit and market risks in excess of the amount recognized in the
consolidated financial statements.
The Company’s exposure to credit loss in the event of nonperformance by the counterparty to the financial
instrument for loan commitments and lines of credit is represented by the contractual amounts of these instruments.
Commitments to extend credit amounted to $435.2 million at a weighted average rate of 7.07% at December 31,
2025. Included in these commitments were $136.4 million of fixed-rate commitments at a weighted average rate of 7.07% and
$298.8 million of adjustable-rate commitments with a weighted average rate of 7.07%, as of December 31, 2025. Since
generally all loan commitments are expected to be drawn upon, the total loan commitments approximate future cash
requirements, whereas the amounts of lines of credit may not be indicative of the Company’s future cash requirements. The
loan commitments generally expire in 90 days, while construction loan lines of credit mature within eighteen months and
home equity lines of credit mature within ten years. The Company uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.
Commitments to extend credit are legally binding agreements to lend to a customer as long as there is no violation of
any condition established in the contract. Commitments generally have fixed expiration dates and require payment of a fee.
The Company evaluates each customer’s creditworthiness on a case-by-case basis. Collateral held consists primarily of real
estate.
The Bank collateralized a portion of its deposits with letters of credit issued by FHLB-NY. At December 31, 2025
and 2024 there were $1,543.4 million and $1,405.7 million, respectively, of letters of credit outstanding. The letters of credit
are collateralized by mortgage loans pledged by the Bank.
The Company has purchase obligations running through 2027 totaling $10.3 million and $13.3 million as of
December 31, 2025 and 2024, respectively, which are primarily related to contracts with data processing, loan servicing and
check processing services provided by third-party vendors. During each year ended December 31, 2025 and 2024, the
Company purchased $8.4 million of services provided by third-party vendors.
The Company’s future non-cancellable purchase obligations, which were not recognized in our Consolidated
Statements of Financial Condition as of December 31, 2025, are as follows:
Year ended December 31:
(In thousands)
2026
$
9,897
2027
400
Total
$
10,297
The Trusts issued capital securities with a par value of $61.9 million in June and July 2007. The Holding Company
has guaranteed the payment of the Trusts’ obligations under these capital securities.
Contingencies:
The Company is a defendant in various lawsuits. Management of the Company, after consultation with outside legal
counsel, believes that the resolution of these various matters will not result in any material adverse effect on the Company’s
consolidated financial condition, results of operations or cash flows.
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126
17. Concentration of Credit Risk
The Company’s lending is concentrated in the New York City metropolitan area. The Company evaluates each
customer’s creditworthiness on a case-by-case basis under the Company’s established underwriting policies. The collateral
obtained by the Company generally consists of first liens on one-to-four family residential, multi-family residential, and
commercial real estate. The largest amount the Bank could lend to one borrower was approximately $136.4 million and
$127.1 million at December 31, 2025 and 2024, respectively. The Bank’s largest aggregate amount of outstanding loans to one
borrower was $100.9 million, and $93.0 million at December 31, 2025 and 2024, respectively, all of which were performing
according to their terms.
18. Related Party Transactions
Certain directors, senior officers, and their related parties, including their immediate families and companies in which
they are principal owners, were deposit customers of the Bank. At December 31, 2025 and 2024, there were no outstanding
loans to any related party. Deposits of related parties totaled $10.9 million and $5.6 million at December 31, 2025 and 2024,
respectively.
19. Fair Value of Financial Instruments
The Company carries certain financial assets and financial liabilities at fair value in accordance with GAAP which
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. GAAP permits entities to choose to measure many financial instruments and
certain other items at fair value. The Company did not purchase or sell any financial assets or liabilities under the fair value
option during the years ended December 31, 2025 and 2024.
Management selected the fair value option for certain investment securities, and certain borrowed funds as the yield,
at the time of election, on the financial assets was below-market, while the rate on the financial liabilities was above-market
rate. Management also considered the average duration of these instruments, which, for investment securities, was longer than
the average for the portfolio of securities, and, for borrowings, primarily represented the longer-term borrowings of the
Company. Choosing these instruments for the fair value option adjusted the carrying value of these financial assets and
financial liabilities to their current fair value, and more closely aligned the financial performance of the Company with the
economic value of these financial instruments. Management believed that electing the fair value option for these financial
assets and financial liabilities allows them to better react to changes in interest rates. At the time of election, Management did
not elect the fair value option for investment securities and borrowings with shorter duration, adjustable-rates, and yields that
approximated the then current market rate, as management believed that these financial assets and financial liabilities
approximated their economic value.
The following table presents the financial assets and financial liabilities reported at fair value under the fair value
option at December 31, 2025 and 2024, and the changes in fair value included in the Consolidated Statements of Operations –
Net gain (loss) from fair value adjustments:
Changes in Fair Values For Items Measured at Fair Value
Fair Value
Fair Value
Pursuant to Election of the Fair Value Option
Measurements at
Measurements at
For the years ended December 31,
Description
December 31, 2025 December 31, 2024
2025
2024
2023
(In thousands)
Mortgage-backed securities
$
211
$
237
$
1
$
8
$
6
Other securities
14,201
13,355
473
(83)
81
Borrowed funds
51,666
48,795
(2,983)
(864)
2,486
Net gain (loss) from fair value adjustments
$
(2,509)
$
(939)
$
2,573
Included in the fair value of the financial assets and financial liabilities selected for the fair value option is the
accrued interest receivable or payable for the related instrument. The Company reports as interest income or interest expense
in the Consolidated Statements of Operations, the interest receivable or payable on the financial instruments selected for the
fair value option at their respective contractual rates.
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127
The borrowed funds under the fair value option, have a contractual principal amount of $61.9 million at
December 31, 2025 and 2024. The fair value of borrowed funds includes accrued interest payable of $0.3 million and $0.4
million at December 31, 2025 and 2024, respectively.
The Company generally holds its earning assets, other than securities available for sale, to maturity and settles its
liabilities at maturity. However, fair value estimates are made at a specific point in time and are based on relevant market
information. These estimates do not reflect any premium or discount that could result from offering for sale at one time the
Company’s entire holdings of a particular instrument. Accordingly, as assumptions change, such as interest rates and
prepayments, fair value estimates change and these amounts may not necessarily be realized in an immediate sale.
Disclosure of fair value does not require fair value information for items that do not meet the definition of a financial
instrument or certain other financial instruments specifically excluded from its requirements. These items include core deposit
intangibles and other customer relationships, premises and equipment, leases, income taxes and equity.
Further, fair value disclosure does not attempt to value future income or business. These items may be material and
accordingly, the fair value information presented does not purport to represent, nor should it be construed to represent, the
underlying “market” or franchise value of the Company.
Financial assets and financial liabilities reported at fair value are required to be measured based on either: (1) quoted
prices in active markets for identical financial instruments (Level 1); (2) significant other observable inputs (Level 2); or
(3) significant unobservable inputs (Level 3).
A description of the methods and significant assumptions utilized in estimating the fair value of the Company’s assets
and liabilities that are carried at fair value on a recurring basis are as follows:
Level 1 – where quoted market prices are available in an active market. At December 31, 2025 and 2024, Level 1
included one mutual fund.
Level 2 – when quoted market prices are not available, fair value is estimated using quoted market prices for similar
financial instruments and adjusted for differences between the quoted instrument and the instrument being valued. Fair value
can also be estimated by using pricing models, or discounted cash flows. 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. In addition to observable market information, models also incorporate maturity and cash flow
assumptions. At December 31, 2025 and 2024, Level 2 included mortgage related securities, CLOs, corporate debt, U.S.
government agencies and derivatives.
Level 3 – when there is limited activity or less transparency around inputs to the valuation, financial instruments are
classified as Level 3. At December 31, 2025 and 2024, Level 3 included trust preferred securities owned and junior
subordinated debentures issued by the Company and municipals.
The methods described above may produce fair values that may not be indicative of net realizable value or reflective
of future fair values. While the Company believes its valuation methods are appropriate and consistent with those of other
market participants, the use of different methodologies, assumptions and models to determine fair value of certain financial
instruments could produce different estimates of fair value at the reporting date.
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128
The following table sets forth the Company’s assets and liabilities that are carried at fair value on a recurring basis,
including those reported at fair value under the fair value option, and the level that was used to determine their fair value, at
December 31:
Quoted Prices
in Active Markets
Significant Other
Significant Other
for Identical Assets
Observable Inputs
Unobservable Inputs
Total carried at fair value
(Level 1)
(Level 2)
(Level 3)
on a recurring basis
2025
2024
2025
2024
2025
2024
2025
2024
Assets:
(In thousands)
Securities available for sale:
Mortgage-backed securities
$
—
$
—
$
821,938
$
911,636
$
—
$
—
$
821,938
$
911,636
Other securities
12,650
11,890
536,524
554,914
18,812
19,465
567,986
586,269
Derivatives
—
—
37,900
54,700
—
—
37,900
54,700
Total assets
$
12,650
$
11,890
$ 1,396,362
$ 1,521,250
$
18,812
$
19,465
$ 1,427,824
$ 1,552,605
Liabilities:
Borrowings
$
—
$
—
$
—
$
—
$
51,666
$
48,795
$
51,666
$
48,795
Derivatives
—
—
31,714
20,396
—
—
31,714
20,396
Total liabilities
$
—
$
—
$
31,714
$
20,396
$
51,666
$
48,795
$
83,380
$
69,191
The following tables set forth the Company’s assets and liabilities that are carried at fair value on a recurring basis,
classified within Level 3 of the valuation hierarchy for the periods indicated:
For the year ended
December 31, 2025
December 31, 2024
Trust preferred
Junior subordinated
Trust preferred
Junior subordinated
Municipals
securities
debentures
Municipals
securities
debentures
(In thousands)
Beginning balance
$
18,000
$
1,465
$
48,795
$
—
$
1,437
$
47,850
Transfer to Level 3 (1)
—
—
—
18,000
—
—
Net gain (loss) from fair value adjustment of
financial assets (2)
—
—
—
—
30
—
Net (gain) loss from fair value adjustment of
financial liabilities (2)
—
87
2,983
—
—
864
Increase (decrease) in accrued interest
—
(1)
(38)
—
(2)
(61)
(Provision) benefit for credit losses
(294)
—
—
—
—
—
Change in unrealized gains (losses) included in
other comprehensive loss-assets
(445)
—
—
—
—
142
Change in unrealized (gains) losses included in
other comprehensive loss-liabilities
—
—
(74)
—
—
—
Ending balance
$
17,261
$
1,551
$
51,666
$
18,000
$
1,465
$
48,795
Changes in unrealized gains (losses) held at
period end
$
(445)
$
—
$
2,357
$
—
$
—
$
2,283
(1)
Transferred from held-to-maturity to available for sale of $20.6 million and fair value of $18.0 million.
(2)
Presented in the Consolidated Statements of Operations under Net gain (loss) from fair value adjustments.
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129
The following tables present the qualitative information about recurring Level 3 fair value of financial instruments
and the fair value measurements at the periods indicated:
December 31, 2025
Valuation
Unobservable
Weighted
Fair Value
Technique
Input
Range
Average
(Dollars in thousands)
Assets:
Municipals
$
17,261
Discounted cash flows
Spread over A rated Municipal Curves
5.9 %
n/a
Trust preferred securities
1,551
Discounted cash flows
Spread over 3-month SOFR
3.7 %
n/a
Liabilities:
Junior subordinated debentures
$
51,666
Discounted cash flows
Spread over 3-month SOFR
3.7 %
n/a
December 31, 2024
Valuation
Unobservable
Weighted
Fair Value
Technique
Input
Range
Average
(Dollars in thousands)
Assets:
Municipals
$
18,000
Sales approach
Reduction for planned expedited disposal
n/a
n/a
Trust preferred securities
1,465
Discounted cash flows
Spread over 3-month SOFR
4.3 %
n/a
Liabilities:
Junior subordinated debentures
$
48,795
Discounted cash flows
Spread over 3-month SOFR
4.3 %
n/a
The significant unobservable inputs used in the fair value measurement of the Company’s municipals, trust preferred
securities and junior subordinated debentures valued under Level 3 at December 31, 2025 and 2024, are the effective yields
used in the cash flow models. Significant increases or decreases in the effective yield in isolation would result in a
significantly lower or higher fair value measurement.
The following table sets forth the Company’s assets that are carried at fair value on a non-recurring basis, and the
level that was used to determine their fair value, at December 31:
Quoted Prices
in Active Markets
Significant Other
Significant Other
for Identical Assets
Observable Inputs
Unobservable Inputs
Total carried at fair value
(Level 1)
(Level 2)
(Level 3)
on a non-recurring basis
2025
2024
2025
2024
2025
2024
2025
2024
(In thousands)
Assets:
Impaired loans
$
—
$
—
$
—
$
—
$
17,789
$
16,784
$
17,789
$
16,784
Total assets
$
—
$
—
$
—
$
—
$
17,789
$
16,784
$
17,789
$
16,784
The following tables present the qualitative information about non-recurring Level 3 fair value measurements of
financial instruments at the periods indicated:
At December 31, 2025
Fair Value Valuation Technique
Unobservable Input
Range
Weighted Average
(Dollars in thousands)
Assets:
Impaired loans
16,712
Sales approach
Adjustment to sales comparison value to
reconcile differences between comparable
sales
-25.0% to 10.0 %
(8.5)%
Reduction for planned expedited disposal
15.0 %
15.0 %
Impaired loans
1,077
Discounted Cashflow
Discount Rate
8.3 %
8.3 %
Probability of Default
50.0 %
50.0 %
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130
At December 31, 2024
Fair Value Valuation Technique
Unobservable Input
Range
Weighted Average
(Dollars in thousands)
Assets:
Impaired loans
$
4,121
Sales approach
Adjustment to sales comparison value to
reconcile differences between comparable
sales
- %
- %
Reduction for planned expedited disposal
15.0 %
15.0 %
Impaired loans
2,453
Discounted Cashflow
Discount Rate
9.3% to 10.0 %
9.5 %
Probability of Default
25.0% to 50.0 %
33.2 %
Impaired loans
10,210
Income approach
Capitalization rate
4.8% to 6.5 %
5.7 %
Reduction for planned expedited disposal
15.0 %
15.0 %
The weighted average for unobservable inputs for collateral-dependent loans is based on the relative fair value of the
loans.
The Company did not have any liabilities that were carried at fair value on a non-recurring basis at December 31,
2025 and 2024.
The methods and assumptions used to estimate fair value at December 31, 2025 and 2024, are as follows:
Securities:
The fair values of securities are contained in Note 6 (“Securities”) of Notes to the Consolidated Financial Statements.
Fair value is based upon quoted market prices, where available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities and adjusted for differences between the quoted instrument and the
instrument being valued. When there is limited activity or less transparency around inputs to the valuation, securities are
valued using discounted cash flows.
Certain Delinquent Loans:
For certain delinquent loans, fair value is generally estimated by discounting management’s estimate of future cash
flows with a discount rate commensurate with the risk associated with such assets or, for collateral dependent loans, 85% of
the appraised or internally estimated value of the property. See Note 3 (“Loans and Allowance for Credit Losses”) of the Notes
to the Consolidated Financial Statements.
Other Real Estate Owned and Other Repossessed Assets:
The fair value for OREO is based on appraised value through a current appraisal, or sometimes through an internal
review, additionally adjusted by the estimated costs to sell the property. The fair value for other repossessed assets are based
upon the most recently reported arm’s length sales transaction. When there is no recent sale activity, the fair value is calculated
using capitalization rates.
Junior Subordinated Debentures:
The fair value of the junior subordinated debentures was developed using a credit spread based on the subordinated
debt issued by the Company adjusting for differences in the junior subordinated debt’s credit rating, liquidity and time to
maturity. The unrealized net gain/loss attributable to changes in our own credit risk was determined by adjusting the fair value
as determined in the proceeding sentence by the average rate of default on debt instruments with a similar debt rating as our
junior subordinated debentures, with the difference from the original calculation and this calculation resulting in the
instrument-specific unrealized gain/loss.
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131
Derivatives:
The fair value of derivatives are based upon broker quotes.
The following tables set forth the carrying amounts and fair values of selected financial instruments based on the
assumptions described above used by the Company in estimating fair value at the periods indicated:
December 31, 2025
Carrying
Fair
Amount
Value
Level 1
Level 2
Level 3
(In thousands)
Assets:
Cash and due from banks
$
126,076
$
126,076
$
126,076
$
—
$
—
Securities held-to-maturity
Mortgage-backed securities
7,817
7,211
—
7,211
—
Other securities
42,363
39,021
—
—
39,021
Securities available for sale
Mortgage-backed securities
821,938
821,938
—
821,938
—
Other securities
567,986
567,986
12,650
536,524
18,812
Loans held for investment, net of fees and costs
6,653,952
6,414,923
—
—
6,414,923
FHLB-NY stock
18,937
18,937
—
18,937
—
Accrued interest receivable
59,436
59,436
—
59,436
—
Derivatives
37,900
37,900
—
37,900
—
Liabilities:
Deposits
$
7,311,742
$
7,307,635
$
5,022,898
$
2,284,737
$
—
Borrowed Funds
484,653
459,300
—
407,634
51,666
Accrued interest payable
13,030
13,030
—
13,030
—
Derivatives
31,714
31,714
—
31,714
—
December 31, 2024
Carrying
Fair
Amount
Value
Level 1
Level 2
Level 3
(In thousands)
Assets:
Cash and due from banks
$
152,574
$
152,574
$
152,574
$
—
$
—
Securities held-to-maturity
Mortgage-backed securities
7,836
6,903
—
6,903
—
Other securities
43,649
37,815
—
—
37,815
Securities available for sale
Mortgage-backed securities
911,636
911,636
—
911,636
—
Other securities
586,269
586,269
11,890
554,914
19,465
Loans held for sale
70,098
70,098
—
—
70,098
Loans held for investment, net of fees and costs
6,745,848
6,506,439
—
—
6,506,439
FHLB-NY stock
38,096
38,096
—
38,096
—
Accrued interest receivable
62,036
62,036
—
62,036
—
Derivatives
54,700
54,700
—
54,700
—
Liabilities:
Deposits
$
7,178,933
$
7,148,847
$
4,528,769
$
2,620,078
$
—
Borrowed Funds
916,054
887,312
—
838,517
48,795
Accrued interest payable
12,275
12,275
—
12,275
—
Derivatives
20,396
20,396
—
20,396
—
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132
20. Derivative Financial Instruments
At December 31, 2025, the Company’s derivative financial instruments consist of interest rate swaps and interest rate
floors options. At December 31, 2024, the Company’s derivative financial instruments consisted of interest rate swaps. The
Company’s derivatives are used for four purposes: 1) to mitigate the Company’s exposure to rising interest rates on certain
fixed rate loans with a notional amount of $645.7 million and $695.6 million of swaps outstanding at December 31, 2025 and
December 31, 2024, respectively; 2) to facilitate risk management strategies for our loan customers with $1.2 billion of swaps
outstanding, which include $589.2 million each with customers and bank counterparties at December 31, 2025 and $973.9
million of swaps outstanding, which include $486.9 million each with customers and bank counterparties at December 31,
2024; and 3) to mitigate exposure to rising interest rates on certain short-term advances, brokered deposits with $905.8 million
and $950.8 million of swaps outstanding at December 31, 2025 and December 31, 2024, respectively; and 4) to mitigate the
Company’s exposure to decreasing interest rates on a portion of its adjustable rate loan portfolio with a notional amount of
$100.0 million of interest rate floors options outstanding at December 31, 2025. There were no interest rate floors options
outstanding at December 31, 2024.
At December 31, 2025, and 2024 the Company has portfolio layer hedges on a closed portfolio of loans with a
notional amount of $480.0 million and $500.0 million, respectively.
For non-portfolio layer method fair value hedges, the hedge basis (the amount of the change in fair value) is added to
(or subtracted from) the carrying amount of the hedged item. For portfolio layer method hedges, the hedge basis is not
adjusted by the carrying value of the hedged item and is instead maintained on a closed portfolio basis. These basis
adjustments would be allocated to the amortized cost of specific loans within the pools if the hedges were de-designated.
At December 31, 2025 and 2024, we held derivatives designated as cash flow hedges, fair value hedges and certain
derivatives not designated as hedges.
The Company’s derivative instruments are carried at fair value in the Company’s financial statements as part of Other
assets for derivatives with positive fair values and Other liabilities for derivatives with negative fair values. The accounting for
changes in the fair value of a derivative instrument is dependent upon whether or not it qualifies and has been designated as a
hedge for accounting purposes, and further, by the type of hedging relationship.
At December 31, 2025 and 2024, derivatives with a combined notional amount of $1.2 billion and $973.9 million,
respectively, were not designated as hedges. At December 31, 2025 and 2024, derivatives with a combined notional amount of
$645.7 million and $695.6 million were designated as fair value hedges. At December 31, 2025 and 2024, derivatives with a
combined notional amount of $1.0 billion and $950.8 million, respectively, were designated as cash flow hedges.
For cash flow hedges, the changes in the fair value of the derivative are reported in accumulated other comprehensive
income (loss), net of tax. Amounts in accumulated other comprehensive income (loss) are reclassified into earnings in the
same period during which the hedged forecasted transaction effects earnings. During the years ended December 31, 2025 and
2024, $11.6 million and $25.3 million in reduced expense, respectively, was reclassified from accumulated other
comprehensive income (loss) to interest expense. The estimated amount to be reclassified in next 12 months out of
accumulated other comprehensive income (loss) into earnings is $0.7 million in increased expense.
A portion of the reduced expense is driven by the amortization of income from terminated cash flow hedges. This
income is amortized over the remaining original term of terminated cash flow hedges. During the year ended December 31,
2025, no cashflow hedges were terminated. During the year ended December 31, 2024, the Company terminated seven cash
flow hedges with a combined notional value of $420.8 million, resulting in a net gain of $1.7 million. During the years ended
December 31, 2025, 2024 and 2023, income from the amortization of terminated cash flow hedges totaled $0.5 million, $1.4
million and $4.7 million, respectively, which is recorded in deposits and other interest expense in the Consolidated Statements
of Operations.
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133
The following table sets forth information regarding the Company’s derivative financial instruments at the periods
indicated:
Assets
Liabilities
Notional
Notional
Amount
Fair Value (1)
Amount
Fair Value (1)
December 31, 2025
(In thousands)
Cash flow hedges:
Interest rate swaps (deposits)
$
205,000
$
725
$
700,750
$
5,398
Interest rate floors options (loans)
100,000
894
—
—
Fair value hedges:
Interest rate swaps (loans)
216,359
11,608
429,356
1,643
Non hedge:
Interest rate swaps (loans)
589,240
24,673
589,240
24,673
Total
$
1,110,599
$
37,900
$
1,719,346
$
31,714
December 31, 2024
Cash flow hedges:
Interest rate swaps (deposits)
$
950,750
$
14,686
$
—
$
—
Fair value hedges:
Interest rate swaps (loans)
560,587
19,812
135,000
194
Non hedge:
Interest rate swaps (loans)
486,929
20,202
486,929
20,202
Total
$
1,998,266
$
54,700
$
621,929
$
20,396
(1) Derivatives in a positive position are recorded as “Other assets” and derivatives in a negative position are recorded as “Other liabilities” in the
Consolidated Statements of Financial Condition.
The following table presents information regarding the Company’s fair value hedged items for the periods indicated:
Cumulative Amount
of the Fair Value Hedging Adjustment
Line Item in the Consolidated Statement
Carrying Amount of the
Included in the Carrying Amount of
of Financial Condition in Which
Hedged
the Hedged
the Hedged Item Is Included
Assets/(Liabilities)
Assets/(Liabilities)
(In thousands)
December 31, 2025
December 31, 2024
December 31, 2025
December 31, 2024
Loans
Multi-family residential
$
75,296
$
76,882
$
(8,082)
$
(11,015)
Commercial real estate
40,566
62,843
(2,180)
(4,009)
Commercial business
39,541
39,500
(1,636)
(3,113)
Total
$
155,403
$
179,225
$
(11,898)
$
(18,137)
Portfolio Layer
Loans held for Investment (1)
$
480,000
$
500,000
$
1,645
$
(2,025)
Total
$
480,000
$
500,000
$
1,645
$
(2,025)
(1) Carrying amount represents the amortized cost of the portfolio layer method closed portfolio at December 31, 2025 and 2024, totaling $2.2 billion and
$2.4 billion, respectively. The cumulative amount of basis adjustments at December 31, 2025 and 2024 were $1.6 million and ($2.0) million, respectively.
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134
The following table sets forth the effect of derivative instruments on the Consolidated Statements of Operations for
the periods indicated:
For the years ended
Affected Line Item in the Statements
December 31,
(In thousands)
Where Net Income is Presented
2025
2024
2023
Financial Derivatives:
Interest rate swaps - fair value hedge (loans)
Interest and fees on loans
$
7,382
$
13,826
15,909
Interest rate swaps - fair value hedge (securities)
Interest and dividends on securities
—
6,736
2,912
Interest rate swaps - non hedge (municipal deposit)
Interest expense - Deposits
—
1
3
Interest rate swaps - cash flow hedge (short-term advances)
Other interest expense
—
589
5,312
Interest rate swaps - cash flow hedge (brokered deposits)
Interest expense - Deposits
11,897
24,755
20,112
Interest rate floors options - cash flow hedge (loans)
Interest and fees on loans
(322)
—
—
Total net income (expense) from the effects of derivative instruments
$
18,957
$
45,907
$
44,248
The Company’s interest rate swaps are subject to master netting arrangements between the Company and its three
designated counterparties. The Company has not made a policy election to offset its derivative positions. The interest rate
swaps with borrowers are cross collateralized with the underlying loan and, therefore, there is no posted collateral. Interest
rate swap agreements with third-party counterparties contain provisions that require the Company to post collateral if the
derivative exposure exceeds a threshold amount and receive collateral for agreements in a net asset position. Collateral posted
to, or received from, third-party counterparties in connection with these derivative instruments is recorded in other liabilities
or other assets, respectively, in the consolidated statements of financial condition.
The following tables present the effect of the master netting arrangements on the presentation of the derivative assets
and liabilities in the Consolidated Statements of Condition as of the dates indicated:
Gross Amount
Net Amount
Gross Amounts
Offset in Statement of
Presented in Statement of
Financial
Cash
(In thousands)
Recognized
Financial Condition
Financial Condition
Instruments Collateral
Net Amount
December 31, 2025
Assets:
Interest rate swaps
$
37,006
$
—
$
37,006
$
—
$
(16,615)
$
20,391
Interest rate floors options
894
—
894
—
—
894
Liabilities:
Interest rate swaps
31,714
—
31,714
—
—
31,714
December 31, 2024
Assets:
Interest rate swaps
$
54,700
$
—
$
54,700
$
—
$
(47,665)
$
7,035
Liabilities:
Interest rate swaps
20,396
—
20,396
—
—
20,396
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135
21. New Authoritative Accounting Pronouncements
Accounting Standards: Adopted in 2025
On January 1, 2025, the company adopted ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income
Tax Disclosures” on a prospective basis. This ASU requires that public business entities on an annual basis (1) disclose
specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a
quantitative threshold. The ASU requires all entities disclose on an annual basis (1) the amount of income taxes paid,
disaggregated by federal, state and foreign taxes and (2) the amount of income taxes paid disaggregated by individual
jurisdictions in which income taxes paid is equal or greater than 5 percent of total income taxes paid. The requirements of this
standard was adopted for the Company's annual report ending December 31, 2025, and it did not have an impact on the
Company’s financial condition or results of operations. See Note 10 (“Income Taxes”).
Accounting Standards: Pending Adoption
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income –
Expense Disaggregation Disclosures (Subtopic 220-40)”. This ASU requires that public business entities on an interim and
annual basis (1) Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d)
intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing
activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense
caption is an expense caption presented on the face of the income statement within continuing operations that contains any of
the expense categories listed in (a) - (e). (2) Include certain amounts that are already required to be disclosed under current
generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements. (3)
Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated
quantitatively. (4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of
selling expenses. This ASU is effective for public business entities for annual periods beginning after December 15, 2026 and
interim reporting periods beginning after December 15, 2027. We are currently evaluating if the adoption of this ASU will
have a material effect on our disclosures.
22. Parent Company Only Financial Information
Earnings of the Bank are recognized by the Holding Company using the equity method of accounting. Accordingly,
earnings of the Bank are recorded as increases in the Holding Company’s investment, any dividends would reduce the Holding
Company’s investment in the Bank, and any changes in the Bank’s unrealized gain or loss on securities available for sale, net
of taxes, would increase or decrease, respectively, the Holding Company’s investment in the Bank.
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136
The condensed financial statements for the Holding Company are presented below:
December 31, December 31,
Condensed Statements of Financial Condition
2025
2024
(Dollars in thousands)
Assets:
Cash and due from banks
$
38,320
$
89,636
Securities available for sale:
Other securities
1,551
1,465
Investment in Bank
913,216
883,354
Goodwill
—
2,185
Other assets
4,226
1,728
Total assets
$
957,313
$
978,368
Liabilities:
Subordinated debentures
$
189,054
$
188,326
Junior subordinated debentures, at fair value
51,666
48,795
Due to Bank
—
10,242
Other liabilities
8,618
6,466
Total liabilities
249,338
253,829
Stockholders' Equity:
Common stock
387
387
Additional paid-in capital
326,613
326,671
Treasury stock, at average cost (4,899,349 shares and 5,018,720 shares, respectively)
(98,948)
(101,655)
Retained earnings
480,376
492,003
Accumulated other comprehensive income (loss), net of taxes
(453)
7,133
Total equity
707,975
724,539
Total liabilities and equity
$
957,313
$
978,368
For the years ended December 31,
Condensed Statements of Operations and Comprehensive Income
2025
2024
2023
(In thousands)
Dividends from the Bank
$
—
$
—
$
125,000
Interest income
2,201
3,240
767
Interest expense
(12,253)
(12,829)
(12,668)
Net gain (loss) from fair value adjustments
(2,896)
(834)
2,405
Other operating expenses
(10,052)
(2,954)
(2,483)
Income (loss) before taxes and equity in undistributed earnings (losses) of
subsidiary
(23,000)
(13,377)
113,021
Income tax benefit
4,368
219
4,816
Income (loss) before equity in undistributed earnings (losses) of subsidiary
(18,632)
(13,158)
117,837
Equity in undistributed earnings (losses) of the Bank
37,512
(18,175)
(89,173)
Net income (loss)
18,880
(31,333)
28,664
Other comprehensive (loss) income, net of tax
(7,586)
45,784
(2,163)
Comprehensive net income (loss)
$
11,294
$
14,451
$
26,501
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137
For the years ended December 31,
Condensed Statements of Cash Flows
2025
2024
2023
(In thousands)
Operating activities:
Net income (loss)
$
18,880
$
(31,333)
$
28,664
Adjustments to reconcile net income (loss) to net cash provided by (used
in) operating activities:
Equity in undistributed (earnings) losses of the Bank
(37,512)
18,175
89,173
Deferred income tax provision (benefit)
(916)
(218)
774
Net (gain) loss from fair value adjustments
2,896
834
(2,405)
Stock-based compensation expense
3,153
2,461
5,604
Net change in operating assets and liabilities
3,194
4,333
(1,189)
Net cash provided by (used in) operating activities
(10,305)
(5,748)
120,621
Investing activities:
Investment in Bank
(10,000)
(46,325)
—
Net cash provided by (used in) investing activities
(10,000)
(46,325)
—
Financing activities:
Proceeds from long-term borrowings
—
—
—
Net proceeds received in common stock offering
—
65,540
—
Purchase of treasury stock
—
—
(11,473)
Repurchase of shares to satisfy tax obligations
(721)
(1,707)
(1,692)
Cash dividends paid
(30,290)
(26,043)
(26,260)
Net cash provided by (used in) financing activities
(31,011)
37,790
(39,425)
Net increase (decrease) in cash and cash equivalents
(51,316)
(14,283)
81,196
Cash and cash equivalents, beginning of year
89,636
103,919
22,723
Cash and cash equivalents, end of year
$
38,320
$
89,636
$
103,919
23. Segment Reporting
The Company operates as a single unit, therefore, for the purpose of segment reporting we consider the Company as
a single reportable segment, a community bank. The Bank revenues are derived principally from interest on loans, our
mortgage-backed securities portfolio, and interest and dividends on other investments in our securities portfolio. We also
generate non-interest income from loan fees, service charges on deposit accounts, mortgage servicing fees, and other fees,
income earned on BOLI, dividends on FHLB-NY stock and net gains and losses on sales of securities and loans.
Flushing Bank’s chief operating decision maker (“CODM”) is the senior executive committee that includes the chief
executive officer, chief financial officer, and the chief operating officer. The CODM uses net income (loss) as the measure of
segment performance to evaluate the income generated from assets (return on assets) and to evaluate how efficiently the
Company leverages its shareholders equity (return on equity) in deciding the most appropriate avenue to reinvest profits.
As we consider the entire entity as one operating segment, please see the Consolidated Statements of Operations for
the measure of segment performance, net income and the Consolidated Statements of Financial Condition for segment assets.
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138
The following table presents consolidated net income and other important metrics the CODM will use to evaluate the
operations of the Company:
For the years ended December 31,
2025
2024
2023
(Dollars in thousands, except per share data)
Net income (loss)
$
18,880
$
(31,333)
$
28,664
Diluted earnings (loss) per common share
$
0.54
$
(1.07)
$
0.96
Return on average assets
0.21 %
(0.35) %
0.34 %
Return on average equity
2.63 %
(4.67) %
4.25 %
Book value per common share
$
20.96
$
21.53
$
23.21
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139
Report of Independent Registered Public Accounting Firm
Stockholders and Board of Directors
Flushing Financial Corporation
Uniondale, New York
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial condition of Flushing Financial Corporation
(the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive
income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025,
and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and
2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in
conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2025, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”) and our report dated March 6, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our
opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Credit Losses
As described in Note 3 to the Company’s consolidated financial statements, the Company reported an allowance for
credit losses for loans held for investment of $42.8 million at December 31, 2025. As described in Note 2 to the Company’s
consolidated financial statements, the allowance for credit losses represents management’s estimate of credit
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140
losses for the remaining estimated life of the loan portfolio and consists of quantitative and qualitative components, some of
which are subjective in nature. The Company considers historical losses, which are then adjusted to incorporate current
economic conditions and reasonable and supportable forecasts to develop the quantitative component. This quantitative
component is then adjusted for qualitative risk factors, if not already captured within the quantitative component.
We identified certain management’s assumptions within the quantitative and qualitative components of the allowance
for credit losses on loans held for investment as the critical audit matter. Evaluating the reasonableness of the reasonable and
supportable forecast period and the reversion to historical loss period, and the determination of qualitative risk level related to
economic conditions involved subjective and complex judgment by management. Auditing these assumptions required
especially subjective and complex auditor judgment and increased extent of effort, and specialized skills and knowledge.
The primary procedures we performed to address this critical audit matter included:
●
Testing the design and operating effectiveness of controls relating to determination of the reasonable and supportable
forecast period and the reversion to historical loss period, as well as assumptions around the determination of
qualitative risk factors related to economic conditions.
●
Testing the completeness and accuracy and the relevance and reliability of certain data used in determining the
qualitative risk factors related to economic conditions and the reasonable and supportable forecast period and the
reversion to historical loss period by comparing the data to internally developed and third-party sources, and other
audit evidence gathered.
●
Assessing the reasonableness of management’s judgments in determining the selected qualitative risk level related to
economic conditions, including assessing the consistency of management’s application of its underlying framework
for determining these assumptions and assessing for potential bias and potential contradictory evidence.
●
Utilizing personnel with specialized skills and knowledge to assist in: (i) evaluating the appropriateness of economic
cycle determined by management and (ii) assessing reasonableness of the reasonable and supportable forecast period
and the reversion to historical loss period.
/S/ BDO USA, P.C.
We have served as the Company’s auditor since 2015.
New York, New York
March 6, 2026
Table of Contents
141
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Flushing Financial Corporation
Uniondale, New York
Opinion on Internal Control over Financial Reporting
We have audited Flushing Financial Corporation’s (the “Company’s”) internal control over financial reporting as of
December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated statements of financial condition of the Company as of December 31, 2025 and 2024, the related
consolidated statements of operation, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three
years in the period ended December 31, 2025, and the related notes and our report dated March 6, 2026, expressed, “an unqualified
opinion thereon”.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/S/ BDO USA, P.C.
New York, New York
March 6, 2026
Table of Contents
142
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
The Company carried out, under the supervision and with the participation of the Company’s management, including
its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of
the end of the period covered by this Annual Report. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that, as of December 31, 2025, the design and operation of these disclosure controls and
procedures were effective. During the period covered by this Annual Report, there have been no changes in the Company’s
internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, and
for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2025.
Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial
officers and effected by the Company’s Board of Directors, management and other personnel, 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. Internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management and directors of the
Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting
as of December 31, 2025 based upon criteria in Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 Framework) (“COSO”). Based on this assessment,
management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2025
based on those criteria issued by COSO.
BDO USA, P.C., the Company’s independent registered public accounting firm that audited the Company’s
consolidated financial statements included in this Annual Report on Form 10-K, has issued a report on the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2025, as stated in its report.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
Table of Contents
143
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Other than the disclosures below, information regarding the directors and executive officers of the Company appears
in the Company’s Proxy Statement for the Annual Meeting of Stockholders to be held May 27, 2026 (“Proxy Statement”)
under the captions “Board Nominees,” “Continuing Directors,” “Executive Officers Who Are Not Directors” and “Meeting
and Committees of the Board of Directors – Audit Committee” and is incorporated herein by this reference. Information
regarding Section 16(a) beneficial ownership appears in the Company’s Proxy Statement under the caption
“Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by this reference.
Code of Ethics. The Company has adopted a Code of Business Conduct and Ethics that applies to all of its directors,
officers
and
employees.
This
code
is
publicly
available
on
the
Company’s
website
at:
https://investor.flushingbank.com/media/document/6812de87-72ab-4d2c-9aa9-78f5c4c9d69f/assets/Code-of-Business-
Conduct-Ethics-FB-Website.pdf?disposition=inline.
Any substantive amendments to the code and any grant of a waiver from a provision of the code requiring disclosure
under applicable SEC or NASDAQ rules will be disclosed in a report on Form 8-K.
Audit Committee Financial Expert. The Board of Directors of the Company has determined that Louis C. Grassi, the
Chairman of the Audit Committee, is an “audit committee financial expert” as defined under Item 401(h) of Regulation S-K,
and that he is independent as defined under applicable NASDAQ listing standards. Mr. Grassi is a certified public accountant
and a certified fraud examiner.
Item 11. Executive Compensation.
Information regarding executive compensation appears in the Proxy Statement under the caption “Executive
Compensation” and is incorporated herein by this reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information regarding security ownership of certain beneficial owners appears in the Proxy Statement under the
caption “Stock Ownership of Certain Beneficial Owners” and is incorporated herein by this reference.
Information regarding security ownership of management appears in the Proxy Statement under the caption “Stock
Ownership of Management” and is incorporated herein by this reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information regarding certain relationships and related transactions and directors independence appears in the Proxy
Statement under the captions “Compensation Committee Interlocks and Insider Participation” and “Related Party
Transactions” and is incorporated herein by this reference.
Item 14. Principal Accounting Fees and Services.
Information regarding fees paid to the Company’s independent auditor appears in the Proxy Statement under the
caption “Schedule of Fees to Independent Auditors” and is hereby incorporated by this reference.
Table of Contents
144
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) 1. Financial Statements
The following financial statements are included in Item 8 of this Annual Report and are incorporated herein by this
reference:
●
Consolidated Statements of Financial Condition at December 31, 2025 and 2024
●
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2025
●
Consolidated Statements of Comprehensive Income for each of the three years in the period ended
December 31, 2025
●
Consolidated Statements of Changes in Stockholders’ Equity for each of the three years in the period ended
December 31, 2025
●
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2025
●
Notes to Consolidated Financial Statements
●
Reports of Independent Registered Public Accounting Firm (BDO USA, P.C.; New York, New York; PCAOB ID
243)
2. Financial Statement Schedules
Financial Statement Schedules have been omitted because they are not applicable or the required information is
shown in the Consolidated Financial Statements or Notes thereto included in Item 8 of this Annual Report and are
incorporated herein by this reference.
Table of Contents
145
3. Exhibits Required by Securities and Exchange Commission Regulation S-K
Exhibit
Number
Description
2.1#
Agreement and Plan of Merger, dated as of December 29, 2025, by and among Flushing Financial Corporation,
OceanFirst Financial Corp. and Apollo Merger Sub Corp. (Incorporated by reference to Exhibit 2.1 filed with
Form 8-K filed January 5, 2026)
3.1 P
Certificate of Incorporation of Flushing Financial Corporation (Incorporated by reference to Exhibits filed with
the Registration Statement on Form S-1 filed September 1, 1995, Registration No. 33-96488)
3.2
Certificate of Amendment to Certificate of Incorporation of Flushing Financial Corporation (Incorporated by
reference to Exhibit 4.2 filed with Form S-8 filed May 31, 2002)
3.3
Certificate of Amendment to Certificate of Incorporation of Flushing Financial Corporation (Incorporated by
reference to Exhibit 3.3 filed with Form 10-K for the year ended December 31, 2011)
3.4
Amended and Restated By-Laws of Flushing Financial Corporation (Incorporated by reference to Exhibit 3.6
filed with Form 10-Q for the quarter ended June 30, 2014)
4.1
Indenture, dated November 22, 2021, between Flushing Financial Corporation and Wilmington Trust, National
Association, as trustee (Incorporated by reference to Exhibit 4.1 filed with Form 8-K filed November 22, 2021)
4.2
First Supplemental Indenture, dated November 22, 2021, between Flushing Financial Corporation and
Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.2 filed with Form 8-
K filed November 22, 2021)
4.3
Second Supplemental Indenture, dated August 24, 2022, between Flushing Financial Corporation and
Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibit 4.2 filed with Form 8-
K filed August 24, 2022)
4.4
Description of Securities (Incorporated by reference to Exhibit 4.3 filed with Form 10-K for the year ended
December 31, 2019)
10.1*
Form of Amended and Restated Employment Agreement between Flushing Bank and Certain Officers
(Incorporated by reference to Exhibit 10.5 filed with Form 10-Q for the quarter ended June 30, 2013)
10.2*
Form of Amended and Restated Employment Agreement between Flushing Financial Corporation and Certain
Officers (Incorporated by reference to Exhibit 10.6 filed with Form 10-Q for the quarter ended June 30, 2013)
10.3*
Amended and Restated Employment Agreement between Flushing Financial Corporation and John R. Buran
(Incorporated by reference to Exhibit 10.2 filed with Form 10-Q for the quarter ended June 30, 2013)
10.4*
Amended and Restated Employment Agreement between Flushing Bank and John R. Buran (Incorporated by
reference to Exhibit 10.1 filed with Form 10-Q for the quarter ended June 30, 2013)
10.5*
Amended and Restated Employment Agreement between Flushing Financial Corporation and Maria A. Grasso
(Incorporated by reference to Exhibit 10.4 filed with Form 10-Q for the quarter ended June 30, 2013)
10.6*
Amended and Restated Employment Agreement between Flushing Bank and Maria A. Grasso (Incorporated by
reference to Exhibit 10.3 filed with Form 10-Q for the quarter ended June 30, 2013)
10.7*
Employment Agreement between Flushing Financial Corporation and Susan K. Cullen (Incorporated by
reference to Exhibit 10.1 filed with Form 10-Q for the quarter ended March 31, 2016)
10.8*
Flushing Bank Specified Officer Change in Control Severance Policy (Effective July 2025) (Incorporated by
reference to Exhibit 10.1 filed with Form 10-Q for the quarter ended June 30, 2025)
10.9*
Employee Severance Compensation Plan for Senior Vice Presidents, Vice Presidents and Assistant Vice
Presidents of Flushing Bank (Effective July 2025) (Incorporated by reference to Exhibit 10.2 filed with
Form 10-Q for the quarter ended June 30, 2025)
10.10*
Amended and Restated Outside Director Retirement Plan (Incorporated by reference to Exhibit 10.10(a) filed
with Form 10-Q for the quarter ended March 31, 2006)
10.11*
Amended and Restated Flushing Bank Outside Director Deferred Compensation Plan (Incorporated by
reference to Exhibit 10.6(d) filed with Form 10-Q for the quarter ended September 30, 2000)
10.12*
Form of Indemnity Agreement among Flushing Bank, Flushing Financial Corporation, and each Director
(Incorporated by reference to Exhibit 10.8(a) filed with Form 10-Q for the quarter ended September 30, 1996)
Table of Contents
146
10.13*
Form of Indemnity Agreement among Flushing Bank, Flushing Financial Corporation, and Certain Officers
(Incorporated by reference to Exhibit 10.8(b) filed with Form 10-Q for the quarter ended September 30, 1996)
10.14* P
Guarantee by Flushing Financial Corporation (Incorporated by reference to Exhibits filed with the Registration
Statement on Form S-1 filed September 1, 1995, Registration No. 33-96488)
10.15*
Form of Outside Director Restricted Stock Unit Award Letter (Incorporated by reference to Exhibit 10.21 filed
with Form 10-K for the year ended December 31, 2015)
10.16*
Form of Employee Restricted Stock Unit Grant Letter Agreement (Incorporated by reference to Exhibit 10.24
filed with Form 10-K for the year ended December 31, 2015)
10.17*
Annual Incentive Plan for Executives and Senior Officers (Incorporated by reference to Exhibit 10.17 filed
with Form 10-K for the year ended December 31, 2022)
10.18
Lease agreement between Flushing Bank and Rexcorp Plaza SPE LLC (Incorporated by reference to Exhibit
10.1 filed with Form 10-Q for the quarter ended June 30, 2014)
10.19*
Flushing Financial Corporation 2014 Omnibus Incentive Plan (Incorporating amendments through May 18,
2021) (Incorporated by reference to Exhibit 10.1 filed with Form 10-Q for the quarter ended June 30, 2021)
10.20*
Form of Employee Performance Restricted Stock Unit Award Letter (pre-2023) (Incorporated by reference to
Exhibit 10.27 filed with Form 10-K for the year ended December 31, 2018)
10.21*
Form of Director Restricted Stock Unit Award Letter With One Year Vesting (Incorporated by reference to
Exhibit 10.28 filed with Form 10-K for the year ended December 31, 2018)
10.22*
Flushing Bank Supplemental Savings Incentive Plan, Amended and Restated as of November 1, 2018
(Incorporated by reference to Exhibit 10.29 filed with Form 10-K for the year ended December 31, 2018)
10.23*
Employment Agreement between Flushing Financial Corporation and Thomas M. Buonaiuto (Incorporated by
reference to Exhibit 10.1 filed with Form 8-K filed October 28, 2019)
10.24*
Consulting Agreement between Flushing Bank and Douglas C. Manditch (Incorporated by reference to Exhibit
10.2 filed with Form 8-K filed October 28, 2019)
10.25*
Form of Employee Additional Performance Restricted Stock Unit Award Letter (Incorporated by reference to
Exhibit 10.25 filed with Form 10-K for the year ended December 31, 2022)
10.26*
Form of Employee Performance Restricted Stock Unit Award Letter (Incorporated by reference to Exhibit
10.26 filed with Form 10-K for the year ended December 31, 2022)
10.27*
Form of Employee Additional Restricted Stock Unit Award Letter (Incorporated by reference to Exhibit 10.27
filed with Form 10-K for the year ended December 31, 2022)
10.28*
Flushing Financial Corporation 2024 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.1 filed
with Form 10-Q for the quarter ended June 30, 2024)
10.29
Form of Voting Agreement, dated as of December 29, 2025, by and between Flushing Financial Corporation
and certain stockholders of OceanFirst Financial Corp. (Incorporated by reference to Exhibit 10.1 filed with
Form 8-K filed January 5, 2026)
10.30*
Form of Retention Agreement by and between Flushing Financial Corporation and certain officers of Flushing
Financial Corporation (Incorporated by reference to Exhibit 10.2 filed with Form 8-K filed January 5, 2026)
10.31*
Form of Annual Bonus Pre-Payment Agreement between Flushing Financial Corporation and certain officers
of Flushing Financial Corporation (Incorporated by reference to Exhibit 10.3 filed with Form 8-K filed January
5, 2026)
10.32*
Form of Release Agreement among Flushing Financial Corporation, Flushing Bank and certain officers of
Flushing Financial Corporation and Flushing Bank (Incorporated by reference to Exhibit 10.4 filed with Form
8-K filed January 5, 2026)
21.1
Subsidiaries information incorporated herein by reference to Part I – Subsidiary Activities
23.1
Consent of Independent Registered Public Accounting Firm (filed herewith)
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (filed
herewith)
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (filed
herewith)
32.1
Certification Pursuant to 18 U.S.C, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 by the Chief Executive Officer (furnished herewith)
32.2
Certification Pursuant to 18 U.S.C, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 by the Chief Financial Officer (furnished herewith)
Table of Contents
147
97.1
Flushing Financial Corporation Incentive-Based Compensation Clawback Policy (filed herewith)
101.INS
Inline XBRL Instance Document (filed herewith)
101.SCH
Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104
Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data
File because its XBRL tags are embedded within the Inline XBRL document
#
Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The
registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.
*
Indicates compensatory plan or arrangement.
†
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Flushing Financial hereby undertakes to
furnish supplemental copies of any of the omitted schedules upon request by the U.S. Securities and Exchange
Commission.
P Indicates a filing submitted in paper.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in New York, New York, on March
6, 2026.
FLUSHING FINANCIAL CORPORATION
By /S/JOHN R. BURAN
John R. Buran
President and CEO
POWER OF ATTORNEY
We, the undersigned directors and officers of Flushing Financial Corporation (the “Company”) hereby severally
constitute and appoint John R. Buran and Susan K. Cullen as our true and lawful attorneys and agents, each acting alone and
with full power of substitution and re-substitution, to do any and all things in our names in the capacities indicated below
which said John R. Buran or Susan K. Cullen may deem necessary or advisable to enable the Company to comply with the
Securities Exchange Act of 1934, and any rules, regulations and requirements of the Securities and Exchange Commission, in
connection with this report on Form 10-K, or amendment thereto, including specifically, but not limited to, power and
authority to sign for us in our names in the capacities indicated below the report on this report on Form 10-K, or amendment
thereto; and we hereby approve, ratify and confirm all that said John R. Buran or Susan K. Cullen shall do or cause to be done
by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K, has been signed by
the following persons in the capacities and on the dates indicated.
Signature
Title
Date
/S/JOHN R. BURAN
Director, President (Principal Executive
Officer)
March 6, 2026
John R. Buran
/S/ALFRED A. DELLIBOVI
Director, Chairman
March 6, 2026
Alfred A. DelliBovi
/S/SUSAN K. CULLEN
Chief Financial Officer (Principal
Financial and Accounting Officer)
March 6, 2026
Susan K. Cullen
/S/ JAMES D. BENNETT
Director
March 6, 2026
Table of Contents
148
James D. Bennett
/S/STEVEN J. D’IORIO
Director
March 6, 2026
Steven J. D’Iorio
/S/LOUIS C. GRASSI
Director
March 6, 2026
Louis C. Grassi
/S/SAM S. HAN
Director
March 6, 2026
Sam S. Han
/S/JOHN J. MCCABE
Director
March 6, 2026
John J. McCabe
/S/DONNA M. O’BRIEN
Director
March 6, 2026
Donna M. O’Brien
/S/MICHAEL A. AZARIAN
Director
March 6, 2026
Michael A. Azarian
/S/CAREN C. YOH
Director
March 6, 2026
Caren C. Yoh
/S/DOUGLAS C. MANDITCH
Director
March 6, 2026
Douglas C. Manditch
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
Flushing Financial Corporation
Uniondale, New York
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3
(No. 333-283312) and Form S-8 (No. 333-198021, 333-219707, 333-257162, and 333-281482) of
Flushing Financial Corporation (the Company) of our reports dated March 6, 2026, relating to the
consolidated financial statements and the effectiveness of internal control over financial reporting
which appear in this Annual Report on Form 10-K for the year ended December 31, 2025.
/s/ BDO USA, LLP
New York, New York
March 6, 2026
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John R. Buran, certify that:
1. I have reviewed this annual report on Form 10-K of Flushing Financial Corporation;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this annual 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 annual report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
annual report based on such evaluation; and
d) disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent quarter that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent function):
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 controls over financial reporting.
Dated: March 6, 2026
By:/s/John R. Buran
John R. Buran
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Susan K. Cullen, certify that:
1. I have reviewed this annual report on Form 10-K of Flushing Financial Corporation;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this annual 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 annual report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
annual report based on such evaluation; and
d) disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent quarter that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent function):
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 controls over financial reporting.
Dated: March 6, 2026
By:/s/Susan K. Cullen
Susan K. Cullen
Senior Executive Vice President, Treasurer and
Chief Financial Officer
Exhibit 32.1
CERTIFICATION 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 Annual Report of Flushing Financial Corporation (the “Corporation”) on Form 10-K for the year ending
December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John R. Buran,
Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to my 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 Corporation.
By: /s/John R. Buran
John R. Buran
Chief Executive Officer
March 6, 2026
Exhibit 32.2
CERTIFICATION 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 Annual Report of Flushing Financial Corporation (the “Corporation”) on Form 10-K for the year ending
December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Susan K. Cullen,
Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to my 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 Corporation.
By: /s/Susan K. Cullen
Susan K. Cullen
Chief Financial Officer
March 6, 2026
Exhibit 97.1
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Incentive-Based Compensation Clawback Policy
1. Purpose
The Board of Directors (the “Board”) of Flushing Financial Corporation (the “Company”) has
adopted this Incentive-Based Compensation Clawback Policy (the “Policy”) for the purpose of
enabling the Company to recover certain incentive compensation in the event that the Company is
required to prepare an Accounting Restatement (as defined in Section 6). This Policy is intended to
comply with, and shall be interpreted to be consistent with, Section 10D of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), Rule 10D-1 promulgated under the Exchange Act
(“Rule 10D-1”), and Nasdaq Listing Rule 5608 (the “Listing Standards”). Unless otherwise defined
in this Policy, capitalized terms shall have the meaning ascribed to such terms in Section 6.
2. Policy Scope
2.1
Employees Covered
This policy applies to all Incentive-Based Compensation received by a Covered Executive:
(i)
after beginning services as a Covered Executive;
(ii)
who served as Covered Executive at any time during the performance period for such
Incentive-Based Compensation;
(iii)
while the company had a listed class of securities on a national securities exchange or a
national securities association; and
(iv)
during the Applicable Period.
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2.2
Effective Date; Retroactive Application
This Policy shall be effective as of October 2, 2023 (the “Effective Date”). The terms of this
Policy shall apply to any Incentive-Based Compensation that is received by Covered Executives on
or after the Effective Date, even if such Incentive-Based Compensation was approved, awarded,
granted or paid to Covered Executives prior to the Effective Date. Without limiting the generality of
Section 5.1(b) hereof, and subject to applicable law, the Committee may affect recovery under this
Policy from any amount of compensation approved, awarded, granted, payable or paid to the
Covered Executives prior to, on or after the Effective Date.
2.3
Amendment; Termination
The Board may amend, modify, supplement, rescind or replace all or any portion of this
Policy at any time from time to time in its discretion, and shall amend this Policy as it deems
necessary to comply with applicable laws or any rules or standards adopted by a national securities
exchange on which the Company’s securities are listed.
3. Policy Statement
This Policy shall be administered by the Compensation Committee of the Board (the “Committee”)
unless otherwise determined by the Board. The Committee is authorized to interpret and construe
this Policy and to make all determinations necessary, appropriate or advisable for the administration
of this Policy, in each case to the extent permitted under the Listing Standards. Any and all
determinations made by the Committee pursuant to the provisions of this policy shall be final and
binding on all persons, including the Company, its affiliates, its stockholders and Covered
Executives. Any action or inaction by the Committee with respect to a Covered Executive under this
Policy in no way limits the Committee’s actions or decisions not to act with respect to any other
Covered Executive under this Policy or under any similar policy, agreement or arrangement, nor
shall any such action or inaction serve as a waiver of any rights the Company may have against any
Covered Executive other than as set forth in this Policy.
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In the administration of this Policy, the Committee is authorized and directed to consult with the full
Board or such other committees of the Board, such as the Audit Committee, as may be necessary or
appropriate as to matters within the scope of such other committee’s responsibility and authority.
Subject to any limitation at applicable law, the Committee may authorize and empower any officer
or employee of the Company to take any and all actions necessary or appropriate to carry out the
purpose and intent of this Policy (other than with respect to any recovery under this Policy involving
such officer or employee).
3.1
Review
This Policy will be reviewed periodically, but in no event less than once every twelve (12)
months, and will be approved by the Board of Directors annually.
4. Policy Administration
4.1
Authority
a. The Bank President and Chief Executive Officer (“President”) has been delegated
authority from the Board of Directors to implement the Incentive-Based Compensation
Clawback Policy and the President has delegated oversight of the Incentive-Based
Compensation Clawback Policy to the Chief Operating Officer.
b. The Chief Operating Officer has the authority to implement the provisions of this
Policy and delegates further authority to the Director of Human Resources.
c. The Director of Human Resources has the authority to implement the provisions of this
Policy and to further delegate such authority as deemed appropriate.
4.2
Responsibility and Accountability
a. Board of Directors
The Board of Directors of the Bank provides oversight of the Bank’s activities
including activities which pertain to the Incentive-Based Compensation Clawback
Policy.
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b. The Business Owners
The Director of Human Resources is responsible for monitoring and tracking all
matters that relate to the Incentive-Based Compensation Clawback Policy.
5. Policy Standards
5.1
Clawback Requirement
In the event the Company is required to prepare an Accounting Restatement, the Company
shall promptly recover the amount of any Erroneously Awarded Compensation received by any
Covered Executive, as calculated pursuant to Section 5.1(a) hereof, during the Applicable Period.
The Company’s obligation to recover Erroneously Awarded Compensation is not dependent on if or
when the Company files restated financial statements. Recovery under this Policy with respect to a
Covered Executive shall not require the finding of any misconduct by such Covered Executive or
any responsibility of such Covered Executive for the accounting error leading to an Accounting
Restatement.
a. Erroneously Awarded Compensation: Amount Subject to Recovery
The amount of “Erroneously Awarded Compensation” subject to recovery under the
Policy, as determined by the Committee, is the amount of Incentive-Based Compensation received
by the Covered Executive that exceeds the amount of Incentive-Based Compensation that would
have been received by the Covered Executive had it been determined based on the restated amounts.
Erroneously Awarded Compensation shall be computed by the Committee without regard to any
taxes paid by the Covered Executive in respect of the Erroneously Awarded Compensation.
By way of example, with respect to any compensation plans or programs that take into account
Incentive-Based Compensation, the amount of Erroneously Awarded Compensation subject to
recovery hereunder includes, but is not
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limited to, the amount contributed to any notional account based on Erroneously Awarded
Compensation and any earnings accrued to date on that notional amount.
For Incentive-Based Compensation based on stock price or TSR: (a) the Committee shall determine
the amount of Erroneously Awarded Compensation based on a reasonable estimate of the effect of
the Accounting Restatement on the stock price or TSR upon which the Incentive- Based
Compensation was received; and (b) the Company shall maintain documentation of the
determination of that reasonable estimate and provide such documentation to The Nasdaq Stock
Market (“Nasdaq”).
b. Clawback Method
The Committee shall determine, in its sole discretion, the timing and method for promptly
recovering Erroneously Awarded Compensation hereunder, which may include without limitation (a)
seeking reimbursement of all or part of any cash or equity-based award, (b) cancelling prior cash or
equity-based awards, whether vested or unvested or paid or unpaid, (c) cancelling or offsetting
against any planned future cash or equity-based awards, (d) forfeiture of deferred compensation,
subject to compliance with Section 409A of the Code and the regulations promulgated thereunder
and (e) any other method authorized by applicable law or contract. Subject to compliance with any
applicable law, the Committee may affect recovery under this Policy from any amount otherwise
payable to the Covered Executive, including amounts payable to such individual under any
otherwise applicable Company plan or program, including base salary, bonuses or commissions and
compensation previously deferred by the Covered Executive.
The Company is authorized and directed pursuant to this Policy to recover Erroneously Awarded
Compensation in compliance with this Policy unless the Committee determines that recovery would
be impracticable solely for the following limited reasons, and subject to the following procedural
and disclosure requirements:
●The direct expense paid to a third party to assist in enforcing the Policy would exceed the
amount to be recovered. Before concluding that it
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would be impracticable to recover any amount of Erroneously Awarded Compensation based
on expense of enforcement, the Committee must make a reasonable attempt to recover such
Erroneously Awarded Compensation, document such reasonable attempt(s) to recover and
provide that documentation to Nasdaq;
●Recovery would violate home country law where that law was adopted prior to November 28,
2022. Before concluding that it would be impracticable to recover any amount of Erroneously
Awarded Compensation based on violation of home country law, the Committee must obtain
an opinion of home country counsel, acceptable to Nasdaq, that recovery would result in such
a violation and must provide such opinion to Nasdaq; or
●Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits
are broadly available to employees of the Company, to fail to meet the requirements of 26
U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
5.2
Prohibition on Covered Executive Indemnification and Insurance Reimbursement
Notwithstanding the terms of any indemnification or insurance policy or any contractual
arrangement with any Covered Executive that may be interpreted to the contrary, the Company shall
not indemnify any Covered Executive against the loss of any Erroneously Awarded Compensation,
including any payment or reimbursement for the cost of third-party insurance purchased by a
Covered Executive to cover any such loss.
5.3
Committee Indemnification
Any members of the Committee, and any other members of the Board who assist in the
administration of this Policy, shall not be personally liable for any action, determination or
interpretation made with respect to this Policy and shall be fully indemnified by the Company to the
fullest extent under applicable law and Company policy with respect to any such action,
determination or interpretation. The foregoing sentence shall not limit any other rights to
indemnification of the members of the Board under applicable law or Company policy.
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5.4
Policy Filing Requirements
The Company shall file all disclosures with respect to this Policy in accordance with the
requirements of the federal securities laws, including disclosures required by U.S. Securities
and Exchange Commission filings.
5.5
Other Recovery Obligations; General Rights
To the extent that the application of this Policy would provide for recovery of Incentive-Based
Compensation that the Company recovers pursuant to Section 304 of the Sarbanes-Oxley Act or
other recovery obligations, the amount the relevant Covered Executive has already reimbursed the
Company will be credited to the required recovery under this Policy. This Policy shall not limit the
rights of the Company to take any other actions or pursue other remedies that the Company may
deem appropriate under the circumstances and under applicable law, in each case to the extent
permitted under the Listing Standards.
Nothing contained in this Policy, and no recoupment or recovery as contemplated by this Policy,
shall limit any claims, damages or other legal remedies the Company or any of its affiliates may
have against a Covered Executive arising out of or resulting from any actions or omissions by the
Covered Executive.
5.6
Successors
This Policy shall be binding and enforceable against all Covered Executives and their
beneficiaries, heirs, executors, administrators or other legal representatives.
5.7
Governing Law; Venue
This Policy and all rights and obligations hereunder are governed by and construed in
accordance with the internal laws of the State of New York, excluding any choice of law rules or
principles that may direct the application of the laws of another jurisdiction. All actions arising out
of or relating to this Policy shall be resolved in any state or federal court located within the State of
Delaware.
5.8
Acknowledgement
Each of the Company’s Covered Executives shall sign and return to the Company, within 30
days following the later of (i) the Effective Date or (ii) the date
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the individual becomes a Covered Executive, the Clawback Policy Acknowledgment, pursuant to
which the Covered Executive agrees to be bound by, and to comply with, the terms and conditions
of this Policy.
6. Definitions
6.1
“Accounting Restatement” means an accounting restatement of the Company’s financial
statements due to the Company’s material noncompliance with any financial reporting
requirement under the securities laws, including any required accounting restatement to
correct an error in previously issued financial statements that is material to the previously
issued financial statements, or that would result in a material misstatement if the error
were corrected in the current period or left uncorrected in the current period.
6.2
“Applicable Period” means the three completed fiscal years immediately preceding the
date on which the Company is required to prepare an Accounting Restatement, as well as
any transition period (that results from a change in the Company’s fiscal year) within or
immediately following those three completed fiscal years (except that a transition period
that comprises a period of at least nine months shall count as a completed fiscal year). The
“date on which the Company is required to prepare an Accounting Restatement” is the
earlier to occur of (A) the date the Audit Committee concludes, or reasonably should have
concluded, that the Company is required to prepare an Accounting Restatement or (B) the
date a court, regulator or other legally authorized body directs the Company to prepare an
Accounting Restatement, in each case regardless of if or when the restated financial
statements are filed.
6.3
“Code” means the U.S. Internal Revenue Code of 1986, as amended. Reference to any
Code provision includes any regulation thereunder and any successor provisions and
regulations, and reference to regulations includes any applicable guidance or
pronouncement of the Department of the Treasury and/or Internal Revenue Service.
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6.4
“Covered Executives” means the Company’s current and former executive officers, as
determined by the Committee in accordance with the definition of executive officer set
forth in Rule 10D-1 and the Listing Standards.
6.5
“Erroneously Awarded Compensation” has the meaning set forth in Section 5.1(a) of this
Policy.
6.6
“Financial Reporting Measure” means any measure that is determined and presented in
accordance with the accounting principles used in preparing the Company’s financial
statements, and any measure that is derived wholly or in part from such measure. For the
avoidance of doubt, Financial Reporting Measures include stock price and total
shareholder return (“TSR”). A Financial Reporting Measure need not be presented within
the Company’s financial statements or included in a filing with the Securities Exchange
Commission to qualify as a “Financial Reporting Measure.”
6.7
“Incentive-Based Compensation” means any compensation that is granted, earned or
vested based wholly or in part upon the attainment of a Financial Reporting Measure.
Incentive-Based Compensation is “received” for purposes of this Policy in the Company’s
fiscal period during which the Financial Reporting Measure specified in the Incentive-
Based Compensation award is attained, even if the payment or grant of such Incentive-
Based Compensation occurs after the end of that period. Incentive-Based Compensation
that is subject to both a Financial Reporting Measure vesting condition and a service-based
vesting condition shall be considered received when the relevant Financial Reporting
Measure is achieved, even if the Incentive-Based Compensation continues to be subject to
the service-based vesting condition.