EMPLOYEE BENEFIT PLANS

9 Months Ended

Sep. 30, 2025

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

9. EMPLOYEE BENEFIT PLANS

Supplemental Executive Retirement Plan (SERP)

Beginning in 2016, the Company instituted a SERP for its executive officers. All benefits provided under the SERP are unfunded and, as the executive officers retire, the Company will make a payment to the participant. At September 30, 2025 and December 31, 2024, the Company recorded $213,000 and $194,000, respectively, for the SERP in other liabilities on the consolidated

statements of financial condition. Expenses for the SERP are included in compensation and employee benefits on the consolidated statements of income and were approximately $6,299 and $5,823, respectively, for the three months ended September 30, 2025 and 2024 and $18,896 and $17,468, respectively, for the nine months ended September 30, 2025 and 2024.  During the three months ended September 30, 2025, the Company purchased an annuity contract in the amount of $1.1 million to informally fund benefits under the SERP. The Company is the sole owner of the annuity contract and shall have the right to exercise all incidents of ownership, shall be the beneficiary of any death proceeds and shall at all times be entitled to the annuity contract’s cash surrender value. The annuity is included in bank owned life insurance on the consolidated statements of financial condition.

Defined Benefit Plan

The Company provides pension benefits for eligible employees through a noncontributory defined benefit pension plan (the “Pension Plan”). Substantially all employees participate in the retirement plan on a noncontributing basis and are fully vested after five years of service.

On October 13, 2017, the Compensation Committee elected to soft-freeze the defined benefit pension plan effective January 1, 2018. All employees hired after that date will not be eligible to participate in the defined benefit pension plan; they will, however, be able to participate in a 401(k) plan that the Company will match up to 50% of the employee elected contribution amount capped at 5% of the employee’s earnings. Expense for the 401(k) is included in the compensation and employee benefits on the consolidated statement of income and was $18,903 and $13,292, respectively, for the three months ended September 30, 2025 and 2024 and $59,945 and $35,880, respectively, for the nine months ended September 30, 2025 and 2024.

EMPLOYEE STOCK OWNERSHIP PLAN (“ESOP”)

Effective upon the completion of the Company’s initial public stock offering in October 2017, the Bank established an Employee Stock Ownership Plan (“ESOP”) for all eligible employees. The ESOP used $775,740 in proceeds from a term loan obtained from the Company to purchase 77,574 shares of common stock on the open market at an average price of  $10.00 per share. The ESOP loan will be repaid principally from the Bank’s contribution to the ESOP in annual payments through 2047 at a fixed interest rate of 4.25%. Shares are released to participants on a straight-line basis over the loan term and allocated based on participant compensation. The Bank recognizes compensation benefit expense as shares are committed for release at their current market price. The difference between the market price and the cost of shares committed to be released is recorded as an adjustment to additional paid-in capital. Dividends on allocated shares are recorded as a reduction of retained earnings and dividends on unallocated shares are recorded as a reduction of debt. The Company recognized approximately $4,467 and $6,038 of compensation expense related to this plan for the three months ended September 30, 2025 and 2024 and $13,401 and $18,113 of compensation expense related to this plan for the nine months ended September 30, 2025 and September 30, 2024 respectively. At September 30, 2025, there were 59,193 shares not yet released having an aggregate market value of approximately $681,311. Participant vesting provisions for the ESOP are 20% per year and will be fully vested upon completion of six years of credited service. Eligible employees who were employed with the Bank shall receive credit for vesting purposes for each year of continuous employment prior to adoption of the ESOP.

Subsequent to September 30, 2025, in connection with the completion of the Conversion on October 15, 2025, Seneca Bancorp, Inc. provided the ESOP with $1.5 million loan from the proceeds of the stock offering (i) to fund the ESOP’s purchase of 8% of the shares of common stock sold in the stock offering, or 83,588 shares of Seneca Bancorp, Inc. common stock, and (ii) to refinance the existing loan obligation of the ESOP so that there is only one ESOP loan following the Conversion and stock offering. The new ESOP loan is being repaid in substantially equal payments of principal and interest over 25 years at a fixed interest rate of 7.25%.

STOCK BASED COMPENSATION

A summary of the Company’s stock option activity and related information for its equity incentive plan for the three months ended September 30, 2025 and 2024 is as follows:

	For the three months ended September 30,
	2025			2024
		Weighted			Weighted
		Average			Average
		Exercise			Exercise
		Price Per			Price Per
	Options	Share		Options	Share
	Unaudited
Outstanding at the beginning of the period	60,960	$	9.27	60,960	$	9.27
Grants:	—		—	—		—
Exercised	—		—	—		—
Forfeitures	—		—	—		—
Outstanding at period end	60,960	$	9.27	60,960	$	9.27
Vested at end of period	55,820	$	9.27	50,640	$	9.27
Exercisable	55,820	$	9.27	50,640	$	9.27

A summary of the Company’s stock option activity and related information for its equity incentive plan for the nine months ended September 30, 2025 and 2024 is as follows:

	For the nine months ended September 30,
	2025			2024
		Weighted			Weighted
		Average			Average
		Exercise			Exercise
		Price Per			Price Per
	Options	Share		Options	Share
Outstanding at the beginning of the period	60,960	$	9.27	62,980	$	9.27
Grants:	—		—	—		—
Exercised	—		—	—		—
Forfeitures	—	$	—	(2,020)		(9.18)
Outstanding at period end	60,960	$	9.27	60,960	$	9.27
Vested at end of year	55,820	$	9.27	50,640	$	9.27
Exercisable	55,820	$	9.27	50,640	$	9.27

The intrinsic value of options outstanding at September 30, 2025 and December 31, 2024 was $92,972 and $2,960 respectively.

The grants to senior management and directors vest over a five-year period in equal installments, with the first installment vesting on the anniversary date of the grant and succeeding installments on each anniversary thereafter, through 2028.

The compensation expense of the awards is based on the fair value of the instruments on the date of the grant and no options are available to be exercised at each year end.

The Company recorded compensation expense in the amount of $3,139 and $9,755 for the three months ended September 30, 2025 and 2024 respectively and $11,687 and $29,265 for the nine months ended September 30, 2025 and 2024 respectively. The Company had $15,878 of compensation expense remaining to be recognized at September 30, 2025.

Compensation costs related to share-based payments transactions are recognized based on the grant-date fair value of the stock-based compensation issued. Compensation costs are recognized over the period that an employee provides service in exchange for the award. Compensation costs related to the employee stock ownership plan are dependent upon the average stock price and the shares committed to be released to the plan participants through the period in which income is reported.

In May 2023 and 2022 the Company awarded 12,000 shares of restricted stock awards to senior management, respectively. The restricted stock vests 20% per year on the specified vesting date, until 100% vested on the specified vesting date of the fifth year after the restricted stock was granted. The Company recorded compensation expense in the amount of $11,488 and $11,488 for the three months ended September 30, 2025 and 2024, respectively, and $34,344 and $34,344 for the nine months ended September 30, 2025 and 2024, respectively. The Company has $101,512 of compensation expenses remaining to be recognized at September 30, 2025.

The Company did not have any awards granted or forfeited during the three or nine months ended September 30, 2025 and 2024.