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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2024

or

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

For the transition period from                      to

Commission File Number: 001-40589

NorthEast Community Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Maryland

86-3173858

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

325 Hamilton Avenue

White Plains, New York 10601

(Address of Principal Executive Offices)

(914) 684-2500

(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, par value $0.01 per share

NECB

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

Emerging growth company

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

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

As of May 7, 2024, there were 14,032,696 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

`

    

    

    

    

 

    

    

Page

Part I

Financial Information

3

Item 1.

Financial Statements

3

Consolidated Statements of Financial Condition as of March 31, 2024 and December 31, 2023 (Unaudited)

3

Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

5

Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

6

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

7

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

36

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

46

Item 4.

Controls and Procedures

48

Part II

Other Information

48

Item 1.

Legal Proceedings

48

Item 1A.

Risk Factors

48

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

48

Item 3.

Defaults Upon Senior Securities

49

Item 4.

Mine Safety Disclosures

49

Item 5.

Other Information

49

Item 6.

Exhibits

49

Exhibit Index

50

Signatures

51

2

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

March 31, 

December 31, 

    

2024

    

2023

(In thousands, except share

and per share amounts)

ASSETS

Cash and amounts due from depository institutions

$

9,940

$

13,394

Interest-bearing deposits

 

97,508

 

55,277

Total cash and cash equivalents

 

107,448

 

68,671

Certificates of deposit

 

100

 

100

Equity securities

 

18,020

 

18,102

Securities held-to-maturity ( net of allowance for credit losses of $133 and $136, fair value of  $12,937 and $13,126, respectively )

 

15,735

 

15,860

Loans receivable

 

1,654,626

 

1,586,721

Deferred loan (fees) costs, net

(52)

176

Allowance for credit losses

(4,927)

(5,093)

Net loans

1,649,647

 

1,581,804

Premises and equipment, net

 

25,223

 

25,452

Investments in restricted stock, at cost

 

614

 

929

Bank owned life insurance

 

25,239

 

25,082

Accrued interest receivable

 

12,952

 

12,311

Real estate owned

 

1,456

 

1,456

Property held for investment

 

1,398

 

1,407

Right of Use Assets – Operating

 

4,427

 

4,566

Right of Use Assets – Financing

 

350

 

351

Other assets

 

4,299

 

8,044

Total assets

$

1,866,908

$

1,764,135

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

Liabilities:

 

  

 

  

Deposits:

 

  

 

  

Non-interest bearing

$

288,589

$

300,184

Interest bearing

 

1,223,413

 

1,099,852

Total deposits

 

1,512,002

 

1,400,036

Advance payments by borrowers for taxes and insurance

 

2,346

 

2,020

Borrowings

 

47,000

 

64,000

Lease Liability – Operating

 

4,497

 

4,625

Lease Liability – Financing

 

580

 

571

Accounts payable and accrued expenses

 

11,559

 

13,558

Total liabilities

 

1,577,984

 

1,484,810

See notes to interim unaudited consolidated financial statements.

3

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)

(Unaudited)

March 31, 

December 31, 

    

2024

    

2023

(In thousands, except share

and per share amounts)

Stockholders’ equity:

 

  

 

  

Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding

 

$

 

$

Common stock, $0.01 par value; 75,000,000 shares authorized; 14,065,796 shares and 14,144,856 shares issued and outstanding, respectively

141

142

Additional paid-in capital

 

109,267

109,924

Unearned Employee Stock Ownership Plan (“ESOP”) shares

 

(6,346)

(6,563)

Retained earnings

 

185,542

175,505

Accumulated other comprehensive income

 

320

317

Total stockholders’ equity

 

288,924

 

279,325

Total liabilities and stockholders’ equity

$

1,866,908

$

1,764,135

See notes to interim unaudited consolidated financial statements.

4

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended March 31, 

    

2024

    

2023

 

(In thousands, except 

 

per share amounts)

INTEREST INCOME:

  

 

  

Loans

$

36,703

$

27,575

Interest-earning deposits

 

1,200

703

Securities

 

218

233

Total Interest Income

 

38,121

 

28,511

INTEREST EXPENSE:

 

  

 

  

Deposits

 

12,394

5,552

Borrowings

 

731

112

Financing lease

 

10

9

Total Interest Expense

 

13,135

 

5,673

Net Interest Income

 

24,986

 

22,838

Provision for (reversal of) credit loss

(165)

1

Net Interest Income after Provision for (Reversal of) Credit Loss

 

25,151

 

22,837

NON-INTEREST INCOME:

 

  

 

  

Other loan fees and service charges

 

462

607

Earnings on bank owned life insurance

 

157

150

Investment advisory fees

 

-

117

Unrealized (loss) gain on equity securities

 

(82)

225

Other

 

17

16

Total Non-Interest Income

 

554

 

1,115

NON-INTEREST EXPENSES:

 

  

 

  

Salaries and employee benefits

 

5,351

4,542

Occupancy expense

 

707

669

Equipment

 

253

304

Outside data processing

 

637

515

Advertising

 

88

49

Real estate owned expense

 

11

21

Other

 

2,634

2,091

Total Non-Interest Expenses

 

9,681

 

8,191

INCOME BEFORE PROVISION FOR INCOME TAXES

 

16,024

 

15,761

PROVISION FOR INCOME TAXES

 

4,650

4,517

NET INCOME

$

11,374

$

11,244

EARNINGS PER COMMON SHARE – BASIC

$

0.87

$

0.77

EARNINGS PER COMMON SHARE – DILUTED

0.86

0.77

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC

13,118

14,649

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – DILUTED

 

13,191

 

14,696

See notes to interim unaudited consolidated financial statements.

5

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended March 31, 

    

2024

    

2023

(In thousands)

Net Income

$

11,374

$

11,244

Other comprehensive income:

 

  

 

  

Defined benefit pension:

 

  

 

Reclassification adjustments out of accumulated other comprehensive income:

 

  

 

  

Amortization of actuarial gain

 

(13)

 

(8)

Actuarial loss arising during period

 

18

 

18

Total

 

5

 

10

Income tax effect¹

 

(2)

 

(3)

Total other comprehensive income

 

3

 

7

Total Comprehensive Income

$

11,377

$

11,251

¹Amounts are included in provision for income taxes in the consolidated statements of income.

See notes to interim unaudited consolidated financial statements.

6

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2024 and 2023

(Unaudited)

Accumulated

Additional

Other

Number of

Common

Paid- in

Unearned

Retained

Comprehensive

    

Shares, net

    

Stock

    

Capital

    

ESOP Shares

    

Earnings

    

Income

    

Total

(In thousands, except share and per share amounts)

Balance – December 31, 2023

14,144,856

$

142

$

109,924

$

(6,563)

$

175,505

$

317

$

279,325

Net income

 

 

 

 

 

11,374

 

 

11,374

Other comprehensive income

 

 

 

 

 

 

3

 

3

Cash dividend declared ($0.10 per share)

 

 

 

 

 

(1,337)

 

 

(1,337)

Stock repurchases

(80,060)

(1)

(1,250)

(1,251)

Compensation expense related to restricted stock awards

252

252

Compensation expense related to stock options

192

192

Stock option exercise

1,000

14

14

ESOP shares earned

 

 

 

135

 

217

 

 

 

352

Balance – March 31, 2024

14,065,796

$

141

$

109,267

$

(6,346)

$

185,542

$

320

$

288,924

Accumulated

Additional

Other

Number of

Common

Paid- in

Unearned

Retained

Comprehensive

    

Shares, net

    

Stock

    

Capital

    

ESOP Shares

    

Earnings

    

Income

    

Total

(In thousands, except share and per share amounts)

Balance – December 31, 2022

16,049,454

$

161

$

136,434

$

(7,432)

$

132,670

$

156

$

261,989

Net income

 

 

 

 

 

11,244

 

 

11,244

Other comprehensive income

 

 

 

 

 

7

7

Cash dividend declared ($0.06 per share)

 

 

 

 

(875)

 

(875)

Stock repurchases

(723,626)

(8)

(10,514)

(10,522)

Restricted stock award

Compensation expense related to restricted stock awards

241

241

Compensation expense related to stock options

192

192

Cumulative effect of adoption of ASU 2016-13

 

(99)

 

(99)

ESOP shares earned

 

 

 

109

 

217

 

 

 

326

Balance - March 31, 2023

15,325,828

$

153

$

126,462

$

(7,215)

$

142,940

$

163

$

262,503

See notes to interim unaudited consolidated financial statements.

7

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended March 31, 

    

2024

    

2023

(In thousands)

Cash Flows from Operating Activities:

 

  

 

  

Net income

$

11,374

$

11,244

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Net amortization of securities premiums and discounts, net

 

1

10

(Decrease) increase in provision for (reversal of) credit losses

 

(165)

1

Depreciation

 

297

316

Net amortization of deferred loan fees and costs

 

14

119

Deferred income tax benefit

 

(97)

(89)

Unrealized loss (gain) recognized on equity securities

 

82

(225)

Earnings on bank owned life insurance

 

(157)

(150)

ESOP compensation expense

 

352

326

Compensation expense related to stock options

192

192

Compensation expense related to restricted stock

252

241

Increase in accrued interest receivable

 

(641)

(1,322)

Decrease in other assets

 

3,991

3,543

Decrease in accounts payable - loan closing

(59)

(2,705)

Decrease in accounts payable and accrued expenses

 

(2,528)

(552)

Net Cash Provided by Operating Activities

 

12,908

 

10,949

Cash Flows from Investing Activities:

 

  

 

  

Net increase in loans

 

(71,136)

 

(102,613)

Proceeds from sale of loans

 

3,424

 

3,708

Principal repayments on securities available-for-sale

1

Principal repayments on securities held-to-maturity

 

128

 

142

Redemptions of restricted stock

 

315

 

315

Purchases of premises and equipment

 

(68)

 

(96)

Net Cash Used in Investing Activities

 

(67,337)

 

(98,543)

Cash Flows from Financing Activities:

 

  

 

  

Net increase in deposits

 

111,966

 

86,438

Repayment of FRB borrowings

(10,000)

Repayment of FHLB of NY advances

 

(7,000)

 

(7,000)

Stock repurchases

(1,251)

(10,522)

Stock option exercised

14

Increase in advance payments by borrowers for taxes and insurance

 

326

 

1,384

Cash dividends paid

 

(849)

 

(969)

Net Cash Provided by Financing Activities

 

93,206

 

69,331

Net Increase (Decrease) in Cash and Cash Equivalents

 

38,777

 

(18,263)

Cash and Cash Equivalents – Beginning

 

68,671

 

95,308

Cash and Cash Equivalents – Ending

$

107,448

$

77,045

See notes to interim unaudited consolidated financial statements.

8

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

Three Months Ended March 31, 

    

2024

    

2023

(In thousands)

Supplementary Cash Flows Information:

 

  

 

  

Income taxes paid

$

4,019

$

371

Interest paid

$

12,866

$

5,621

Supplementary Disclosure of Non-Cash Investing and Financing Activities:

 

  

 

  

Dividends declared and not paid

$

1,407

$

924

See notes to interim unaudited consolidated financial statements.

9

NORTHEAST COMMUNITY BANCORP, INC.

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

(Unaudited)

NORTHEAST COMMUNITY BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Summary of Significant Accounting Policies

The following is a description of the Company’s business and significant accounting and reporting policies:

Nature of Business:

Northeast Community Bancorp, Inc. (the “Company”) is a Maryland corporation that was incorporated in May 2021 to be the successor to NorthEast Community Bancorp, Inc., a federally chartered corporation (the “Mid-Tier Holding Company”), upon completion of the second-step conversion of NorthEast Community Bank (the “Bank”) from the two-tier mutual holding company structure to the stock holding company structure. NorthEast Community Bancorp, MHC was the former mutual holding company for the Mid-Tier Holding Company prior to the completion of the second-step conversion. In conjunction with the second-step conversion, each of NorthEast Community Bancorp, MHC and the Mid-Tier Holding Company merged out of existence and now cease to exist.

The Bank is a New York State-chartered savings bank and the Company’s primary activity is the ownership and operation of the Bank.

The Bank is headquartered in White Plains, New York. The Bank was founded in 1934 and is a community oriented financial institution dedicated to serving the financial services needs of individuals and businesses within its market area. The Bank currently conducts business through its eleven branch offices located in the Bronx, New York, Orange, Rockland, and Sullivan Counties in New York and Essex, Middlesex and Norfolk Counties in Massachusetts and three loan production offices located in White Plains, New York, New City, New York, and Danvers, Massachusetts.

The Bank’s principal business consists of originating primarily construction loans and, to a lesser extent, commercial and industrial loans and multifamily and mixed-use residential real estate loans and non-residential real estate loans. The Bank offers a variety of retail deposit products to the general public in the areas surrounding its main office and its branch offices, with interest rates that are competitive with those of similar products offered by other financial institutions operating in its market area. The Bank also utilizes borrowings as a source of funds. The Bank’s revenues are derived primarily from interest on loans and, to a lesser extent, interest on investment securities and mortgage-backed securities. The Bank also generates revenues from other income including deposit fees, service charges and investment advisory fees.

The Bank also previously offered investment advisory and financial planning services under the name Harbor West Wealth Management Group, a division of the Bank, through a networking arrangement with a registered broker-dealer and investment advisor. The Bank entered into an agreement to sell all the Bank’s assets relating to Harbor West Wealth Management Group to a third party in December 2023, and the sale closed in January 2024. The Bank no longer offers these services.

New England Commercial Properties LLC (“NECP”), a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2007 to facilitate the purchase or lease of real property by the Bank. New England Commercial Properties, LLC currently owns one foreclosed property located in Pennsylvania.

NECB Financial Services Group, LLC (“NECB Financial”), a New York limited liability company and wholly owned subsidiary of the Bank, was formed in the third quarter of 2012 as a complement to Harbor West Wealth Management Group to sell life insurance and fixed rate annuities. NECB Financial is licensed in New York State.

10

NECB Financial terminated its license in Connecticut on February 22, 2024 due to the sale of all the Bank’s assets relating to Harbor West Wealth Management Group to a third party in January 2024. This subsidiary is currently inactive.

72 West Eckerson LLC (“72 West Eckerson”), a New York limited liability company and wholly owned subsidiary of the Bank, was formed in April 2015 to facilitate the purchase or lease of real property by the Bank and currently owns the Bank branch locations in Spring Valley, New York and Monroe, New York.

166 Route 59 Realty LLC (“166 Route 59 Realty”), a New York limited liability company and wholly owned subsidiary of the Bank, was formed in April 2021 to facilitate the purchase or lease of real property by the Bank and currently owns the property for the Bank branch located in Airmont, New York.

3 Winterton Realty LLC, a New York limited liability company and wholly owned subsidiary of the Bank, was formed in October 2021 to facilitate the purchase or lease of real property by the Bank and currently owns the property for the Bank branch located in Bloomingburg, New York.

Principal of Consolidations:

The accompanying unaudited consolidated financial statements include the accounts of the Company, the Bank, NECP, NECB Financial, 72 West Eckerson, 166 Route 59 Realty, and 3 Winterton Realty LLC (collectively the “Company”) and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All significant inter-company accounts and transactions have been eliminated in consolidation. The accounting and reporting policies of the Company and its subsidiaries conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. The unaudited consolidated interim financial information should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023.

In the opinion of the Company, all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of the operating results for the interim periods have been included. The results of operations for periods of less than a year are not necessarily indicative of results for the full year or any other period.

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.

Loan Receivable:

Loans are stated at unpaid principal balances plus net deferred loan origination fees and costs less an allowance for credit losses. Interest on loans receivable is recorded on the accrual basis. An allowance for uncollected interest is established on loans where management has determined that the borrowers may be unable to meet contractual principal and/or interest obligations or where interest or principal is 90 days or more past due, unless the loans are well secured with a reasonable expectation of collection. When a loan is placed on nonaccrual, an allowance for uncollected interest is established and charged against current income. Thereafter, interest income is not recognized unless the financial condition and payment record of the borrower warrant the recognition of interest income. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Interest on loans that have been restructured is accrued according to the renegotiated terms. Net loan origination fees and costs are deferred and amortized into interest income over the contractual lives of the related loans by use of the level yield method. Past due status of loans is based upon the contractual due date.

11

Loan Concentration Risk:

The Company’s lending activity is concentrated in construction loans secured by the construction of multi-family properties in Massachusetts and by the construction primarily of multi-family, residential condominium properties, and occasionally non-residential properties located in New York State. As of March 31, 2024 and December 31, 2023, the Company had a majority of construction loans located in New York State, including $680.8 million and $626.0 million in the Bronx, $202.3 million and $198.5 million in the Town of Monroe, $134.6 million and $133.7 million in the Hamlet of Monsey, and $103.8 million and $105.9 million in the Village of Spring Valley. At March 31, 2024, the Company had $78.1 million, or 6.0%, of construction loans located in Rockland County, New York, related to office space or commercial use.

Note 2 — Regulatory Capital

The Company and the Bank are subject to regulatory capital requirements promulgated by the federal banking agencies. The Federal Reserve establishes capital requirements, including well capitalized standards, for the consolidated bank holding company, and the FDIC has similar requirements for the Company’s subsidiary bank. The Bank met all capital adequacy requirements to which it was subject as of March 31, 2024 and December 31, 2023.

The following table presents information about the Bank’s capital levels at the dates presented:

Regulatory Capital Requirements

 

Minimum Capital

For Classification as

 

Actual

Adequacy(1)

Well-Capitalized

 

    

Amount

    

Ratio

    

Amount

    

Ratio

    

Amount

    

Ratio

 

(Dollars in Thousands)

 

As of March 31, 2024:

 

  

 

  

 

  

 

  

 

  

 

  

Total capital (to risk-weighted assets)

$

270,492

 

13.78

%  

$

157,081

 

8.00

%  

$

196,352

 

10.00

%

Tier 1 capital (to risk-weighted assets)

 

264,439

 

13.47

 

117,811

 

6.00

 

157,081

 

8.00

Common equity tier 1 capital (to risk-weighted assets)

 

264,439

 

13.47

 

88,358

 

4.50

 

127,628

 

6.50

Core (Tier 1) capital (to adjusted total assets)

 

264,439

 

14.65

 

72,195

 

4.00

 

90,243

 

5.00

As of December 31, 2023:

 

  

 

  

 

  

 

  

 

  

 

  

Total capital (to risk-weighted assets)

$

255,252

 

13.43

%  

$

152,097

 

8.00

%  

$

190,121

 

10.00

%

Tier 1 capital (to risk-weighted assets)

 

249,013

 

13.10

 

114,072

 

6.00

 

152,097

 

8.00

Common equity tier 1 capital (to risk-weighted assets)

 

249,013

 

13.10

 

85,554

 

4.50

 

123,579

 

6.50

Core (Tier 1) capital (to adjusted total assets)

 

249,013

 

14.43

 

69,007

 

4.00

 

86,259

 

5.00

(1)Ratios do not include the capital conservation buffer.

Based on the most recent notification by the FDIC, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action. There have been no conditions or events that have occurred since notification that management believes have changed the Bank’s category.

Note 3 — Earnings Per Share

Basic earnings per share is calculated by dividing the net income available to common stockholders by the weighted average number of common shares outstanding during the period less any unvested restricted shares. Unallocated common shares held by the Employee Stock Ownership Plan (“ESOP”) are not included in the weighted-average number of common shares outstanding for purposes of calculating basic net income per common share until they are committed to be released. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result

12

from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options and are determined using the treasury stock method. The following table sets forth the weighted average shares outstanding used in the computations of basic and diluted earnings per share.

The following table sets forth the computations of basic and diluted earnings per share:

Three Months Ended March 31,