ECBバンコープの年次報告

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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 year ended December 31, 2024.

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

For the transition period from _______________ to _______________.

Commission file number: 001-41456

ECB BANCORP, INC.

(Exact name of registrant as specified in its charter)

    Maryland

    88-1502079

    (State or other jurisdiction of
incorporation or organization)

    (I.R.S. Employer
Identification Number)


419 Broadway, Everett, MA 02149		02149
(Address of principal executive offices)		(Zip Code)

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

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

    Common stock, par value $0.01 per share

    Trading Symbol(s) 

    The NASDAQ Stock Market, LLC

    (Title of each class)
 
    ECBK 

    (Name of each exchange on which is registered)

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 ☐ 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 ☐ 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. 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, 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 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. ☐

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. ☐

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 ☐ NO ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the last sale price on June 30, 2024 of $12.48, was approximately $94.3 million.

As of March 25, 2025, there were 9,056,814 issued and outstanding shares of the Registrant’s Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Proxy Statement for the 2025 Annual Meeting of Stockholders (Part III)

ECB Bancorp, Inc.

Form 10-K

TABLE OF CONTENTS


Part I
Item 1.	Business	1

Item 1A.	Risk Factors	36

Item 1B.	Unresolved Staff Comments	36

Item 1C.	Cybersecurity	36

Item 2.	Properties	39

Item 3.	Legal Proceedings	39

Item 4.	Mine Safety Disclosures	39

Part II
Item 5.	Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	40

Item 6.	[Reserved]	41

Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	42

Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	54

Item 8.	Financial Statements and Supplementary Data	55

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	102

Item 9A.	Controls and Procedures	102

Item 9B.	Other Information	102

Item 9C	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	102

Part III
Item 10.	Directors, Executive Officers and Corporate Governance	103

Item 11.	Executive Compensation	104

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	104

Item 13.	Certain Relationships and Related Transactions and Director Independence	104

Item 14.	Principal Accountant Fees and Services	104

Part IV
Item 15.	Exhibits and Financial Statement Schedules	105

Item 16.	Form 10-K Summary	107

	Signatures	108

PART I

ITEM 1. Business

FORWARD-LOOKING STATEMENTS

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

•

statements of our goals, intentions and expectations;

•

statements regarding our business plans, prospects, growth and operating strategies;

•

statements regarding the asset quality of our loan and investment portfolios; and

•

estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this Annual Report.

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

•

general economic conditions, either nationally or in our market areas, that are worse than expected including as a result of employment levels and labor shortages, and the effects of inflation, a potential recession or slowed economic growth caused by supply chain disruptions or otherwise;

•

the extent, severity or duration of a pandemic on us and on our customers, employees and third-party service providers;

•

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;

•

our ability to access cost-effective funding;

•

fluctuations in real estate values and both residential and commercial real estate market conditions;

•

demand for loans and deposits in our market area;

•

our ability to implement and change our business strategies;

•

competition among depository and other financial institutions;

•

inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments, or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

•

adverse changes in the securities or secondary mortgage markets;

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;

•

changes in the quality or composition of our loan or investment portfolios;

•

technological changes that may be more difficult or expensive than expected;

•

the inability of third-party providers to perform as expected; a failure or breach of our operational or security systems or infrastructure, including cyberattacks;

•

our ability to manage market risk, credit risk and operational risk;

•

our ability to enter new markets successfully and capitalize on growth opportunities;

•

changes in consumer spending, borrowing and savings habits;

•

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

•

our ability to attract and retain key employees; and

•

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

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

In this Annual Report the terms “we,” “our,” and “us” refer to ECB Bancorp, Inc. and Everett Co-operative Bank, unless the context indicates another meaning. In addition, we sometimes refer to ECB Bancorp, Inc. as “ECB Bancorp,” and to Everett Co-operative Bank as the “Bank.”

BUSINESS OF ECB BANCORP

ECB Bancorp (sometimes herein, the “Company”) is a Maryland corporation that was incorporated in March 2022 for the purpose of becoming the registered bank holding company for Everett Co-operative Bank (the “Bank”) upon the consummation of the Bank’s mutual to stock conversion and initial stock offering which was completed on July 27, 2022. In connection with the conversion, the Company sold 8,915,247 shares of common stock, par value $0.01 per share, which included 734,020 shares sold to the Bank’s Employee Stock Ownership Plan, for gross offering proceeds (before deducting offering expenses) of approximately $89.2 million based on the offering price of $10.00 per share. The Company also contributed 260,000 shares of common stock and $600,000 in cash to the Everett Co-operative Bank Charitable Foundation, Inc. The shares of the Company’s common stock sold in the offering began trading on the Nasdaq Capital Market on July 28, 2022 under the symbol “ECBK.”

Since being incorporated, other than holding the common stock of Everett Co-operative Bank, engaging in share repurchases and making a loan to the Bank’s employee stock ownership plan, we have not engaged in any material business activities to date.

Our cash flow depends on earnings from the investment of the net proceeds we retained from our initial public stock offering that was consummated in July 2022, and any dividends we receive from Everett Co-operative Bank. We neither own nor lease any property, but pay a fee to Everett Co-operative Bank for the use of its premises, equipment and furniture. At the present time, we employ only persons who are officers of Everett Co-operative Bank who also serve as officers of ECB Bancorp. We use the support staff of Everett Co-operative Bank from time to time and pay a fee to Everett Co-operative Bank for the time devoted to ECB Bancorp by employees of Everett Co-operative Bank. However, these persons are not separately compensated by ECB Bancorp. ECB Bancorp may hire additional employees, as appropriate, to the extent it expands its business in the future.

Our executive offices are located at 419 Broadway, Everett, Massachusetts 02149. Our telephone number at this address is (617) 387-1110. Our website address is www.everettbank.com. Information on our website is not incorporated into this Annual Report on Form 10-K and should not be considered part of this Annual Report.

BUSINESS OF EVERETT CO-OPERATIVE BANK

General

Everett Co-operative Bank is a Massachusetts-chartered stock cooperative bank headquartered in Everett, Massachusetts. The Bank completed its mutual to stock conversion on July 27, 2022 at which time it became the wholly owned subsidiary of ECB Bancorp.

Everett Co-operative Bank was organized in 1890 and has operated continuously in Everett, Massachusetts since this time. We conduct business from our three full-service banking offices located in Everett, Lynnfield and Woburn, Massachusetts, which are located in the greater Boston metropolitan area in Middlesex and Essex Counties. Everett is adjacent to Boston and is approximately three miles from Boston’s financial district, and Lynnfield is located approximately 10 miles to the north in Essex County. Our Woburn branch, opened in 2023, is located approximately 10 miles from Boston’s financial district in Middlesex County. We consider our deposit market area to be Middlesex, Essex and Suffolk Counties, Massachusetts and our primary lending area to be these Counties as well as Norfolk County, Massachusetts, which are located primarily within the Route 128 corridor outside of Boston.

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one-to-four family residential real estate loans, commercial real estate and multifamily real estate loans, construction and land loans and home equity lines of credit and loans. To a lesser extent we also originate commercial business loans and consumer loans. At December 31, 2024, $422.8 million, or 36.9%, of our total loan portfolio was comprised of one-to-four family residential real estate loans, $344.0 million, or 30.0%, of our total loan portfolio was comprised of multifamily real estate loans, $229.0 million, or 20.0%, of our total loan portfolio was comprised of commercial real estate loans, $90.9 million, or 7.9%, of our total loan portfolio was comprised of construction loans, $45.2 million, or 4.0%, of our total loan portfolio was comprised of home equity lines of credit and loans, $13.8 million, or 1.2% of our total loan portfolio was comprised of commercial business loans, and $141,000, or 0.01% of our total loan portfolio was comprised of consumer loans. We also invest in securities, consisting primarily of U.S. government and federal agency obligations, mortgage-backed securities and corporate bonds. We offer a variety of deposit accounts, including certificate of deposit accounts, IRAs, money market accounts, savings accounts and both interest-bearing and noninterest-bearing checking accounts. We historically have utilized advances from the Federal Home Loan Bank of Boston (the “FHLB”) to fund our operations and we had $234.0 million of FHLB advances outstanding at December 31, 2024. Additionally, in recent years, we have also accepted brokered deposits as a non-retail funding source to fund our operations. At December 31, 2024, we had $125.6 million of brokered deposits outstanding.

Business Strategy

One of the key features of our business strategy has been to grow our loan portfolio, primarily through an increased focus on growing our commercial real estate and multifamily lending operations. In order to execute ths growth strategy in an orderly and diligent manner, we enhanced our commercial real estate and multifamily lending infrastructure and engaged a group of experienced credit analysts. Consistent with our strategy to grow our commercial loan operations and the consequent commercial relationship opportunities, we have and will continue to upgrade our suite of deposit products and related services and have and will continue to upgrade our digital and mobile applications in order to accommodate business customers and thereby accelerate the growth in our core deposits.

Historically, given our size, capital position and lending team experience and capacity, we have originated for participation to other local banking institutions our larger commercial real estate and commercial loans. As we continue to enhance our commercial real estate team and infrastructure and with the increase in capital resulting from the conversion, we are able to selectively retain larger loans that we historically would have originated for participation with other local institutions. In this regard, we have revised our lending policies and loans to one borrower limitations to increase our lending limits and the type and size of loans we choose to hold in our portfolio.

We are similarly focused on enhancing our retail operations. To that end, the Company has developed new high yield consumer and business products as well as introducing an array of cash management services designed to attract new business relationships to the bank. In addition, in September of 2023, the Company opened a new branch in Woburn, MA, increasing our retail network to three branches. We will continue to attract and retain retail customers by emphasizing personal service, accessibility and flexibility in the face of mass market-oriented large, national and super-regional banks which maintain local branch networks in our market.

We believe that we have created, and will continue to enhance, the framework which will enable us to execute on our strategy to grow the Company through orderly and diligent loan growth, including competing for and underwriting larger individual loans and maintaining larger lending relationships. Similarly, we believe that we are well-positioned to execute on our retail growth strategy including our increased emphasis on retail sales marketing efforts by Company personnel. We have and expect to continue to invest in our personnel and information technology to support this balance sheet growth.

We believe we have been effective in competing against both larger regional banks and local community banks operating in our market. We compete against the larger banks through our responsive and personalized service, providing our customers with quicker decision making, customized products where appropriate and access to our senior managers. We believe our highly experienced commercial and residential bankers and a sophisticated product and service mix, including a suite of technology solutions and support, enable us to compete effectively against local community banks. We believe that recent consolidation of financial institutions in and around our market continues to create further opportunity for expansion in our market and hiring available personnel. We will continue to emphasize these core business principles as we focus on growing our balance sheet and will implement them with the larger banking relationships that we seek to originate and maintain.

Reflecting our focus on our community, in connection with our mutual to stock conversion and initial public offering which closed in July 2022, we established the Everett Co-operative Bank Charitable Foundation (the "Foundation") and funded it with $600,000 in cash and 260,000 shares of our common stock, for a total contribution of $3,200,000 based on the $10.00 per share offering price. The purpose of this foundation is to make contributions to support various charitable organizations operating in our community now and in the future. During the year ended December 31, 2024, the Foundation made $129,000 in contributions to local non-profit charities and organizations.

Everett Co-operative Bank is subject to comprehensive regulation and examination by the Massachusetts Commission of Banks ("Commissioner"), as its chartering agency, and the Federal Deposit Insurance Corporation (“FDIC”) as its primary federal regulator and primary insurer of its deposits. See “Supervision and Regulation.” Our executive offices are located at 419 Broadway, Everett, Massachusetts 02149. Our telephone number at this address is (617) 387-1110. Our website address is www.everettbank.com. Information on our website is not incorporated into this Annual Report on Form 10-K and should not be considered part of this Annual Report.

Market Area

We consider Middlesex, Essex and Suffolk Counties, Massachusetts as our primary market area for gathering deposits, and each of these Counties as well as Norfolk County, Massachusetts as our primary lending market area. Our main office and two additional branch offices are located in Middlesex and Essex Counties, all of which are located in the greater Boston metropolitan area. Everett is a suburb which is adjacent to Boston and approximately three miles from Boston’s financial district, Woburn where our new branch opened in 2023 is located is approximately ten miles from Boston's financial district, and Lynnfield where our additional branch office is located is approximately 10 miles north in Essex County. While we occasionally make loans secured by properties located outside of our primary lending market, these loans are generally to borrowers with whom we have an existing relationship and who have a presence within our primary lending market.

The Boston metropolitan area benefits from the presence of numerous institutions of higher learning, medical care and research centers and the corporate headquarters of several significant multinational corporations. Eastern Massachusetts also has many high technology companies employing personnel with specialized skills. These factors affect the demand for residential homes, multifamily apartments, office buildings, shopping centers, industrial warehouses and other commercial properties.

According to the United States Department of Labor, the Boston metropolitan area was one of the United States' twelve largest metropolitan statistical areas in June 2024. Located adjacent to major transportation corridors, the Boston metropolitan area provides a highly diversified economic base, with major employment sectors ranging from services, manufacturing and wholesale/retail trade, to finance, technology and medical care.

According to the United States Department of Labor, in December 2024, the Boston-Cambridge-Newton, Massachusetts Statistical Area had an unemployment rate of 3.8%, compared to a Massachusetts state unemployment rate of 4.1% and the national unemployment rate of 4.1%.

Based on United States census estimates, from 2010 to 2023, the populations of Middlesex and Essex Counties increased 120,867 and 66,930, respectively. The United States census estimates that the median household income from 2019-2023 for Middlesex and Essex Counties were $126,779 and $99,431, respectively, compared to median household income of $94,755 for Boston the metropolitan area, $101,341 for the Commonwealth of Massachusetts and $78,538 for the United States.

Competition

We face significant competition within our market both in making loans and attracting deposits. Our market area has a high concentration of financial institutions, including large money center and regional banks, community banks, credit unions and other non-bank financial service providers. Some of our competitors offer products and services that we currently do not offer, such as trust services and private banking.

Our competition for loans comes primarily from the competitors referenced above and from other financial service providers, such as mortgage companies and mortgage brokers. Competition for loans also comes from the increasing number of non-depository financial service companies participating in the mortgage market, such as insurance companies, securities firms, financial technology companies, specialty finance firms and technology companies.

We expect competition to remain intense in the future as a result of legislative, regulatory and technological changes and the continuing trend toward consolidation of the financial services industry. Technological advances, for example, have lowered barriers to entry, which have allowed banks to expand their geographic reach by providing services over the internet and made it possible for non-depository institutions, including financial technology companies, to offer products and services that traditionally have been provided by banks. Competition for deposits and the origination of loans could limit our growth in the future.

We are a small community savings institution and as of June 30, 2024 (the latest date for which information is available), our market share was 0.89% of total FDIC-insured deposits in Middlesex County, Massachusetts making us the 25th largest out of 48 financial institutions in Middlesex County, and our market share was 0.68% of total FDIC-insured deposits in Essex County, Massachusetts making us the 22nd largest out of 36 financial institutions in Essex County.

Lending Activities

Our principal lending activity is originating one-to-four family residential real estate loans, commercial real estate and multifamily real estate loans, construction and land loans and home equity lines of credit and loans. To a much lesser extent, we also originate commercial business loans and consumer loans. Subject to market conditions and our asset-liability analysis, we expect to continue to grow our commercial real estate and multifamily loan portfolios as well as our one-to-four family residential real estate loan portfolio. We also originate for sale and sell a portion of the fixed-rate one-to-four family residential real estate loans that we originate that generally have terms of 15 years or greater, on a servicing-released, limited or no recourse basis, while retaining shorter-term fixed-rate and all adjustable-rate one-to-four family residential real estate loans in order to manage the duration and time to repricing of our loan portfolio.

Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. We had no loans held for sale at December 31, 2024 and December 31, 2023.


	At December 31,						At December 31,
	2024						2023
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Real estate loans:
One-to-four family residential	$	422,841			36.9	%	$	410,131			39.1	%
Multi-family		343,970			30.0			287,361			27.4
Commercial		228,991			20.0			196,365			18.7
Home equity lines of credit and loans		45,154			4.0			33,357			3.2
Construction		90,894			7.9			112,000			10.7
Other loans:
Commercial loans		13,844			1.2			9,219			0.9
Consumer		141		0.0				173			0.0
		1,145,835			100.0	%		1,048,606			100.0	%
Less:
Net deferred loan fees		(502	)					(226	)
Allowance for credit losses		(8,884	)					(8,591	)
Total loans, net	$	1,136,449					$	1,039,789

Loan Portfolio Maturities. The following tables set forth the contractual maturities of our total loan portfolio at December 31, 2024. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. Because the tables present contractual maturities and do not reflect repricing or the effect of prepayments, actual maturities may differ.


	One year or less		After one year through five years		After five years through 15 years		After 15 years		Total
	(Dollars in thousands)
Real estate loans:
One-to-four family residential	$	5,245	$	5,540	$	30,405	$	381,651	$	422,841
Multi-family		18,188		18,799		12,236		294,747		343,970
Commercial		2,165		31,486		27,657		167,683		228,991
Home equity lines of credit and loans		-		1,619		1,641		41,894		45,154
Construction		21,871		14,872		10,592		43,559		90,894
Other loans:
Commercial loans		29		10,039		3,085		691		13,844
Consumer		29		67		-		45		141
Total loans	$	47,527	$	82,422	$	85,616	$	930,270	$	1,145,835

The following table sets forth our fixed- and adjustable-rate loans at December 31, 2024 that are due after December 31, 2025.



	Due after December 31, 2025
	Fixed		Adjustable		Total
			(Dollars in thousands)
Real estate loans:
One-to-four family residential	$	105,715	$	311,881	$	417,596
Multi-family		26,038		299,744		325,782
Commercial		19,894		206,932		226,826
Home equity lines of credit and loans		1,342		43,812		45,154
Construction		16,357		52,666		69,023
Other loans:
Commercial loans		12,973		842		13,815
Consumer loans		45		67		112

Total loans	$	182,364	$	915,944	$	1,098,308

One-to-Four Family Residential Real Estate Lending. The focus of our lending has long been the origination of long-term loans secured by mortgages on owner-occupied one-to-four family residences. At December 31, 2024, $422.8 million, or 36.9%, of our total loan portfolio, consisted of one-to-four family residential real estate loans. Included in this balance was $145.6 million of non-owner occupied loans. Loans for non-owner occupied properties purchased for investment purposes and where the property income is not the borrower’s primary source of income are generally underwritten to Fannie Mae guidelines. Loans for non-owner occupied properties purchased for investment purposes and where the property income is the primary source of income to the borrower are underwritten based on our commercial real estate underwriting guidelines. As of December 31, 2024, our average outstanding one-to-four family residential real estate loan balance was $439,000 and our largest outstanding loan secured by one-to-four family residential restate had a principal balance of $5.0 million, which, as of December 31, 2024, was performing in accordance with its repayment terms. The majority of the one-to-four family residential real estate loans that we originate are secured by properties located in our primary market area. See “ – Originations, Sales and Purchases of Loans.”

Our one-to-four family residential real estate loans are generally underwritten according to Fannie Mae guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate both fixed- and adjustable-rate one-to-four family residential real estate loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency (“FHFA”). We also originate loans above the FHFA limit, which are referred to as “jumbo loans.” We generally underwrite jumbo loans in a manner similar to conforming loans.

During the year ended December 31, 2024, we originated $10.8 million of jumbo loans.

We originate both fixed-rate and adjustable-rate one-to-four family residential real estate loans with terms of up to 30 years. At December 31, 2024, $108.9 million, or 25.8%, of our one-to-four family residential real estate loans were fixed-rate loans.

We originate our adjustable-rate one-to-four family residential real estate loans with initial interest rate adjustment periods of three, five, seven and ten years, based on changes in a designated market index. These loans are limited to a 200-basis point initial increase in their interest rate, a 200-basis point increase in their interest rate annually after the initial adjustment, and a maximum upward adjustment of 600 basis points over the life of the loan. We determine whether a borrower qualifies for an adjustable-rate mortgage loan based on our lending policy.

We originate conventional one-to-four family residential mortgage loans with loan-to-value ratios of up to 80% without private mortgage insurance. Occasionally, we originate loans with loan-to-value ratios of up to 97% with private mortgage insurance and where the borrower’s debt generally does not exceed 45% of the borrower’s monthly cash-flow.

A portion of our one-to-four family residential real estate loans are for the financing of residential condominium units. Consistent with our risk analysis, we generally will not finance more than 20% of the units in any condominium project with more than four units.

Generally, we sell a portion of the fixed-rate one-to-four family residential real estate loans that we originate with terms that are generally greater than 15 years. We base the amount of fixed-rate loans that we sell on our liquidity needs, asset/liability mix, loan volume, portfolio size and other factors. Currently, the majority of loans that we sell are sold to the secondary market with servicing released.

We generally do not offer “interest-only” mortgage loans on one-to-four family residential real estate loans nor do we offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on his loan, resulting in an increased principal balance during the life of the loan. Additionally, we do not offer “subprime loans” (loans that are made to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having less than full documentation).

We evaluate both the borrower’s ability to make principal, interest and escrow payments and the value of the property that will secure the loan. Our one-to-four family residential real estate loans generally do not currently include prepayment penalties, are non-assumable and do not produce negative amortization. Our one-to-four family residential mortgage loans customarily include “due-on-sale” clauses giving us the right to declare the loan immediately due and payable in the event that, among other things, the borrower sells the property subject to the mortgage. All borrowers are required to obtain title insurance for the benefit of Everett Co-operative Bank. We also require homeowner’s insurance and fire and casualty insurance and, where circumstances warrant, flood insurance on properties securing real estate loans.

We offer one-to-four family residential real estate loans secured by non-owner occupied properties. Generally, we will not make loans in excess of 75% loan to value on non-owner-occupied two-to-four family residential real estate properties or in excess of 80% on single family non-owner occupied residential real estate properties.

Commercial Real Estate and Multifamily Lending. Our commercial real estate loans are secured primarily by multifamily apartment buildings, retail and mixed-use properties, light industrial properties, manufacturing facilities and office buildings, almost all of which are located in our primary market area. We do not have any exposure to high rise office space in Boston, MA. Our office loans are secured by office space primarily outside of the city of Boston where demand for office space along with vacancy rates remain stable. Our multifamily loans are secured primarily by five or more-unit residential buildings. At December 31, 2024, we had $229.0 million in commercial real estate loans and $344.0 million in multifamily real estate loans, representing 20.0% and 30.0% of our total loan portfolio, respectively.

The following table shows the diversification of the commercial real estate portfolio as of December 31, 2024:


	At December 31, 2024
	Owner-Occupied		Non-Owner-Occupied		Balance		Percent
	(Dollars in thousands)
Mixed-Use	$	5,855	$	88,938	$	94,793		41.4	%
Retail		8,183		35,524		43,707		19.1	%
Industrial		10,547		26,072		36,619		16.0	%
Office		5,943		29,023		34,966		15.3	%
Hospitality		5,375		4,250		9,625		4.2	%
Other		8,833		448		9,281		4.0	%
Total commercial real estate loans	$	44,736	$	184,255	$	228,991		100.0	%

We generally originate adjustable-rate commercial real estate and multifamily real estate loans with maximum terms of up to 30 years. From time to time we will also originate fixed rate loans in these portfolios. We generally limit loan-to-value ratios to 75% of the lesser of the appraised value or purchase price. All of our commercial real estate and multifamily real estate loans are subject to our underwriting procedures and guidelines set by our Commercial Lending and General Lending Policies.

At December 31, 2024, our largest commercial real estate loan totaled $10.5 million and was secured by a warehouse distribution center located in our primary market area. At December 31, 2024, this loan was performing in accordance with its repayment terms. At December 31, 2024, our largest multifamily real estate loan totaled $20.0 million and was secured by five properties with a total of 118 residential units located in our primary market area. At December 31, 2024, this loan was performing in accordance with its repayment terms.

We consider a number of factors in originating commercial real estate and multifamily loans. We evaluate the character, qualifications and financial condition of the borrower (including credit history), profitability and expertise, as well as the value and condition of the mortgaged property securing the loan and market conditions. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning and/or managing similar property and the borrower’s repayment history with us and other financial institutions. In evaluating the property securing the loan, among other factors, we consider the net operating income of the mortgaged property before debt service and depreciation, amortization and interest. The debt service coverage ratio (the ratio of net operating income to debt service) is calculated to ensure that, subject to certain exceptions, it is at least 1.20x. Our commercial real estate and multifamily loans are appraised by outside independent and qualified appraisers that are duly approved in accordance with Everett Co-operative Bank Appraisal policy. Personal guarantees are often obtained from commercial real estate borrowers if such individual has a greater than 20% ownership interest in the property. Each borrower’s financial information on such loans is monitored on an ongoing basis by requiring periodic financial statement updates which are reviewed when received.

Our loans-to-one borrower limit is 20% of the Bank’s capital, which limit was $29.1 million at December 31, 2024. At December 31, 2024, our average commercial real estate loan had a balance of $1.1 million and our average multifamily loan had a balance of $2.7 million. As we continue to enhance our commercial real estate team and infrastructure and with the increase in capital resulting from the conversion, we are now able to selectively retain larger loans that we historically would have originated for participation with other local financial institutions. In this regard, we have revised our lending policies and loans to one borrower limitations to increase our lending limits and the type and size of loans we choose to hold in our portfolio.

Construction and Land Loans. At December 31, 2024, we had $90.9 million in construction and land loans, or 7.9% of total loans. We make construction loans, primarily to developers, contractors and builders of apartment buildings, for single-family homes and condominiums and to individuals for the construction of their primary residences. We also generate a limited amount of land loans that will be used for residential or commercial development. Land loans also include loans secured by land purchased for investment purposes. At December 31, 2024, our construction loans included $3.4 million in lines of credit secured by land.

While we may originate loans to builders whether or not the collateral property underlying the loan is under contract for sale, we consider each project carefully in light of current residential real estate market conditions. Generally, we will make construction loans for which there is no contract for sale for the underlying completed home at the time of origination, and which we refer to as speculative construction loans, only to well-known builders in our market area. We actively monitor the number of unsold homes in our construction loan portfolio and local housing markets to attempt to maintain an appropriate balance between home sales and new loan originations. We generally limit the maximum number of speculative units (units that are not pre-sold) approved for each builder, typically starting with one speculative loan per builder until we develop a relationship with the builder. At December 31, 2024, speculative construction loans totaled $28.1 million.

Our construction loans are fixed- and adjustable-rate, interest-only loans that provide for the payment of interest during the construction phase, which is usually up to 12 to 24 months or in some cases up to 36 months for more complex projects. At the end of the construction phase, the loan may convert to a permanent mortgage loan or may be paid in full. Depending on the complexity of the construction project, the term of an “interest-only” construction loan may be extended if circumstances warrant it up to an additional three to six months with a maximum interest only term of 36 months. At December 31, 2024, the additional unadvanced portions of these construction loans totaled $54.6 million.

Construction and land loans are generally limited to 80% (75% for investment properties) loan-to-completed-appraised-value ratio upon completion of the project. Before making a commitment to fund a construction loan, we require an appraisal of the property by an independent licensed appraiser. We also generally require inspections of the property before disbursements of funds during the term of the construction loan. Construction projects over $2 million require an approved construction consultant to review the construction budget, complete a feasibility analysis, monitor construction progress and manage construction draws.

At December 31, 2024, our largest construction loan was for $16.8 million and was for the construction of a mixed-use building in our market area. This loan was performing in accordance with its repayment terms at December 31, 2024.

Home Equity Loans and Lines of Credit. In addition to one-to-four family residential real estate loans, we offer home equity loans and lines of credit that are secured by the borrower’s primary, secondary residence or investment property. At December 31, 2024, we had $45.2 million, or 4.0%, of our total loan portfolio in home equity loans and lines of credit. At that date we also had $45.9 million of unused commitments related to home equity lines of credit.

Home equity loans and lines of credit are generally underwritten using the same criteria that we use to underwrite one-to-four family residential real estate loans. Home equity loans and lines of credit may be underwritten with a loan-to-value ratio of up to 70%, or 80% when combined with the principal balance of the existing first mortgage loan. Our home equity loans are primarily originated with fixed rates of interest with terms of up to 15 years. Our home equity lines of credit are originated with a variable rate based on the prime rate of interest plus or minus an applicable margin with a floor rate and require interest paid monthly.

Home equity loans and lines of credit are generally secured by junior mortgages and have greater risk than one-to-four family residential real estate loans secured by first mortgages. We face the risk that the collateral will be insufficient to compensate us for credit losses and costs of foreclosure, after repayment of the senior mortgages, if applicable. When customers default on their loans, we attempt to foreclose on the property and resell the property as soon as possible to minimize foreclosure and carrying costs. However, the value of the collateral may not be sufficient to compensate us for the amount of the unpaid loan and we may be unsuccessful in recovering the remaining balance from those customers. Particularly with respect to our home equity loans and lines of credit, decreases in real estate values could adversely affect our ability to fully recover the loan balance in the event of a default.

Commercial Loans. At December 31, 2024, commercial loans were $13.8 million, or 1.2% of total loans.

We make commercial loans and lines of credit primarily to small businesses in our market area. These loans and lines of credit are generally secured by business assets, such as equipment and accounts receivable. Commercial loans and lines of credit are made with both adjustable and fixed-interest rates and for terms generally up to 60 months or on demand.

Depending on the collateral used to secure the loans, commercial loans are made in amounts of up to 80% of the value of the collateral securing the loan.

When making commercial loans, we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, the projected cash flows of the business and the value of the collateral, accounts receivable, inventory and equipment.

At December 31, 2024, our largest commercial loan totaled $4.5 million and was secured by a security interest in a mortgage and note. At December 31, 2024, this loan was performing in accordance with its repayment terms.

Consumer Lending. To a much lesser extent, we offer a variety of consumer loans to individuals who reside or work in our market area, including new and used automobile loans, unsecured overdraft lines of credit and loans secured by savings accounts. At December 31, 2024, our consumer loan portfolio totaled $141,000, or 0.01%, of our total loan portfolio.

Consumer loans generally have shorter terms to maturity, which reduces our exposure to changes in interest rates. In addition, management believes that offering consumer loan products helps to expand and create stronger ties to our existing customer base by increasing the number of customer relationships and providing cross-marketing opportunities.

Loan Underwriting Risks

Adjustable-Rate Residential Real Estate Loans. Although adjustable-rate mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they periodically reprice, as interest rates increase, the required payments due from the borrower also increase (subject to rate caps), increasing the potential for default by the borrower. At the same time, the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustments of the contractual interest rate are also limited by the maximum periodic and lifetime rate adjustments permitted by our loan documents.

Commercial Real Estate Loans. Loans secured by commercial real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential real estate loans. The primary concern in commercial real estate lending is the borrower’s creditworthiness, the feasibility and cash flow potential of the project. Repayments of loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy. To monitor cash flows on income properties, we require borrowers and guarantors to provide financial statements including and not limited to personal financial statements, tax returns and rent rolls on an annual basis at minimum. These documents are reviewed according to the commercial lending policy and general lending policy guidelines. In reaching a decision on whether to make a commercial real estate loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of the property, the borrower’s expertise, credit history and profitability and the value of the underlying property. We have generally required that the properties securing these real estate loans have an aggregate debt service ratio, including the guarantor’s cash flows and the borrower’s other projects, of at least 1.20x. We pull an environmental report with every new loan request. An environmental phase one report is obtained when the possibility exists that hazardous materials may have existed on the site, or the site may have been impacted by adjoining properties that handled hazardous materials.

If we foreclose on a commercial real estate loan, the marketing and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs. In addition, vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability. Depending on the individual circumstances, initial charge-offs and subsequent losses on commercial real estate loans can be unpredictable and substantial. As of December 31, 2024, we maintained no “other real estate owned” as a result of foreclosures (or the acceptance of a deed in lieu of foreclosure).

Commercial Loans. Unlike residential real estate loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income streams, and which are secured by real property whose value tends to be more easily ascertainable, commercial loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flows of the borrower’s business operation, and the collateral securing these loans may fluctuate in value.

Our commercial loans are originated primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. Collateral for commercial loans typically consists of accounts receivable, inventory or equipment. Credit support provided by the borrower for most of these loans is based on the liquidation of the pledged collateral and enforcement of a personal guarantee, if any. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself.

Construction and Land Loans. Our construction loans are based upon estimates of costs and values associated with the completed project. Underwriting is focused on the borrower's financial strength, credit history and demonstrated ability to produce a quality product, effectively market it and manage their operations effectively.

Construction lending involves additional risks when compared with permanent lending because funds are advanced upon the security of the project, which is of uncertain value before its completion. Because of the inherent uncertainties in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. In addition, generally during the term of a construction loan, interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget. These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. In addition, speculative construction loans, which are loans made to home builders who, at the time of loan origination, have not yet secured an end buyer for the home under construction, typically carry higher risks than those associated with traditional construction loans. These increased risks arise because of the risk that there will be inadequate demand to ensure the sale of the property within an acceptable time. As a result, in addition to the risks associated with traditional construction loans, speculative construction loans carry the added risk that the builder will have to pay the property taxes and other carrying costs of the property until an end buyer is found. Land loans have substantially similar risks to speculative construction loans.

Originations, Sales and Purchases of Loans

Our loan originations are generated by our loan personnel operating at our banking offices. All loans we originate are underwritten pursuant to our policies and procedures. While we originate both fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon relative borrower demand and the pricing levels as set in the local marketplace by competing banks, thrifts, credit unions, and mortgage banking companies. Our volume of real estate loan originations is influenced significantly by market interest rates, and, accordingly, the volume of our real estate loan originations can vary from period to period.

Consistent with our interest rate risk management strategy, we originate for sale and sell a portion of the fixed-rate, one- to four-family residential real estate loans that we originate with terms of 15 years or greater, on a servicing-released, limited or no recourse basis, while retaining shorter-term fixed-rate and all adjustable-rate one- to four-family residential real estate loans in order to manage the duration and time to repricing of our loan portfolio. We consider our balance sheet as well as market conditions on an ongoing basis in making decisions as to whether to hold loans we originate for investment or to sell such loans to investors, choosing the strategy that is most advantageous to us from a profitability and risk management standpoint. During the year ended December 31, 2024, we sold $7.8 million of one-to-four family owner-occupied residential real estate loans. Subject to market and economic conditions, management intends to continue this sales activity in future periods to generate gain on sale income.

From time to time, we may purchase loan participations secured by properties within and outside of our primary market area in which we are not the lead lender. In these circumstances, we follow our customary loan underwriting and approval policies. At December 31, 2024, we had four loans in which we were not the lead lender totaling $26.1 million.

In addition, during 2024, we purchased $3.2 million in whole one- to four- family residential real estate loans from correspondent loan originators. We may participate out portions of a loan that exceeded our loans-to-one borrower legal lending limit and for risk diversification.

At December 31, 2024, we did not have any loans held for sale.

Loan Approval Procedures and Authority

The maximum amount that we may lend to one borrower and the borrower’s related entities is generally limited, by statute, to 20% of the Bank's capital, which is defined under Massachusetts law as the sum of our surplus account, undivided profits and capital stock. Loans secured by a first mortgage on residential property occupied by the borrower are excluded from this limit. At December 31, 2024, our regulatory limit on loans-to-one borrower was $29.1 million. At December 31, 2024, our largest relationship at this date consisted of eight multifamily loans totaling $27.7 million secured by 17 multifamily properties and five residential buildings with a total of 119 residential units in our market area. This loan relationship was performing in accordance with its original repayment terms at December 31, 2024. Our second largest lending relationship consisted of eight loans, including one commercial real estate loans, five multifamily loans and three construction loan, totaling $25.9 million and was secured primarily by three mixed-used building, ten residential units and a single room occupancy building with 48 units. This loan relationship was performing in accordance with its original repayment terms at December 31, 2024. As a result of our stock offering which closed in July 2022, our regulatory loans-to-one borrower limit has increased and, as we continue to enhance our commercial real estate team and infrastructure and our increased capital position, we are now able to selectively retain larger loans that we historically would have originated for participation with other local financial institutions. In this regard, we have revised our lending policies and loans to one borrower limitations to increase our lending limits and the type and size of loans we choose to hold in our portfolio.

Our lending is subject to written underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower and property valuations (consistent with our appraisal policy) prepared by outside independent licensed or certified appraisers approved by our board of directors as well as internal evaluations, where permitted by regulations. The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, financial statements and tax returns.

The Board of Directors has overall responsibility for our lending policy, and the board reviews this policy at least annually.

Our Chief Executive Officer, Chief Operating Officer or Chief Lending Officer each have individual lending authority for up to $1.0 million for residential or commercial loans. Loans of between $1.0 million and $3.5 million require the approval of the Loan Committee, which is comprised of senior management of the Bank as well as the Chief Executive Officer, and loans or relationships in excess of $3.5 million require approval of the full Board of Directors. Additionally, our policies and loan approval limits which are established by the board of directors provide various lending approval authority for other designated individual officers or officers acting together.

Generally, we require title insurance on our mortgage loans as well as fire and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan. We also require flood insurance if the improved property is determined to be in a flood zone area.

Delinquencies and Non-Performing Assets

Delinquency Procedures. When a borrower fails to make required payments on a loan, we take a number of steps to induce the borrower to cure the delinquency and restore the loan to current status. We generally send a written notice of non-payment to the borrower 15, 30, 60 and 90 days after a loan is first past due. We will additionally try to contact the borrower by telephone after the 30th day after the due date.

Generally, when a loan becomes 90 days past due, the loan is turned over to our attorneys to ensure that further collection activities are conducted in accordance with applicable laws and regulations. All loans past due 90 days are put on non-accrual and reported to the board of directors monthly. If our attorneys do not receive a response from the borrower, or if the terms of any payment plan established are not followed, then foreclosure proceedings will be implemented. Management submits a delinquent loan report detailing loans 30 days or more past due to the board of directors on a monthly basis.

When we acquire real estate as a result of foreclosure or by deed in lieu of foreclosure, the real estate is classified as foreclosed real estate until it is sold. The real estate is recorded at estimated fair value at the date of acquisition less estimated costs to sell, and any write-down resulting from the acquisition is charged to the allowance for credit losses. Estimated fair value is based on an appraisal typically obtained before the foreclosure process is completed. Subsequent decreases in the value of the property are charged to operations. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.

From time to time, we may grant a concession to borrowers who are experiencing financial difficulties for economic or legal reasons related to the borrower’s financial difficulties. This usually includes a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness of the principal amount due. Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months.

Delinquent Loans. The following table sets forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated.


	At December 31,
	2024						2023
	30–59 Days		60–89 Days		90 Days or More		30–59 Days		60–89 Days		90 Days or More
	(in thousands)

Real estate loans:
One-to-four family residential	$	1,260	$	—	$	1,077	$	722	$	225	$	809
Multi-family		—		—		—		—		—		—
Commercial		—		—		—		—		—		—
Home equity lines of credit and loans		405		—		85		360		—		8
Construction		—		—		—		—		—		—

Other loans:
Commercial		—		—		—		—		—		—
Consumer		—		—		—		1		—		—
Total	$	1,665	$	—	$	1,162	$	1,083	$	225	$	817

Non-Performing Assets. The following table sets forth information regarding our non-performing assets.


	At December 31,
	2024			2023
	(in thousands)
Non-accrual loans:
Real estate loans:
One-to-four family residential	$	1,872		$	1,191
Multi-family		—			—
Commercial		—			—
Home equity lines of credit and loans		85			22
Construction		—			—
Commercial		—			—
Consumer		—			—
Total non-accrual loans	$	1,957		$	1,213
Accruing loans past due 90 days or more:
Real estate loans:
One-to-four family residential	$	—		$	—
Multi-family		—			—
Commercial		—			—
Home equity lines of credit and loans		—			—
Construction		—			—
Bank owned property held for sale		—			—
Total real estate owned		—			—
Total non-performing assets	$	1,957		$	1,213
Total non-performing loans to total loans		0.17	%		0.12	%
Total non-performing loans to total assets		0.14	%		0.09	%
Total non-performing assets to total assets		0.14	%		0.09	%

Classified Assets. Federal regulations provide that each insured savings institution classify its assets on a regular basis. In addition, in connection with examination of insured depository institutions, federal and Massachusetts banking regulators have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.

When an insured depository institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable expected losses. General allowances represent loss allowances which have been established to cover expected losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory agencies, which may require the establishment of additional general or specific loss allowances.

In connection with the filing of our quarterly reports with the FDIC and in accordance with our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations.

On the basis of this review of our assets, our classified and special mention assets at the dates indicated were as follows:


	At December 31,
	2024		2023
	(in thousands)
Substandard assets	$	99	$	—
Doubtful assets		—		—
Loss assets		—		—
Total classified assets	$	99	$	—
Special mention assets	$	1,739	$	1,282
Foreclosed real estate and other assets	$	—	$	—

Other Loans of Concern. There were no other loans at December 31, 2024 that are not already disclosed where there is information about possible credit problems of borrowers that caused management to have serious doubts about the ability of the borrowers to comply with present loan repayment terms and that may result in disclosure of such loans in the future.

Allowance for Credit Losses. On January 1, 2023, the Company adopted the ASU 2016-13 Current Expected Credit Loss (CECL) methodology for estimating the credit losses for loans and off-balance sheet commitments. This methodology replaced the previous incurred loss and impairment methodology with a methodology referred to as CECL. This methodology reflects expected credit losses and requires consideration of historical experience, current conditions, and reasonable and supportable forecasts of future economic conditions. Management uses forward-looking information to estimate the expected credit loss on a loan at the time of origination. The change from the incurred loss methodology to the CECL methodology was recognized through an adjustment to retained earnings. A provision for credit losses, which is a charge against earnings, is recorded to bring the allowance for credit losses to a level that, in management’s judgment, is adequate to absorb expected lifetime credit losses in the loan portfolio. Management’s evaluation process used to determine the appropriateness of the allowance for credit losses is subject to the use of estimates, assumptions, and judgment. The evaluation process involves gathering and interpreting many qualitative and quantitative factors which could affect expected credit losses. Because interpretation and analysis involves judgment, current economic or business conditions can change, and future events are inherently difficult to predict, the anticipated amount of estimated credit losses and therefore the appropriateness of the allowance for credit losses could change significantly.

As an integral part of their examination process, the Commissioner and the FDIC will periodically review our allowance for credit losses, and as a result of such reviews, we may determine to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in the process for establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

The following table sets forth activity in our allowance for credit losses on loans for the years indicated:


	At December 31,
	2024					2023
	(in thousands)
Allowance for credit losses on loans at beginning of year	$	8,591				$	7,200
Cumulative effect accounting adjustment		—					182
Provision for credit losses		296					1,210
Charge-offs:
Real estate loans:
One-to-four family residential		—					—
Multi-family		—					—
Commercial		—					—
Home equity lines of credit and loans		—					—
Construction		—					—
Commercial		—					—
Consumer		(4	)				(2	)
Total charge-offs	$	(4	)			$	(2	)

Recoveries:
Real estate loans:
One-to-four family residential		—					—
Multi-family		—					—
Commercial		—					—
Home equity lines of credit and loans		—					—
Construction		—					—
Commercial		—					—
Consumer		1					1
Total recoveries		1					1

Net (charge-offs) recoveries	$	(3	)	$	-	$	(1	)

Allowance for credit losses on loans at end of year	$	8,884		$	-	$	8,591

Allowance for credit losses on loans to non-performing loans		453.96	%				708.24	%
Allowance for credit losses on loans to total loans outstanding at end of year		0.78	%				0.82	%
Net (charge offs) recoveries to average loans outstanding during the year		0.00	%				0.00	%

Allocation of Allowance for Credit Losses on Loans. The following table sets forth the allowance for credit losses on loans allocated by loan category and the percent of loans in each category to total loans at the dates indicated.


	At December 31,
	2024								2023
	Allowance for Credit Losses		Percent of Allowance in Each Category to Total Allocated Allowance			Percent of Loans in Each Category to Total Loans			Allowance for Credit Losses		Percent of Allowance in Each Category to Total Allocated Allowance			Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Real estate loans:
One-to-four family residential	$	2,928		33.0	%		36.9	%	$	3,555		41.4	%		39.1	%
Multi-family		2,422		27.3			30.0			1,190		13.9			27.4
Commercial		2,260		25.4			20.0			1,636		19.0			18.7
Home equity lines of credit and loans		118		1.3			4.0			321		3.7			3.2
Construction		1,036		11.7			7.9			1,757		20.5			10.7
Commercial loans		119		1.3			1.2			131		1.5			0.9
Consumer		1		0.0		0.0				1		0.0			0.0
Total	$	8,884		100.0	%		100.0	%	$	8,591		100.0	%		100.0	%

Investment Activities

General. Our investment policy is established by the Board of Directors. The objectives of the policy are to: (i) provide and maintain liquidity within the guidelines of the Massachusetts banking laws and regulations for loan demand and deposit fluctuations, and to allow us to alter our liquidity position to meet both day-to-day and long-term changes in assets and liabilities; (ii) manage interest rate risk in accordance with our interest rate risk policy; (iii) provide collateral for pledging requirements; (iv) maximize return on our investments; and (v) maintain a balance of high quality diversified investments to minimize risk.

We have legal authority to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various government-sponsored enterprises and municipal governments, deposits at the Federal Home Loan Bank of Boston (the “FHLB”), certificates of deposit of federally insured institutions, investment grade corporate bonds and marketable equity securities. We also are required to maintain an investment in FHLB stock. While we have the authority under applicable law to invest in derivative securities, we have not invested in derivative securities.

At December 31, 2024, our investment portfolio consisted primarily of debt securities issued by the U.S. Treasury, U.S. government sponsored enterprises, mortgage-backed securities, collateralized mortgage obligations and corporate debt securities.

Our investment policy is reviewed annually by our Board of Directors and all policy changes recommended by management must be approved by the board. Authority to make investments under the approved guidelines are delegated to appropriate officers. While general investment strategies are developed and authorized by the board, the execution of specific actions with respect to securities held by Everett Co-operative Bank rests with the Chief Financial Officer within the scope of the established investment policy.

At the time of purchase, we designate a security as held-to-maturity, available-for-sale, or trading, depending on our ability and intent. Securities available-for-sale or trading are reported at fair value, while securities held-to-maturity are reported at amortized cost. Consistent with our overall business and asset/liability management plan, which focuses on sustaining adequate levels of core earnings, the base premise of our investment portfolio is that all securities purchased will be suitable to be held-to-maturity. At December 31, 2024, $73.2 million, or 91.8%, of our securities portfolio was comprised of held-to-maturity securities.

Some of our securities are callable by the issuer. Although these securities may have a yield somewhat higher than the yield of similar securities without such features, these securities are subject to the risk that they may be redeemed by the issuer prior to maturing in the event general interest rates decline.

At December 31, 2024, we had $17.4 million of securities which were subject to redemption by the issuer prior to their stated maturity.

For available-for-sale debt securities with a fair value less than amortized cost basis, management will determine whether it has the intent to sell the debt security or whether it is more likely than not it will be required to sell the debt security before the recovery of its amortized cost basis. If either condition is met, management will recognized a write-down to fair value through a charge to earnings. For all other debt securities, management evaluates their expected credit losses over the remaining term. The majority of the Company’s debt securities consist of mortgage-backed securities, U.S. Treasury securities and debt securities issued by U.S. government-sponsored enterprises. These securities carry an explicit or implicit guarantee from the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Accordingly, the Company applies a zero-credit loss assumption and has not recorded any allowance for these securities. For corporate bonds classified as held-to-maturity, a probability of default and loss given default analysis is performed to determine the allowance for credit losses. We monitor the investment portfolio and credit performance on a quarterly basis to determine if any allowance is considered necessary.

At December 31, 2024, our corporate bond portfolio consisted of investment grade securities with maturities shorter than ten years. Our investment policy provides that we may invest up to 10% of our tier-one risk-based capital in corporate bonds from individual issuers which, at the time of purchase, are within the three highest investment-grade ratings from Standard & Poor’s or Moody’s. The maturity of these bonds generally may not exceed five years unless approved by the board of directors, and the aggregate limit is 50% of the investment portfolio for this security type. Bonds that subsequently experience a decline in credit rating below investment grade are monitored at least quarterly.

Bank-Owned Life Insurance. We invest in bank-owned life insurance to provide us with a funding source for our benefit plan obligations. Bank-owned life insurance also generally provides us noninterest income that is non-taxable. Applicable regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for credit losses. At December 31, 2024, we had $14.9 million in bank-owned life insurance.

Other Securities. We hold common stock of the FHLB in connection with our membership with the FHLB and our borrowing activities. The FHLB common stock is carried at cost and classified as restricted equity securities. It is not practicable to determine the fair value of FHLB common stock due to restrictions placed on its transferability. Under current FHLB rules, we will be required to purchase additional FHLB common stock if we increase borrowings in the future.

Securities Portfolio. The following tables set forth the stated maturities and weighted average yields of our investment securities which are classified as held-to-maturity and available-for-sale at December 31, 2024. Certain securities have adjustable interest rates and will reprice periodically within the various maturity ranges. These repricing schedules are not reflected in the table below. Prepayments are not reflected in the table below.


	One Year or Less					More than One Year to Five Years					More than Five Years to Ten Years					More than Ten Years					Total
			Weighted					Weighted					Weighted					Weighted							Weighted
	Amortized		Average			Amortized		Average			Amortized		Average			Amortized		Average			Amortized		Fair		Average
	Cost		Yield			Cost		Yield			Cost		Yield			Cost		Yield			Cost		Value		Yield
	(Dollars in thousands)
Securities held-to-maturity:
Debt securities issued by U.S. government-sponsored enterprises	$	5,588		0.40	%	$	—		—		$	—		—		$	—		—		$	5,588	$	5,450		0.40	%
Mortgage-backed securities		7		2.19	%		6,886		3.77	%		1,998		2.77	%		35,370		2.15	%		44,261		38,947		2.43	%
Corporate bonds		1,501		2.29	%		13,398		4.59	%		3,000		7.50	%		—		—			17,899		17,620		4.88	%
U.S. Treasury securities		5,467		4.99	%		—		—			—		—			—		—			5,467		5,488		4.99	%
Total	$	12,563		2.62	%	$	20,284		4.31	%	$	4,998		5.61	%	$	35,370		2.15	%	$	73,215	$	67,505		3.06	%


	One Year or Less					More than One Year to Five Years					More than Five Years to Ten Years					More than Ten Years					Total
			Weighted					Weighted					Weighted					Weighted							Weighted
	Amortized		Average			Amortized		Average			Amortized		Average			Amortized		Average			Amortized		Fair		Average
	Cost		Yield			Cost		Yield			Cost		Yield			Cost		Yield			Cost		Value		Yield
	(Dollars in thousands)
Securities available-for-sale
Mortgage-backed securities	$	2,009		4.32	%	$	2,155		3.62	%	$	—		—		$	—		—		$	4,164	$	4,126		3.96	%
Collateralized Mortgage Obligation		—		—			—		—			—		—			1,452		3.78	%		1,452		1,438		3.78	%
Corporate bonds		—		—			—		—			1,000		8.00	%		—		—			1,000		1,000		8.00	%
Total	$	2,009		4.32	%	$	2,155		3.62	%	$	1,000		8.00	%	$	1,452		3.78	%	$	6,616	$	6,564		4.53	%

For additional information regarding our investment securities portfolio, see Note 3 of the consolidated financial statements.

Sources of Funds

General. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also use borrowings to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive funds from scheduled loan payments, investment maturities, loan prepayments, loan sales, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

Deposits. Our deposits are generated primarily from residents within our primary market area. We offer a selection of deposit accounts, including noninterest-bearing and interest-bearing demand accounts, money market accounts, savings accounts and certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. In recent years, we have also accepted brokered deposits as non-retail funding source to fund our operations. These non-core funding sources are not relationship-based accounts and are generally more price-sensitive than our core deposits. Therefore, these deposits carry a greater risk of non-renewal than our core deposits. At December 31, 2024, our core deposits, which are deposits other than certificates of deposit and brokered deposits, were $393.0 million, representing 39.4% of total deposits. At December 31, 2024, our largest deposit relationship had $21.1 million in deposits.

We are focused on ensuring that our products, services and accessibility will continue to make Everett Co-operative Bank a competitive community bank, and will continue to attract and retain retail customers by emphasizing personal service, accessibility and flexibility. The Company has developed new high yield consumer and business products as well as introducing an array of cash management services designed to attract new business relationships to the bank. In addition, in September of 2023, the Company opened a new branch in Woburn, MA, increasing our retail network to three branches. We will continue to attract and retain retail customers by emphasizing personal service, accessibility and flexibility in the face of mass market-oriented large, national and super-regional banks which maintain local branch networks in our market.

Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. The flow of deposits is influenced significantly by general economic conditions, changes in interest rates and competition. The variety of deposit accounts that we offer allows us to be competitive in generating deposits and to respond with flexibility to changes in our customers’ demands. Our ability to gather deposits is impacted by the competitive market in which we operate, which includes numerous financial institutions of varying sizes offering a wide range of products. We believe that deposits are a stable source of funds, but our ability to attract and maintain deposits at favorable rates will be affected by market conditions, including competition and prevailing interest rates.

The following table sets forth the distribution of total deposits, by account type, at the dates indicated.


	At December 31,
	2024								2023
	Amount		Percent			Average Rate			Amount		Percent			Average Rate
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	84,958		8.5	%		0.00	%	$	78,342		9.0	%		0.00	%
Interest-bearing demand deposits		20,546		2.1			0.10	%		22,158		2.6			0.09	%
Regular savings deposits and other deposits		102,933		10.3			2.10	%		137,848		15.9			2.49	%
Money market deposits		184,581		18.5			3.47	%		131,363		15.1			3.16	%
Certificates of deposit		605,515		60.6			4.38	%		498,503		57.4			4.25	%
Total	$	998,533		100.0	%				$	868,214		100.0	%

As of December 31, 2024 and 2023, the aggregate amount of deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance, was $503.8 million and $419.9 million, respectively. As of December 31, 2024, the aggregate amount of all our certificates of deposit in excess of $250,000 was $258.7 million.

All of our deposits are fully insured due to the additional insurance provided to a Massachusetts cooperative bank, such as Everett Co-operative Bank, under the Depositors Insurance Fund, a private industry-sponsored insurance fund in Massachusetts that insures all deposits at Everett Co-operative Bank above FDIC limits.

Borrowings. At December 31, 2024, total borrowings were $234.0 million. Borrowings consist of both short-term and long-term FHLB advances. Borrowings provide us with one source of funding. Maintaining available borrowing capacity with the FHLB provides us with a contingent source of liquidity. Everett Co-operative Bank is a member of the FHLB of Boston. The primary reason for our FHLB membership is to gain access to a reliable source of wholesale funding, particularly term funding, as a tool to manage liquidity and interest rate risk. As a member of the FHLB, we are required to purchase shares in the FHLB. Accordingly, we had invested $10.0 million in shares of the FHLB at December 31, 2024. We had $328.5 million of borrowing capacity remaining with the FHLB at December 31, 2024. At December 31, 2024, we had $10.0 million of borrowing capacity with the Atlantic Community Bankers Bank and $15.1 million of borrowing capacity with the Federal Reserve Bank.

Subsidiary and Other Activities

Everett Co-operative Bank is the wholly owned subsidiary of ECB Bancorp.

Everett Co-operative Bank has one subsidiary, First Everett Securities Corporation, Inc. (“FESC, Inc.”), a Massachusetts corporation, which is engaged in the buying, selling and holding of investment securities. The income earned on FESC, Inc.’s securities is subject to a significantly lower rate of state tax than that assessed on income earned on securities maintained at Everett Co-operative Bank. At December 31, 2024, FESC, Inc. had total assets of $52.3 million, substantially all of which were in securities and cash to be invested.

Expense and Tax Allocation

Everett Co-operative Bank has entered into an agreement with ECB Bancorp to provide it with certain administrative support services for compensation not less than the fair market value of the services provided. In addition, Everett Co-operative Bank and ECB Bancorp have entered into an agreement to establish a method for allocating and for reimbursing the payment of their consolidated tax liability.

Personnel

As of December 31, 2024, we had 64 full-time equivalent employees. Our employees are not represented by any collective bargaining group. Management believes that we have a good working relationship with our employees.

SUPERVISION AND REGULATION

General

Everett Co-operative Bank is a Massachusetts-chartered stock cooperative bank and is the wholly owned subsidiary of ECB Bancorp, a Maryland corporation, which is a registered bank holding company. Everett Co-operative Bank’s deposits are insured up to applicable limits by the FDIC and by the Depositors Insurance Fund for amounts in excess of the FDIC insurance limits. Everett Co-operative Bank is subject to extensive regulation by the Commissioner, as its chartering agency, and by the FDIC, its primary federal regulator and deposit insurer. Everett Co-operative Bank is required to file reports with, and is periodically examined by, the FDIC and the Commissioner concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, including, but not limited to, mergers with or acquisitions of other financial institutions. As a registered bank holding company, ECB Bancorp is regulated by the Board of Governors of the Federal Reserve Board (the “Federal Reserve Board”). Everett Co-operative Bank also is a member of and owns stock in the Federal Home Loan Bank of Boston, which is one of the 11 regional banks in the Federal Home Loan Bank System.

Under this system of regulation, the regulatory authorities have extensive discretion in connection with their supervisory, enforcement, rulemaking and examination activities and policies, including rules or policies that: establish minimum capital levels; restrict the timing and amount of dividend payments; govern the classification of assets; provide oversight for the adequacy of credit loss reserves for regulatory purposes and the adequacy of its risk management framework; and establish the timing and amounts of assessments and fees imposed by the regulatory agencies. Moreover, as part of their examination authority, the banking regulators assign numerical ratings to banks and savings institutions relating to capital, asset quality, management, liquidity, earnings and other factors. These ratings rely on the supervisor’s judgment and the receipt of a less than satisfactory rating in one or more categories may result in enforcement action by the banking regulators against a financial institution. A less than satisfactory rating may also prevent a financial institution, such as Everett Co-operative Bank or its holding company, from obtaining necessary regulatory approvals to access the capital markets, pay dividends, acquire other financial institutions or establish new branches.

In addition, we must comply with significant anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and fair lending laws and regulations. Everett Co-operative Bank must comply with consumer protection regulations issued by the Consumer Financial Protection Bureau, as enforced by the FDIC. Government agencies have the authority to impose monetary penalties and other sanctions on institutions that fail to comply with these laws and regulations, which could significantly affect our business activities, including our ability to acquire other financial institutions or expand our branch network.

As a bank holding company, ECB Bancorp is required to comply with the Bank Holding Company Act of 1956, as amended, and the rules and regulations of the Federal Reserve Board. It is required to file certain reports with the Federal Reserve Board and is subject to examination by and the enforcement authority of the Federal Reserve Board. Additionally, the Federal Reserve Board may directly examine the subsidiaries of a bank holding company, including Everett Co-operative Bank. ECB Bancorp is also subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.

Any change in applicable laws or regulations, whether by the Massachusetts legislature, the Commissioner, the Consumer Financial Protection Bureau, the FDIC, the Federal Reserve Board, the Securities and Exchange Commission or Congress, could have a material adverse impact on the operations and financial performance of ECB Bancorp and Everett Co-operative Bank.

Set forth below is a brief description of material regulatory requirements that are applicable to Everett Co-operative Bank and ECB Bancorp. The description is limited to certain material aspects of the statutes and regulations addressed, and is not intended to be a complete description of such statutes and regulations and their effects on Everett Co-operative Bank and ECB Bancorp.

Massachusetts Banking Laws and Supervision

General. As a Massachusetts-chartered cooperative bank, Everett Co-operative Bank is subject to supervision, regulation and examination by the Commissioner and to various Massachusetts statutes and regulations which govern, among other things, investment powers, lending and deposit-taking activities, borrowings, maintenance of surplus and reserve accounts, distribution of earnings and payment of dividends. In addition, Everett Co-operative Bank is subject to Massachusetts consumer protection, Community Reinvestment Act, civil rights laws and regulations. The approval of the Massachusetts Commissioner of Banks is required for a Massachusetts-chartered bank to establish or close branches, merge with other financial institutions, issue stock and undertake certain other activities.

Massachusetts regulations generally allow Massachusetts banks, with appropriate regulatory approvals, to engage in activities permissible for federally chartered banks or banks chartered by another state. The Commissioner also has adopted procedures reducing regulatory burdens and expense and expediting branching by well-capitalized and well-managed banks.

Dividends. A Massachusetts stock bank may declare cash dividends from net profits not more frequently than quarterly. Noncash dividends may be declared at any time. No dividends may be declared, credited or paid if the bank’s capital stock is impaired. The approval of the Commissioner is required if the total of all dividends declared in any calendar year exceeds the total of its net profits for that year combined with its retained net profits of the preceding two years. Dividends from ECB Bancorp may depend, in part, upon receipt of dividends from Everett Co-operative Bank. The payment of dividends from Everett Co-operative Bank would be restricted by federal law if the payment of such dividends resulted in Everett Co-operative Bank failing to meet regulatory capital requirements.

Loans to One Borrower Limitations. Massachusetts banking law grants broad lending authority. However, with certain limited exceptions, total obligations to one borrower may not exceed 20% of the total of an institution's capital stock (if any), surplus and undivided profits. The Commissioner applies the Office of the Comptroller of the Currency’s attribution rules to a borrower’s related interests. At December 31, 2024, Everett Co-operative Bank was in compliance with the loans-to-one borrower limitations.

Loans to a Bank’s Insiders. Under Massachusetts law, a Massachusetts-chartered bank must comply with Regulation O of the Federal Reserve Board, and the Commissioner retains examination and enforcement authority to ensure compliance.

Investment Activities. In general, Massachusetts-chartered banks may invest in preferred and common stock of any corporation organized under the laws of the United States or any state provided such investments do not involve control of any corporation and do not, in the aggregate, exceed 4% of the bank’s deposits. Federal law imposes additional restrictions on Everett Co-operative Bank’s investment activities.

Regulatory Enforcement Authority. Any Massachusetts bank that does not operate in accordance with the regulations, policies and directives of the Commissioner may be subject to sanctions for noncompliance, including revocation of its charter. The Commissioner may, under certain circumstances, suspend or remove officers or directors who have violated the law, conducted the bank’s business in an unsafe or unsound manner or contrary to the depositors’ interests or been negligent in the performance of their duties. Upon finding that a bank has engaged in an unfair or deceptive act or practice, the Commissioner may issue an order to cease and desist and impose a fine on the bank concerned. The Commissioner also has authority to take possession of a bank and appoint the FDIC as receiver under certain conditions such as an unsafe and unsound condition to transact business, the conduct of business in an unsafe or unauthorized manner or impaired capital. In addition, Massachusetts consumer protection and civil rights statutes applicable to Everett Co-operative Bank permit private individual and class action law suits and provide for the rescission of consumer transactions, including loans, and the recovery of statutory and punitive damages and attorneys’ fees in the case of certain violations of those statutes.

Excess Deposit Insurance Fund. All Massachusetts-chartered cooperative banks are members of the Depositors Insurance Fund, a private industry-sponsored insurance fund in Massachusetts that insures all deposits at Everett Co-operative Bank above FDIC limits.

Protection of Personal Information. Massachusetts banking regulations contain requirements intended to protect personal information and are similar to federal laws such as the Gramm-Leach-Bliley Act, discussed below under “ – Federal Regulations – Other Regulations,” that require organizations to establish written information security programs to prevent identity theft. The Massachusetts regulation also contains technology system requirements, especially for the encryption of personal information sent over wireless or public networks or stored on portable devices.

Insurance Sales. Massachusetts banks may engage in insurance sales activities if the Commissioner has approved a plan of operation for insurance activities and the bank obtains a license from the Massachusetts Division of Insurance. A bank may be licensed directly or indirectly through an affiliate or a subsidiary corporation established for this purpose. Everett Co-operative Bank does not sell or refer insurance products, and has not sought approval for insurance sales activities.

Parity Regulation. A Massachusetts bank may exercise any power and engage in any activity that has been authorized for national banks, federal thrifts or state banks in a state other than Massachusetts, provided that the activity is permissible under applicable federal law and not specifically prohibited by Massachusetts law. Such powers and activities must be subject to the same limitations and restrictions imposed on the national bank, federal thrift or out-of-state bank that exercised the power or activity.

Massachusetts has other statutes or regulations that are similar to certain of the federal provisions discussed below.

Federal Regulations

Capital Requirements. Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.

In determining the amount of risk-weighted assets for calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk-weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. Common equity Tier 1 capital is generally defined as common shareholders’ equity and related surplus and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain non-cumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. In assessing an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.

Federal law required the federal banking agencies, including the FDIC, to establish a “community bank leverage ratio” of between 8% and 10% for institutions with total consolidated assets of less than $10 billion. Institutions with capital complying with the ratio and otherwise meeting the specified requirements and electing the alternative framework are considered to comply with the applicable regulatory capital requirements, including the risk-based requirements. The community bank leverage ratio was established at 9% Tier 1 capital to total average assets, effective January 1, 2020. A qualifying institution may opt in and out of the community bank leverage ratio framework on its quarterly call report. An institution that temporarily ceases to meet any qualifying criteria is provided with a two-quarter grace period to regain compliance.

Failure to meet the qualifying criteria within the grace period or maintain a leverage ratio of 8% or greater requires the institution to comply with the generally applicable regulatory capital requirements.

At December 31, 2024, Everett Co-operative Bank had not opted into the community bank leverage ratio framework and its capital ratios exceeded all applicable requirements.

Capital Distributions. The Federal Deposit Insurance Act generally provides that an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement. Unless the approval of the FDIC is obtained, Everett Co-operative Bank may not declare or pay a dividend if the total of all dividends declared during the calendar year, including the proposed dividend, exceeds the sum of its net income during the current calendar year and the retained net income, not previously used for dividents, of the prior two calendar years.

Community Reinvestment Act and Fair Lending Laws. All insured depository institutions have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income borrowers. The FDIC is required to assess Everett Co-operative Bank’s record of compliance with the Community Reinvestment Act. An institution’s failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on its activities. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the FDIC, as well as other federal regulatory agencies and the Department of Justice.

The Community Reinvestment Act requires all institutions insured by the FDIC to publicly disclose their rating. Everett Co-operative Bank received a “Satisfactory” Community Reinvestment Act rating in its most recent federal examination.

Massachusetts has its own statutory counterpart to the CRA which is also applicable to Everett Co-operative Bank. The Massachusetts version is generally similar to the CRA but utilizes a five-tiered descriptive rating system. Massachusetts law requires the Commissioner to consider, but not be limited to, a bank’s record of performance under Massachusetts law in considering any application by the bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution. Everett Co-operative Bank’s most recent 2022 CRA performance rating under Massachusetts law was “Satisfactory.”

Transactions with Related Parties. An insured depository institution’s authority to engage in transactions with its affiliates is generally limited by Sections 23A and 23B of the Federal Reserve Act and federal regulation. An affiliate is generally a company that controls, or is under common control with, an insured depository institution such as Everett Co-operative Bank. ECB Bancorp is an affiliate of Everett Co-operative Bank because of its control of Everett Co-operative Bank. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations prohibit a state-chartered bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets and be on terms that are as favorable to the institution as comparable transactions with non-affiliates.

Everett Co-operative Bank’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders:

•

be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and

•

not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of Everett Co-operative Bank’s capital.

In addition, extensions of credit in excess of certain limits must be approved by Everett Co-operative Bank’s board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved.

Enforcement. The FDIC has extensive enforcement authority over insured state banks, such as Everett Co-operative Bank, that are not members of the Federal Reserve System. The enforcement authority includes, among other things, the ability to assess civil money penalties, issue cease and desist orders, and remove directors and officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations, breaches of fiduciary duty and unsafe or unsound practices. The FDIC is required, with certain exceptions, to appoint a receiver or conservator for an insured state non-member bank if that bank was “critically undercapitalized” on average during the calendar quarter beginning 270 days after the date on which the institution became “critically undercapitalized.” The FDIC may also appoint itself as conservator or receiver for an insured state non-member bank under specified circumstances, including: (1) insolvency; (2) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; (3) existence of an unsafe or unsound condition to transact business; (4) insufficient capital; or (5) the incurrence of losses that will deplete substantially all of the institution’s capital with no reasonable prospect of replenishment without federal assistance.

Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for the insured depository institutions they supervise. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, compensation and benefits, and other operational and managerial standards as the agency deems appropriate. Interagency 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 submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to implement an acceptable compliance plan. Failure to implement such a plan can result in further enforcement action, including the issuance of a cease and desist order and/or the imposition of civil money penalties.

Branching. Federal law permits insured state banks to engage in interstate branching if the laws of the state where the new banking office is to be established would permit the establishment of the banking office if it were chartered by a bank in such state. Under Massachusetts law, Everett Co-operative Bank can establish a branch in Massachusetts or in any other state. All branch applications require prior approval of the Commissioner and the FDIC. Finally, Everett Co-operative Bank may also establish banking offices in other states by merging with banks or by purchasing banking offices of other banks in other states, subject to certain restrictions.

Prompt Corrective Action. Federal law requires, among other things, that federal banking agencies take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For this purpose, the FDIC’s regulations establish five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Under applicable regulations, an institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%.

An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.

At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on the payment of dividends, and restrictions on the acceptance of brokered deposits. Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the holding company must guarantee the performance of that plan. Based upon its capital levels, a bank that is classified as well-capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment. An undercapitalized bank’s compliance with a capital restoration plan is required to be guaranteed by any company that controls the undercapitalized institution in an amount equal to the lesser of 5.0% of the institution’s total assets when deemed undercapitalized or the amount necessary to achieve the status of adequately capitalized. If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of additional restrictions, including a regulatory order to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, ceasing receipt of deposits from correspondent banks, dismissal of directors or officers, and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company. “Critically undercapitalized” institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after it obtains such status.

The previously referenced final rule establishing an elective “community bank leverage ratio” regulatory capital framework provides that a qualifying institution whose capital exceeds the community bank leverage ratio and opts to use that framework will be considered “well-capitalized” for purposes of prompt corrective action.

At December 31, 2024, Everett Co-operative Bank met the criteria for being considered “well capitalized.”

Insurance of Deposit Accounts. The Deposit Insurance Fund of the FDIC insures deposits at FDIC-insured financial institutions such as Everett Co-operative Bank, generally up to a maximum of $250,000 per separately insured depositor. The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund.

Under the FDIC’s risk-based assessment system, institutions deemed less risky of failure pay lower assessments. Assessments for institutions of less than $10 billion of assets are based on financial measures and supervisory ratings derived from statistical modeling estimating the probability of an institution's failure within three years.

The FDIC has authority to increase insurance assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of Everett Co-operative Bank. For 2024 the FDIC insurance expense for Everett Co-operative Bank was approximately $752,000. We cannot predict what assessment rates will be in the future.

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. Everett Co-operative Bank does not know of any practice, condition or violation that may lead to termination of its deposit insurance.

Brokered Deposits. Federal law and FDIC 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, “adequately capitalized.” Depository institutions that have brokered deposits in excess of 10% of total assets may be subject to increased FDIC deposit insurance premium assessments. However, for institutions that are well capitalized and have a CAMELS composite rating of 1 or 2, reciprocal deposits are deducted from brokered deposits. The Economic Growth, Regulatory Relief, and Consumer Protection Act, enacted in 2018, amends the Federal Deposit Insurance Act to exempt a capped amount of reciprocal deposits from treatment as brokered deposits for certain insured depository institutions.

Privacy Regulations. Federal regulations generally require that Everett Co-operative Bank disclose its privacy policy, including identifying with whom it shares a customer’s “non-public personal information,” to customers at the time of establishing the customer relationship and annually thereafter. In addition, Everett Co-operative Bank is required to provide its customers with the ability to “opt-out” of having their personal information shared with unaffiliated third parties and not to disclose account numbers or access codes to non-affiliated third parties for marketing purposes. Everett Co-operative Bank currently has a privacy protection policy in place and believes that such policy is in compliance with the regulations.

Anti-Money Laundering - The Bank Secrecy Act. Under the Bank Secrecy Act (“BSA”), a financial institution is required to have systems in place to detect certain transactions, based on the size and nature of the transaction. Financial institutions are generally required to report to the U.S. Treasury any cash transactions involving at least $10,000. In addition, financial institutions are required to file suspicious activity reports for any transaction or series of transactions that involve more than $5,000 and which the financial institution knows, suspects or has reason to suspect involves illegal funds, is designed to evade the requirements of the BSA or has no lawful purpose. The USA PATRIOT Act, which amended the BSA, together with the implementing regulations of various federal regulatory agencies, has caused financial institutions, such as Everett Co-operative Bank, to adopt and implement additional policies or amend existing policies and procedures with respect to, among other things, anti-money laundering compliance, suspicious activity, currency transaction reporting, customer identity verification and customer risk analysis. In evaluating an application to acquire a bank or to merge banks or effect a purchase of assets and assumption of deposits and other liabilities, the applicable federal banking regulator must consider the anti-money laundering compliance record of both the applicant and the target. In addition, under the USA PATRIOT Act financial institutions are required to take steps to monitor their correspondent banking and private banking relationships as well as, if applicable, their relationships with “shell banks.”

Prohibitions Against Tying Arrangements. Everett Co-operative Bank is prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Other Regulations

Interest and other charges collected or contracted for by Everett Co-operative Bank are subject to state usury laws and federal laws concerning interest rates. Loan operations are also subject to state and federal laws applicable to credit transactions, such as the:

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Home Mortgage Disclosure Act, 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;

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Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

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Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; and

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Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

The deposit operations of Everett Co-operative Bank also are subject to, among others, the:

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Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

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Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; and Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern 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.

•

Federal Home Loan Bank System

Everett Co-operative Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Banks provide central credit facilities primarily for member institutions. Members of a Federal Home Loan Bank are required to acquire and hold shares of capital stock in their Federal Home Loan Bank. Everett Co-operative Bank complied with this requirement at December 31, 2024. Based on redemption provisions of the Federal Home Loan Bank of Boston, the stock has no quoted market value and is carried at cost. The Company reviews its investment in capital stock of the FHLB for impairment based on the ultimate recoverability of the cost basis in the FHLB stock. At December 31, 2024, no impairment had been recognized.

Holding Company Regulation

ECB Bancorp is a bank holding company within the meaning of Bank Holding Company of 1956, as amended. As such, ECB Bancorp is registered with the Federal Reserve Board and is subject to regulations, examinations, supervision and reporting requirements applicable to bank holding companies. In addition, the Federal Reserve Board has enforcement authority over ECB Bancorp and its non-bank subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to Everett Co-operative Bank.

A bank holding company is generally prohibited from engaging in non-banking activities, 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 Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the Federal Reserve Board 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 association whose direct and indirect activities are limited to those permitted for bank holding companies.

The Gramm-Leach-Bliley Act of 1999 authorized a bank holding company that meets specified conditions, including being “well capitalized” and “well managed,” to opt to become a “financial holding company” and thereby engage in a broader array of financial activities than previously permitted. Such activities can include insurance underwriting and investment banking. ECB Bancorp is not a financial holding company.

Bank holding companies with less than $3 billion in consolidated assets are exempt from consolidated regulatory capital requirements unless the Federal Reserve Board determines otherwise in particular cases.

By law, holding companies, including bank holding companies, must act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

The Federal Reserve Board has issued supervisory policies regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies and savings and loan holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. Regulatory guidance provides for prior regulatory consultation with respect to capital distributions in certain circumstances such as where the company’s net income for the past four quarters, net of capital distributions previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. The policy statement also states that a holding company should inform the Federal Reserve Board supervisory staff before redeeming or repurchasing common stock or perpetual preferred stock if the holding company is experiencing financial weaknesses or if the repurchase or redemption would result in a net reduction, at the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred.

These regulatory policies may affect the ability of ECB Bancorp to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

Massachusetts Holding Company Regulation. Under Massachusetts banking laws, a company owning or controlling two or more banking institutions, including a cooperative bank, is regulated by the Commissioner as a bank holding company. Each such bank holding company: (i) must obtain the approval of the Massachusetts Board of Bank Incorporation before engaging in certain transactions, such as the acquisition of more than 5% of the voting stock of another banking institution; (ii) must register, and file reports, with the Commissioner; and (iii) is subject to examination by the Commissioner. ECB Bancorp would become a bank holding company regulated by the Commissioner if it acquires a second banking institution and holds and operates it separately from Everett Co-operative Bank.

Change in Control Regulations

Under the Change in Bank Control Act, no person or group of persons may acquire “control” of a bank holding company, such as ECB Bancorp, unless the Federal Reserve Board has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the institution’s directors, or a determination by the regulator that the acquirer has the power, directly or indirectly, to exercise a controlling influence over the management or policies of the institution. There is a presumption of control upon the acquisition of 10% or more of a class of voting stock if the holding company involved has its shares registered under the Securities Exchange Act of 1934, or, if the holding company involved does not have its shares registered under the Securities Exchange Act of 1934, if no other persons will own, control or hold the power to vote a greater percentage of that class of voting security after the acquisition.

Federal Securities Laws

The common stock of ECB Bancorp is registered with the Securities and Exchange Commission. ECB Bancorp is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. We have policies, procedures and systems designed to comply with these regulations, and we review and document such policies, procedures and systems to ensure continued compliance with these regulations.

Emerging Growth Company Status

ECB Bancorp is an emerging growth company. For as long as it continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to public companies. These exemptions include, but are not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As an emerging growth company, ECB Bancorp also is not subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors audit our internal control over financial reporting. We have also elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Such an election is irrevocable during the period a company is an emerging growth company.

ECB Bancorp will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the completion of the conversion and offering; (ii) the first fiscal year after our annual gross revenues are $1.235 billion (adjusted for inflation) or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million at the end of the second quarter of that fiscal year. We expect to lose our status as an emerging growth company effective December 31, 2027, which is the end of the fifth year after the completion date of the conversion and offering.

TAXATION

Federal Taxation

General. ECB Bancorp and Everett Co-operative Bank are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income tax matters and is not a comprehensive description of the tax rules applicable to ECB Bancorp and Everett Co-operative Bank.

Method of Accounting. For federal income tax purposes, Everett Co-operative Bank currently reports its income and expenses on the accrual method of accounting and uses a tax year ending December 31 for filing its federal income tax returns.

Alternative Minimum Tax. The Internal Revenue Code imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences, less an exemption amount, referred to as “alternative minimum taxable income.” The alternative minimum tax is payable to the extent tax computed this way exceeds tax computed by applying the regular tax rates to regular taxable income. Net operating losses can, in general, offset no more than 90% of alternative minimum taxable income. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. The Tax Cuts and Jobs Act repealed the alternative minimum tax for income generated after January 1, 2018. At December 31, 2024, Everett Co-operative Bank had no minimum tax credit carryovers.

Net Operating Loss Carryovers. As a result of the Tax Cuts and Jobs Act generally, a financial institution may carry federal net operating losses forward indefinitely. At December 31, 2024, Everett Co-operative Bank had no federal net operating loss carryforwards.

Charitable Contribution Carryovers. At December 31, 2024, the Company had a charitable contribution carryover of $1,356,000 which expires on December 31, 2027.

Capital Loss Carryovers. A corporation cannot recognize capital losses in excess of capital gains generated. Generally, a financial institution may carry back capital losses to the preceding three taxable years and forward to the succeeding five taxable years. Any capital loss carryback or carryover is treated as a short-term capital loss for the year to which it is carried. As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any undeducted loss remaining after the five-year carryover period is not deductible. At December 31, 2024, Everett Co-operative Bank had no capital loss carryovers.

Corporate Dividends. ECB Bancorp may generally exclude from its income 100% of dividends received from Everett Co-operative Bank as a member of the same affiliated group of corporations.

Audit of Tax Returns. Everett Co-operative Bank’s federal income tax returns have not been audited in the most recent five-year period.

State Taxation

Financial institutions in Massachusetts file combined income tax returns with affiliated companies that are not security corporations. The Massachusetts excise tax rate for cooperative banks is currently 9.0% of federal taxable income, adjusted for certain items. Taxable income includes gross income as defined under the Internal Revenue Code, plus interest from bonds, notes and evidences of indebtedness of any state, including Massachusetts, less deductions, but not the credits, allowable under the provisions of the Internal Revenue Code, except for those deductions relating to dividends received and income or franchise taxes imposed by a state or political subdivision. Carryforwards and carrybacks of net operating losses and capital losses are not allowed. Everett Co-operative Bank’s state tax returns, as well as those of its subsidiaries, have not been audited in the most recent five-year period.

A financial institution or business corporation is generally entitled to special tax treatment as a “security corporation” under Massachusetts law provided that: (a) its activities are limited to buying, selling, dealing in or holding securities on its own behalf and not as a broker; and (b) it has applied for, and received, classification as a “security corporation” by the Commissioner of the Massachusetts Department of Revenue.

A security corporation that is also a bank holding company under the Internal Revenue Code must pay a tax equal to 0.33% of its gross income. A security corporation that is not a bank holding company under the Internal Revenue Code must pay a tax equal to 1.32% of its gross income. Everett Co-operative Bank’s wholly owned subsidiary, First Everett Securities Corporation, which engages in securities transactions on its own behalf, is qualified as a security corporation. As such, it has received security corporation classification by the Massachusetts Department of Revenue and does not conduct any activities deemed impermissible under the governing statutes and the various regulations, directives, letter rulings and administrative pronouncements issued by the Massachusetts Department of Revenue.

As a Maryland corporation, ECB Bancorp is required to file an annual report with and pay franchise taxes to the state of Maryland.

Availability of Annual Report on Form 10-K

This Annual Report on Form 10-K is available on our website at www.everettbank.com. Information on the website is not incorporated into, and is not otherwise considered a part of, this Annual Report on Form 10-K.

ITEM 1A. Risk Factors

The presentation of Risk Factors is not required for smaller reporting companies like ECB Bancorp.

ITEM 1B. Unresolved Staff Comments

None.

ITEM 1C. Cybersecurity

Cybersecurity is a significant and integrated component of the Company’s risk management strategy. As a financial services company, cyber threats are present and growing, and the potential exists for a cybersecurity incident to occur, which could disrupt business operations or compromise sensitive data. To date, the Company has not, to its knowledge, experienced an incident materially affecting or reasonably likely to materially affect the Company.

To prepare and respond to incidents, the Company has implemented a multi-layered cybersecurity strategy, integrating people, technology, and processes. This includes employee training, the use of innovative technologies, and the implementation of policies and procedures in the areas of Information Security, Data Governance, Business Continuity and Disaster Recovery, Privacy, Third-Party Risk Management, and Incident Response. The Company engages third-party consultants and independent auditors to, among other things, conduct penetration tests and perform cybersecurity risk assessments and audits.

The Information Technology (“IT”) Department of the Company is primarily responsible for identifying, assessing and managing material risks from cybersecurity threats. The Information Technology Department is managed by the Chief Information Officer (the “CIO”) who reports directly to the Company’s Chief Operating Officer and Chief Financial Officer. The CIO has more than 38 years of relevant experience both with the Company and with other organizations in the IT field. The CIO also oversees the Company’s Information Security Program and manages a third-party consultant that is an expert in the Information Security field and acts as our Information Security Officer (“ISO”). The Information Security Program is governed by various information security and cybersecurity, systems development, change control, disaster recovery/business continuity and physical asset classification and control policies. The Information Security Program identifies data sources, threats and vulnerabilities and ensures awareness, accountability, and oversight for data protection throughout the Company and with trusted third parties to ensure that data is protected and able to be recovered in the event of a breach or failure (technical or other disaster). The IT Department conducts on-going technology and IT threat meetings to ensure the latest threats are addressed in addition to penetration, business continuity/ disaster recovery testing, and incident response plan testing. The CIO is a member of various management committees, chairs the Company’s management-level Information Technology and Information Security Committee (“IT/IS Committee”), and presents information security and cybersecurity updates on a monthly basis to the IT/IS Committee and periodically to the Board of Directors.

The IT/IS Committee provides oversight, from a risk perspective, of information systems security. As referenced above, the CIO and ISO provide information security updates to the IT/IS Committee at each IT/IS Committee meeting. Additional information security training for the committee is provided through targeted training overseen by the ISO. In addition, as discussed below, the Company has implemented an Incident Response Plan to provide a structured and systematic incident response process for information security incidents that affect any of the information technology systems, network, or data of the Company. The Incident Response Plan is implemented and maintained by the CIO and ISO and is subject to annual review and approval by the Board of Directors. At least annually, the ISO coordinates tabletop testing events where senior management participate in a coordinated response exercise to disastrous scenarios that could happen to the Company. Cybersecurity metrics are reported to the IT/IS Committee on a monthly basis.

The Board of Directors recognizes the importance of the Interagency Guidelines Establishing Standards for Safeguarding Customer Information and has incorporated those elements in its ongoing oversight of the Information Security Program.

Risk Assessment. On a periodic basis, but not less than annually, the CIO and ISO, in conjunction with the IT/IS Committee, identifies and documents internal and external vulnerabilities that could result in unauthorized disclosure, misuse, alteration, or destruction of customer information or customer records. Based on the results of the risk assessment, the Company’s Information Security Program may be revised to protect against any anticipated threats or hazards to the security or integrity of such information. The IT/IS Committee reviews changes to the program designed to monitor, measure, and respond to vulnerabilities identified.

Response to Security Vulnerabilities. In response to identified risks, management may take certain steps to correct and respond to security vulnerabilities, which may include:

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Eliminating unwarranted risks by applying vendor-provided software fixes, commonly called patches.

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Ensuring that changes to security configurations are documented, approved, and tested.

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Ensuring that exploitable files and services are assessed and removed or disabled based upon known vulnerabilities and business needs.

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Updating vulnerability scanning and intrusion detection tools to identify known vulnerabilities and related unauthorized activities.

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Conducting subsequent penetration testing and vulnerability assessments, as warranted.

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Reviewing performance with service providers to ensure security maintenance and reporting responsibilities are operating according to contract provisions and that service providers provide notification of system security breaches that may affect the Company.

Internal Controls, Audit, and Testing. Regular internal monitoring is integral to the Company’s risk assessment process, which includes regular testing of internal key controls, systems, and procedures. In addition, independent third-party penetration testing to test the effectiveness of security controls and preparedness measures is conducted at least annually or more often, if warranted by the risk assessment or other external factors. Management determines the scope and objectives of the penetration analysis.

Service Providers. Like many companies, the Company relies on third-party vendor solutions to support its operations. Many of these vendors, especially in the financial services industry, have access to sensitive and proprietary information. In order to mitigate the operational, informational and other risks associated with the use of vendors, the Company maintains a Third-Party Risk Management Program, which is implemented through a Third-Party Risk Management Policy and includes a detailed onboarding process and periodic reviews of vendors with access to sensitive Company data.

The Third-Party Risk Management Policy applies to any business arrangement between the Company and another individual or entity, by contract or otherwise, in compliance with the Interagency Guidance on Third-Party Relationships: Risk Management. The Third-Party Risk Management Program is audited as part of the Company’s annual Internal Audit Risk Assessment.

Employees and Training. Employees are the first line of defense against cybersecurity measures. Each employee is responsible for protecting Company and customer information. Employees are provided training at initial onboarding and thereafter regarding information security and cybersecurity-related policies and procedures applicable to their respective roles within the organization. In addition, employees are subjected to monthly simulated phishing assessments, designed to sharpen threat detection and reporting capabilities. In addition to training, employees are supported with solutions designed to identify, prevent, detect, respond to, and recover from incidents. Notable technologies include firewalls, intrusion detection systems, security automation and response capabilities, user behavior analytics, multi-factor authentication, data backups to immutable storage and business continuity applications. Notable services include 24/7 security monitoring and response, continuous vulnerability scanning, third-party monitoring, and threat intelligence.

Board Reporting. At least annually, the CIO and ISO report to the Board, directly, the overall status of the Information Security Program and the Company’s compliance with the Interagency Guidelines for Safeguarding Customer Information. Any material findings related to the risk assessment, risk management and control decisions, service provider arrangements, results of testing, security breaches or violations are discussed as are management’s responses and any recommendations for program changes.

Program Adjustments. The CIO and ISO monitor, evaluate, and adjust the Information Security Program considering any relevant changes in technology, the sensitivity of its customer information, internal or external threats to information, and changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, outsourcing arrangements, and changes to customer information systems.

Incident Response Plan. To ensure that information security incidents can be recovered from quickly and with the least impact to the Company and its customers, the Company maintains a structured and systematic incident response plan (the “IRP”) for all information security incidents that affect any of the IT systems, network, or data of the Company, including the Company’s data held, or IT services provided by third-party vendors or other service providers. The CIO and ISO are responsible for implementing and maintaining the IRP, which includes:

Identifying the incident response team (“IRT”) and any appropriate sub-teams to address specific information security incidents, or categories of information security incidents.

Coordinating IRT activities, including developing, maintaining, and following appropriate procedures to respond to and document identified information security incidents.

Conducting post-incident reviews to gather feedback on information security incident response procedures and address any identified gaps in security measures.

Providing training and conducting periodic exercises to promote employee and stakeholder preparedness and awareness of the IRP.

Reviewing the IRP at least annually, or whenever there is a material change in the Company’s business practices that may reasonably affect its cyber incident response procedures.

ITEM 2. Properties

We conduct our business through our main office located in Everett, Massachusetts, and our branch offices located in Lynnfield, Massachusetts, both of which we own, and through our branch office in Woburn, Massachusetts, which we lease. Additionally, we lease office space in Everett, Massachusetts which services back office and loan administration functions. At December 31, 2024 the total net book value of our land, buildings, leasehold improvements, furniture, fixtures and equipment was $3.5 million.

ITEM 3. Legal Proceedings

Among other things, the activities of Everett Co-operative Bank, including with respect to disclosures about and implementation of numerous consumer products, are subject to various laws and numerous regulations, including those related to unfair or deceptive acts or practices. If Everett Co-operative Bank is found to have violated one or more consumer protection laws, it may be required to pay restitution to certain affected customers in connection with certain of these practices. In addition, as a result of the extensive regulation, supervision and examination of our business described elsewhere in this Annual Report, we are also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our business, certain of which may result in adverse judgments, settlements, fines, penalties, public or private censure, increased costs, required remediation, restriction on business activities or other impacts on us.

We are not involved in any pending legal proceedings as a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at December 31, 2024, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

ITEM 4. Mine Safety Disclosures ITEM 5.

Not applicable.

PART II

Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market, Holder and Dividend Information. The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “ECBK.” The approximate number of holders of record of ECB Bancorp common stock as of March 25, 2025 was 380. Certain shares of ECB Bancorp are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.

ECB Bancorp does not currently pay cash dividends on its common stock. Dividend payments by ECB Bancorp are dependent, in part, on dividends it receives from Everett Co-operative Bank, because ECB Bancorp has no source of income other than dividends from Everett Co-operative Bank, earnings from the investment of proceeds from the sale of shares of common stock in the stock offering which closed in July 2022 retained by ECB Bancorp and interest payments with respect to our loan to the Employee Stock Ownership Plan. See “Item 1. Business—Supervision and Regulation—Federal Banking Regulation—Capital Distributions.”

The Federal Reserve Board has issued supervisory policies providing that dividends should be paid only out of current earnings and only if our prospective rate of earnings retention is consistent with our capital needs, asset quality and overall financial condition. Federal Reserve Board guidance also provides for prior regulatory consultation with respect to capital distributions in certain circumstances such as where the holding company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the holding company’s overall rate or earnings retention is inconsistent with its capital needs and overall financial condition. In addition, Everett Co-operative Bank’s ability to pay dividends will be limited if it does not have the capital conservation buffer required by the capital rules, which may limit our ability to pay dividends to shareholders. No assurances can be given that any dividends will be paid or that, if paid, will not be reduced or eliminated in the future. Special cash dividends, stock dividends or returns of capital, to the extent permitted by regulations and policies of the Federal Reserve Board and the Commissioner, may be paid in addition to, or in lieu of, regular cash dividends.

Stock-Based Compensation Plans. Information regarding stock-based compensation awards outstanding and available for future grants as of December 31, 2024 is presented in the table below. Additional information regarding stock-based compensation plans is presented in Note 10-Stock-Based Compensation in Item 8.


Plan Category	Number of Shares to be Issued Upon Exercise of Outstanding Awards		Weighted-Average Exercise Price of Outstanding Awards		Number of Shares Available for Future Grants
Plans approved by shareholders		758,137	$	10.49		177,207
Plans not approved by shareholders	—		—		—
Total		758,137	$	10.49		177,207

Other than the stock-based compensation awards, ECB Bancorp has an Employee Stock Ownership Plan.

Report of Offering of Securities and Use of Proceeds Therefrom. Not applicable.

Issuer Purchases of Equity Securities. On August 10, 2023, the Company announced the commencement of a stock repurchase program to acquire up to 458,762 shares, or 5% of the Company’s then outstanding common stock. Repurchases will be made from time to time depending on market conditions and other factors, and will be conducted through open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. There is no guarantee as to the exact number of shares to be repurchased by the Company. The following table sets forth the information regarding the Company's common stock repurchase activities during the three months ended December 31, 2024:


	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares That May Yet Be Purchased Under the Program

From October 1, 2024 to October 31, 2024		32,082	$	14.40		32,082		96,756
From November 1, 2024 to November 30, 2024		10,462	$	14.92		10,462		86,294
From December 1, 2024 to December 31, 2024		18,142	$	15.06		18,142		68,152
Total		60,686	$	14.70		60,686

ITEM 6. [Reserved]

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis reflects our financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the audited financial statements, which appear beginning on page 55 of this Annual Report on Form 10-K.

Overview

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one-to-four family residential real estate loans, commercial real estate loans, multifamily real estate loans, construction loans, home equity lines of credit and loans and commercial loans. At December 31, 2024, $422.8 million, or 36.9%, of our total loan portfolio was comprised of one-to-four family residential real estate loans, $344.0 million, or 30.0%, of our total loan portfolio was comprised of multifamily real estate loans, $229.0 million, or 20.0%, of our total loan portfolio was comprised of commercial real estate loans, $90.9 million, or 7.9%, of our total loan portfolio was comprised of construction loans, $45.2 million, or 4.0%, of our total loan portfolio was comprised of home equity lines of credit and loans and $13.8 million, or 1.2% of our total loan portfolio was comprised of commercial loans. We also invest in securities, consisting primarily of U.S. government and federal agency obligations, mortgage-backed securities and corporate bonds. We offer a variety of deposit accounts, including certificate of deposit accounts, individual retirement accounts, money market accounts, savings accounts and interest-bearing and noninterest-bearing checking accounts. In addition to customer deposits, in recent years, we have also accepted brokered deposits as a non-retail funding source to supplement our customer deposits and fund our operations. At December 31, 2024, we had $125.6 million of brokered deposits. We also have utilized advances from the Federal Home Loan Bank of Boston (the “FHLB”) as an additional funding source to fund our operations and we had $234.0 million of FHLB advances outstanding at December 31, 2024.

For the years ended December 31, 2024 and 2023, we had net income of $4.0 million and $4.5 million, respectively. Our current business strategy includes continuing to focus on originating and growing our commercial real estate, multifamily real estate and construction loan portfolios as well as the origination of one-to-four family residential real estate loans and home equity lines of credit and loans. To a lesser extent, we also originate other commercial loans and consumer loans.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provision for credit losses, noninterest income and noninterest expense. Noninterest income currently consists primarily of fees and service charges, gains on sales of loans and income on bank-owned life insurance. Noninterest expense currently consists primarily of expenses related to salary and employee benefits and director fees, occupancy and equipment, data processing, computer software and licensing fees, advertising, professional fees, FDIC deposit insurance and other general and administrative expenses.

Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Business Strategy

Our principal objective is to build long-term value for our shareholders by operating a profitable community-oriented financial institution dedicated to meeting the banking needs of our customers. Highlights of our current business strategy include:

•

Continuing to focus on enhancing our commercial real estate and multifamily real estate lending. In order to increase the yield on our loan portfolio and reduce the term to maturity of our loan portfolio, we intend to continue our focus on growing the originations of commercial real estate loans and multifamily real estate loans while maintaining what we believe are prudent underwriting standards and we expect that these loan categories will comprise a greater percentage of our total loan portfolio. In order to execute on this strategy, in January 2022 we hired a new Chief Lending Officer as well as some additional commercial lending and credit analyst personnel throughout 2022 and 2023. The capital raised in the offering has and will continue to allow us to increase our commercial lending capacity by enabling us to originate and retain all or a greater portion of loans that we historically participated out to other local institutions.

Given that our regulatory loans to one borrower limits have increased with our increase in capital, we have revised our lending policies and loans to one borrower limitations to increase our lending limits and the type and size of loans we choose to originate and hold in our portfolio. Our commercial real estate and multifamily real estate loan portfolios increased to $229.0 million and $344.0 million, respectively, at December 31, 2024 from $196.4 million and $287.4 million, respectively, at December 31, 2023.

•

Reduced emphasis on one-to-four family residential real estate lending. We have been, and will continue to be, a one-to-four family residential real estate lender for borrowers in our market area and such lending will remain a core focus, but we expect that our lending strategy will result in a decrease to one-to-four family residential loans as a percentage of our total loan portfolio as we increase our focus on commercial real estate and multifamily real estate lending. As of December 31, 2024, $422.8 million, or 36.9%, of our total loan portfolio, consisted of one-to-four family residential real estate loans and at that date an additional $45.2 million, or 4.0%, of our total loan portfolio, consisted of home equity lines of credit and loans. We expect that one-to-four family residential real estate lending will remain one of our primary lending activities.

•

Maintaining our strong asset quality through prudent loan underwriting. As we seek to grow our loan portfolio, we intend to maintain prudent loan underwriting and credit monitoring processes. At December 31, 2024 and 2023, non-performing assets totaled $2.0 million and $1.2 million, respectively, which represented 0.14% and 0.09% of total assets at those dates, respectively.

•

Continuing to attract and retain customers in our market area and build our “core” deposits consisting of interest-bearing and noninterest-bearing checking, savings and money market accounts. Our strategy to enhance and grow our commercial real estate and multifamily real estate lending in a diligent and orderly manner is also designed to encourage relationship banking and increase our core deposits, including noninterest-bearing transaction accounts, and decrease our dependence on certificates of deposit. We plan to leverage our increased focus on commercial real estate and commercial lending efforts to also increase our opportunities to develop commercial business deposit relationships. Additionally, we believe the recent hire of our Senior Vice President of Retail Operations, who brings 38 years of banking experience to our retail sales and administrative team, will be invaluable to the implementation of the added product delivery channels and technological services such as additional electronic and mobile banking applications and cash management services, which we believe will increase our core deposits.

•

Remaining a community-oriented institution and relying on high quality service to maintain and build a loyal local customer base. We were established in 1890 and have been operating continuously in and around Everett, Massachusetts since that time. By using our recognized brand name and the goodwill developed over years of providing timely, efficient banking services, we believe we have been able to attract a solid base of local retail customers on which to continue to build our banking business. Additionally, we believe that the establishment and funding of the charitable foundation will further promote our relationships and exposure in our market area through our support of charitable organizations operating in our local community now and in the future.

•

Expanding our banking franchise as opportunities arise through de novo branching and/or branch acquisitions. We historically operated from our two full-service banking offices in Everett, MA and Lynnfield, MA. During 2023 we successfully opened our third branch which is located in Woburn, MA. We believe there are branch expansion opportunities that exist within our primary market area. We intend to evaluate branch expansion opportunities, including through establishing one or more de novo branches and/or branch acquisitions as such opportunities arise.

Summary of Significant Accounting Policies

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with U.S. GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be significant accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

The following represent our significant accounting policies:

Allowance for Credit Losses. On January 1, 2023, the Company adopted the ASU 2016-13 Current Expected Credit Loss (CECL) methodology for estimating the credit losses for loans. This methodology replaced the incurred loss and impairment methodology. The CECL methodology reflects expected credit losses and requires consideration of historical experience, current conditions, and reasonable and supportable forecasts of future economic conditions. Management uses forward-looking information to estimate the expected credit loss on a loan at the time of origination. The change from the incurred loss methodology to the CECL methodology was recognized through an adjustment to retained earnings.

Actual credit losses, net of recoveries, are deducted from the allowance for credit losses. Loans are charged off when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance for credit losses. A provision for credit losses, which is a charge against earnings, is recorded to bring the allowance for credit losses to a level that, in management’s judgment, is adequate to absorb expected lifetime credit losses in the loan portfolio. Management’s evaluation process used to determine the appropriateness of the allowance for credit losses is subject to the use of estimates, assumptions, and judgment. The evaluation process involves gathering and interpreting many qualitative and quantitative factors which could affect expected credit losses. Because interpretation and analysis involves judgment, current economic or business conditions can change, and future events are inherently difficult to predict, the anticipated amount of estimated credit losses and therefore the appropriateness of the allowance for credit losses could change significantly.

The allocation methodology applied by ECB Bancorp is designed to assess the appropriateness of the allowance for credit losses and includes allocations for individually evaluated loans and loss factor allocations for all remaining loans, with a quantitative model with an assessment of certain qualitative factors. The methodology includes evaluation and consideration of several factors, such as, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, internal historical and industry loss experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions or circumstances underlying the collectability of loans. Because each of the criteria used is subject to change, the allocation of the allowance for credit losses is made for analytical purposes and is not necessarily indicative of the trend of future credit losses in any particular loan category. The total allowance is available to absorb losses from any segment of the loan portfolio. Management believes the allowance for credit losses was adequate at December 31, 2024. The allowance analysis is reviewed by the board of directors on a quarterly basis in compliance with regulatory requirements. In addition, various regulatory agencies periodically review the allowance for credit losses. As a result of such reviews, we may choose to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in the process of establishing the allowance for credit losses as the process is the responsibility of ECB Bancorp. and any increase or decrease in the allowance is the responsibility of management.

As noted above, we consider a number of variables in our evaluation of the adequacy of the allowance for credit losses, with one of the more significant variables being prepayment rates in the various segments of our loan portfolio. Based on our model, if all segments of our loan portfolio experienced a 50% decrease in estimated prepayment rates and curtailment rates, our allowance for credit losses as of December 31, 2024 would have increased $2.4 million to $11.3 million, holding all other variables constant.

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

Securities Valuation and Allowance for Credit Losses. We classify our investments in debt securities as either held-to-maturity or available-for-sale. Securities classified as held-to-maturity are recorded at amortized cost. Available-for-sale securities are carried at fair value. We obtain our fair values from one or more third-party services. This service’s fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations and cash flows. For available-for-sale debt securities with a fair value less than amortized cost basis, management will determine whether it has the intent to sell the debt security or whether it is more likely than not it will be required to sell the debt security before the recovery of its amortized cost basis. If either condition is met, management will recognize a write-down to fair value through a charge to earnings. For all other debt securities, management evaluates their expected credit losses over the remaining term. The majority of the Company’s debt securities consist of mortgage-backed securities, U.S. Treasury securities and debt securities issued by U.S. government-sponsored enterprises. These securities carry an explicit or implicit guarantee from the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Accordingly, the Company applies a zero-credit loss assumption and has not recorded any allowance for these securities. For corporate bonds classified as held-to-maturity, a probability of default and loss given default analysis is performed to determine the allowance for credit losses. We monitor the investment portfolio and credit performance on a quarterly basis to determine if any allowance is considered necessary.

Comparison of Financial Condition at December 31, 2024 and December 31, 2023

Total Assets. Total assets increased $137.8 million, or 10.8%, to $1.42 billion at December 31, 2024 from $1.28 billion at December 31, 2023. The increase was primarily the result of increases in loans and cash and cash equivalents.

Cash and Cash Equivalents. Cash and cash equivalents increased $38.6 million, or 32.4%, to $157.6 million at December 31, 2024 from $119.0 million at December 31, 2023. Cash and cash equivalents increased primarily due to increases in deposits that were greater than our loan growth as we have focused on maintaining strong levels of liquidity.

Loans. Total gross loans increased $97.2 million, or 9.3%, to $1.15 billion at December 31, 2024 from $1.05 billion at December 31, 2023.

•

Multi-family real estate loans increased $56.6 million, or 19.7%, to $344.0 million at December 31, 2024, from $287.4 million at December 31, 2023.

•

Commercial real estate loans increased $32.6 million, or 16.6%, to $229.0 million at December 31, 2024, from $196.4 million at December 31, 2023.

•

Residential real estate loans increased $12.7 million, or 3.1%, to $422.8 million at December 31, 2024, from $410.1 million at December 31, 2023.

•

Home equity lines of credit increased $11.8 million, or 35.4%, to $45.2 million at December 31, 2024, from $33.4 million at December 31, 2023.

•

Commercial loans increased $4.6 million, or 50.2%, to $13.8 million at December 31, 2024, from $9.2 million at December 31, 2023.

•

Construction loans decreased $21.1 million, or 18.8%, to $90.9 million at December 31, 2024, from $112.0 million at December 31, 2023.

The increase in these loan portfolios reflects our strategy to grow the balance sheet by continuing to diversify into higher-yielding commercial real estate and multi-family real estate loans to improve net margins and manage interest rate risk.

Federal Home Loan Bank stock. The Federal Home Loan Bank (FHLB) is a cooperative bank that provides services to its member banking institutions. The primary reason for our membership in the FHLB is to gain access to a reliable source of wholesale funding and as a tool to manage interest rate risk. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. We purchase and/or are subject to redemption of FHLB stock proportional to the volume of funding received and view the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return. We held an investment in FHLB stock of $10.0 million and $9.9 million at December 31, 2024 and 2023, respectively. The amount of stock we are required to purchase is in proportion to our FHLB borrowings and level of total assets.

Bank-owned Life Insurance. We invest in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is nontaxable. Bank-owned life insurance increased $473,000, or 3.3%, to $14.9 million at December 31, 2024 from $14.5 million at December 31, 2023. The increase was due to an increase in cash surrender value of our bank-owned life insurance portfolio during the year ended December 31, 2024.

Deposits. Deposits increased $130.3 million, or 15.0%, to $998.5 million at December 31, 2024 from $868.2 million at December 31, 2023.

•

Certificates of deposit increased $107.0 million, or 21.5%, to $605.5 million at December 31, 2024 from $498.5 million at December 31, 2023;

•

Money market deposit accounts increased $53.2 million, or 40.5%, to $184.6 million at December 31, 2024 from $131.4 million at December 31, 2023;

•

Demand deposit accounts increased $6.6 million, or 8.4%, to $85.0 million at December 31, 2024 from $78.3 million at December 31, 2023;

•

Savings accounts decreased $34.9 million, or 25.3%, to $102.9 million at December 31, 2024 from $137.8 million at December 31, 2023; and

•

Interest-bearing checking accounts decreased $1.6 million, or 7.3%, to $20.5 million at December 31, 2024 from $22.2 million at December 31, 2023.

Federal Home Loan Bank Advances. Advances from the Federal Home Loan Bank remained the same at $234.0 million at December 31, 2024 and December 31, 2023.

Shareholders’ Equity. Total shareholders’ equity increased $3.4 million, or 2.0%, to $168.3 million at December 31, 2024 from $164.9 million at December 31, 2023. This increase is primarily the result of net income of $4.0 million and a $1.5 million increase in additional paid-in capital related to stock-based compensation. Partially offsetting this was a decrease in additional paid-in capital of $2.7 million related to shares repurchased under our share repurchase plan. The book value per share increased $0.75 to $18.50 at December 31, 2024 from $17.75 at December 31, 2023.

Comparison of Operating Results for the Years Ended December 31, 2024 and December 31, 2023

Net Income. Net income was $4.0 million for the year ended December 31, 2024, compared to net income of $4.5 million for the year ended December 31, 2023, a decrease of $465,000, or 10.4%.

Interest and Dividend Income. Interest and dividend income increased $12.3 million, or 22.4%, to $67.0 million for the year ended December 31, 2024 from $54.8 million for the year ended December 31, 2023 due to a $9.5 million increase in interest and fees on loans, a $485,000 increase in interest and dividends on securities and a $2.3 million increase in interest on short term investments.

The increase in interest and fees on loans was driven by an increase of $109.5 million in the average balance of the loan portfolio to $1.10 billion for the year ended December 31, 2024 from $994.8 million for the year ended December 31, 2023, as well as an increase in the yield of 38 basis points to 5.24% during the year ended December 31, 2024 from 4.86% during the year ended December 31, 2023. The yield for the year ended December 31, 2024 benefited from new loans with higher rates as well as loans repricing higher. Interest and dividends on securities increased $485,000, or 18.0%, to $3.2 million for the year ended December 31, 2024 from $2.7 million for the year ended December 31, 2023. This increase was driven by an increase in the yield of investment securities of 39 basis points to 2.95% for the year ended December 31, 2024, from 2.56% for the year ended December 31, 2023 resulting from the higher market interest rate environment, partially offset by a decrease in the average balance of $1.2 million from $81.3 million during the year ended December 31, 2023 to $80.1 million during the year ended December 31, 2024. Interest on short term investments increased $2.3 million, or 60.4% to $6.0 million for the year ended December 31, 2024 from $3.7 million for the year ended December 31, 2023. This increase was driven by the average balance of short-term investments increasing $42.4 million to $114.3 million for the year ended December 31, 2024 from $71.9 million for the year ended December 31, 2023.

Average interest-earning assets increased $150.6 million to $1.30 billion for the year ended December 31, 2024 from $1.15 billion for the year ended December 31, 2023. The yield on interest earning-assets increased 38 basis points to 5.10% for the year ended December 31, 2024 from 4.72% for the year ended December 31, 2023.

Interest Expense. Total interest expense increased $12.1 million, or 40.3%, to $42.1 million for the year ended December 31, 2024 from $30.0 million for the year ended December 31, 2023. Interest expense on deposit accounts increased $12.0 million, or 56.1%, to $33.4 million for the year ended December 31, 2024 from $21.4 million for the year ended December 31, 2023, due to an increase in the average balance of interest-bearing deposits of $155.8 million, or 22.2%, to $858.4 million for the year ended December 31, 2024 from $702.5 million for the year ended December 31, 2023, as well as an increase in the weighted average rate on interest-bearing deposits of 85 basis points to 3.90% for the year ended December 31, 2024 from 3.05% for the year ended December 31, 2023.

Interest expense on Federal Home Loan Bank advances increased $49,000, or 0.57%, to $8.62 million for the year ended December 31, 2024 from $8.57 million for the year ended December 31, 2023. The average balance of Federal Home Loan Bank advances decreased $684,000, or 0.3%, to $217.1 million for the year ended December 31, 2024 from $217.8 million for the year ended December 31, 2023. For the year ended December 31, 2024, the weighted average cost of Federal Home Loan Bank Advances was 3.97%, as compared to 3.94% for the year ended December 31, 2023.

Net Interest and Dividend Income. Net interest and dividend income before provision for credit losses was $25.0 million for the year ended December 31, 2024, compared to $24.8 million for the year ended December 31, 2023, or an increase of $198,000, or 0.8%. The net interest margin for the year ended December 31, 2024 was 1.86% as compared to 2.11% for the year ended December 31, 2023. The decrease in the net interest margin was driven by increases in the cost of interest bearing liabilities that were higher than increases in yields on interest earning assets during 2024.

Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, a provision for credit losses of $174,000 was recorded for the year ended December 31, 2024 in accordance with the CECL standard, compared to a provision for credit losses of $803,000 for the year ended December 31, 2023. The $629,000, or 78.3%, decrease in the provision was driven by lower loan growth during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Noninterest Income. Noninterest income was $1.2 million for the year ended December 31, 2024, as compared to $1.1 million for the year ended December 31, 2023, or an increase of $174,000, or 16.5%. The increase was primarily due to increases in net gains on sales of loans. The table below sets forth our noninterest income for the years ended December 31, 2024 and 2023:


	Year Ended December 31,				Change
	2024		2023		Amount			Percent
	(Dollars in thousands)
Customer service fees	$	577	$	516	$	61			11.8		%
Income from bank-owned life insurance		473		479		(6	)		(1.3	)
Net gain on sales of loans		119		21		98			466.7
Other		57		36		21			58.3
Total noninterest income	$	1,226	$	1,052	$	174			16.5		%

Noninterest Expense. Noninterest expense increased $1.6 million, or 8.5%, to $20.7 million for the year ended December 31, 2024 from $19.1 million for the year ended December 31, 2023. Significant changes are as follows:

•

Salaries and employee benefits increased $1.4 million, or 11.8%, driven by $974,000 in stock based compensation recorded during the year ended December 31, 2024, related to the 2023 Equity Incentive Plan, as compared to $165,000 in stock based compensation recorded during the year ended December 31, 2023. The employee stock awards were granted in the fourth quarter of 2023;

•

Director compensation increased $253,000, or 43.5%, driven by $332,000 in stock-based compensation recorded in the year ended December 31, 2024, as compared to $103,000 in stock-based compensation costs recorded during the year ended December 31, 2023. The director stock awards were granted at the end of the third quarter of 2023; and

•

Advertising and promotions decreased $243,000, or 30.6%, as we have streamlined our advertising efforts.

The table below sets forth our noninterest expense for the years ended December 31, 2024 and 2023:


	Year Ended December 31,				Change
	2024		2023		Amount			Percent
	(Dollars in thousands)
Salaries and employee benefits	$	13,062	$	11,679	$	1,383			11.8		%
Director compensation		834		581		253			43.5
Occupancy and equipment		1,033		941		92			9.8
Data processing		1,198		1,093		105			9.6
Computer software and licensing fees		443		375		68			18.1
Advertising and promotions		551		794		(243	)		(30.6	)
Professional fees		1,258		1,355		(97	)		(7.2	)
Federal Deposit Insurance Corporation deposit insurance		752		793		(41	)		(5.2	)
Other expense		1,538		1,443		95			6.6
Total noninterest expense	$	20,669	$	19,054	$	1,615			8.5		%

Income Tax Expense. Income tax expense decreased $149,000, or 9.7%, to $1.4 million for the year ended December 31, 2024 from $1.5 million for the year ended December 31, 2023. The effective tax rate was 25.7% and 25.5% for the years ended December 31, 2024 and 2023, respectively.

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the years indicated. Average balances are daily average balances. The Company has no tax-equivalent yield adjustments. Non-accrual loans are included in average balances only. Average yields include the effect of deferred costs and fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.


	For the Year Ended December 31,
	2024							2023
	Average Outstanding Balance		Interest		Yield/ Rate			Average Outstanding Balance		Interest		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Total loans	$	1,104,288	$	57,852		5.24	%	$	994,834	$	48,330		4.86	%
Securities (1)		80,057		2,363		2.95			81,300		2,079		2.56
Short term investments		114,295		6,004		5.25			71,918		3,745		5.21
Interest-bearing time deposits		64		3		5.44			62		—		0.70
Total interest-earning assets		1,298,704		66,222		5.10	%		1,148,114		54,154		4.72	%
Non-interest-earning assets		34,056							32,755
Total assets	$	1,332,760						$	1,180,869

Interest-bearing liabilities:
Checking accounts	$	18,891	$	14		0.07	%	$	21,939	$	18		0.08	%
Savings accounts		111,858		3,048		2.72			164,087		4,074		2.48
Money market accounts		158,405		5,669		3.58			105,793		2,412		2.28
Certificates of deposit		569,199		24,704		4.34			410,704		14,909		3.63
Total interest-bearing deposits		858,353		33,435		3.90			702,523		21,413		3.05
Federal Home Loan Bank advances		217,087		8,622		3.97			217,771		8,573		3.94
Total interest-bearing liabilities		1,075,440		42,057		3.91	%		920,294		29,986		3.26	%
Non-interest-bearing demand deposits		77,721							84,546
Non-interest-bearing liabilities		12,661							11,148
Total liabilities		1,165,822							1,015,988
Shareholders' equity		166,938							164,881
Total liabilities and shareholders' equity	$	1,332,760						$	1,180,869

Net interest income			$	24,165						$	24,168
Net interest rate spread (2)						1.19	%						1.46	%
Net interest-earning assets (3)	$	223,264						$	227,820
Net interest margin (4)						1.86	%						2.11	%

Average interest-earning assets to interest- bearing liabilities						120.76	%						124.76	%

(1)

Excludes interest and dividends on cost method investments of $823,000 and $622,000 for the years ended December 31, 2024 and 2023, respectively.

(2)

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

(3)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4)

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

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


	Years Ended December 31, 2024 vs. 2023
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(in thousands)
Interest-earning assets:
Loans	$	5,561		$	3,961		$	9,522
Securities		(33	)		317			284
Short term investments		2,226			33			2,259
Interest-bearing time deposits		-			3			3
Total interest-earning assets	$	7,754		$	4,314		$	12,068

Interest-bearing liabilities:
Checking accounts	$	(2	)	$	(2	)	$	(4	)
Savings accounts		(1,394	)		368			(1,026	)
Money market deposits		1,518			1,739			3,257
Certificates of deposit		6,500			3,295			9,795
Total deposits		6,622			5,400			12,022
Advances from the Federal Home Loan Bank		(27	)		76			49
Total interest-bearing liabilities	$	6,595		$	5,476		$	12,071

Change in net interest income	$	1,159		$	(1,162	)	$	(3	)

Management of Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our chief financial officer is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk:

•

maintaining capital levels that exceed the thresholds for well-capitalized status under federal regulations;

•

maintaining a prudent level of liquidity;

•

growing our volume of core deposit accounts;

•

managing our investment securities portfolio to maintain a prudent balance between enhancing profitability and protecting the balance sheet against sensitivity to changes in interest rates;

•

managing our utilization of wholesale funding with borrowings from the Federal Home Loan Bank and brokered deposits in a prudent manner;

•

continuing to diversify our loan portfolio by adding more commercial-related loans, which typically have shorter maturities and/or balloon payments; and beginning in January of 2024 we began to utilize interest rate swaps to help manage our interest rate risk.

•

By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income sensitivity model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest expense we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by various basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100-basis point increase in the “Change in Interest Rates” column below.

The table below sets forth, as of December 31, 2024, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve.


As of December 31, 2024
Change in Interest Rates (basis points) (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Level
(Dollars in thousands)
+400	$	26,718		-8.7	%
+300		27,364		-6.5	%
+200		28,037		-4.2	%
+100		28,683		-2.0	%
Level		29,261		0.0	%
-100		29,467		0.7	%
-200		28,916		-1.2	%
-300		28,257		-3.4	%
-400		26,279		-10.2	%

____________________

Assumes an immediate uniform change in interest rates at all maturities.

The tables above indicate that at December 31, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a decrease in net interest income of 4.2%, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 1.2% decrease in net interest income.

Economic Value of Equity. We also compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases and decreases instantaneously by 100, 200, 300 and 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The table below sets forth, as of December 31, 2024, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve.


As of December 31, 2024
				Estimated Increase (Decrease) in EVE						EVE as a Percentage of Present Value of Assets (3)
Change in Interest Rates (basis points) (1)		Estimated EVE (2)		Amount			Percent			EVE Ratio (4)			Increase (Decrease) (basis points)
(Dollars in thousands)
+400		$	105,756	$	(58,357	)		-35.6	%		8.4	%		(355	)
+300			119,094		(45,019	)		-27.4	%		9.3	%		(269	)
+200			133,497		(30,616	)		-18.7	%		10.1	%		(179	)
+100			148,957		(15,156	)		-9.2	%		11.1	%		(86	)
	—		164,113		—			0.0	%		11.9	%		—
	-100		177,434		13,321			8.1	%		12.6	%		70
	-200		186,368		22,255			13.6	%		13.0	%		108
	-300		190,748		26,635			16.2	%		13.1	%		115
	-400		189,593		25,480			15.5	%		12.8	%		89

(1)

Assumes an immediate uniform change in interest rates at all maturities.

(2)

EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3)

Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4)

EVE Ratio represents EVE divided by the present value of assets.

The table above indicates that at December 31, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience an 18.7% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 13.6% increase in EVE.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The net interest income and net economic value tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.

Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, increases in market interest rates can decrease the fair values of our loans but increase the fair value of deposits and borrowings.

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We are also able to borrow from the Federal Home Loan Bank of Boston, the Federal Reserve Bank and the Atlantic Community Bankers Bank. At December 31, 2024, we had outstanding advances of $234.0 million from the Federal Home Loan Bank. At December 31, 2024, we had unused borrowing capacity of $328.5 million with the Federal Home Loan Bank, $15.1 million with Federal Reserve Bank and $10.0 million with the Atlantic Community Bankers Bank.

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

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

At December 31, 2024, we had $21.5 million in loan commitments outstanding. In addition to commitments to originate and purchase loans, we had $80.2 million in unused lines of credit to borrowers and $54.6 million in unadvanced construction loans.

Non brokered certificates of deposit due within one year of December 31, 2024 totaled $321.7 million, or 32.2%, of total deposits. If these deposits do not remain with us, we may be required to seek other sources of funds, including brokered deposits and FHLB advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before December 31, 2025, or on our savings and money market accounts.

We believe, however, based on historical experience and current market interest rates that we will retain upon maturity a large portion of our certificates of deposit with maturities of one year or less as of December 31, 2024.

Our primary investing activity is originating loans. During the years ended December 31, 2024 and 2023, we originated and purchased $160.4 million and $268.1 million of loans, respectively.

Financing activities consist primarily of activity in deposit accounts as well as FHLB advances. We experienced net increases in deposits of $130.3 million and $150.1 million for the years ended December 31, 2024 and 2023, respectively. Deposit flows are affected primarily by the overall level of interest rates and the interest rates and products offered by us and our competitors. At December 31, 2024 and 2023, the level of brokered time deposits was $125.6 million and $115.5 million, respectively. At December 31, 2024 and 2023 the level of FHLB advances was $234.0 million.

For additional information, see the consolidated statements of cash flows for the years ended December 31, 2024 and 2023 included as part of the consolidated financial statements appearing elsewhere in this 10-K.

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

At December 31, 2024, Everett Co-operative Bank exceeded all of its regulatory capital requirements, and was categorized as well-capitalized at that date. Management is not aware of any conditions or events since the most recent notification of well-capitalized status that would change our category. See Note 16 of the notes to consolidated financial statements.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At December 31, 2024, we had outstanding commitments to originate loans of $21.5 million. We anticipate that we will have sufficient funds available to meet our current lending commitments. Non brokered time deposits that are scheduled to mature in less than one year from December 31, 2024 totaled $321.7 million. Management expects that a substantial portion of these time deposits will be retained. However, if a substantial portion of these time deposits is not retained, we may utilize advances from the Federal Home Loan Bank, brokered deposits or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Recent Accounting Pronouncements

See Note 2 to the notes to the consolidated financial statements for a description of recent accounting pronouncements that may affect our financial condition and results of operations.

Impact of Inflation and Changing Price

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

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

For information regarding market risk, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

ITEM 8. Financial Statements and Supplementary Data


Financial Statements Table of Contents
		Page

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 392)		56

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 231)		57

Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023		58

Consolidated Statements of Income for the Years Ended December 31, 2024 and 2023		59

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024 and 2023		60

Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2024 and 2023		61

Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023		62

Notes to Consolidated Financial Statements		63

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of ECB Bancorp, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of ECB Bancorp, Inc. and Subsidiary (the Company) as of December 31, 2024, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended and the related notes (collectively, “the financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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 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 financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Our audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company's auditor since 2024.

/s/ Wolf & Company, P.C.

Boston, Massachusetts

March 26, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

ECB Bancorp, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of ECB Bancorp, Inc., and Subsidiary (the Company) as of December 31, 2023, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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 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 financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

/s/ Baker Newman & Noyes LLC

Boston, Massachusetts

March 29, 2024

We served as the Company’s auditor from 2015 to 2024.

ECB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets

December 31, 2024 and December 31, 2023

(Dollars in thousands)


	December 31, 2024			December 31, 2023

ASSETS
Cash and due from banks	$	5,828		$	3,786
Short-term investments		151,789			115,250
Total cash and cash equivalents		157,617			119,036
Interest-bearing time deposits		100			—
Investments in available-for-sale securities (at fair value)		6,564			5,003
Investments in held-to-maturity securities, at cost (fair values of $67,505 at December 31, 2024 and $70,590 at December 31, 2023)		73,215			76,979
Loans, net of allowance for credit losses of $8,884 as of December 31, 2024 and $8,591 as of December 31, 2023		1,136,449			1,039,789
Federal Home Loan Bank stock, at cost		10,000			9,892
Premises and equipment, net		3,512			3,754
Accrued interest receivable		4,015			3,766
Deferred tax assets, net		4,914			4,767
Bank-owned life insurance		14,945			14,472
Other assets		6,822			2,877
Total assets	$	1,418,153		$	1,280,335

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	84,958		$	78,342
Interest-bearing		913,575			789,872
Total deposits		998,533			868,214
Federal Home Loan Bank advances		234,000			234,000
Other liabilities		17,352			13,220
Total liabilities		1,249,885			1,115,434

Shareholders' Equity:
Preferred Stock, par value $0.01; Authorized: 1,000,000 shares; Issued and outstanding: 0 shares and 0 shares, respectively		—			—
Common Stock, par value $0.01; Authorized: 30,000,000 shares; Issued and outstanding: 9,095,833 shares and 9,291,810 shares, respectively		91			93
Additional paid-in capital		86,189			87,431
Retained earnings		87,845			83,854
Accumulated other comprehensive income		382			129
Unallocated common shares held by the Employee Stock Ownership Plan		(6,239	)		(6,606	)
Total shareholders' equity	$	168,268			164,901
Total liabilities and shareholders' equity		1,418,153		$	1,280,335

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

ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Income

Years Ended December 31, 2024 and 2023

(Dollars in thousands, except share data)


	Year Ended
	December 31,
	2024		2023
Interest and dividend income:
Interest and fees on loans	$	57,852	$	48,330
Interest and dividends on securities		3,186		2,701
Interest on short-term investments		6,004		3,745
Interest on interest-bearing time deposits		3		—
Total interest and dividend income		67,045		54,776
Interest expense:
Interest on deposits		33,435		21,413
Interest on Federal Home Loan Bank advances		8,622		8,573
Total interest expense		42,057		29,986
Net interest and dividend income		24,988		24,790
Provision for credit losses		174		803
Net interest and dividend income after provision for credit losses		24,814		23,987
Noninterest income:
Customer service fees		577		516
Income from bank-owned life insurance		473		479
Net gain on sales of loans		119		21
Other income		57		36
Total noninterest income		1,226		1,052
Noninterest expense:
Salaries and employee benefits		13,062		11,679
Director compensation		834		581
Occupancy and equipment expense		1,033		941
Data processing		1,198		1,093
Computer software and licensing fees		443		375
Advertising and promotions		551		794
Professional fees		1,258		1,355
Federal Deposit Insurance Corporation deposit insurance		752		793
Other expense		1,538		1,443
Total noninterest expense		20,669		19,054
Income before income tax expense		5,371		5,985
Income tax expense		1,380		1,529
Net income	$	3,991	$	4,456
Share data:
Weighted average shares outstanding, basic		8,257,014		8,466,021
Weighted average shares outstanding, diluted		8,345,737		8,523,705
Basic earnings per share	$	0.48	$	0.53
Diluted earnings per share	$	0.48	$	0.52

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

ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2024 and 2023

(Dollars in thousands)


	Year Ended
	December 31,
	2024			2023

Net income	$	3,991		$	4,456
Other comprehensive income (loss), net of tax:
Net change in unrealized holding gain on securities available-for-sale		(43	)		(6	)
Net change in unrecognized postretirement benefit costs pertaining to supplemental executive retirement plan		14			(93	)
Net change in unrecognized postretirement benefit costs pertaining to director fee continuation plan		5			(21	)
Net change in fair value of cash flow hedges		277			—
Other comprehensive income (loss), net of tax		253			(120	)

Comprehensive income	$	4,244		$	4,336

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

ECB Bancorp, Inc. and Subsidiary

Statements of Changes in Shareholders' Equity

For the Years Ended December 31, 2024 and 2023

(Dollars in thousands)



	Shares of Common Stock Outstanding			Common Stock			Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Unallocated Common Stock Held by ESOP			Total
Balance at December 31, 2022		9,175,247		$	92		$	89,286		$	80,076		$	249		$	(6,973	)	$	162,730
Cumulative Effect Accounting Adjustment for CECL Adoption		-			-			-			(678	)		-			-			(678	)
Net income		-			-			-			4,456			-			-			4,456
Other comprehensive loss, net of tax		-			-			-			-			(120	)		-			(120	)
ESOP shares allocated (36,701 shares)		-			-			103			-			-			367			470
Shares repurchased under share repurchase plan		(189,394	)		(2	)		(2,223	)		-			-			-			(2,225	)
Restricted stock awards issued, net of awards surrendered		305,957			3			(3	)		-			-			-			-
Stock-based compensation		-			-			268			-			-			-			268
Balance at December 31, 2023		9,291,810		$	93		$	87,431		$	83,854		$	129		$	(6,606	)	$	164,901
Net income		-			-			-			3,991			-			-			3,991
Other comprehensive income, net of tax		-			-			-			-			253			-			253
ESOP shares allocated (36,701 shares)		-			-			127			-			-			367			494
Shares repurchased under share repurchase plan		(201,216	)		(2	)		(2,720	)		-			-			-			(2,722	)
Restricted stock awards issued, net of awards surrendered		(593	)		-			(24	)		-			-			-			(24	)
Stock-based compensation		-			-			1,306			-			-			-			1,306
Stock options exercised		5,832			-			69			-			-			-			69
Balance at December 31, 2024		9,095,833		$	91		$	86,189		$	87,845		$	382		$	(6,239	)	$	168,268

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

ECB Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows

Years Ended December 31, 2024 and 2023

(Dollars in thousands)


	Year Ended
	December 31,
	2024			2023
Cash flows from operating activities:
Net income	$	3,991		$	4,456
Adjustments to reconcile net income to net cash provided by operating activities:
(Accretion) amortization of securities, net		(63	)		31
Provision for credit losses		174			803
Change in deferred loan costs/fees		276			(32	)
Gain on sales of loans, net		(119	)		(21	)
Proceeds from sales of loans		7,905			367
Loans originated for sale, net		(7,786	)		(346	)
Depreciation and amortization expense		302			279
Increase in accrued interest receivable		(249	)		(1,134	)
(Decrease) increase in accrued interest payable		(16	)		1,455
Increase in bank-owned life insurance		(473	)		(405	)
Gain from life insurance policy death benefit		—			(72	)
Deferred income tax benefit		(250	)		(111	)
ESOP expense		494			470
Stock-based compensation expense		1,306			268
Stock options exercised		69			—
Increase in other assets		(3,388	)		(1,242	)
Increase in other liabilities		4,124			1,668
Net cash provided by operating activities		6,297			6,434

Cash flows from investing activities:
Purchases of held-to-maturity securities		(8,874	)		(8,292	)
Proceeds from paydowns and maturities of held-to-maturity securities		12,684			8,864
Purchases of available-for-sale securities		(6,628	)		—
Proceeds from paydowns and maturities of available-for-sale securities		5,029			—
Proceeds from life insurance policy death benefit		—			249
Purchase of interest-bearing time deposits		(200	)		—
Proceeds from maturities of interest bearing time deposits		100			300
Purchase of Federal Home Loan Bank Stock		(2,464	)		(3,525	)
Redemption of Federal Home Loan Bank Stock		2,356			926
Loan originations and principal collections, net		(89,058	)		(142,269	)
Purchase of loans		(8,175	)		(13,207	)
Recoveries of loans previously charged off		1			1
Capital expenditures		(60	)		(335	)
Net cash used in investing activities		(95,289	)		(157,288	)

Cash flows from financing activities:
Net increase (decrease) in demand deposits, NOW and savings accounts		23,307			(28,590	)
Net increase in time deposits		107,012			178,655
Proceeds from long-term Federal Home Loan Bank advances		55,000			195,000
Repayments of long-term Federal Home Loan Bank advances		(70,000	)		(80,000	)
Net change in short-term Federal Home Loan Bank advances		15,000			(55,000	)
Restricted stock awards issued, net of awards surrendered		(24	)		—
Payments for shares repurchased under share repurchase plan		(2,722	)		(2,225	)
Net cash provided by financing activities		127,573			207,840

Net increase in cash and cash equivalents		38,581			56,986
Cash and cash equivalents at beginning of year		119,036			62,050
Cash and cash equivalents at end of period	$	157,617		$	119,036

Supplemental disclosures:
Interest paid	$	42,041		$	28,531
Income taxes paid		1,566			2,259
Noncash activities:
Effect of the adoption of ASU 2016-13
Allowance for credit losses		—			182
Deferred income taxes		—			266
Other liabilities		—			762

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

ECB Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2024

Notes to Consolidated Financial Statements

NOTE 1 - NATURE OF OPERATIONS

CONVERSION

On March 9, 2022, the Board of Directors of Everett Co-operative Bank (the "Bank") adopted a Plan of Conversion under which the Bank would convert from a Massachusetts mutual co-operative bank into a Massachusetts stock co-operative bank and become the wholly-owned subsidiary of a newly chartered stock holding company, ECB Bancorp, Inc. (the “Holding Company”). The Plan of Conversion received the required approvals of various regulatory agencies and the Plan of Conversion was approved by the required vote of more than two-thirds of the Bank’s depositors present and voting at a special meeting of depositors held on May 5, 2022. The Bank’s mutual to stock conversion and the Company’s stock offering were consummated on July 27, 2022. In the offering, the Company sold 8,915,247 shares of common stock at a per share price of $10.00 for gross offering proceeds of $89.2 million. Additionally, the Company contributed 260,000 shares and $600,000 in cash to the Everett Co-operative Bank Charitable Foundation (the “Foundation”).

The Bank has established a Liquidation Account in an amount equal to the net worth of the Bank as of the date of the latest consolidated balance sheet contained in the final prospectus distributed in connection with the Company's stock conversion and stock offering. The function of the Liquidation Account is to establish a priority on liquidation of the Bank. The Liquidation Account will be maintained by the Bank for the benefit of the eligible account holders who continue to maintain deposit accounts with the Bank following the conversion. Each eligible account holder, with respect to each deposit account, holds a related inchoate interest in a portion of the Liquidation Account balance, in relation to each deposit account balance at the eligibility record date, or to such balance as it may be subsequently reduced, as hereinafter provided. The initial Liquidation Account balance will not be increased, and is subject to downward adjustment to the extent of any downward adjustment of any subaccount balance of any eligible account holder in accordance with the regulations of the Division of Banks of the Commonwealth of Massachusetts.

In the unlikely event of a complete liquidation of the Bank (and only in such event), following all liquidation payments to creditors (including those to depositors to the extent of their deposit accounts) each eligible account holder shall be entitled to receive a liquidating distribution from the Liquidation Account, in the amount of the then-adjusted subaccount balances for his or her deposit accounts then held, before any liquidating distribution may be made to any holder of the Bank’s capital stock.

The Bank may not declare or pay a cash dividend on its outstanding capital stock if the effect thereof would cause its regulatory capital to be reduced below the amount required to maintain the Liquidation Account and under FDIC rules and regulations.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING POLICIES

The accounting and reporting policies of the Company and the Bank conform to accounting principles generally accepted in the United States of America (U.S. GAAP) and predominant practices within the banking industry. The consolidated financial statements are prepared using the accrual basis of accounting. The significant accounting policies are summarized below to assist the reader in better understanding the consolidated financial statements and other data contained herein. In the opinion of management, all adjustments necessary for a fair presentation are reflected in these consolidated financial statements, and all adjustments made are of a normal recurring nature.

Principles of Consolidation

The consolidated financial statements of the Company include the balances and results of operations of its wholly-owned subsidiary Everett Co-operative Bank (the "Bank") as well as First Everett Securities Corporation, a wholly-owned subsidiary of the Bank. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The allowance for credit losses is a significant estimate that is particularly susceptible to significant change in the near term.

Reclassification

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

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, cash items, due from banks and short-term investments.

The Company has historically been required to maintain certain vault cash and/or deposits with the Federal Reserve Bank of Boston. However, based on the COVID-19 pandemic, the Federal Reserve has reduced the reserve requirement ratio to zero percent across all deposit tiers as of March 26, 2020.

Securities

The Company classifies securities at the time of purchase into one of three categories: held-to-maturity (HTM), available-for-sale (AFS), or trading. These security classifications may be modified after acquisition only under certain specified conditions. In general, debt securities may be classified as held-to-maturity only if the Company has the positive intent and ability to hold them to maturity. Trading securities are defined as those bought and held principally for the purpose of selling them in the near term. All other debt securities must be classified as available-for-sale.

•

Held-to-maturity securities are measured at amortized cost on the consolidated balance sheets. Unrealized holding gains and losses are not included in earnings, or in a separate component of shareholders' equity; they are disclosed in the notes to the consolidated financial statements.

•

Available-for-sale securities are carried at fair value on the consolidated balance sheets. Unrealized holding gains and losses are not included in earnings but are reported in other comprehensive income, net of related taxes.

•

Trading securities are carried at fair value on the consolidated balance sheets. Unrealized holding gains and losses for trading securities are included in earnings. The Company had no securities classified as trading securities at December 31, 2024 and 2023.

Purchase premiums and discounts are recognized in interest income, using the interest method. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. Such gains and losses are recognized within non-interest income within the consolidated statements of income.

For AFS securities in an unrealized loss position, management will first evaluate whether there is intent to sell a security, or if it is more likely than not that the Company will be required to sell a security prior to anticipated recovery of its amortized cost basis. If either of these criteria are met, the Company will record a write-down of the security’s amortized cost basis to fair value through income. For those AFS securities which do not meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors.

In performing this assessment, management considers the creditworthiness of the issuer including whether the security is guaranteed by the U.S. federal government or other government agency, the extent to which fair value is less than amortized cost, and changes in credit rating during the period, among other factors. If this assessment indicates the existence of credit losses, an allowance for credit losses will be established, as determined by a discounted cash flow analysis. To the extent the estimated cash flows do not support the amortized cost, the deficiency is considered to be due to credit loss and is recognized in earnings.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when the security is determined to be uncollectible, or when either of the afore-mentioned criteria surrounding intent or requirement to sell have been met. No allowance for credit losses was recorded for AFS securities as of December 31, 2024 and 2023.

Debt securities are placed on non-accrual status at the time any principal or interest payments become 90 days delinquent. Interest accrued but not received for a security placed on non-accrual is reversed against current interest income.

Refer to Note 3, “Investments in Securities” for additional information regarding the measurement of impairment losses on AFS securities.

The Company measures expected credit losses on held to maturity securities on a collective basis by major security type. Management classifies the held-to maturity portfolio into the following major security types: U.S. Government Sponsored Enterprises, U.S. Treasury, Agency Mortgage-Backed Securities, and Corporate Bonds.

Refer to Note 3, “Investments in Securities” for additional information regarding the measurement of credit losses on HTM securities.

Federal Home Loan Bank Stock

The Bank, as a member of the Federal Home Loan Bank of Boston (FHLB), is required to maintain an investment in capital stock of the FHLB. Based on redemption provisions of the FHLB, the stock has no quoted market value and is carried at cost. The Company reviews its investment in capital stock of the FHLB for impairment based on the ultimate recoverability of the cost basis in the FHLB stock.

Loans Held-for-Sale

Loans held-for-sale are carried at the lower of amortized cost or estimated fair value in the aggregate. Net unrealized losses are recognized through a valuation allowance and recorded in noninterest income. Fair value is based on committed secondary market prices. No losses have been recorded during 2024 or 2023. Gains or losses on sales of mortgage loans are recognized in the Consolidated Statements of Income at the time of sale. Interest income is recognized on loans held for sale between the time the loan is funded and the loan is sold. Direct loan origination costs and fees are deferred upon origination and are recognized in the Consolidated Statements of Income on the date of sale.

Loans

Loans that the Company has the intent and ability to hold until maturity or payoff are carried at amortized cost (net of the allowance for credit losses). Amortized cost is the principal amount outstanding, adjusted by partial charge-offs and net of any deferred loan costs or fees. For originated loans, loan fees and certain direct origination costs are deferred and amortized into interest income over the contractual life of the loan using the level-yield method. When a loan is paid off, the unamortized portion is recognized in interest income. Interest income on loans is accrued based upon the daily principal amount outstanding except for loans on nonaccrual status. As a general rule, loans more than 90 days past due with respect to principal or interest are classified as nonaccrual loans, or sooner if management considers such action to be prudent. However, loans that are more than 90 days past due may be kept on an accruing status if the loan is well secured and in the process of collection. Income accruals are suspended on all nonaccrual loans in a timely manner and all previously accrued and uncollected interest is reversed against current income. A loan can be returned to accrual status when collectibility of principal and interest is reasonably assured and the loan has performed for a period of time, generally at least six months.

When doubt exists as to the collectability of a loan, any payments received are applied to reduce the amortized cost of the loan to the extent necessary to eliminate such doubt. For all loan portfolios, a charge-off occurs when the Company determines that a specific loan, or portion thereof, is uncollectible. This determination is made based on management's review of specific facts and circumstances of the individual loan, including the expected cash flows to repay the loan, the value of the collateral and the ability and willingness of any guarantors to perform.

Allowance for Credit Losses

The allowance for credit losses is established based upon the Company's current estimate of expected lifetime credit losses on loans measured at amortized cost. Credit losses are charged against the allowance when management's assessments confirm that the Company will not collect the full amortized cost basis of a loan. Subsequent recoveries, if any, are credited to the allowance. Under the current expected credit loss methodology (CECL) methodology, the Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics. The Company segments financial assets with similar risk characteristics and has elected to segment its loans based on Federal Call codes used for reporting loans to the Federal Deposit Insurance Corporation as part of the Call Report process. These segments are collectively evaluated for expected credit losses using a quantitative Discounted Cash Flow ("DCF") model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. The Company has elected to use this approach because DCF models allow for effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner and peer data is available for certain inputs such as the probability of default and the loss given default. The quantitative model utilizes a loss factor based approach to estimate expected credit losses, which are derived from internal historical and industry peer loss experience. The model estimates expected credit losses using loan level data over the estimated life of the exposure, considering the effect of prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period, beyond which is a reversion to the historical long-run average using the straight-line reversion method. Management periodically evaluates a reasonable and supportable forecast period and a reversion period to be appropriate for purposes of estimating expected credit losses. The qualitative risk factors impacting the expected risk of loss within the portfolio include the following:

•

Lending policies and procedures

•

Economic and business conditions

•

Nature and volume of loans

•

Changes in management

•

Changes in credit quality

•

Changes in loan review system

•

Changes to underlying collateral values

•

Concentrations of credit risk

•

Other external factors

The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each loan segment are as follows:

One-to-four residential real estate and home equity lines of credit and loans: The Company generally does not originate loans with a loan-to-value ratio greater than 80 percent without requiring private mortgage insurance. Loans in these segments are collateralized primarily by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in these segments.

Commercial real estate and multi-family residential: Loans in these segments are primarily income-producing properties throughout Massachusetts. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates which, in turn, will have an effect on the credit quality in these segments.

Management periodically obtains rent rolls and continually monitors the cash flows of these loans.

Construction: The loans in this segment are residential and commercial construction-to-permanent loans collateralized by owner-occupied residential and commercial real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial: Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Consumer: Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower.

Loans that do not share similar risk characteristics with any pools of assets are subject to individual evaluation and are removed from the collectively assessed pools to avoid double counting. This includes loans on non-accrual status and loans that are 90 days or greater past due. For the loans that will be individually evaluated, the Company will use either a discounted cash flow (“DCF”) approach or a fair value of collateral approach. The latter approach will be used for loans deemed to be collateral dependent or when foreclosure is probable.

Accrued interest receivable amounts are excluded from balances of loans held at amortized cost and are included within accrued interest receivable in the consolidated balance sheets. Management has elected not to measure an allowance for credit losses on these amounts as the Company employs a timely write-off policy. Consistent with the Company's policy for nonaccrual loans, accrued interest receivable is typically written off when loans reach 90 days past due and are placed on nonaccrual status.

In the ordinary course of business, the Company enters into commitments to extend credit. Such financial instruments are recorded in the financial statements when they are funded. The credit risk associated with these commitments is evaluated in a manner similar to the allowance for credit losses on loans with an additional assumption of probability of funding. The reserve for unfunded lending commitments is included in other liabilities in the consolidated balance sheets.

Bank Owned Life Insurance

The Company holds bank-owned life insurance on the lives of certain participating employees. The amount reported as an asset on the Consolidated Balance Sheets is the sum of the cash surrender values reported to the Company by the various insurance carriers. Increases in the cash surrender value of life insurance policies, as well as benefits received net of any cash surrender value, are recorded in other noninterest income, and are generally not subject to income taxes. The Company reviews the financial strength of the insurance carriers prior to the purchase of life insurance policies and no less than annually thereafter. Regulatory requirements limit the total amount of CSV to be held with any individual carrier to 15% of Tier 1 capital (as defined for regulatory purposes) and the total CSV of all life insurance policies is limited to 25% of Tier 1 capital.

Premises and Equipment

Land is carried at cost. Buildings, leasehold improvements and furniture and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease terms or the estimated lives of the improvements. Expected lease terms include lease options to the extent that the exercise of such options is reasonably assured.

Leases

Leases are evaluated at inception to determine if leases should be classified as an operating or finance lease. Leases are recognized as right-of-use lease assets and lease liabilities. The discount rate used in determining the present value of lease payments is based on the Company’s incremental borrowing rate for borrowings with terms similar to each lease at commencement date. The Company recognizes lease expense for operating leases on a straight-line basis.

Other Real Estate Owned

Real estate properties and other assets, which have served as collateral to secure loans, are held for sale and are initially recorded at fair value less estimated costs to sell at the date control is established, resulting in a new cost basis. The amount by which the recorded investment in the loan exceeds the fair value (net of estimated costs to sell) of the foreclosed asset is charged to the allowance for credit losses. Subsequent declines in the fair value of the foreclosed asset below the new cost basis are recorded through the use of a valuation allowance. Subsequent increases in the fair value are recorded as reductions in the valuation allowance, but not below zero. Upon a sale of a foreclosed asset, any excess of the carrying value over the sale proceeds is recognized as a loss on sale. Any excess of sale proceeds over the carrying value of the foreclosed asset is first applied as a recovery to the valuation allowance, if any, with the remainder being recognized as a gain on sale. Operating expenses and changes in the valuation allowance relating to foreclosed assets are recorded in other noninterest expense.

Advertising

The Company directly expenses costs associated with advertising as they are incurred.

Stock-based Compensation

The Company recognizes stock-based compensation based on the grant-date fair value of the award with no adjustment for expected forfeitures, as forfeitures are recognized when they occur. For restricted stock awards, the Company recognizes compensation expense ratably over the vesting period for the fair value of the award, measured at the grant date. For stock option awards, the Company values awards granted using the Black-Scholes option-pricing model. The Company recognizes compensation expense for these awards on a straight-line basis over the requisite service period for the entire award (straight-line attribution method), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date fair value of the award that is vested at that time. The Company recognizes excess tax benefits on certain stock compensation transactions. The excess tax benefits are recorded through earnings as a discrete item within the Company’s effective tax rate during the period of the transaction.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold, based upon the technical merits of the position. Estimated interest and penalties, if applicable, related to uncertain tax positions are included as a component of income tax expense.

The Company has evaluated the positions taken on its tax returns filed and the potential impact on its tax status as of December 31, 2024. The Company has concluded no uncertain income tax positions exist at December 31, 2024. The Company is subject to U.S. federal, state and local income tax examinations by tax authorities for the 2021 through 2023 tax years.

Risks and Uncertainties

Most of the Company’s business activity is with customers located within the greater Boston area. The majority of the Company’s loan portfolio is comprised of loans collateralized by real estate located in the greater Boston area.

The Company invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect the amounts reported in the consolidated balance sheet or statements of income.

Ineffective liquidity management could adversely affect the Company's financial results and condition. Effective liquidity management is essential for the operation of the business. The Company requires sufficient liquidity to meet customer loan requests, customer deposit maturities/withdrawals, payments on its debt obligations as they come due, and other cash commitments under both normal operating conditions and other unpredictable circumstances causing industry or general financial market stress. The Company's access to funding sources in amounts adequate to finance its activities on terms that are acceptable to the Company could be impaired by factors that affect the Company specifically, or the financial services industry or economy generally. Factors that could detrimentally impact the Company's access to liquidity sources include a downturn in the geographic markets in which our loans and operations are concentrated or difficult credit markets. The Company's access to deposits may also be affected by the liquidity needs of its depositors. In particular, a portion of the Company's liabilities are checking accounts and other liquid deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial majority of the Company's assets are loans, which cannot be called or sold in the same time frame. Although the Company has historically been able to replace maturing deposits and advances as necessary, it might not be able to replace such funds in the future, especially if a large number of the Company's depositors seek to withdraw their accounts, regardless of the reason. A failure to maintain adequate liquidity could materially and adversely affect the Company's business, results of operations, or financial condition.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606: Revenue from Contracts with Customers. The Company’s principal revenue streams come from interest and dividend income and mortgage banking activities – which are specifically excluded from the scope of Topic 606. Revenue streams within the scope of Topic 606 such as customer service and account maintenance fees, deposit charges, ATM interchange and other transaction fees represent an immaterial percentage of total revenue and are recognized when the Company’s performance obligations have been satisfied.

Earnings Per Share

Basic earnings per share is calculated by dividing the income available to common shares by the weighted-average number of common shares outstanding during the period. Diluted earnings per share have been calculated in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if all potential dilutive common shares (such as those resulting from the exercise of stock options) were issued during the period, computed using the treasury stock method. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations.

Common Share Repurchases

Shares repurchased by the Company under the Company’s share repurchase program have been classified as authorized but unissued shares. The cost of shares repurchased by the Company has been accounted for as a reduction to common stock and additional paid in capital balances. Under Maryland corporation law, repurchased shares are not classified as Treasury shares; but rather, are classified as authorized but unissued shares. U.S. GAAP states that the accounting for share repurchases shall conform to state law where applicable.

Employee Stock Ownership Plan ("ESOP")

ESOP shares are shown as a reduction of equity and are presented in the consolidated statements of changes in shareholders’ equity as unallocated common stock held by ESOP. Compensation expense for the Company’s ESOP is recorded at an amount equal to the shares committed to be allocated by the ESOP multiplied by the average fair market value of the shares during the period. The Company recognizes compensation expense ratably over the period based upon the Company’s estimate of the number of shares committed to be allocated by the ESOP. When the shares are released, unallocated common stock held by ESOP is reduced by the cost of the ESOP shares released and the difference between the average fair market value and the cost of the shares committed to be allocated by the ESOP is recorded as an adjustment to additional paid-in capital. The loan receivable from the ESOP is not reported as an asset nor is the Company’s guarantee to fund the ESOP reported as a liability on the Company’s consolidated balance sheet.

Derivatives and Hedging

Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is determined by whether it has been designated and qualifies as part of a hedging relationship, and further, by the type of hedging relationship. At the inception of a hedge, the Company documents certain items, including but not limited to the following: the relationship between hedging instruments and hedged items, the Company's risk management objectives, hedging strategies, and the evaluation of hedge transaction effectiveness. Documentation includes linking all derivatives designated as cash flow hedges to specific forecasted transactions.

The Company’s derivative instruments that are designated and qualify for hedge accounting are classified as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows associated with a recognized asset or liability, or a forecasted transaction). As such, changes in the fair value of the designated hedging instrument that is included in the assessment of hedge effectiveness are recorded in other comprehensive income and reclassified into net income in the same period or periods during which the hedged forecasted transaction affects net income. Such reclassifications are presented in the same income statement line item as the net income effect of the hedged item. If the hedging instrument is not highly effective at achieving offsetting cash flows attributable to the revised contractually specified interest rate(s), hedge accounting will be discontinued. At that time, accumulated other comprehensive income would be frozen and amortized, as long as the forecasted transactions are still probable of occurring. If a cash flow hedge is terminated, hedge accounting treatment would be retained, and accumulated other comprehensive income would be frozen and amortized, as long as the forecasted transactions are still probable of occurring

RECENT ACCOUNTING STANDARDS

The Company qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012 and has elected to defer the adoption of new or revised accounting standards until the nonpublic company effective dates. As such, the Company will adopt standards on the nonpublic company effective dates until such time that we no longer qualify as an EGC.

The Company adopted Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures, on January 1, 2024, which requires that information be reported about a company’s operating segments using a “management approach.” Reportable segments are identified in these standards as those revenue producing components for which separate financial information is produced internally and which are subject to evaluation by the chief operating decision maker (“CODM”). The Company has determined that its CODM is its Chief Executive Officer. The Company has one reportable segment: its banking business, which consists of a full range of lending and deposit offerings. The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net income calculated on the same basis as is net income reported in the Company’s consolidated statements of income and other comprehensive income. The CODM is also regularly provided with expense information at a level consistent with that disclosed in the Company’s consolidated statements of income and other comprehensive income.

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. These amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation. ASU 2023-09 also requires entities to provide additional information for reconciling items that meet a quantitative threshold.

As an emerging growth company, the amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2025 with early adoption permitted. ASU 2023-09 is not expected to have a significant impact on our financial statements.

In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures, but expects additional disclosures upon adoption.

NOTE 3 – INVESTMENTS IN SECURITIES

Held to Maturity Securities

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


			Gross		Gross			Allowance
	Amortized		Unrealized		Unrealized			for Credit		Fair
Held-to-maturity:	Cost		Gains		Losses			Losses		Value
	(in thousands)
As of December 31, 2024
Debt securities issued by U.S. government-sponsored enterprises	$	5,588	$	—	$	(138	)	$	—	$	5,450
Mortgage-backed securities		44,261		20		(5,334	)		—		38,947
Corporate bonds		17,899		192		(471	)		—		17,620
U.S. Treasury securities		5,467		21		—			—		5,488
Total held-to-maturity securities	$	73,215	$	233	$	(5,943	)	$	—	$	67,505
As of December 31, 2023
Debt securities issued by U.S. government-sponsored enterprises	$	10,225	$	—	$	(381	)	$	—	$	9,844
Mortgage-backed securities		49,445		36		(5,235	)		—		44,246
Corporate bonds		14,408		—		(779	)		—		13,629
U.S. Treasury securities		2,901		—		(30	)		—		2,871
Total held-to-maturity securities	$	76,979	$	36	$	(6,425	)	$	—	$	70,590

Held to maturity securities held by the Company are guaranteed by the U.S. federal government or other government sponsored agencies and have a long history of no credit losses. As a result, management has determined these securities to have a zero loss expectation and therefore the Company did not record a provision for estimated credit losses on any held to maturity securities during the year ended December 31, 2024 and December 31, 2023. The Company's investments in corporate bonds are deemed “investment grade” and (a) the Company does not intend to sell these securities before recovery and (b) it is more likely than not that the Company will not be required to sell these securities before recovery. Excluded from the table above is accrued interest on held to maturity securities of $378,000 and $310,000 at December 31, 2024 and 2023. respectively, which is included within accrued interest receivable in the Consolidated Balance Sheets. Additionally, the Company did not record any write-offs of accrued interest income on held to maturity securities for the year ended December 31, 2024 and December 31, 2023.

No securities held by the Company were delinquent on contractual payments at December 31, 2024 and December 31, 2023, nor were any securities placed on non-accrual status for the year then ended.

Available-for-Sale Securities


			Gross		Gross			Allowance
	Amortized		Unrealized		Unrealized			for Credit		Fair
Available-for-sale	Cost		Gains		Losses			Losses		Value
	(in thousands)
As of December 31, 2024
Mortgage-backed securities	$	4,164	$	—	$	(38	)	$	—	$	4,126
Collateralized mortgage obligation		1,452		—		(14	)		—		1,438
Corporate bonds		1,000		—		—			—		1,000
Total available-for-sale securities	$	6,616	$	—	$	(52	)	$	—	$	6,564
As of December 31, 2023
Corporate bonds	$	5,000	$	4	$	(1	)	$	—	$	5,003
Total available-for-sale securities	$	5,000	$	4	$	(1	)	$	—	$	5,003

The Company did not record a provision for estimated credit losses on any available-for-sale securities for the year ended December 31, 2024 and December 31, 2023. Excluded from the table above is accrued interest on available-for-sale securities of $16,000 and $58,000 at December 31, 2024 and 2023, respectively, which is included within accrued interest receivable in the Consolidated Balance Sheets. Additionally, the Company did not record any write-offs of accrued interest income on available for sale securities for the year ended December 31, 2024 and December 31, 2023. No securities held by the Company were delinquent on contractual payments at December 31, 2024 and December 31, 2023, nor were any securities placed on non-accrual status for the year then ended.

The aggregate fair value and unrealized losses of available-for-sale securities that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more, and have no allowance for credit losses, are as follows as of December 31, 2024 and December 31, 2023:


			Less than 12 Months					12 Months or Longer				Total
	# of		Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Holdings		Value		Losses			Value		Losses		Value		Losses
								(in thousands)
As of December 31, 2024
Available for Sale:
Mortgage-backed securities		2	$	4,126	$	(38	)	$	-	$	-	$	4,126	$	(38	)
Collateralized mortgage obligation		1		1,438		(14	)		-		-		1,438		(14	)
Total temporarily impaired securities		3	$	5,564	$	(52	)	$	-	$	-	$	5,564	$	(52	)

As of December 31, 2023

Available for Sale:
Corporate bonds		1	$	2,500	$	(1	)	$	-	$	-	$	2,500	$	(1	)
Total temporarily impaired securities		1	$	2,500	$	(1	)	$	-	$	-	$	2,500	$	(1	)

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

Held to Maturity and Available-for-Sale Securities

The actual maturities of certain available for sale or held to maturity securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

A schedule of the contractual maturities of available for sale and held to maturity securities as of December 31, 2024 is presented below:


	Available-
	for-sale		Held-to-maturity
	Fair		Amortized		Fair
	Value		Cost Basis		Value
	(in thousands)
Within 1 year	$	2,003	$	12,563	$	12,444
After 1 year through 5 years		2,123		20,284		20,068
After 5 years through 10 years		1,000		4,998		4,760
After 10 years		1,438		35,370		30,233
Total	$	6,564	$	73,215	$	67,505

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. There were no sales of securities during the years ended December 31, 2024 and 2023.

The carrying value of securities pledged to secure advances from the FHLB were $55.5 million and $62.6 million as of December 31, 2024 and December 31, 2023, respectively.

The carrying value of securities pledged to secure advances from the Federal Reserve Bank (“FRB”) was $16.0 million as of December 31, 2024. There were no securities pledged to FRB at December 31, 2023.

NOTE 4 – LOANS, ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Loans consisted of the following as of the dates indicated:


	At December 31,						At December 31,
	2024						2023
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Real estate loans:
One-to-four family residential	$	422,841			36.9	%	$	410,131			39.1	%
Multi-family		343,970			30.0			287,361			27.4
Commercial		228,991			20.0			196,365			18.7
Home equity lines of credit and loans		45,154			4.0			33,357			3.2
Construction		90,894			7.9			112,000			10.7
Other loans:
Commercial loans		13,844			1.2			9,219			0.9
Consumer		141		0.0				173			0.0
		1,145,835			100.0	%		1,048,606			100.0	%
Less:
Net deferred loan fees		(502	)					(226	)
Allowance for credit losses		(8,884	)					(8,591	)
Total loans, net	$	1,136,449					$	1,039,789

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this footnote. As of December 31, 2024 and 2023, accrued interest receivable for loans totaled $3.5 million and $3.2 million, respectively, and is included in the "Accrued interest receivable" line item on the Company's Consolidated Balance Sheets.

The Company elected to exclude net deferred loan fees from the amortized cost basis of loans disclosed throughout this footnote.

The carrying value of loans pledged to secure advances from the FHLB was $744.6 million and $553.0 million as of December 31, 2024 and December 31, 2023, respectively.

The following tables set forth information regarding the allowance for credit losses as of and for the year ended December 31, 2024 and December 31, 2023:


	For the year ended December 31, 2024
	Beginning Balance		Charge-offs			Recoveries		(Benefit) provision			Ending Balance(1)
						(in thousands)
Real estate loans:
One-to-four family residential	$	3,555	$	-		$	-	$	(627	)	$	2,928
Multi-family		1,190		-			-		1,232			2,422
Commercial		1,636		-			-		624			2,260
Home equity lines of credit and loans		321		-			-		(203	)		118
Construction		1,757		-			-		(721	)		1,036
Other loans:
Commercial loans		131		-			-		(12	)		119
Consumer		1		(4	)		1		3			1
Total	$	8,591	$	(4	)	$	1	$	296		$	8,884


	For the year ended December 31, 2023
	Beginning Balance		Cumulative effect of accounting adjustment(2)			Charge-offs			Recoveries		Provision (benefit)			Ending Balance(1)
						(in thousands)
Real estate loans:
One-to-four family residential	$	1,703	$	130		$	-		$	-	$	1,722		$	3,555
Multi-family		1,839		77			-			-		(726	)		1,190
Commercial		1,797		145			-			-		(306	)		1,636
Home equity lines of credit and loans		194		(20	)		-			-		147			321
Construction		1,286		136			-			-		335			1,757
Other loans:
Commercial loans		60		34			-			-		37			131
Consumer		1		-			(2	)		1		1			1
Unallocated		320		(320	)		-			-		-			-
Total	$	7,200	$	182		$	(2	)	$	1	$	1,210		$	8,591

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $3.5 million and $3.2 million as of December 31, 2024 and December 31, 2023, respectively.

(2) Represents an adjustment needed to reflect the cumulative day one impact pursuant to the Company's adoption of Accounting Standards Update 2016-13. The adjustment for the year ended December 31, 2023 represents a $182,000 increase to the allowance attributable to the change in accounting methodology for estimating the allowance for credit losses on loans resulting from the Company's adoption of the standard.

The following table shows the age analysis of past due loans as of the dates indicated:


	30–59 Days		60–89 Days		90 Days or More		Total Past Due		Total Current		Total Loans		90 days or more and accruing		Loans on Non-accrual
	(in thousands)
As of December 31, 2024
Real estate loans:
One-to-four family residential	$	1,260	$	—	$	1,077	$	2,337	$	420,504	$	422,841	$	—	$	1,872
Multi-family		—		—		—		—		343,970		343,970		—		—
Commercial		—		—		—		—		228,991		228,991		—		—
Home equity lines of credit and loans		405		—		85		490		44,664		45,154		—		85
Construction		—		—		—		—		90,894		90,894		—		—

Other loans:
Commercial		—		—		—		—		13,844		13,844		—		—
Consumer		—		—		—		—		141		141		—		—
	$	1,665	$	—	$	1,162	$	2,827	$	1,143,008	$	1,145,835	$	—	$	1,957


	30–59 Days		60–89 Days		90 Days or More		Total Past Due		Total Current		Total Loans		90 days or more and accruing		Loans on Non-accrual
	(in thousands)
As of December 31, 2023
Real estate loans:
One-to-four family residential	$	722	$	225	$	809	$	1,756	$	408,375	$	410,131	$	—	$	1,191
Multi-family		—		—		—		—		287,361		287,361		—		—
Commercial		—		—		—		—		196,365		196,365		—		—
Home equity lines of credit and loans		360		—		8		368		32,989		33,357		—		22
Construction		—		—		—		—		112,000		112,000		—		—

Other loans:
Commercial		—		—		—		—		9,219		9,219		—		—
Consumer		1		—		—		1		172		173		—		—
	$	1,083	$	225	$	817	$	2,125	$	1,046,481	$	1,048,606	$	—	$	1,213

As of December 31, 2024, the Company's collateral-dependent non-accrual residential real estate loans and home equity line of credit loans had amortized cost bases of $1.9 million and $85,000, respectively. These loans are secured by real estate with no related allowance for credit losses.

As of December 31, 2023, the Company's collateral-dependent non-accrual residential real estate loans and home equity line of credit loans had amortized cost bases of $1.2 million and $22,000, respectively. These loans are secured by real estate with no related allowance for credit losses.

The following table shows information regarding nonaccrual loans as of the dates indicated:


	As of December 31, 2024						Year Ended December 31, 2024
	With an Allowance for Credit Losses		Without an Allowance for Credit Losses		Total		Interest Income Recognized
	(in thousands)
December 31, 2024
Real estate loans:
One-to-four family residential	$	—	$	1,872	$	1,872	$	53
Home equity lines of credit and loans		—		85		85		1
Total nonaccrual loans	$	—	$	1,957	$	1,957	$	54


	As of December 31, 2023						Year Ended December 31, 2023
	With an Allowance for Credit Losses		Without an Allowance for Credit Losses		Total		Interest Income Recognized
	(in thousands)
December 31, 2023
Real estate loans:
One-to-four family residential	$	—	$	1,191	$	1,191	$	39
Home equity lines of credit and loans		—		22		22		1
Total nonaccrual loans	$	—	$	1,213	$	1,213	$	40

Credit Quality Information

During the second quarter of 2024, the Company expanded its internal loan risk rating system from a seven grade system to a ten grade system. The new loan rating system for multi-family and commercial real estate, construction, commercial loans and certain residential and home equity lines of credit is as follows:

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

Loans rated 7: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 8: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Bank will sustain some loss if the weakness is not corrected.

Loans rated 9: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

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

The rating system as of December 31, 2023 was as follows:

Loans rated 1 – 3: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 4: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 5: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Bank will sustain some loss if the weakness is not corrected.

Loans rated 6: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 7: Loans in this category are considered uncollectible (loss) and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial loans with aggregate potential outstanding balances of $500,000 or more, and all commercial real estate loans (including multi-family and construction loans as well as residential and home equity line of credit loans to commercial borrowers) with aggregate potential outstanding balances of $2.0 million or more. For loans that are not formally rated, the Company initially assesses credit quality based upon the borrower’s ability to pay and subsequently monitors these loans based on the borrower’s payment activity.

The following table details the amortized cost balances of the Company's loan portfolios, presented by credit quality indicator and origination year as of December 31, 2024 and December 31, 2023:


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
	2024		2023		2022		2021		2020		Prior
As of December 31, 2024	(in thousands)
One-to-four family residential
Pass	$	8,351	$	12,065	$	34,466	$	15,123	$	3,979	$	11,766	$	—	$	—	$	85,750
Special Mention		—		—		—		—		636		771		—		—		1,407
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		30,905		46,491		84,245		68,818		48,728		56,497		—		—		335,684
Total	$	39,256	$	58,556	$	118,711	$	83,941	$	53,343	$	69,034	$	—	$	—	$	422,841

Current-period gross charge-offs (2)	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Multi-family
Pass	$	24,006	$	55,612	$	201,562	$	35,315	$	8,611	$	8,792	$	10,072	$	—	$	343,970
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		—		—		—		—		—		—		—		—		—
Total	$	24,006	$	55,612	$	201,562	$	35,315	$	8,611	$	8,792	$	10,072	$	—	$	343,970

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate
Pass	$	28,614	$	40,935	$	82,054	$	25,215	$	15,447	$	32,071	$	4,655	$	—	$	228,991
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		—		—		—		—		—		—		—		—		—
Total	$	28,614	$	40,935	$	82,054	$	25,215	$	15,447	$	32,071	$	4,655	$	—	$	228,991

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home equity lines of credit and loans
Pass	$	199	$	323	$	—	$	—	$	—	$	—	$	8,083	$	—	$	8,605
Special Mention		—		—		—		—		—		10		322		—		332
Substandard		—		—		—		—		—		—		99		—		99
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		176		382		27		7		—		71		34,618		837		36,118
Total	$	375	$	705	$	27	$	7	$	—	$	81	$	43,122	$	837	$	45,154

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction
Pass	$	30,986	$	19,398	$	32,483	$	2,493	$	—	$	2,988	$	—	$	—	$	88,348
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		1,116		1,430		—		—		—		—		—		—		2,546
Total	$	32,102	$	20,828	$	32,483	$	2,493	$	—	$	2,988	$	—	$	—	$	90,894

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial loans
Pass	$	4,501	$	4,410	$	2,597	$	340	$	—	$	195	$	1,801	$	—	$	13,844
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		—		—		—		—		—		—		—		—		—
Total	$	4,501	$	4,410	$	2,597	$	340	$	—	$	195	$	1,801	$	—	$	13,844

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		7		16		29		39		—		6		44		—		141
Total	$	7	$	16	$	29	$	39	$	—	$	6	$	44	$	—	$	141

Current-period gross charge-offs	$	4	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	4


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
	2023		2022		2021		2020		2019		Prior
As of December 31, 2023	(in thousands)
One-to-four family residential
Pass	$	9,689	$	36,662	$	15,529	$	4,476	$	4,230	$	9,224	$	—	$	—	$	79,810
Special Mention		—		—		—		809		—		451		—		—		1,260
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		48,688		90,827		72,463		51,035		7,129		58,919		—		—		329,061
Total	$	58,377	$	127,489	$	87,992	$	56,320	$	11,359	$	68,594	$	—	$	—	$	410,131

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Multi-family
Pass	$	45,188	$	194,999	$	26,820	$	8,873	$	—	$	9,798	$	1,683	$	—	$	287,361
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		—		—		—		—		—		—		—		—		—
Total	$	45,188	$	194,999	$	26,820	$	8,873	$	—	$	9,798	$	1,683	$	—	$	287,361

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate
Pass	$	43,639	$	72,671	$	24,138	$	16,407	$	4,054	$	31,132	$	4,324	$	—	$	196,365
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		—		—		—		—		—		—		—		—		—
Total	$	43,639	$	72,671	$	24,138	$	16,407	$	4,054	$	31,132	$	4,324	$	—	$	196,365

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home equity lines of credit and loans
Pass	$	326	$	—	$	—	$	—	$	—	$	—	$	4,986	$	—	$	5,312
Special Mention		—		—		—		—		—		14		8		—		22
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		410		36		12		—		65		22		26,970		508		28,023
Total	$	736	$	36	$	12	$	—	$	65	$	36	$	31,964	$	508	$	33,357

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction
Pass	$	33,707	$	55,170	$	17,228	$	—	$	786	$	2,988	$	—	$	—	$	109,879
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		2,121		—		—		—		—		—		—		—		2,121
Total	$	35,828	$	55,170	$	17,228	$	—	$	786	$	2,988	$	—	$	—	$	112,000

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial loans
Pass	$	4,444	$	3,349	$	428	$	35	$	89	$	154	$	655	$	—	$	9,154
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		—		—		65		—		—		—		—		—		65
Total	$	4,444	$	3,349	$	493	$	35	$	89	$	154	$	655	$	—	$	9,219

Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Loans not formally rated (1)		31		38		45		—		—		13		46		—		173
Total	$	31	$	38	$	45	$	—	$	—	$	13	$	46	$	—	$	173

Current-period gross charge-offs	$	2	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	2

(1) Non-accrual loans that were not formally rated amounted to $526,000 as of December 31, 2024. All loans not formally rated were accruing as of December 31, 2023.

At December 31, 2024, the Company had one consumer mortgage loans secured by residential real estate property in the process of foreclosure for $335,000. At December 31, 2023, the Company had no consumer mortgage loans secured by residential real estate property in the process of foreclosure.

For the year ended December 31, 2024 and December 31, 2023, the Company did not provide loan modifications involving borrowers that are experiencing financial difficulty. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification, if applicable. The Allowance for Credit Losses ("ACL") incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination. Because the effect of most modifications made to borrowers experiencing financial difficulty would already be included in the ACL as a result of the measurement methodologies used to estimate the allowance, a change in the ACL is generally not recorded upon modification.

NOTE 5 – PREMISES AND EQUIPMENT

The following is a summary of premises and equipment as of December 31:


	2024			2023
	(in thousands)

Banking premises and equipment:
Land	$	594		$	594
Buildings and improvements		5,696			5,696
Leasehold improvements		351			345
Furniture and equipment		1,754			1,724
Total cost		8,395			8,359
Accumulated depreciation and amortization		(4,883	)		(4,605	)
Net premises and equipment	$	3,512		$	3,754

Depreciation and amortization expense for the years ended December 31, 2024 and 2023 amounted to $302,000 and $279,000, respectively.

NOTE 6 – LEASES

The Company has operating leases for office space and one of our branch locations. These leases have remaining lease terms of two years to three years and certain of these leases have options to extend the lease for up to ten years. The options to extend have been included in the lease term if it was determined that it was reasonably certain that the Company will exercise the option.

All of the Company's leases are classified as operating leases. The right-of-use assets and corresponding lease liabilities are classified within “other assets” and “other liabilities,” respectively, in the accompanying consolidated balance sheets.

As of the dates indicated, the Company had the following related to operating leases:


	As of December 31, 2024		As of December 31, 2023
	(Dollars in thousands)

Right-of-use assets	$	1,149	$	1,295
Lease liabilities		1,200		1,336

Lease expense for the years ended December 31, 2024 and December 31, 2023 amounted to $200,000 and $175,000, respectively.

The calculated amount of the right-of-use assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company's lease agreements include options to renew at the Company's discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right-of-use assets and lease liabilities.

The weighted average remaining lease term for operating leases at December 31, 2024 and 2023 was 7.6 years and 8.5 years, respectively. The weighted average discount rate was 4.28% and 4.21% at December 31, 2024 and 2023, respectively.

The following table sets forth the remaining minimum rental payments related to operating leases outstanding as of December 31, 2024.


	As of December 31, 2024
Year	(in thousands)
2025	$	191
2026		198
2027		207
2028		161
2029		152
Thereafter		519
Total minimum lease payments		1,428
Less: amount representing interest		228
Present value of future minimum lease payments	$	1,200

NOTE 7 – DEPOSITS

The aggregate amount of time deposit accounts in denominations that meet or exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit (currently $250,000) at December 31, 2024 and 2023 was $258.7 million and $196.8 million, respectively.

The aggregate amount of brokered time deposits at December 31, 2024 and 2023 was $125.6 million and $115.5 million, respectively. All brokered time deposits are in denominations less than $250,000.

For time deposits as of December 31, 2024, the scheduled maturities for each of the following years ended December 31 are (in thousands):


2025	$	388,407
2026		148,448
2027		53,853
2028		9,614
2029		5,193
Total	$	605,515

NOTE 8 – BORROWINGS

Borrowings consist of advances borrowed from the FHLB.

Maturities of advances from the FHLB for the years ending after December 31, 2024 and December 31, 2023 are summarized as follows (dollars in thousands):


2024						2023
Stated Maturity	Total Outstanding		Weighted Average Contractual Rate			Stated Maturity	Total Outstanding		Weighted Average Contractual Rate

2025	$	25,000		4.52	%	2024	$	30,000		4.37	%
2026		4,000		0.82		2025		-		-
2027		95,000		3.95		2026		24,000		3.57
2028		65,000		4.20		2027		95,000		3.95
2029		45,000		3.58		2028		85,000		4.09
Total	$	234,000		3.96	%	Total	$	234,000		4.02	%

Borrowings from the FHLB are secured by a blanket lien on qualified collateral, consisting primarily of loans with first mortgages secured by one-to-four family, multifamily and commercial real estate properties and other qualified assets.

At December 31, 2024 and 2023, the interest rates on FHLB advances ranged from 0.82% to 4.95% and 0.82% to 4.95%, respectively.

At December 31, 2024 and 2023, the Bank had a $2.2 million line of credit established with the FHLB. There were no advances on this line. The available borrowing capacity with the FHLB was $328.5 million as of December 31, 2024 and $200.8 million as of December 31, 2023.

At December 31, 2024 and 2023, the Bank had a $10.0 million line of credit established with the Atlantic Community Bankers Bank. There were no advances on this line.

At December 31, 2024 , the Bank had a line of credit established with the FRB with unused borrowing capacity of $15.1 million. There were no advances on this line. The Bank had no line of credit with the FRB at December 31, 2023.

NOTE 9 – EMPLOYEE BENEFIT PLANS

Pension Plans

401(k) Plan

The Company has adopted a savings plan which qualifies under Section 401(k) of the Internal Revenue Code and provides for voluntary contributions by participating employees ranging from 1% to 75% of their compensation, subject to certain limitations based on federal tax laws. The Bank makes matching contributions equal to 100% of each eligible employee’s voluntary contributions, up to 7% of the employee’s eligible wages.

Total expense related to the 401(k) plan for the years ended December 31, 2024 and 2023 amounted to $473,000 and $450,000, respectively.

Employee Incentive Plan

The Company provides an employee incentive plan which is approved annually by the Board of Directors, based on various factors. The employee incentive plan expense for the years ended December 31, 2024 and 2023 amounted to $1,557,000 and $1,356,000, respectively.

Supplemental Executive Retirement Plan (SERP)

The Bank formed a SERP for certain executive officers. The SERP provides nonfunded retirement benefits designed to supplement benefits available through the Bank’s other retirement plans for employees. The liability for the SERP amounted to $1,029,000 and $1,106,000 at December 31, 2024 and 2023, respectively.

Director Fee Continuation Plan (DFCP)

Effective January 1, 2017, the Bank established a DFCP which provides supplemental retirement benefits for directors. Under the DFCP, individuals who are directors as of the effective date of the DFCP are 100% vested in their benefits. Individuals who become directors after the effective date become fully vested in their accounts after having served on the Board of Directors for twelve years.

The following tables set forth information about the SERP and DFCP as of December 31 and the years then ended:


	2024						2023
	SERP			DFCP			SERP			DFCP
	(in thousands)
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	1,106		$	769		$	1,156		$	689
Service cost		7			94			6			79
Interest cost		49			34			53			32
Actuarial (gain) loss		(25	)		(23	)		(9	)		9
Benefits paid		(108	)		(40	)		(100	)		(40	)
Benefit obligation at end of year		1,029			834			1,106			769
Funded status		(1,029	)		(834	)		(1,106	)		(769	)

Amounts recognized in accumulated other comprehensive income as of December 31, 2024 and 2023, before tax effect, consist of:


	2024						2023
	SERP			DFCP			SERP			DFCP
	(in thousands)

Net gain	$	(99	)	$	(104	)	$	(79	)	$	(97	)

The accumulated benefit obligation and unfunded status of the SERP was $1,029,000 and $1,106,000 at December 31, 2024 and 2023, respectively, and is classified within “other liabilities” in the accompanying consolidated balance sheets. The accumulated benefit obligation and unfunded status of the DFCP was $834,000 and $769,000 at December 31, 2024 and 2023, respectively, and is classified within “other liabilities” in the accompanying consolidated balance sheets.

Assumptions used to determine the benefit obligation at December 31 are as follows:


	2024						2023
	SERP			DFCP			SERP			DFCP

Discount rate		5.27	%		5.24	%		4.66	%		4.58	%

Components of net periodic cost (benefit) and other comprehensive loss (income) for the years ended December 31 are as follows:


	2024						2023
	SERP			DFCP			SERP			DFCP
	(in thousands)
Components of net periodic cost
Service cost	$	7		$	94		$	6		$	79
Interest cost		49			34			53			32
Amortization of net actuarial gain		(5	)		(16	)		(138	)		(21	)
Net periodic cost (benefit)		51			112			(79	)		90

Other changes in benefit obligations recognized as other comprehensive (income) loss:
Net actuarial (gain) loss	$	(25	)	$	(23	)	$	(9	)	$	9
Amortization of net actuarial loss		5			16			138			21
Total other comprehensive (income) loss		(20	)		(7	)		129			30

Total net periodic cost and other comprehensive loss	$	31		$	105		$	50		$	120

The components of net periodic benefit cost attributable to service cost for the SERP and DFCP are included in the line items "salaries and employee benefits" and "director compensation," respectively. The components of net periodic benefit cost other than the service cost component are included in the line item “other expense” in the income statement.

Assumptions used to determine the net periodic cost for years ended December 31 are as follows:


	2024						2023
	SERP			DFCP			SERP			DFCP

Discount rate		4.66	%		4.58	%		4.86	%		4.77	%

Estimated future benefit payments, which reflect expected future service, as appropriate, as of December 31, 2024 are as follows:


	SERP		DFCP
	(in thousands)
2025	$	110	$	60
2026		110		60
2027		107		100
2028		106		100
2029		105		100
Years 2030 through 2034		430		525

Supplemental Executive Retirement Agreement

On January 1, 2018, the Company entered into a supplemental executive retirement agreement with an executive officer whereby the Company is obligated to provide post-retirement salary continuation benefits equal to 60% of the executive officer’s final average compensation, as defined. Benefits are 100% vested, commence upon retirement, and are payable based on a ten-year certain and life annuity. The liability for the Plan amounted to $3,385,000 and $3,200,000 as of December 31, 2024 and 2023, respectively. The expense recognized for the Plan for the years ended December 31, 2024 and 2023 amounted to $185,000 and $119,000, respectively.

Executive Deferred Compensation Plans

In 2021 and 2023, the Company entered into deferred compensation plans with two executive officers that allow the Company to make contributions to an account for the executive officers each year, as of January 1, based on the prior year’s performance and the Company's intent is that the contribution equal 10% of the executive officers' salaries and bonuses.

The Company may make other contributions to the deferred compensation plans, at its discretion, at other times during the year. The expense recognized under the deferred compensation plans for the years ended December 31, 2024 and 2023 amounted to $94,000 and $83,000, respectively. The liability for the Executive Deferred Compensation Plans amounted to $273,000 and $179,000 as of December 31, 2024 and 2023, respectively.

Deferred Compensation Plan for Directors

The Company maintains the Everett Co-operative Bank Deferred Compensation Plan for Directors (the “Director Deferred Compensation Plan”) to allow for certain tax planning opportunities and additional retirement income for directors of the Company. All non-employee directors are eligible to participate in the Director Deferred Compensation Plan. Under the Director Deferred Compensation Plan, directors may elect to defer the receipt of up to 100% of their director fees. Participants are always 100% vested in their deferred fees and any interest credited to those deferrals. Earnings are credited to a participant’s deferrals each year and are indexed annually to the highest certificate of deposit rate offered by the Bank on January 1st of each year. The liability for the Director Deferred Compensation Plan amounted to $748,000 and $698,000 as of December 31, 2024 and 2023, respectively.

Survivor Benefit Plan

The Company entered into Survivor Benefit Plan Participation Agreements with a group of employees whereby the Company is obligated to provide up to two years of recognized compensation, as defined, to the beneficiary if the participant dies while employed by the Company. There was no expense recognized during 2024 or 2023.

Employment and Change in Control Agreements

The Company entered into an employment agreement with the Chief Executive Officer and Change in Control agreements with certain executive officers, which provide severance payments in the event of the executive’s involuntary or constructive termination of employment, including upon a termination following a change in control as defined in the agreements.

Employee Stock Ownership Plan

As part of the Initial Public Offering ("IPO") completed on July 27, 2022, the Bank established a tax-qualified Employee Stock Ownership Plan ("ESOP") to provide eligible employees the opportunity to own Company shares. The ESOP borrowed $7.3 million from the Company to purchase 734,020 common shares during the IPO. The loan is payable in annual installments over 20 years at an interest rate of 4.75%. As the loan is repaid to the Company, shares are released and allocated proportionally to eligible participants on the basis of each participant’s proportional share of compensation relative to the compensation of all participants. The unallocated ESOP shares are pledged as collateral on the loan.

The Company accounts for its ESOP in accordance with FASB ASC 718-40, Compensation – Stock Compensation. Under this guidance, unreleased shares are deducted from shareholders’ equity as unearned ESOP shares in the accompanying consolidated balance sheets. The Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they are committed to be released. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the difference will be credited or debited to additional paid-in capital included within shareholders' equity. As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a liability in the Company’s consolidated balance sheets.

Total compensation expense recognized in connection with the ESOP was $494,000 and $470,000 for the years ended December 31, 2024 and 2023, respectively. The following table presents share information held by the ESOP:


	As of December 31, 2024		As of December 31, 2023
	(Dollars in thousands)

Allocated shares		107,139		72,017
Shares committed to be released		-		-
Unallocated shares		623,917		660,618
Total shares		731,056		732,635
Fair value of unallocated shares	$	9,259	$	8,297

NOTE 10 – STOCK-BASED COMPENSATION

On September 7, 2023, the Company adopted the ECB Bancorp, Inc. 2023 Equity Incentive Plan ("2023 Equity Plan”). The 2023 Equity Plan authorizes 1,248,133 shares of common stock for equity based compensation awards including restricted stock awards, restricted stock units, stock options, and incentive stock options. As of December 31, 2024, there were 177,207 shares available for future grants.

Stock-Based Compensation - Stock Options

On September 8, 2023, the Company granted 174,960 stock options to non-employee directors with a contractual term of 10 years. On October 31, 2023, the Company granted 589,009 stock options to employees with a contractual term of 10 years. The stock options vest in equal annual installments over a five-year period. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. There were no stock options granted for the year ended December 31, 2024. The following table sets forth information regarding the 2023 grants:


Date of grant	9/8/2023			10/31/2023
Options granted		174,960			589,009
Vesting period (years)		5			5
Expiration date	9/8/2033			10/31/2033
Expected volatility (1)		30.17	%		30.02	%
Expected term (years) (2)		6.50			6.50
Expected dividend yield (3)		0.00	%		0.00	%
Risk free rate of return (4)		4.31	%		4.87	%
Fair value per option	$	4.74		$	4.19

(1) Expected volatility is based on the standard deviation of the historical volatility of the daily adjusted closing price of a group of peers' shares.

(2) Expected term represents the period of time that the option is expected to be outstanding. The Company determined that expected life using the "Simplified Method."

(3) Expected dividend yield is determined based on management's expectations regarding issuing dividends in the foreseeable future.

(4) The risk-free rate of return is based on the U.S. Treasury yield curve in effect at the time of grant for a period equivalent to the expected term of the option.

The following table represents stock option activities for the periods indicated:


	Year Ended December 31, 2024
	Outstanding and exercisable									Non-vested
	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($1000)		Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($1000)
Balance at beginning of period		-		$	-						763,969		$	10.50
Granted		-			-						-			-
Vested		152,794			10.50						(152,794	)		10.50
Exercised		(5,832	)		11.80						-			-
Forfeited or expired		-			-						-			-
Balance at end of period		146,962		$	10.45		8.81	$	645		611,175		$	10.50		8.81	$	2,650


	Year Ended December 31, 2023
	Outstanding and exercisable								Non-vested
	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($1000)		Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($1000)
Balance at beginning of period		-	$	-						-	$	-
Granted		-		-						763,969		10.50
Exercised		-		-						-		-
Vested		-		-						-		-
Forfeited or expired		-		-						-		-
Balance at end of period		-	$	-		-	$	-		763,969	$	10.50		9.81	$	1,570

The total intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date.

Stock-Based Compensation - Restricted Stock Awards

The restricted stock awards are measured based on grant-date fair value, which reflects the closing price of our stock on the date of grant. All of the restricted stock awards which have been granted to date vest over five years in equal portions beginning on the first anniversary date of the restricted stock award.

On September 8, 2023, the Company granted 69,984 restricted stock awards to non-employee directors. On October 31, 2023, the Company granted 235,973 restricted stock awards to employees. On August 6, 2024, the Company granted 1,000 restricted stock awards to employees. All restricted stock awards are vesting ratably over 5 years from grant date. The following table represents information regarding non-vested restricted stock award activities for the periods indicated:


	Year Ended December 31, 2024					Year Ended December 31, 2023
	Number of Shares			Weighted-Average Grant Date Fair Value Per Share		Number of Shares		Weighted-Average Grant Date Fair Value Per Share
Balance at beginning of period		305,957		$	10.50		-	$	-
Granted		1,000			13.00		305,957		10.50
Vested		(61,191	)		10.50		-		-
Forfeited		-			-		-		-
Balance at end of period		245,766		$	10.51		305,957	$	10.50

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


	Year Ended December 31, 2024		Year Ended December 31, 2023
	(in thousands)
Stock-based compensation expense
Stock options	$	661	$	135
Restricted stock awards		645		133
Total stock-based compensation expense	$	1,306	$	268
Related tax benefits recognized in earnings	$	280	$	47

The following table sets forth the total compensation cost related to non-vested awards not yet recognized and the weighted average period (in years) over which it is expected to be recognized as of December 31, 2024 and December 31, 2023 (dollars in thousands):


	Year Ended December 31, 2024				Year Ended December 31, 2023
	Amount		Weighted average period		Amount		Weighted average period

Stock options	$	2,501		3.80	$	3,162		4.80
Restricted stock awards		2,449		3.80		3,081		4.80
Total	$	4,950			$	6,243

NOTE 11 – INCOME TAXES

The components of income tax expense are as follows for the years ended December 31:


	2024			2023
	(in thousands)
Current:
Federal	$	1,193		$	1,179
State		437			461
		1,630			1,640
Deferred:
Federal		(185	)		(67	)
State		(65	)		(44	)
		(250	)		(111	)
Total income tax expense	$	1,380		$	1,529

The reasons for the differences between the statutory federal income tax rate and the effective tax rates are summarized as follows for the years ended December 31:


	2024				2023
	% of income				% of income

Statutory tax rates		21.0		%		21.0		%
Increase (decrease) in tax resulting from:
State tax, net of federal tax benefit		5.6				5.5
Bank-owned life insurance		(1.8	)			(1.7	)
Stock-based compensation		1.0				0.5
Other, net		(0.1	)			0.2
Effective tax rates		25.7		%		25.5		%

The Company had gross deferred tax assets and gross deferred tax liabilities as follows as of December 31:


	2024			2023
	(in thousands)
Deferred tax assets:
Allowance for credit losses	$	2,676		$	2,628
Employee benefit plans		2,375			2,150
ESOP		60			25
Lease liability		14			12
Net unrealized holding loss on available-for-sale securities		12			—
Interest on non-performing loans		10			4
Charitable contribution carryover		391			522
Other		66			—
Gross deferred tax assets		5,604			5,341

Deferred tax liabilities:
Depreciation		(308	)		(300	)
Unrecognized employee benefit costs under ASC 715-10		(57	)		(50	)
Net deferred loan costs		(184	)		(63	)
Stock-based compensation		(33	)		(160	)
Net unrealized holding gain on available-for-sale securities		—			(1	)
Cash flow hedge		(108	)		—
Gross deferred tax liabilities		(690	)		(574	)

Net deferred tax asset	$	4,914		$	4,767

The federal income tax reserve for credit losses at the Company’s base year amounted to $1,876,000 as of December 31, 2024 and 2023. If any portion of the reserve is used for purposes other than to absorb the losses for which it was established, approximately 150% of the amount actually used (limited to the amount of the reserve) would be subject to taxation in the year it is used. As the Company intends to use the reserve only to absorb credit losses, a deferred income tax liability of approximately $527,000 has not been provided as of December 31, 2024 and 2023.

At December 31, 2024, the Company had a charitable contribution carryover of $1,356,000 which expires on December 31, 2027. There is no valuation allowance recorded against the related deferred tax asset as the Company deems it probable that the deferred tax benefits will be fully realized.

NOTE 12 - RELATED PARTY TRANSACTIONS

During 2018, the Company entered into a lease agreement with a related party for office space. The initial lease term expired in February 2023 and contains a five year option to extend, as well as a cancellation clause permitting the Company to cancel the lease anytime during the initial term with sixty days’ notice. In February of 2022, the lease was amended to replace the five year option to extend with three options to extend the term of two years, two years and one year. In 2023, the Company executed the two year lease extension option. In August of 2024, the Company extended the lease through February 2027. Annual rent is $48,000, payable monthly, not including an annual tenant improvement credit of $18,000. The Company is responsible for a portion of common area charges, as well as other customary leasehold costs. Net annual rental payments amounted to $30,000 for 2024 and 2023.

In addition, during February 2022, a new lease agreement was entered into with the related party for additional office space. The initial lease term expired in February 2023 and contains three options to extend the term of two years, two years and one year. The first two year option was exercised during 2022. In August of 2024, the Company extended the lease through February 2027. Annual rent is $28,000, payable monthly. The Company is responsible for a portion of common area charges, as well as other customary leasehold costs. Net annual rental payments amounted to $28,000 and $27,000 for 2024 and 2023, respectively.

The Company utilizes the services of a law firm that is a related party for loan closings and related matters as well as general corporate legal matters. Fees for the years ended December 31, 2024 and December 31, 2023 were $117,000 and $116,000, respectively. Fees paid by the Company amounted to $67,000 for 2024 and 2023. The other fees were paid by borrowers, or paid by the Company and then reimbursed by borrowers.

The Company utilizes the services of one of the members of the Board of Directors of the Company for loan closings and related matters. Fees for the years ended December 31, 2024 and December 31, 2023 were $162,000 and $182,000, respectively. Fees paid by the Company for the years ended December 31, 2024 and December 31, 2023 were $8,000 and $9,000, respectively. The other fees were paid by borrowers, or paid by the Company and then reimbursed by borrowers.

NOTE 13 - FAIR VALUE MEASUREMENTS

ASC 820-10, Fair Value Measurement – Overall, provides a framework for measuring fair value under U.S. GAAP. This guidance also allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.

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

Level 1 – Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

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

Level 3 – Valuations for assets and liabilities that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets and liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value for December 31, 2024 and December 31, 2023.

Cash and Cash Equivalents

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

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

The Company’s investment in debt securities is generally classified within Level 2 of the fair value hierarchy. For those securities, the Company obtains fair value measurements from independent pricing services which are not adjusted by management. The fair value measurements consider observable data that considers standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

FHLB Stock

The fair value of FHLB stock approximates the carrying amount based on the redemption provisions of the FHLB. These assets were classified as Level 2.

Loans

The fair value of loans is measured on an exit price basis incorporating discounts for credit, liquidity and marketability factors. Loans were classified as Level 3 since the valuation methodology utilizes significant unobservable inputs.

Bank-Owned Life Insurance

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

Accrued Interest Receivable

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

Deposits

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, interest-bearing demand deposits, savings and money market accounts, was equal to their carrying amount. The fair value of certificates of deposits is valued using a replacement cost of funds approach, and discounted to the market rates and based on weighted remaining maturity. Deposits were classified as Level 2 given the use of observable market inputs.

Accrued Interest Payable

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

Derivative Instruments

The fair value of interest rate swaps was determined using discounted cash flow analysis on the expected cash flows of the interest rate swaps. This analysis reflects the contractual terms of the interest rate swaps, including the period of maturity, and uses observable market-based inputs including interest rate curves. The inputs used to value the Company’s interest rate swaps fall within Level 2 of the fair value hierarchy and as a result, the interest rate swaps were categorized as Level 2 within the fair value hierarchy.

As of December 31, 2024 and 2023, the following summarizes assets measured at fair value on a recurring basis:


	Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices		Significant		Significant
			in Active		Other		Unobservable
			Markets for		Observable		Inputs
			Identical Assets		Inputs		Level 3
			Level 1		Level 2

			(in thousands)
As of December 31, 2024
Assets:
Available-for-sale securities
Mortgage-backed securities	$	4,126	$	—	$	4,126	$	—
Collateralized mortgage obligation		1,438		—		1,438		—
Corporate bonds		1,000		—		1,000		—
Derivative instruments		557		—		557		—
Total assets measured at fair value on a recurring basis	$	7,121	$	—	$	7,121	$	—

Liabilities:
Derivative instruments	$	173	$	—	$	173	$	—
Total liabilities measured at fair value on a recurring basis	$	173	$	—	$	173	$	—

As of December 31, 2023
Available-for-sale securities
Corporate bonds	$	5,003	$	—	$	5,003	$	—
Total assets measured at fair value on a recurring basis	$	5,003	$	—	$	5,003	$	—

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

As of December 31, 2024 and 2023, the Bank had no assets or liabilities for which a nonrecurring change in fair value had been recorded.

ASC Topic 825, “Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value are discussed above. The estimated fair values and related carrying amounts of assets and liabilities for which fair value is only disclosed are shown below at the dates indicated:


	December 31, 2024
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
			(in thousands)
Financial assets:
Cash and cash equivalents	$	157,617	$	157,617	$	157,617	$	-	$	-
Interest-bearing time deposits		100		100		-		100		-
Held-to-maturity securities		73,215		67,505		-		67,505		-
FHLB stock		10,000		10,000		-		10,000		-
Loans, net		1,136,449		1,079,916		-		-		1,079,916
Accrued interest receivable		4,015		4,015		4,015		-		-
Bank-owned life insurance		14,945		14,945		-		14,945		-

Financial liabilities:
Deposits, other than certificates of deposit	$	393,018	$	393,018	$	-	$	393,018	$	-
Certificates of deposit		605,515		606,387		-		606,387		-
Federal Home Loan Bank advances		234,000		232,027		-		232,027		-
Accrued interest payable		2,207		2,207		2,207		-		-


	December 31, 2023
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
			(in thousands)
Financial assets:
Cash and cash equivalents	$	119,036	$	119,036	$	119,036	$	-	$	-
Held-to-maturity securities		76,979		70,590		-		70,590		-
FHLB stock		9,892		9,892		-		9,892		-
Loans, net		1,039,789		952,867		-		-		952,867
Accrued interest receivable		3,766		3,766		3,766		-		-
Bank-owned life insurance		14,472		14,472		-		14,472		-

Financial liabilities:
Deposits, other than certificates of deposit	$	369,711	$	369,711	$	-	$	369,711	$	-
Certificates of deposit		498,503		495,551		-		495,551		-
Federal Home Loan Bank advances		234,000		233,878		-		233,878		-
Accrued interest payable		2,191		2,191		2,191		-		-

NOTE 14 – COMMITMENTS AND CONTINGENCIES

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower.

Collateral held varies but usually includes income producing commercial properties or residential real estate.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance by a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. As of December 31, 2024 and 2023, the maximum potential amount of the Company’s obligation was $50,000 and $0, respectively, for standby letters of credit. The Company’s outstanding letters of credit generally have a term of less than one year. If a letter of credit is drawn upon, the Company may seek recourse through the customer’s underlying line of credit. If the customer’s line of credit is also in default, the Company may take possession of the collateral, if any, securing the line of credit.

Amounts of financial instruments whose contract amounts represent off-balance sheet credit risk are as follows as of the dates indicated:


	December 31, 2024		December 31, 2023
	(in thousands)
Commitments to originate loans	$	21,542	$	22,701
Commitments to purchase loans		-		415
Unadvanced funds on lines of credit		80,156		78,378
Unadvanced funds on construction loans		54,636		53,013
Letters of credit		50		-
	$	156,384	$	154,507

The Company accrues for credit losses related to off-balance sheet financial instruments. Expected losses on off-balance sheet loan commitments are estimated using the same risk factors used to determine the allowance for credit losses on loans, adjusted for the likelihood that funding will occur. The allowance for off-balance sheet commitments is recorded within other liabilities on the consolidated balance sheets and amounted to $634,000 and $756,000 as of December 31, 2024 and 2023, respectively. Effective January 1, 2023, the Company adopted ASC Topic 326 with a cumulative transition adjustment of a $762,000 increase in allowance for credit losses on off-balance sheet credit exposures. For the year ended December 31, 2024 and 2023, a benefit of $122,000 and $407,000 was recorded to reflect a reduction in allowance for off-balance sheet commitments, respectively.

NOTE 15 – OTHER COMPREHENSIVE INCOME (LOSS)

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the shareholders' equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income.

The components of other comprehensive income (loss) and related tax effects are as follows for the years ended December 31, 2024 and 2023:


	Year ended
	December 31,
	2024			2023
	(in thousands)

Change in unrealized gains on securities:
Change in net unrealized holding gains on available-for-sale securities	$	(55	)	$	(7	)
Reclassification adjustment for realized gains in net income		—			—
Other comprehensive loss related to available-for-sale securities		(55	)		(7	)
Income tax benefit		12			1
Net-of-tax amount		(43	)		(6	)

Net actuarial gain on SERP		25			9
Reclassification adjustment for amortization of net actuarial gain (1)		(5	)		(138	)
Other comprehensive income (loss) related to SERP		20			(129	)
Income tax (expense) benefit		(6	)		36
Net-of-tax amount		14			(93	)

Net actuarial gain (loss) on DFCP		23			(9	)
Reclassification adjustment for amortization of net actuarial gain (2)		(16	)		(21	)
Other comprehensive income (loss) related to DFCP		7			(30	)
Income tax (expense) benefit		(2	)		9
Net-of-tax amount		5			(21	)

Net change in fair value of cash flow hedges		1,129			—
Reclassification adjustment for realized gains in net income (3)		(745	)		—
Other comprehensive income related to cash flow hedges		384			—
Income tax expense		(107	)		—
Net-of-tax amount		277			—
Other comprehensive income (loss), net of tax	$	253		$	(120	)

(1) Reclassification adjustments are comprised of amortization of unrecognized SERP costs reclassified into other expense.

(2) Reclassification adjustments are comprised of amortization of unrecognized DFCP costs reclassified into other expense.

(2) Reclassification adjustments are comprised of realized gains on cash flow hedges reclassified into interest expense.

Accumulated other comprehensive income as of December 31, 2024 and 2023 consists of unrecognized benefit costs, net of taxes, unrealized holding gains on securities available for sale, net of tax, and fair value of cash flow hedges, net of tax, as follows:


	As of December 31, 2024			As of December 31, 2023
	(in thousands)
Net unrealized holding (losses) gains on securities available-for-sale, net of tax	$	(40	)	$	3
Unrecognized SERP gain, net of tax		70			56
Unrecognized DFCP gain, net of tax		75			70
Fair value of cash flow hedges, net of tax		277			—

Accumulated other comprehensive income	$	382		$	129

NOTE 16 – REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements.

Management believes, as of December 31, 2024, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2024, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The Bank’s actual capital amounts and ratios are presented in the table as of the dates indicated:


				Minimum For Capital			Minimum To Be Well
				Adequacy Purposes			Capitalized Under
				Plus Capital			Prompt Corrective
	Actual			Conservation Buffer			Action Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(dollars in thousands)
As of December 31, 2024
Total Capital (to Risk Weighted Assets)	$	154,753	16.58%	$	98,010	10.50%	$	93,343	10.00%
Tier 1 Capital (to Risk Weighted Assets)		145,235	15.56%		79,342	8.50%		74,675	8.00%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		145,235	15.56%		65,340	7.00%		60,673	6.50%
Tier 1 Capital (to Average Assets)		145,235	10.47%		55,479	4.00%		69,349	5.00%

As of December 31, 2023
Total Capital (to Risk Weighted Assets)	$	149,014	17.30%	$	90,440	10.50%	$	86,133	10.00%
Tier 1 Capital (to Risk Weighted Assets)		139,667	16.22%		73,213	8.50%		68,907	8.00%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		139,667	16.22%		60,293	7.00%		55,987	6.50%
Tier 1 Capital (to Average Assets)		139,667	11.31%		49,406	4.00%		61,758	5.00%

In addition to the above minimum requirements, the Bank is subject to a Capital Conservation Buffer requirement of 2.5%. The requirement limits capital distributions and certain discretionary bonus payments to management if the Bank does not maintain the minimum Capital Conservation Buffer. At December 31, 2024, the Bank exceeded the minimum Capital Conservation Buffer.

NOTE 17 - PARENT COMPANY FINANCIAL STATEMENTS


ECB BANCORP, INC.
BALANCE SHEETS
(Dollars in thousands)

	December 31,
	2024		2023

ASSETS
Cash	$	15,896	$	17,712
Investment in subsidiary		145,617		139,796
Loan to Everett Co-operative Bank ESOP		6,452		6,696
Deferred tax asset, net		391		522
Income taxes receivable		-		203
Other assets		18		13
Total assets	$	168,374	$	164,942

LIABILITIES AND SHAREHOLDERS' EQUITY
Income taxes payable	$	83	$	-
Other liabilities		23		41
Total liabilities		106		41
Shareholders' equity		168,268		164,901
Total liabilities and shareholders' equity	$	168,374	$	164,942


ECB BANCORP, INC.
STATEMENTS OF INCOME
(Dollars in thousands)

	Year Ended
	December 31,
	2024		2023
Interest income
Interest on loan	$	318	$	329
Interest on cash		249		356
Total interest income		567		685
Noninterest expense
Other expense		257		310
Total noninterest expense		257		310
Income before income taxes and equity in undistributed income of subsidiaries		310		375
Income tax expense		87		105
Income of parent company		223		270
Equity in undistributed income of subsidiary		3,768		4,186
Net income	$	3,991	$	4,456



ECB BANCORP, INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
	Year Ended
	December 31,
	2024			2023
Cash flows from operating activities:
Net income	$	3,991		$	4,456
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of subsidiary		(3,768	)		(4,186	)
Deferred income tax expense		131			161
Stock options exercised		69			—
Net change in:
Other assets		(5	)		(2	)
Income taxes receivable		203			(54	)
Income taxes payable		83			—
Other liabilities		(18	)		36
Net cash provided by operating activities		686			411

Cash flows from investing activities:
ESOP loan principal payments		244			232
Capital contribution to Everett Co-operative Bank		—			(5,000	)
Net cash provided by (used in) investing activities		244			(4,768	)

Cash flows from financing activities:
Payments for shares repurchased under share repurchase plan		(2,722	)		(2,225	)
Restricted stock awards surrendered		(24	)		—
Net cash used in financing activities		(2,746	)		(2,225	)

Net decrease in cash and cash equivalents		(1,816	)		(6,582	)
Cash and cash equivalents at beginning of year		17,712			24,294
Cash and cash equivalents at end of year	$	15,896		$	17,712

NOTE 18 - EARNINGS PER SHARE ("EPS")


	Year ended December 31,
	2024		2023
	(dollars in thousands, except per share data)
Net income allocated to common stock	$	3,991	$	4,456

Weighted-average common shares outstanding used to calculate basic earnings per common share		8,257,014		8,466,021
Add: Dilutive effect of restricted stock awards		88,723		57,684
Weighted-average common shares outstanding used to calculate diluted earnings per common share		8,345,737		8,523,705
Earnings per common share
Basic	$	0.48	$	0.53
Diluted	$	0.48	$	0.52

For the year ended December 31, 2024 and 2023, the shares that were anti-dilutive, and therefore excluded from the calculation of diluted earnings per share, included options to purchase 758,137 and 763,969 shares of common stock, respectively.

NOTE 19 - DERIVATIVE AND HEDGING ACTIVITIES

The Company uses derivative financial instruments to manage its interest rate risk resulting from the differences in the amount, timing, and duration of known or expected cash payments. The Company has entered into interest rate swaps to add stability to interest expense and manage exposure to interest rate movements as part of an overall risk management strategy.

An interest rate swap is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from a second party. The amounts relating to the notional principal amount are not actually exchanged. The Company has entered into interest rate swaps in which it pays fixed and receives floating interest in order to manage its interest rate risk exposure to the variability in interest cash flows on certain floating-rate FHLB Advances and brokered certificates of deposit. The interest rate swaps effectively convert the floating rate payments made on the FHLB Advances and brokered certificates of deposit to a fixed rate and consequently reduce the Company’s exposure to variability in short-term interest rates.

Derivative instruments are carried at fair value in the Company’s Consolidated Financial Statements. The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not the instrument qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship.

The Company’s interest rate swaps have been designated as and are accounted for as cash flow hedges. The changes in fair value are included in other comprehensive income and reclassified into net income in the same period or periods during which the hedged forecasted transaction affects net income.

Cash flow hedges are initially assessed for effectiveness using regression analysis. Changes in the fair value of derivatives that are designated as and that qualify as cash flow hedges are recorded in OCI and are subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. Quarterly, a quantitative analysis is performed to monitor the ongoing effectiveness of the hedging instrument.

All derivative positions were initially, and continue to be, highly effective at December 31, 2024.

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


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

The table below presents the fair value of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets as of December 31, 2024:


	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in thousands)
Derivatives designated as hedging instruments
Interest rate swaps	Other assets	$	557	Other liabilities	$	(173	)
Total		$	557		$	(173	)

For derivative instruments that are designated and qualify as cash flow hedging instruments, the effective portion of the gains or losses is reported as a component of other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company expects approximately $185,000 to be reclassified as a decrease to interest expense from OCI related to the Company’s cash flow hedges in the twelve months following December 31, 2024. This reclassification is due to anticipated payments that will be received on the swaps based upon the forward curve at December 31, 2024.

The maximum length of time over which the Company is currently hedging its exposure to the variability in future cash flows for forecasted transactions related to the payment of variable interest on existing financial instruments is 4.3 years.

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


	Year Ended
	December 31, 2024
	(in thousands)
Interest rate swaps
Amount of gain recognized in OCI on derivatives	$	384
Gain reclassified from OCI into interest expense	$	(745	)

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company’s credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterparty not secured by variation margin plus any initial margin collateral posted. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote. As of December 31, 2024, the Company has pledged cash collateral to a derivative counterparty totaling $1,100,000. As of December 31, 2024, the Company has received cash collateral from a derivative counterparty totaling $570,000. The Company may need to post additional collateral or may receive additional collateral in the future in proportion to potential changes in the overall unrealized gain or loss position.

100

The Company had no derivatives as of December 31, 2023. There was no OCI or interest expense related to cash flow hedges recognized for the year ended December 31, 2023.

NOTE 20 - SUBSEQUENT EVENTS

Management has reviewed events occurring through March 26, 2025, the date the consolidated financial statements were issued and determined that no subsequent events occurred requiring adjustment to or disclosure in these consolidated financial statements.

101

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

ITEM 9A. Controls and Procedures

Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Management's report on internal control over financial reporting. Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.

The 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 accounting principles generally accepted in the United States of America. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) 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, including the principal executive officer and principal financial officer, assessed the effectiveness of the Company’s internal control over financial reporting. As of December 31, 2024, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control-Integrated Framework (2013).” Based on such assessment, management believes that, as of December 31, 2024, the Company’s internal control over financial reporting is effective, based on those criteria.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm.

Internal control over financial reporting. During the quarter ended December 31, 2024, 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.

This Annual Report does not include an attestation report of the independent registered public accounting firm regarding internal control over financial reporting because the Company is an emerging growth company.

ITEM 9B. Other Information

During the fourth quarter of 2024, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections ITEM 10.

Not applicable.

102

PART III

Directors, Executive Officers and Corporate Governance

The information required herein is incorporated by reference from the Company’s definitive proxy statement relating to its 2025 Annual Meeting of Stockholders (the “Proxy Statement”) that will be filed with the SEC within 120 days following the fiscal year end December 31, 2024 under the headings “Corporate Governance,” “Proposal 1 – Election of Directors,” and “Stock Ownership.”

103

ITEM 11. Executive Compensation

The information required herein is incorporated by reference from the Proxy Statement under the heading “Executive Compensation.”

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Except for the information concerning equity compensation plans, the information required herein is incorporated by reference from the Proxy Statement under the heading “Stock Ownership.” The following table sets forth information, as of December 31, 2024, about securities authorized for issuance under the Company’s 2023 Equity Incentive Plan, which has been approved by shareholders.


Plan Category	Number of Shares to be Issued Upon Exercise of Outstanding Awards		Weighted-Average Exercise Price of Outstanding Awards		Number of Shares Available for Future Grants
Plans approved by shareholders		758,137	$	10.49		177,207
Plans not approved by shareholders	—		—		—
Total		758,137	$	10.49		177,207

ITEM 13. Certain Relationships and Related Transactions and Director Independence

The information required herein is incorporated by reference from the Proxy Statement under the headings “Proposal 1 – Election of Directors” and “Other Information – Transactions with Related Persons.”

ITEM 14. Principal Accountant Fees and Services

The information required herein is incorporated by reference from the Proxy Statement under the heading “Proposal 2 – Ratification of Independent Registered Public Accounting Firm.”

104

PART IV

ITEM15. Exhibits and Financial Statement Schedules


(a)(1)	Financial Statements
The documents filed as a part of this Form 10-K are:
	(A)	Report of Independent Registered Public Accounting Firm
	(B)	Consolidated Balance Sheets as of December 31, 2024 and 2023
	(C)	Consolidated Statements of Income for the years ended December 31, 2024 and 2023
	(D)	Consolidated Statements of Comprehensive Income for the years ended December 31, 2024 and 2023
	(E)	Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2024 and 2023
	(F)	Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023
	(G)	Notes to Consolidated Financial Statements.
(a)(2)	Financial Statement Schedules
All financial statement schedules have been omitted as the required information is inapplicable or has been included in the Notes to Consolidated Financial Statements.
(a)(3)	Exhibits
	3.1	Amended and Restated Articles of Incorporation of ECB Bancorp, Inc. (1)
	3.2	Bylaws of ECB Bancorp (1)
	4.1	Form of Common Stock Certificate of ECB Bancorp (1)
	4.2	Description of ECB Bancorp, Inc. Securities (7)
	10.1*	Employment Agreement by and between ECB Bancorp, Inc., Everett Co-operative Bank and Richard J. O’Neil, Jr., As Amended (2)
	10.2*	Change in Control Agreement by and between Everett Co-operative Bank, ECB Bancorp, Inc. (as guarantor) and John Citrano (3)
	10.3*	Change in Control Agreement by and between Everett Co-operative Bank, ECB Bancorp, Inc. (as guarantor) and John Migliozzi (3)
	10.4*	Confidentiality and Non-Solicitation Agreement by and between Everett Co-operative Bank and John Migliozzi (3)
	10.5*	Change in Control Agreement by and between Everett Co-operative Bank, ECB Bancorp, Inc. (as guarantor) and Brandon Lavertu (8)
	10.6*	Everett Co-operative Bank Survivor Benefit Plan (4)
	10.7*	Supplemental Executive Retirement Plan for Richard O’Neil(1)
	10.8*	Non-Qualified Deferred Compensation Plan for John Citrano(1)
	10.9*	Non-Qualified Deferred Compensation Plan for John Migliozzi(5)

105


		10.10*	Non-Qualified Deferred Compensation Plan for Brandon Lavertu
		10.11*	Director Fee Continuation Plan(1)
		10.12*	Director Deferred Compensation Plan(1)
		10.13*	Form of Stock-Based Deferral Plan (1)
		10.14*	Employee Incentive Plan (4)
		10.15*	ECB Bancorp, Inc. 2023 Equity Incentive Plan (5)
		19	Insider Trading Policy
		21	Subsidiaries (1)
		23.1	Consent of Wolf & Company, P.C.
		23.2	Consent of Baker Newman & Noyes LLC
		31.1	Certification required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		31.2	Certification required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		97	ECB Bancorp, Inc. Recoupment/Clawback Policy (7)
		* Denotes management compensatory plan or arrangement
		(1)	Incorporated by reference to the Registration Statement on Form S-1 (file no. 333-263449), filed March 10, 2022.
		(2)	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2022 (file no. 001-41456), filed on March 30, 2023.
		(3)	Incorporated by reference to the Current Report on Form 8-K (file no. 001-41456), filed December 22, 2022.
		(4)	Incorporated by reference to the Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 (file no. 333-263449), filed May 2, 2022.
		(5)	Incorporated by reference to the Current Report on Form 8-K (file no. 001-41456), filed July 19, 2023.
		(6)	Incorporated by reference to Appendix A to the Proxy Statement for the 2024 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on April 26, 2024 (file no. 001-41456)
		(7)	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2023 (file no. 001-41456), filed on March 29, 2024.
		(8)	Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ending June 30, 2024 (file no. 001-41456), filed on August 9, 2024.
		101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
		101.SCH	Inline XBRL Taxonomy Extension Schema Document
		104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

106

ITEM 16. Form 10-K Summary Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

None.

107

Signatures


		ECB BANCORP, INC.

Date: March 26, 2025	By:	/s/Richard J. O'Neil, Jr.
		Richard J. O’Neil, Jr. President and Chief Executive Officer (Duly Authorized Representative)

Pursuant to the requirements of the Securities Exchange of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Signatures	Title	Date

/s/Richard J. O'Neil, Jr.	President, Chief Executive Officer and Director (Principal Executive	March 26, 2025
Richard J. O’Neil, Jr.	Officer)

/s/Brandon Lavertu	Executive Vice President and Chief Financial Officer (Principal Financial Officer & Principal Accounting Officer)	March 26, 2025
Brandon Lavertu

/s/Dennis J. Leonard	Chairman of the Board	March 26, 2025
Dennis J. Leonard

/s/Paul A. Delory	Director	March 26, 2025
Paul A. Delory

/s/Elizabeth P. Jones	Director	March 26, 2025
Elizabeth P. Jones

/s/Joseph Sachetta	Director	March 26, 2025
Joseph Sachetta

/s/Susan Sgroi	Director	March 26, 2025
Susan Sgroi

/s/Marjorie A. White	Director	March 26, 2025
Marjorie A. White

108

EX-10.10 2 ecbk-ex10_10.htm EX-10.10 EX-10.10

EXHIBIT 10.10

EVERETT CO-OPERATIVE BANK

NONQUALIFIED DEFERRED COMPENSATION PLAN

FOR BRANDON LAVERTU

This Nonqualified Deferred Compensation Plan (the "Plan") is adopted effective January 1, 2025, by and between Everett Co-operative Bank (the "Bank"), a Massachusetts banking corporation, and Brandon Lavertu (the "Executive").

RECITALS

The Executive is employed by the Bank.

The Bank recognizes the valuable services the Executive has performed for the Bank and wishes to encourage the Executive's continued employment and to provide the Executive with additional incentive to achieve corporate objectives.

The Bank wishes to provide the terms and conditions upon which the Bank shall pay additional retirement benefits to the Executive.

The Bank intends this Plan shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified deferred compensation arrangement, maintained primarily to provide supplemental retirement benefits for the Executive, a member of a select group of management or highly compensated employees of the Bank; and as such, is intended to be exempt from the provisions of Parts 2, 3, and 4 of Title I of the Employee Retirement Income Security Act of 1974 by operation of Sections 201(2), 301(a)(3) and 401(a)(1) thereof.

The Bank and the Executive intend this Plan shall at all times comply in form and operation with all applicable law, including, to the extent applicable, the requirements of Section 409A and will be administered, operated and construed in accordance with this intention.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the Bank and the Executive agree as follows:

ARTICLE I

DEFINITIONS

This Article provides definitions of terms used throughout this Plan, and whenever used herein in a capitalized form, except as otherwise expressly provided, the terms shall be deemed to have the following meanings:

1.1.

"Account." shall mean a bookkeeping account established and maintained by the Bank on behalf of the Executive and shall be used solely as a device to measure and determined the amounts to be paid to the Executive or his Beneficiary under the terms of the Plan. The Account balance shall include amounts credited by the Bank in accordance with Article 2 and interest thereon as determined in Article 3. The Plan Administrator or plan recordkeeper shall establish additional subaccounts that the Plan Administrator considers necessary to reflect the entire interest of the Executive under the Plan.

1.2.

"Affiliate." shall mean any corporation, partnership, joint venture, association, or similar organization or entity, other than the Bank, that is a member of a controlled group of corporations in which the Bank is a member, as defined in Code Section 414(b) and all other trade or business (whether or not incorporated) under common control for or with the Bank, as defined in Code Section 414(c).

1.3.

"Bank." shall mean Everett Co-operative Bank, and its successors and assigns unless otherwise provided in this Plan, or any other corporation or business organization which, with the consent of Everett Co-operative Bank, or its successors or assigns, assumes the Bank's obligations under this Plan, or any Affiliate which agrees, with the consent of Everett Co-operative Bank, or its successors or assigns, to become a party to the Plan.

1.4.

''Bank Contribution." shall mean the amounts credited on behalf of the Executive by the Bank to the Executive's Account under the terms of the Plan.

1.5.

"Beneficiary" or "Beneficiaries." shall mean the person(s), trust(s) or other entity or entities designated by the Executive, in accordance with the procedures established by the Plan Administrator, to receive applicable payments in the event of the death of the Executive prior to the Executive's receipt of the entire amount credited to his Account.

1.6.

"Beneficiary Designation Form." shall mean the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

1.7.

"Board," shall mean the Board of Directors of the Bank.

1.8.

"Cause." shall mean conduct by the Executive determined by the Bank to be:

1.8.1.

gross negligence or willful malfeasance in the performance of the Executive's duties; or

1.8.2.

the conviction of the Executive for, or plea of nolo contendere by the Executive to, any felony or a misdemeanor involving deceit, dishonesty, or fraud; or

1.8.3.

the commission by the Executive of any misconduct, whether or not related to the Bank or any of its affiliates, that has caused, or would reasonably be expected to cause, material detriment or damage to the Bank or any of its affiliates' reputation, business operation or relation with its employees, customers, vendors, suppliers or regulators; or

1.8.4.

continued, willful and deliberate non-performance by the Executive of his duties (other than by reason of the Executive's physical or mental illness, incapacity or disability) that has continued for more than thirty (30) days following written notice providing the details of such non-performance from the Chairman or the Chief Executive Officer of the Bank, as the case may be; or

1.8.5.

willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Bank to cooperate, or the deliberate destruction of or deliberate failure to preserve documents or other materials that the Executive should reasonably know to be relevant to such investigation, after being instructed by the Bank to preserve such documents, or the willful inducement of others to fail to cooperate or to fail to produce documents or other materials; or

1.8.6.

removal or prohibition of the Executive from participating in the conduct of the Bank's affairs by order issued under applicable law and regulations by a federal or state banking agency having authority over the Bank.

1.9.

"Change in Control." means a change in control of the Bank or ECB Bancorp, Inc. (the "Company"), as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder, including the following:

1.9.1.

Change in ownership: A change in ownership of the Bank or the Company occurs on the date any one person or group of persons accumulates ownership of more than 50% of the total fair market value or total voting power of the Bank or the Company; or

1.9.2.

Change in effective control: A change in effective control occurs when either (i) any one person or more than one person acting as a group acquires within a twelve (12)-month period ownership of stock of the Bank or Company possessing 35% or more of the total voting power of the Bank or Company; or (ii) a majority of the Bank’s or Company’s Board of Directors is replaced during any 12-month period by Directors whose appointment or election is not endorsed in advance by a majority of the Bank’s or Company’s Board of Directors (as applicable), or

1.9.3.

Change in ownership of a substantial portion of assets: A change in the ownership of a substantial portion of the Bank’s or Company's assets occurs if, in a twelve (12)-month period, any one person or more than one person acting as a group acquires assets from the Bank or Company having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of the Bank’s or Company’s entire assets immediately before the acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the Bank’s or Company’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

1.10.

"Claimant." shall mean the Executive or a Beneficiary who believes that he or she is entitled to a benefit under this Plan or is being denied a benefit to which he or she is entitled hereunder.

1.11.

"Code." shall mean the U.S. Internal Revenue Code of 1986 and the Treasury Regulations or other authoritative guidance issued thereunder, as amended from time to time.

1.12.

"Disabled" or "Disability." means the Executive:

1.12.1.

Is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or

1.12.2.

Is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Bank; or If determined to be totally disabled by the Social Security Administration.

1.12.3.

1.13.

"Effective Date." shall mean January 1, 2025.

1.14.

"ERISA." shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time, and the regulations and guidance promulgated thereunder.

1.15.

"Plan." shall mean this Nonqualified Deferred Compensation Plan, evidenced by this written instrument, as amended from time to time. For purposes of applying Section 409A requirements, the benefit of the Executive under this Plan is a nonelective account balance plan under Treasury Regulation §1.409A-1(c)(2)(i)(B).

1.16.

"Plan Administrator." shall mean the Joint Compensation Committee of the Board of Directors of the Bank and the Company or its designee. The Executive may not vote in any Bank decision relating solely to his individual benefits under this Plan.

1.17.

"Plan Year." shall mean, for the first Plan Year, the period beginning on the Effective Date of the Plan and ending December 31 of such calendar year; and thereafter shall mean a twelve (12) month period beginning January 1of each calendar year and continuing through December 31 of such calendar year.

1.18.

"Retirement Age." shall mean age sixty-five (65).

1.19.

"Section 409A." shall mean Code Section 409A and the Treasury Regulations or other authoritative guidance issued thereunder.

1.20.

“Separation from Service" or "Separates from Service." shall mean the Executive has experienced a termination of employment with the Bank. Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Bank and the Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period during which the Executive performed services for the Bank, if that is less than thirty-six (36) months).

1.21.

"Specified Employee." shall mean the Executive meets the definition of a “key employee” as such term is defined in Code Section 416(i)(1)(A)(i), (ii) or (iii) (without regard to the Treasury Regulations thereunder and Section 416(i)(5)). However, the Executive is not a Specified Employee unless any stock of the Bank is publicly traded on an established securities market or otherwise, as defined in Treasury Regulation §1.897-l(m). If the Executive is a key employee at any time during the twelve (12) months ending on December 31, the identification date, the Executive is a Specified Employee for the twelve (12) month period ending on the first day of the fourth month following the identification date. The determination of the Executive as a Specified Employee shall be made by the Plan Administrator in accordance with Code Section 416(i) and the “specified employee” requirements of Section 409A.

1.22.

"Treasury Regulation" or "Treasury Regulations." shall mean regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, as they may be amended from time to time.

1.23.

“Year of Plan Participation” shall mean a twelve (12) month period during which the Executive is employed on a full-time basis by the Bank, inclusive of any approved leaves of absence, beginning on the Effective Date.

ARTICLE II

BANK CONTRIBUTIONS

2.1.

Bank Contributions. Bank Contributions for a particular Plan Year, if made, shall be credited to the Executive's Account on January 1st of such Plan Year, based on the prior year performance. The Bank intends for an annual Bank Contribution amount, if any, to be equal to ten percent (10%) of the Executive's base salary and annual cash bonus but may credit additional contributions at its discretion. The Bank may make additional Bank Contributions to be credited to the Executive's Account at such time or times established by the Bank in its sole discretion.

ARTICLE III

INTEREST CREDITING

3.1.

Crediting of Interest. For the purpose of determining the interest to be credited to the Executive's Account under the Plan, the Bank shall assume that the Executive's Account is invested in such a manner that it earns a rate of interest equal to the "Interest Crediting Rate," as described in Section 3.2. This amount accrued by the Bank as additional deferred compensation shall be a part of the Bank's obligation to the Executive. The determination of interest credited to the Executive's Account shall in no way affect the ability of the general creditors of the Bank to reach the assets of the Bank in the event of the insolvency or bankruptcy of the Bank or place the Executive in a secured position ahead of the general creditors of the Bank. There is no requirement that any assets of the Bank shall be invested in any particular manner.

Interest hereunder shall be credited to the Executive's Account effective as of the date the Account first has a positive balance and continuing through the date the Account balance is fully paid to the Executive.

3.2.

Interest Crediting Rate. The annual Interest Crediting Rate for a Plan Year shall be benchmarked to the 10-Year Treasury Rate as of December 1st of the preceding calendar year. The benchmark shall remain unchanged unless and until the Bank determines, in its sole discretion, to prospectively modify the benchmark effective for a subsequent Plan Year(s). The Bank shall review the Interest Crediting Rate described in this Section on an annual basis.

ARTICLE IV

VESTING/FORFEITURES/TAXES

4.1.

Vesting.

The Executive becomes vested in his Account in accordance with the following schedule:


Complete Years of Plan Participation	Percent Vested
Less than 4	0%
4 but less than 5	20%
5 but less than 6	40%
6 but less than 7	60%
7 but less than 8	80%
8 or more	100%

4.2.

Acceleration of Vesting. Notwithstanding the foregoing vesting schedule, the Executive shall automatically become one hundred percent (100%) vested in his Account upon the earliest of the following events to occur while the Executive is employed by the Bank: (a) Disability; (b) death; or (c) a Change in Control. Additionally, the Bank may accelerate the executive’s vesting at any time in its discretion, provided that the acceleration complies with Section 409A.

4.3.

Forfeiture. Notwithstanding any other provision to the contrary herein. in the event the Executive's employment is terminated for Cause, no benefits of any kind will be due or payable by the Bank under the terms of this Plan and all rights of the Executive, his Beneficiary, executors, or administrators, or any other person, to receive payments thereof shall be forfeited. Additionally, the Executive will forfeit any portion of his Account that is not vested upon his Separation from Service.

4.4.

Removal. Notwithstanding any provision of this Plan to the contrary, the Bank shall not distribute any benefit under this Plan if the Executive is subject to a final removal or prohibition order issued by an appropriate banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

4.5.

Taxes and Withholding. Bank Contributions and interest credited thereon are subject to the Federal Insurance Contribution Act (FICA) and the Federal Unemployment Tax Act (FUTA) to the extent provided under applicable Code provisions and benefits payable under the Plan are subject to all applicable federal, state, city, income, employment or other taxes as may be required to be withheld or paid. The Executive is responsible for the payment of all tax liabilities relating to any such benefits.

ARTICLE V

PAYMENT OF BENEFITS

5.1.

Payments in General.

5.1.1.

Amount of Benefit. The Executive (or, in the event of the death of the Executive, the Executive's Beneficiary) shall be entitled to receive the Executive's vested Account balance as of the earliest payment event to occur under Article V.

5.1.2.

Source of Payments. All payments made under the Plan shall be made in cash from the Bank's general assets.

5.1.3.

Calculation of Installments. For purposes of calculating installments in the first calendar year of the payout period, the Account balance shall be annuitized over the installment period using the Interest Crediting Rate in effect at that time.

In subsequent calendar years of the payout period, the amount of annual installments shall be recalculated as of the installment anniversary, by annuitizing the remaining balance over the remaining installment period using the updated Interest Crediting Rate for that calendar year.

5.2.

Separation fromService.

5.2.1.

Prior to Retirement Age. In the event the Executive Separates from Service prior to Retirement Age (other than for Cause, death, or within six (6) months following a Change in Control), the Bank shall pay to the Executive his Account balance as of the date the Executive attains Retirement Age and applying the vesting percentage pursuant to Section 4.1 as in effect as of the date of Separation from Service. Payment shall be made in annual installments over a period of ten (10) years. The first installment shall be paid on the first day of the month following Retirement Age, with subsequent annual installments paid on the anniversary each year thereafter and calculated in accordance with Section 5.1(c).

5.2.2.

On or After Retirement Age. In the event the Executive Separates from Service (other than for Cause or death) on or after Retirement Age, the Bank shall pay to the Executive his vested Account balance, calculated as of the date of Separation from Service, in annual installments over a period of ten (10) years. The first installment shall be paid on the first day of the month following the date of Separation from Service, with subsequent annual installments paid on the anniversary each year thereafter and calculated in accordance with Section 5.1(c).

5.2.3.

Following a Change in Control. In the event the Executive has a Separation from Service for "Good Reason" (as defined in the Executive's Change in Control Agreement with the Bank) within six (6) months following a Change in Control and prior to Retirement Age, the Bank shall pay to the Executive his vested Account balance, calculated as of the date of Separation from Service, in a lump sum. The payment shall be made within thirty (30) days following the date of Separation from Service.

5.3.

Death.

5.3.1.

While Employed. In the event of the Executive's death while employed by the Bank, the Bank shall pay to the Executive's Beneficiary the Executive's vested Account balance, calculated as of the date of death, in a lump sum. The payment shall be made within thirty (30) days following the date of the Executive's death.

5.3.2.

Death During Installments. In the event of the Executive's death after installments have commenced under Article V but prior to receiving all installments owed hereunder, the Bank shall pay any remaining installments to the Executive's Beneficiary in a lump sum. The payment shall be made within thirty (30) days following the date of the Executive's death.

5.3.3.

Death During a Delay. In the event of the Executive's death after becoming entitled to a benefit but prior to the commencement of payment owed for such benefit, the Bank shall pay to the Executive's Beneficiary the Executive's vested Account balance, calculated as of the date of death, in a lump sum. The payment shall be made within thirty (30) days following the date of the Executive's death.

5.4.

Restrictions on Time of Payment. Solely to the extent necessary to avoid penalties under Section 409A, payments to be made as a result of a Separation from Service (excluding death) under this Article may not commence earlier than six (6) months after the Executive's Separation from Service if, pursuant to Section 409A, the Executive is considered a Specified Employee. ln the event a distribution is delayed pursuant to this paragraph, any amounts otherwise payable during the six months shall be accumulated and paid in a lump sum on the first day of the seventh month following Separation from Service. With respect to installment payments, all remaining payments shall be paid as originally scheduled.

5.5.

Accelerations. Except as specifically permitted herein or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated hereunder by the Bank (without any direct or indirect election on the part of the Executive), in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) and any subsequent guidance issued by the United States Treasury Department. Accordingly, payments may be accelerated, in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) in the following circumstances: (a) in limited cash outs (but not in excess of the limit under Code Section 402(g)(l)(B)); (b) to pay employment-related taxes; or (c) to pay any taxes that may become due at any time that the Plan fails to meet the requirements of Section 409A (but in no case shall such payments exceed the amount to be included in income as a result of the failure to comply with the requirements of Section 409A).

5.6.

Rights of Executive and Beneficiary.

5.6.1.

Creditor Status of Executive and Beneficiary. The Plan constitutes the unfunded, unsecured promise of the Bank to make payments to the Executive or his Beneficiary in the future and shall be a liability solely against the general assets of the Bank. The Bank shall not be required to segregate, set aside or escrow any amounts for the benefit of the Executive or his Beneficiary. The Executive and his Beneficiary shall have the status of a general unsecured creditor of the Bank and may look only to the Bank and its general assets for payment of benefits under the Plan.

5.7.

Discharge of Obligations. The payment to the Executive or his Beneficiary of the Account in full shall discharge all obligations of the Bank to the Executive or his Beneficiary under the Plan with respect to the Executive's Account.

ARTICLE VI

BENEFICIARY DESIGNATION

6.1.

Designation of Beneficiaries.

6.1.1.

The Executive may designate any person or persons (who may be named contingently or successively) to receive any benefits payable under the Plan upon the Executive's death, and the designation may be changed from time to time by the Executive by filing a new designation. Each designation will revoke all prior designations by the Executive, shall be in the form prescribed by the Plan Administrator, and shall be effective only when filed with the Plan Administrator during the Executive's lifetime.

6.1.2.

ln the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Executive, the Bank shall pay the benefit payment to the Executive's spouse, if then living, and if the spouse is not then living to the Executive's then living descendants, if any, per stirpes, and if there are no living descendants, to the Executive's estate. In determining the existence or identity of anyone entitled to a benefit payment, the Bank may rely conclusively upon information supplied by the Executive's personal representative, executor, or administrator.

6.1.3.

The Executive's designation of a Beneficiary will not be revoked or changed automatically by any future marriage or divorce. Should the Executive wish to change the designated Beneficiary in the event of a future marriage or divorce, the Executive will have to do so by means of filing a new Beneficiary Designation Form with the Plan Administrator.

6.1.4.

If a question arises as to the existence or identity of anyone entitled to receive a death benefit payment under the Plan, or if a dispute arises with respect to any death benefit payment under the Plan, the Bank may distribute the payment to the Executive's estate without liability for any tax or other consequences or may take any other action which the Bank deems to be appropriate.

6.2.

Information to be furnished by Executive and Beneficiary; Inability to Locate Executive or Beneficiary. Any communication, statement or notice addressed to the Executive or to a Beneficiary at his or her last post office address as shown on the Bank's records shall be binding on the Executive or Beneficiary for all purposes of the Plan. The Bank shall not be obliged to search for the Executive or Beneficiary beyond the sending of a registered letter to such last known address.

ARTICLE VII

PLAN ADMINISTRATION

Plan Administrator Duties. The Plan Administrator shall be responsible for the management, operation, and administration of the Plan. When making a determination or calculation, the Plan Administrator shall be entitled to rely on information furnished by the Bank, the Executive, or Beneficiary. No provision of this Plan shall be construed as imposing on the Plan Administrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or other law.

Plan Administrator Authority. The Plan Administrator shall enforce this Plan in accordance with its terms, shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

To construe and interpret the terms and provisions of this Plan and to reconcile any inconsistency, in its sole and absolute discretion;

To compute and certify the amount payable to the Executive and his Beneficiaries; to determine the time and manner in which such benefits are paid; and to determine the amount of any withholding taxes to be deducted;

To maintain all records that may be necessary for the administration of this Plan;

To provide for the disclosure of all information and the filing or provision of all reports and statements to the Executive, Beneficiaries, and governmental agencies as shall be required bylaw;

To make and publish such rules for the regulation of this Plan and procedures for the administration of this Plan so long as no such rules or procedures are not inconsistent with the terms hereof; To administer this Plan's claims procedures;

To approve the forms and procedures for use under this Plan; and

To employ such persons or organizations, including without limitation, actuaries, attorneys, accountants, independent fiduciaries, recordkeepers and administrative consultants, to render advice or perform services with respect to the responsibilities of the Plan Administrator under the Plan.

Binding Effect of Decision. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation, and application of this Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Plan.

Agents. In the administration of this Plan, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, (including acting through a duly appointed representative), and may from time to time consult with counsel who may be counsel to the Bank.

Compensation and Expenses. The Plan Administrator shall serve without compensation for services rendered hereunder. The Plan Administrator is authorized at the expense of the Bank to employ such legal counsel and/or Plan recordkeeper as it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in connection with the administration of this Plan shall be paid by the Bank.

Compliance with Section 409A.

Notwithstanding anything contained herein to the contrary, the interpretation and distribution of the Executive's benefits under the Plan shall be made in a manner and at such times as to comply with all applicable provisions of Section 409A and the regulations and guidance promulgated thereunder, or an exception or exclusion therefrom to avoid the imposition of any accelerated or additional taxes. Any defined terms shall be construed consistent with Section 409A and any terms not specifically defined shall have the meaning set forth in Section 409A.

The intent of this Section is to ensure that the Executive is not subject to any tax liability or interest penalty, by reason of the application of Section 409A(a)(1) as a result of any failure to comply with all the requirements of Section 409A, and this Section shall be interpreted in light of, and consistent with, such requirements. This Section shall apply to distributions under the Plan, but only to the extent required in order to avoid taxation of, or interest penalties on, the Executive under Section 409A. These rules shall also be deemed modified or supplemented by such other rules as may be necessary, from time to time, to comply with Section 409A.

ARTICLE VIII

AMENDMENT AND TERMINATION

8.1.

Amendment. This Plan may be amended by the Bank at any time in its discretion and with respect to any provisions hereof, and all parties hereto or claiming any interest hereunder shall be bound by such amendment; provided, however, that no such amendment shall deprive the Executive or a Beneficiary of a benefit amount accrued hereunder prior to the date of the amendment without the written consent of the Executive or Beneficiary. However, the Bank may unilaterally amend this Plan without the consent of the Executive or Beneficiary to ensure that the Plan is characterized as a “top-hat” plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA Sections 201(2), 301(a)(3), and 401(a)(l), or to conform the Plan to the provisions of Section 409A or any other applicable law (including but not limited to ERISA, banking regulations, and the Code).

8.2.

Plan Suspension. Although the Bank anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee it will do so. The Bank reserves the right to suspend the operation of the Plan for a fixed or indeterminate period of time, in its sole discretion. In the event of a suspension of the Plan, during the period of the suspension, the Bank shall continue all aspects of the Plan other than crediting of Bank Contributions. Benefit distributions will continue to be made during the period of the suspension in accordance with Article V.

8.3.

Plan Termination and Liquidation under Section 409A. Notwithstanding anything to the contrary in Section 8.2, the Bank may terminate and liquidate the Plan as described under Treasury Regulation §1.409A-3(j)(4)(ix). Any acceleration of the payment of benefits due to Plan termination and liquidation shall comply with the following subparagraphs, but only as permitted in accordance with Section 409A and Treasury Regulation §1.409A-3(j)(4)(ix). In the event of such termination and liquidation, the Bank shall pay to the Executive his vested Account balance, calculated as of the date of the termination of the Plan. After deduction of estimated expenses in liquidating and paying Plan benefits, the Bank may accelerate payment to the Executive subject to the terms below:

8.3.1.

Upon the Bank's termination of this and all other arrangements that would be aggregated with this Plan, pursuant to Treasury Regulation §1.409A-1(c) ("Similar Arrangements"), provided that: (i) the termination does not occur proximate to a downturn in the financial health of the Bank; (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination; and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Plan.

8.3.2.

Upon the Bank's dissolution taxed under Code Section 331, or with approval of a bankruptcy court, provided that the amounts deferred under the Plan are included in the Executive's gross income in the latest of: (i) the calendar year on which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture or (iii) the first calendar year in which the payment is administratively practicable; or

8.3.3.

Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all the Bank's Similar Arrangements are terminated so the Executive and all participants in the Similar Arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the Plan.

ARTICLE IX

CLAIMS PROCEDURE

9.1.

Claims Procedure. This Article is based on Department of Labor Regulation Section 2560.503-1. If any provision of this Article conflicts with the requirements of those regulations, the requirements of those regulations will prevail. for purposes of this Article, references to Disability benefit claims are intended to describe a claim needing a determination of Disability only if and to the extent that such claim requires an independent determination by the Plan Administrator that the Executive is or is not suffering from a Disability. If the determination of Disability is based entirely on a determination made by another party, such as the Social Security Administration or another federal or state agency or an insurer with respect to a disability insurance policy covering the Executive, the claim shall not be treated as a Disability claim for purposes of the special provisions of this Article that apply to claims for which an independent determination of Disability is required. A Claimant who has not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits as follows:

Initiation - Written Claim. The Claimant initiates a claim by submitting a written request for the benefits to the Plan Administrator. The Plan Administrator will, upon written request of a Claimant, make available copies of all forms and instructions necessary to file a claim for benefits or advise the Claimant where such forms and instructions may be obtained. If the claim relates to Disability benefits, the Plan Administrator shall ensure that all claims and appeals for Disability benefits are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision.

Timing of Bank Response.

Claims That Do Not Require a Determination of Disability. If the claim is for a benefit other than a Disability claim, the Plan Administrator shall notify the Claimant within ninety (90) days after receiving the claim if the claim is allowed or denied. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the Claimant in writing prior to the end of the initial 90-day period that an additional period is required. Any notice of extension must set forth the special circumstances requiring an extension of time and the date by which the Plan Administrator expects to render its decision, such extension not to extend beyond the day which is one hundred eighty (180) days after the day the claim is filed.

ii.

Claims Requiring a Determination of Disability. If the claim relates to a determination of Disability, and the claim requires an independent determination by the Plan Administrator of the Executive’s Disability status, the Plan Administrator shall notify the Claimant of the Plan’s adverse benefit determination within a reasonable period of time, but no later than forty-five (45) days after receipt of the claim. If, due to matters beyond the control of the Plan, the Plan Administrator needs additional time to process a claim, the Claimant will be notified, within forty-five (45) days after the Plan Administrator receives the claim, of those circumstances and of when the Plan Administrator expects to make its decision, but not beyond seventy-five (75) days after receipt of the claim. If, prior to the end of the extension period, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for up to one hundred five (105) days after the Plan Administrator receives the claim, provided that the Plan Administrator notifies the Claimant of the circumstances requiring the extension and the date as of which the Plan expects to render a decision. The extension notice shall specifically explain the standards on which entitlement to a Disability benefit is based, the unresolved issues that prevent a decision on the claim and the additional information needed from the Claimant to resolve those issues, and the Claimant shall be afforded at least forty-five (45) days within which to provide the specified information.

Notice of Decision. If the Plan Administrator denies the claim, in whole or in part, the Plan Administrator shall notify the Claimant in writing, or by electronic communication, of such denial. Any electronic notification shall comply with the standards imposed by 29 CFR 2520.104b-1(c)(I)(i), (iii), and (iv). The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:

The specific reasons for the denial;

A reference to the specific provisions of the Plan or insurance contract on which the denial is based;

Notice that the Claimant has a right to request a review of the claim denial and an explanation of the Plan's review procedures and the time limits applicable to such procedure

A statement of the Claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination, and a description of any time limit that applies under the Plan for bringing such an action.

In the case of an adverse benefit determination with respect to Disability benefits, on the basis of the Plan Administrator's independent determination of the Executive's Disability status, the Plan Administrator will provide:

(1)

A discussion of the decision, including an explanation of the basis for disagreeing with or not following:

(1)

The views presented by the Claimant of health care professionals treating the Claimant and vocational professionals who evaluated the Claimant;

(2)

The views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a Claimant's adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and

(3)

A Disability determination regarding the Claimant presented by the Claimant made by the Social Security Administration.

(2)

If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the Claimant's medical circumstances, or a statement that such explanation will be provided free of charge upon request;

(3)

Either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse determination or, alternatively, a statement that such rules, guidelines, protocols, standards or other similar criteria of the Plan do not exist; and

(4)

A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant's claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by Department of Labor Regulation Section 2560.503-l(m)(8).

(5)

The Plan Administrator shall write the notification in a culturally and linguistically appropriate manner (as described in Department of Labor Regulation Section 2560.503-1 (o)).

Review Procedure. If the Plan Administrator denies the claim, in whole or in part, the Claimant shall have the opportunity for a full and fair review of the claim and the adverse benefit determination as follows:

Initiation - Written Request.

(1)

Claims That Do Not Require a Determination of Disability. To initiate the review of the denial, the Claimant, within sixty (60) days after receiving the Plan Administrator's

(2)

Claims Requiring a Determination of Disability. To initiate the review of the denial involving a claim for a Disability benefit the Claimant, within forty-five (45) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review. If the initial claim for Disability benefits requires an independent determination by the Plan Administrator of the Executive’s Disability status, prior to such review of the denied claim, the Claimant shall be given, free of charge, any new or additional evidence considered, relied upon, or generated by the Plan, insurer, or other person making the benefit determination in connection with the claim, or any new or additional rationale, as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided, to give the Claimant a reasonable opportunity to respond prior to that date.

ii)

Timing of Bank Response. The Plan Administrator shall respond in writing to such Claimant within sixty (60) days, or forty-five (45) days for a Disability claim, after receiving the request for review. If the reviewer determines that special circumstances require additional time for processing the claim, the reviewer can extend the response period by an additional sixty (60) days, or forty-five (45) days for a Disability claim, by notifying the Claimant in writing, prior to the end of the initial 60-day, or 45-day (as applicable), period that an additional period is required.

The notice of extension must set forth the special circumstances and the date by which the reviewer expects to render its decision.

iii)

Additional Submissions - Information Access. On appeal, the Claimant shall be given the opportunity to submit written comments, documents, records, and other information relating to the claim, as well as to request and receive, without charge, reasonable access to, and copies of, all documents, records, and other information relevant (as defined in applicable ERISA regulations) to the claim. In considering the review, all comments, documents, records and other information submitted by the Claimant relating to the claim shall be taken into account, without regard to whether such information was submitted or considered in the initial benefit determination.

iv)

Additional Considerations for Review of a Disability Claim. Additional considerations shall be required in the case of a Disability claim. For example, the claim will be reviewed by an appropriate named fiduciary of the Plan who did not make the initial determination that is subject of the appeal, nor by a subordinate of the individual who made the determination. and the review shall be made without deference to the initial adverse benefit determination. If the initial adverse benefit determination was based in whole or in part on a medical judgment, the reviewer will consult with a health care professional with appropriate training and experience in the field of medicine involving the medical judgment. The health care professional who is consulted on appeal will not be the same individual who was consulted during the initial determination or the subordinate of such individual. If the Plan Administrator obtained the advice of medical or vocational experts in making the initial adverse benefits determination (regardless of whether the advice was relied upon), the Plan Administrator will identify such experts.

Notice of Decision. The Plan Administrator shall notify the Claimant in writing, or by electronic communication, of the decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:

(1)

The reviewer's decision;

(2)

The specific reasons for the denial;

(3)

A reference to the specific provisions of the Plan or insurance contract on which the decision is based;

(4)

A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant

(5)

A statement describing any voluntary appeal procedures offered by the Plan; and

(6)

A statement of the Claimant's right to bring a civil action under ERISA Section 502(a) which shall describe any applicable contractual limitations period that applies to the Cl,

(7)

In the case of an adverse benefit decision with respect to Disability benefits:

(a)

A discussion of the decision, including an explanation of the basis for disagreeing with or not following:

(i)

The views presented by the Claimant of health care professionals treating the Claimant and vocational professionals who evaluated the Claimant;

(ii)

The views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a Claimant's adverse benefit determination, without regard to

(iii)

A Disability determination regarding the Claimant presented by the Claimant made by the Social Security Administration.

(b)

(c)

(d)

The Plan Administrator shall write the notification in a culturally and linguistically appropriate manner (as described in Department of Labor Regulation Section 2560.503-1 (o)).

Calculation of Time Periods. for purposes of the time periods specified in this Article, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim.

If a period of time is extended due to a Claimant's failure to submit all information necessary, the period for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds.

Exhaustion of Remedies. A Claimant must follow the claims review procedures under this Plan and exhaust his or her administrative remedies before taking any legal action with respect to any claim for benefits under the Plan.

Failure of Plan to Follow Procedures. Except for a Disability claim, if the Plan fails to establish or follow the claims procedures required by this Article, a Claimant shall be deemed to have exhausted the administrative remedies available under the Plan and shall be entitled to immediately pursue any available remedy under ERISA Section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. In the case of a claim for Disability benefits, if the Plan fails to strictly adhere to all the requirements of this Article with respect to a Disability claim, the Claimant is deemed to have exhausted the administrative remedies available under the Plan, and shall be entitled to pursue any available remedies under ERISA Section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim, except where the violation was: (a) de minimis; (b) non prejudicial; (c) attributable to good cause or matters beyond the Plan's control; (d) in the context of an ongoing good-faith exchange of information; and (e) not reflective of a pattern or practice of non-compliance. The Claimant may request a written explanation of the violation from the Plan, and the Plan must provide such explanation within ten (10) days, including a specific description of its bases, if any, for asserting that the violation should not cause the administrative remedies to be deemed exhausted. If a court rejects the Claimant's request for immediate review on the basis that the Plan met the standards for the exception, the claim shall be considered as re-filed on appeal upon the Plan's receipt of the decision of the court. Within a reasonable time after the receipt of the decision, the Plan shall provide the claimant with notice of the resubmission.

Arbitration. If the Claimant continues to dispute the benefit denial based upon completed performance of the Plan or the meaning and effect of the terms and conditions thereof, then the Claimant must submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the Claimant. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination. Where a dispute arises as to the Bank's discharge of the Executive for Cause, such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

ARTICLE X

MISCELLANEOUS

Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

Non-assignability. Neither the Executive nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony, or separate maintenance owed by the Executive or any other person, be transferable by operation of law in the event of the Executive's or any other person's bankruptcy or insolvency, or be transferable to a spouse as a result of a property settlement or otherwise. If the Executive, Beneficiary, or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate, or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of the Executive, Beneficiary, or successor in interest in such manner as the Plan Administrator shall direct.

Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Bank and the Executive. Nothing in this Plan shall be deemed to give the Executive the right to be retained in the service of the Bank as an employee or to interfere with the right of the Bank to discipline or discharge the Executive at any time.

Governing Law. The Plan shall be administered, construed and governed in all respects under and by the laws of the Commonwealth of Massachusetts, without reference to the principles of conflicts of law (except and to the extent preempted by applicable federal law).

Notice. Any notice, consent, or demand required or permitted to be given to the Bank or Plan Administrator under this Plan shall be sufficient if in writing and hand delivered or sent by registered or certified mail to the Bank's principal business office. Any notice, consent, or demand required or permitted to be given to the Executive or Beneficiary under this Plan shall be sufficient if in writing and hand delivered or sent by mail to the last known address of the Executive or Beneficiary, as appropriate. Any notice or filing shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or on the receipt for registration or certification.

Coordination with Other Benefits. The benefits provided for the Executive or his Beneficiary under this Plan are in addition to any other benefits available to the Executive under any other plan or program for employees of the Bank. This Plan shall supplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided herein.

Unclaimed Benefits. In the case of a benefit payable on behalf of the Executive, if the Plan Administrator is unable to locate the Executive or Beneficiary to whom such benefit is payable, such Plan benefit may be forfeited to the Bank upon the Plan Administrator's determination. Notwithstanding the foregoing, if, subsequent to any such forfeiture, the Executive or Beneficiary to whom such Plan benefit is payable makes a valid claim for such Plan benefit, such forfeited Plan benefit shall be paid by the Plan Administrator to the Executive or Beneficiary, without interest, from the date it would have otherwise been paid.

IN WITNESS WHEREOF, the parties hereto execute this Plan as of the date first written above.

EVERETT CO-OPERATIVE BANK

By:/s/Richard J. O'Neil, Jr.

Richard J. O’Neil, Jr.

Chief Executive Officer & President

Date: February 27, 2025

EXECUTIVE

By:/s/Brandon Lavertu

Brandon Lavertu

Date: February 27, 2025

EX-19 3 ecbk-ex19.htm EX-19 EX-19

EXHIBIT 19

ECB BANCORP, INC.

PART 1 - POLICY REGARDING INSIDER TRADING

Chief Financial Officer & Executive Vice President Upon completion of the mutual to stock conversion of Everett Co-operative Bank, ECB Bancorp, Inc. (the “Company”) will be a public company, the common stock of which will be listed on the Nasdaq Capital Market and registered under the Securities Exchange Act of 1934, as amended. As a public company, the Company files periodic reports and proxy statements with the Securities and Exchange Commission (the “SEC”). Investment by directors, officers and employees in the Company stock is generally desirable and encouraged. However, such investments should be made with caution and with recognition of the legal prohibitions against the use of confidential information by “insiders” for their own profit.

As a director, officer or employee of a public company, you have the responsibility not to participate in the market for the Company stock while in possession of material, non-public (inside) information about the Company. There are harsh civil and criminal penalties if you wrongly obtain or use such material, inside information when you are deciding whether to buy or sell securities, or if you give that information to another person who uses it in buying or selling securities. If you buy or sell securities while in possession of material, inside information, you will not only have to pay back any profit you made, but you could be found guilty of criminal charges, and face substantial fines or even prison. Additionally, the Company could be held liable for your violations of insider trading laws.

To avoid these harsh consequences, the Company has developed the following guidelines to briefly explain the insider trading laws and set forth procedures and limitations on trading by directors, officers and employees. However, these guidelines do not address all possible situations that you may face. In addition, you need to review and understand the Company’s Policy on Fair Disclosure to Investors that describes your obligations regarding the selective disclosure of confidential information to ensure compliance with SEC Regulation FD, which requires “fair disclosure” of material, non-public information.

Insider Trading Concepts

What is “Inside” Information?

Inside information includes any non-public information of which you become aware because of your “special relationship” with the Company as a director, officer or employee and which has not been disclosed to the public (i.e., is non-public). The information may be about the Company, Everett Co-operative Bank (the “Bank”) or any other subsidiaries or affiliates. It may also include information you learn about another company (for example, companies that are current or prospective customers or suppliers to the Company or those with which the Company may be in negotiations regarding a potential transaction).

What is Material Information?

Information is material if an investor would think that it is important in deciding whether to buy, sell or hold stock, or if it could affect the market price of the stock. Either good or bad information may be material. If you are unsure whether the information is material, assume it is material.

Examples of material information typically include, but are not limited to:

• Financial or accounting problems;

• Estimates of future earnings or losses;

• Significant non-recurring gains or losses;

• Events that could result in restating financial information;

• A proposed acquisition, sale or merger;

• Changes in key management personnel;

• Beginning or settling a major lawsuit;

• Changes in dividend policies;

• Declaring a stock split;

• A stock repurchase program; or

• A stock or bond offering.

What is Non-Public Information?

Non-public information is information that has not yet been made public by the Company. Information only becomes public when the Company makes an official announcement (in a publicly accessible conference call, a press release or in SEC filings, for example) and the investing public has had an opportunity to see or hear it.

Trading Guidelines

A. Rules Applicable to All Directors, Officers and Employees.

No director, officer or employee may trade any security, whether issued by the Company or by any other company, while in possession of “material inside information” about the issuer. Further, no director, officer or employee may disclose “material inside information” to any other person (including immediate family members, friends or stockbrokers) so that such other person may trade in the stock. It is usually safe to buy or sell stock after the information is officially announced, as long as you do not know of other material information that has not yet been announced. Even after the information is announced, you should generally wait one full trading day before buying or selling securities to allow the market to absorb the information.

This means the following with respect to certain Bank or Company employee benefit plans:

•

401(k) Plan. If applicable, an officer or employee having material inside information regarding the Company may not (i) initiate a transfer of funds into or out of any 401(k) plan, or (ii) increase an existing election if applicable to invest funds in Company stock in the 401(k) plan. However, ongoing purchases of the Company’s stock through the plan pursuant to a prior election are not prohibited.

•

Other Company Stock Purchase Plans. A director, officer or employee having material inside information regarding the Company may not sign up for, or increase participation in, any employee stock purchase plan or dividend reinvestment plan. However, ongoing purchases through those plans pursuant to a prior election are not prohibited.

•

Stock Options. A director, officer or employee may exercise a stock option at any time, but any stock acquired upon such exercise may not be sold (whether by means of a cashless exercise or otherwise) if the employee has material inside information regarding the Company. At any time, however, an employee may deliver Company stock already owned to pay the option exercise price and taxes.

B. Additional Rules.

1. Options and Other Stock Plans. The sale of stock acquired upon an exercise of stock options and the transfer of funds into and out of the Company’s stock plans are subject to special rules. The Filing Coordinator should be contacted before any such transaction is conducted.

2. Pension Fund Blackouts. The Sarbanes-Oxley Act of 2002 also requires the Company to prohibit all purchases, sales or transfers of the Company’s securities by directors and executive officers during a pension fund blackout period. A pension fund blackout period exists whenever 50% or more of the plan participants are unable to conduct transactions in their accounts for more than three consecutive days. These blackout periods typically occur when there is a change in the retirement plan’s trustee, record keeper or investment manager. Directors and executive officers will be contacted when these or other restricted trading periods are instituted.

3. Rule 10b5-1 Plans. Directors and executive officers may only enter into a trading plan when they are not in possession of material inside information. In addition, directors and executive officers should not enter into a trading plan during a quarterly blackout period or during a pension blackout period. The Filing Coordinator should be contacted prior to implementation of a trading plan under SEC Rule 10b5-1. Transactions made under a trading plan should be promptly reported to the Filing Coordinator who will prepare the necessary Form 4.

C. Additional Rules Applicable to Proposed Mergers/Acquisitions.

Whenever the Company is actively considering a particular company for merger, acquisition or for another significant business relationship (such as a joint venture) or whenever the Company is engaged in active discussion regarding the sale of control of the Company, all of the Company’s personnel involved in, or aware of, due diligence or other planning for or attention to the acquisition or business relationship should not trade in any of the Company’s securities and any securities of the other company without first contacting the Filing Coordinator, who may consult with outside counsel.

Note: This policy applies to personal securities transactions by the directors and officers and by the employees involved in, or aware of, due diligence or other planning for or attention to the acquisition or business relationship and also applies to:

(a) Transactions for accounts in which the director, officer or employee has an interest or an ability to influence transactions; and

(b) Transactions by the director’s, officer’s or employee’s spouse or any other member of their household unless (i) the household member’s investment decisions are made independently of the director, officer or employee and (ii) the household member has not received inside information about the issuer of the security.

Stock Repurchase by the Company.

This policy does not restrict the Company’s purchase of its common stock. The Board of Directors may choose to delegate to the Chief Executive Officer or his designee(s) the authority and discretion to authorize the Company to purchase Company common stock pursuant to a Board-approved and currently effective stock repurchase program, including during a restricted trading period under this policy. In such a circumstance, the Chief Executive Officer must determine that the following conditions are met:

(a) The Company is not in possession of non-public material information that prohibits such purchases;

(b) Market conditions for the repurchase are favorable;

(c) There are no material differences in the financial condition of the Company referenced in the last publicly reported balance sheet date that have not been publicly disclosed;

(d) There are no material differences in the consolidated results of core operations of the Company for the current quarter and the average for the four most recent quarterly periods that have not been publicly disclosed;

(e) It is anticipated that expected earnings for the current quarter will not be materially different from analysts’ publicly announced estimates for the current quarter or guidance provided by the Company, if any;

(f) The Company is not currently in the process of conducting a transaction or series of related transactions that have not been publicly disclosed and which, if consummated, would likely have a material impact on the financial condition or results of operations of the Company, nor is the Company actively considering any such transaction or series of transactions;

(g) The stock repurchases are conducted in accordance with the currently effective stock repurchase program and are not being conducted for the purpose of manipulating the trading market for the Company common stock; and

(h) The Chief Executive Officer or his designee(e) has sought the advice of any advisors as he shall deem appropriate.

Confidentiality

Serious problems could develop for the Company by unauthorized disclosure of inside information about the Company, whether or not for the purpose of facilitating improper trading of the Company’s stock.

Confidentiality of Non-Public Information.

Directors, officers and employees should not discuss internal matters or developments with anyone outside of the Company (including family members, securities analysts, individual investors, members of the investment community and news media), except as required in the performance of regular corporate duties. In addition, directors, officers and employees of the Company with knowledge of material, non-public information should only disclose such information to other Company personnel on a “need-to-know” basis so that the group of individuals with knowledge of material, non-public information is kept as small as possible.

All inquiries about the Company made by the financial press, investment analysts or others in the financial community, or by stockholders must be handled in accordance with the Company’s Policy on Fair Disclosure to Investors. If you have any doubt as to your responsibilities under this policy, you should seek clarification from the Disclosure Policy Compliance Officer before acting.

Prohibition Against Internet Disclosure

It is inappropriate for any unauthorized person to disclose Company information or to discuss the Company on the Internet, including in any forum or chat room where companies and their prospects are discussed. The posts in these forums are, in some cases, made by investors who are poorly informed, who have malicious intent or who intend to benefit their own stock positions. To avoid the disclosure of material, inside information, no director, officer or employee may discuss the Company or Company-related information in an Internet forum or chat room, regardless of the situation.

***

If you have any questions regarding this policy, please contact the President and Chief Executive Officer of the Company.

PART 2 - POLICY REGARDING BLACKOUT PERIODS AND OTHER RESTRICTIONS APPLICABLE TO THE RESTRICTED GROUP

Upon completion of the mutual to stock conversion of Everett Co-operative Bank, ECB Bancorp, Inc. (the “Company”) will be a public company, the common stock of which is traded on the Nasdaq Capital Market and registered under the Securities and Exchange Act of 1934 (the “Exchange Act”). As a public company, the Company files periodic reports and proxy statements with the Securities and Exchange Commission (the “SEC”).

As a public company, the directors, officers and employees of the Company have a responsibility not to participate in the market for the Company’s securities (“Company Securities”) while in possession of “material information” about the Company that has not been publicly disclosed. Under the Insider Trading and Securities Enforcement Act of 1988 (“Act”), the Company can be held liable for employee violations of the insider trading laws, unless it has adopted policies and procedures to prevent insider trading. Recent efforts by the SEC to police insider trading laws have highlighted the need for awareness of the responsibilities and potential liability in this area. Executive officers and directors of the Company are also subject to various reporting obligations regarding their ownership, and changes in their ownership, of Company common stock.

The Company has adopted policies and procedures regarding insider trading and the confidentiality of information that are applicable to all employees, officers and directors. This policy addresses additional restrictions that are applicable only to Directors, Senior Officers and designated employees of the Company (the “Restricted Group”).

Blackout Periods

Quarterly Blackout Periods. No person in the Restricted Group should trade in Company securities during a blackout period that begins on the 20thday of the last month of each calendar quarter (i.e., on March 20, June 20, September 20 and December 20) and ends at the end of the first full trading day after the public release of the Company’s earnings for such quarter. The blackout period applies to (i) open market purchases or sales, (ii) a sale of securities following exercise of a stock option (including a sale by way of a cashless exercise), (iii) signing up for, or increasing participation in, any employee stock purchase plan or dividend reinvestment plan, and (iv) initiating a transfer of funds into or out of any Company stock fund of a 401(k) plan or increasing an existing election to invest funds in any Company stock fund. However, ongoing purchases through the 401(k) plan or other Company-sponsored plan pursuant to a prior election are permitted at any time (i.e., they are not subject to the blackout period).

Temporary Blackout Periods. The Company may also institute temporary blackout periods in the event of a material corporate development. Notice of temporary blackout periods will be distributed by means of a written or electronic communication specifying the duration of the blackout period and the persons subject to it.

Written Plan Exception. The limitations of the blackout periods shall not apply to trading in Company securities pursuant to a “written plan for trading securities” provided that such plan was entered into prior to the commencement of the applicable blackout period, meets the requirements of SEC Rule 10b5-1 and is approved in advance by the Company’s Board of Directors.

Prohibition on Standing Orders. Standing orders (except standing orders under approved Rule 10b5-1 plans) for the purchase or sale of shares of the Company’s securities should not be used (other than on a daily basis).

Pre-Clearance of all Trades. Prior to the execution, or the placing, of any order with respect to, or any trades in, the Company’s Common Stock, the Filing Coordinator should be notified. This will enable the Company to better assure compliance with the prohibition on trading during the quarterly blackout periods or while in possession of material, nonpublic information, as well as the reporting obligations (e.g., Forms 4 and 5 under Section 16(a) of the federal securities laws) relating to changes in the stock ownership by executive officers and directors.

The following positions are hereby designated “Senior Officer” positions for purposes of the Company policy on participating in the market for the Company’s Common Stock during the blackout periods:

All employees designated senior management team.

All employees that work in: Accounting

Certain employees designated by the Company or the Bank.

Selling Short

No person in the Restricted Group may at any time sell short Company stock or otherwise sell any equity securities of the Company that they do not own. Generally, a short sale means any transaction whereby one may benefit from a decline in the Company’s stock price.

Options

No person in the Restricted Group may at any time buy or sell options on Company securities (so called “puts” and “calls”) except in accordance with a program approved by the Company’s Board of Directors or a trade cleared by the President and Chief Executive Officer. This restriction does not apply to the exercise of employee or director stock options, which is treated under Section A above.

Margin Accounts and Pledges

Securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities held in an account which may be borrowed against or are otherwise pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. A margin sale or foreclosure sale may occur at a time when the pledgor is aware of material non-public information or otherwise is not permitted to trade in Company securities and, as a result, the pledgor may be subject to liability under insider trading laws.

Therefore, you may not purchase Company securities on margin, or borrow against any account in which Company securities are held, or pledge Company securities as collateral for a loan.

An exception to this prohibition may be granted where a person wishes to pledge Company securities as collateral for a loan from a third party (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. Any person who wishes to pledge Company securities as collateral for a loan from a third party must submit a request for approval to the Company’s Board of Directors at least two weeks prior to the execution of the documents evidencing the proposed pledge.

Adopted by the Board of Directors on July 12, 2022.

EX-23.1 4 ecbk-ex23_1.htm EX-23.1 EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in this Registration Statement on Form S-8 (File No. 333-274419) of ECB Bancorp, Inc. of our report dated March 26, 2025, relating to the consolidated financial statements of ECB Bancorp, Inc. and Subsidiary, which appear in this Annual Report on Form 10-K of ECB Bancorp, Inc. for the year ended December 31, 2024.

/s/ Wolf & Company, P.C.

Boston, Massachusetts

March 26, 2025

EX-23.2 5 ecbk-ex23_2.htm EX-23.2 EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-274419) of ECB Bancorp, Inc. of our report, dated March 29, 2024, relating to the consolidated financial statements of ECB Bancorp, Inc. and Subsidiary, appearing in this Annual Report on Form 10-K of ECB Bancorp, Inc. for the year ended December 31, 2024.

/s/ Baker Newman & Noyes LLC

Boston, Massachusetts

March 26, 2025

EX-31.1 6 ecbk-ex31_1.htm EX-31.1 EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION

302 OF THE SARBANES-OXLEY ACT OF 2002

Certification of Chief Executive Officer

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

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


1.	I have reviewed this annual report on Form 10-K of ECB Bancorp, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-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 subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


	d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):


	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


March 26, 2025	/s/Richard J. O'Neil, Jr.
Date	Richard J. O’Neil, Jr.
	President and Chief Executive Officer

EX-31.2 7 ecbk-ex31_2.htm EX-31.2 EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION

302 OF THE SARBANES-OXLEY ACT OF 2002

Certification of Chief Financial Officer

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

I, Brandon Lavertu, certify that:


1.	I have reviewed this annual report on Form 10-K of ECB Bancorp, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-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 subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


	d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):


	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


March 26, 2025	/s/Brandon Lavertu
Date	Brandon Lavertu
	Executive Vice President and Chief Financial Officer

EX-32 8 ecbk-ex32.htm EX-32 EX-32

EXHIBIT 32

CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Richard J. O’Neil, Jr., President and Chief Executive Officer and Brandon Lavertu, Executive Vice President and Chief Financial Officer of ECB Bancorp, Inc. (the “Company”) each certify in their capacity as officers of the Company that they have reviewed the Annual Report of the Company on Form 10-K for the year ended December 31, 2024 and that to the best of their knowledge:


	(1)	the Report fully complies with the requirements of Sections 13(a) of the Securities Exchange Act of 1934; and


	(2)	the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.


March 26, 2025	/s/Richard J. O'Neil, Jr.
Date	Richard J. O’Neil, Jr.
	President and Chief Executive Officer


March 26, 2025	/s/Brandon Lavertu
Date	Brandon Lavertu
	Executive Vice President and Chief Financial Officer