Note 7 — Real Estate Owned (“REO”)

The Company owned two foreclosed properties valued at approximately $5,120,000 at December 31, 2024, consisting of an office building located in Pennsylvania which was acquired through foreclosure in December 2014, and land and land improvement located in Bronx which was acquired through foreclosure in October 2024. In June 2025, the Company sold the foreclosed property located in Bronx to a third-party buyer at no loss and, in connection therewith, the Company provided the financing to the buyer to complete the multi-family construction project. A REO expense of $231,000 was recognized to cover the closing costs for this transaction on the Consolidated Statement of Income. At June 30, 2025, the Company owned one foreclosed property valued at approximately $767,000.

Further declines in real estate values may result in impairment charges in the future. Routine holding costs are charged to expense as incurred and improvements to real estate owned that enhance the value of the real estate are capitalized. REO expense recorded in the Consolidated Statements of Income, including loss on sales and write-downs, amounted to $247,000 and $27,000 for the three months, and $277,000 and $39,000 for the six months ended June 30, 2025 and 2024, respectively.

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